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Tuesday, 11 October 2011

Egypt: the mounting cost of protest | beyondbrics –

Egypt’s finance minister has resigned in protest at the authorities’ handling of Sunday’s bloody demonstration – and the rest of the government may be following suit.

Since it is not the cabinet that’s in charge but the military council, the immediate impact on policymaking could be limited. But it makes an unstable regime look even more wobbly, with dire consequences for the economy. The recent fragile recovery in the stock market could take a knock.

According to the state-run Middle East New Agency, prime minister Essam Sharaf said a cabinet’s decision to consider its future was “standard procedure and did not mean” that the government had resigned. Sharaf was quoted as saying that he was studying the resignation of finance minister and deputy premier Hazem El Beblawi, who quit after only three months in office.

MENA stock markets close - October 11, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
DFM (Dubai Financial Market)
ADX (Abudhabi Securities Exchange)
KSE (Kuwait Stock Exchange)
BSE (Bahrain Stock Exchange)
MSM (Muscat Securities Market)
QE (Qatar Exchange)
LSE (Beirut Stock Exchange)
EGX 30 (Egypt Exchange)
ASE (Amman Stock Exchange)
TUNINDEX (Tunisia Stock Exchange)
CB (Casablanca Stock Exchange)
PSE (Palestine Securities Exchange)

UAE govt clears $11 bln federal budget draft for 2012 | Reuters

The United Arab Emirates government approved a draft 2012 federal budget of 41.8 billion dirhams ($11.4 billion) on Tuesday, roughly the same as expected for this year, pencilling in a tiny deficit, the state news agency WAM reported.

Revenue is projected to reach 41.4 billion dirhams next year, WAM said. That puts the budget shortfall of the world's No. 4 oil exporter at 400 million dirhams, a mere 0.04 percent of its economic output, according to Reuters calculations.

Health, education and social services will be the key budget priorities, Prime Minister and Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum said during Tuesday's cabinet meeting.

Sovereign Wealth and Ruler Loot

The mobility of capital, depending on one’s position, is a virtue or a vice. Since the onset of the Arab Spring, a lot of money has been moving in, out, and around the Middle East. In the classic liberal world, the mobility of money is governed by the market. In the real world however, politics has a say. Some of these politics have been about fear as Saudi and Emirati rulers have reportedly opened their checkbooks to assuage pressures on favored rulers and foment trouble for others. These moves did not come as much of a surprise. But somewhat more unexpected and commented upon by the media have been the responses of Western authorities essentially treating Libya’s sovereign wealth in the same manner as Mubarak’s and Ben Ali’s loot. Here is what is known from media reports.

First out of the gate, even ahead of post-revolutionary Tunisian and Egyptian requests, Swiss officials froze Ben Ali’s and Mubarak’s assets including those of close allies and family members. Clearly, the Swiss were weary of being the poster child for offshore laundering. The European Union and the United Nations eventually followed suit, but Washington has yet to respond publically to Cairo’s requests. However in the case of Libya, the US Treasury went further, utilizing a Soviet-sounding Ford Administration law, the International Emergency Economic Powers Act, to freeze not only Qaddafi family assets but also billions of the Libyan Investment Authority (LIA). This extraordinary, first-ever seizure of a sovereign wealth fund (SWF) has implications not just for the sanctity of capital mobility but for the political health of the Gulf ruling families. After all, the bulk of their investments are held in the United States.

Because most of today’s SWFs operate like national security agencies, estimates of the location and size of their investments vary. However, the consensus is that Arab SWFs amount to around 1.5 trillion dollars or about half of all global SWF funds today. Oil exporters are the fourth largest holders of US Treasury Securities behind China, Japan, and the United Kingdom. It took some time to get to that level and like other firsts in the Gulf it started with Kuwait. In the 1950s, Kuwait established the first modern SWF in a small London office known as the Kuwait Investment Office (KIO), which later folded into the Kuwait Investment Authority (KIA) in 1982. Saudi Arabia, the United Arab Emirates, and Oman followed in these early years with their own funds. Yet all were exclusively staffed with outside management expertise and were generally low profile domestic actors who invested small percentages of annual oil profits into Western government bonds. This last decade witnessed a flurry of new Arab SWFs established by Qatar, Algeria, Bahrain, and Libya. Meanwhile, the big three funds—Saudi Arabia, Kuwait, and the UAE --grew to become the world’s largest, even spinning off subsidiary SWF--like vehicles such as Abu Dhabi’s Mubadala.

Dubai government orders bank merger -

Dubai has ordered Emirates NBD, the emirate’s biggest lender, to take over a troubled smaller competitor that was bailed out by the government earlier this year, as part of a move to consolidate a banking sector still suffering from bad debts.

The takeover of Dubai Bank by government-controlled Emirates NBD, one of the largest banks in the Gulf, is part of “necessary steps to empower financial institutions to fully operate in a way that serves the national economy,” the government’s media office said in a statement on Tuesday.

The move, ordered by Sheikh Mohammed bin Rashid al-Maktoum, Dubai ruler, comes after the government injected capital into Dubai Bank in May. Dubai Bank was created in 2002 as an Islamic institution by shareholders Dubai Holding, a troubled conglomerate owned by the ruler, and Emaar Properties, a large real estate group.

Qatar Bets on Hobbled European Banks Dexia and KBC Group -

Qatari investors are on the hunt for deals across Europe after agreeing to buy the private bank operations of the troubled European firms Dexia and KBC Group.

The deals mirror similar moves in 2008, when banking heavyweights like Barclays and UBS turned to Mideast sovereign wealth funds for huge infusions of cash to recapitalize their operations after Lehman Brothers collapsed.

On Monday, Precision Capital, a Qatari-backed firm based in Luxembourg, agreed to buy KBL European Private Bankers for $1.4 billion. The figure is $400 million less than a previous offer from the Hinduja Group of India, which fell through in March for regulatory reasons.

Dubai Shares Advance on Optimism Europe Crisis Will Be Contained - Businessweek

Dubai’s shares gained for the third time in four days as optimism European policy makers will contain the region’s debt crisis bolstered demand for emerging- market assets.

Arabtec Holding Co., the United Arab Emirates’ biggest construction company, climbed 2.3 percent and Emaar Properties PJSC, the developer of the world’s tallest tower, rose 1.2 percent. The DFM General Index gained 0.7 percent to 1,398.85 at 11:43 a.m. in Dubai. About 21 million shares traded in Dubai today, compared with this year’s daily average of 110 million shares. The Bloomberg GCC 200 Index advanced 0.2 percent.

U.S. stocks rallied yesterday, with the S&P 500 advancing 3.4 percent, after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged over the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s debt crisis by Nov. 3. The STOXX Europe 600 Index rose 1.7 percent yesterday before slipping 0.9 percent today as investors awaited a vote in Slovakia on the euro-area bailout fund.

Borse Dubai backs mergers among global exchanges - MarketWatch

Borse Dubai will continue to support moves toward greater consolidation in the global exchange industry, despite the failure of recent high-profile moves to link exchanges in which it has significant equity holdings, according to the chairman of the government-controlled investment firm.

"The potential for consolidation in the exchange industry remains, despite some recent hiccups, given the argument for scale," Borse Dubai Chairman Essa Kazim told Dow Jones Newswires in an interview this week. "Scale always makes sense and consolidation helps as it creates value in terms of costs and exploiting other business synergies," Kazim added.

Borse Dubai has a significant voice in the global exchange industry by virtue of its stakes in the London Stock Exchange Group (LSE.LN) and in Nasdaq OMX Group NDAQ +4.19% , both of which were involved in recent merger proposals that eventually fell apart. The London Stock Exchange abandoned a planned merger with Canada's TMX Group Inc. TMXGF +2.32% in June, after failing to win shareholder support amid strong opposition to the deal within Canada; Nasdaq OMX's attempt to buy NYSE Euronext NYX +6.16% was blocked by the U.S. Justice Department.

Will the Dubai Financial Market stay permanently depressed as Dubai Bank vanishes? « ArabianMoney

It’s not been a good few weeks or months for the Dubai Financial Market. Stocks have been testing seven-year lows again. Only today the leading retail bank Emirates NBD was forced to takeover the failed Dubai Bank and the quoted Amlak Finance is expected to be next.

The head of equities for the UAE’s largest investment bank Shuaa Capital, Walid Shihabi resigned this week. Brokerages continue to close and DFM trading volumes are very low. The index graph is back to the lows of March 2009:

MENA Bonds: Preparing for a final 4Q push - Zawya

September 2011 did its best to put a brave face on a dull third quarter. Announcements, regulations and a couple of issuances were recorded, raising hopes of a more active final quarter of the year.

As the third quarter wound to a close, the Middle East and North Africa hustled to add depth to its bond market. HSBC Middle East anticipates a USD 1 billion project bond issued with a tenor of 15 years and above out of Qatar or Abu Dhabi in the coming six months. A project bond is used to fund long-term greenfield projects which might include water, power and infrastructure.

In the GCC, the first nine months of 2011 witnessed the issue of USD 20.862 billion worth of bonds compared to USD 21.48 billion in the same period of 2010.

U.A.E. Bank Provisions Surge, May Hurt Third-Quarter Earnings: Arab Credit - Bloomberg

Provisions taken by banks in the United Arab Emirates for non-performing loans increased to the highest level in more than a year and may damp earnings for the country’s lenders in the third quarter.

Provisions for non-performing loans rose 11 percent in the first eight months of 2011 to 49.2 billion dirhams ($13.4 billion) in August, the highest since at least April 2010 when Bloomberg began tracking U.A.E. banking data.

“Profits will be affected because specific provisions in the third quarter of 2011 are likely to be higher than in the same period last year,” Shabbir Malik, Dubai-based research associate at EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank, said in an e-mailed answer to questions yesterday. “Provisions are still high because businesses continue to restructure their debt.”

Emirates NBD to Take Over Dubai Bank After Government Rescue - Businessweek

Emirates NBD PJSC, the United Arab Emirates biggest lender by assets, will take over Dubai Bank PJSC after the company was rescued by Dubai’s government following loan losses.

"The takeover would achieve its fruitful objectives shortly and would reflect positively on the performance of U.A.E. banking in general in the coming period," Emirates NBD Chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement from the Media Office of Dubai. The takeover was ordered by the ruler of Dubai, it said.

Dubai Bank, an Islamic lender owned by Dubai Holding LLC and Emaar Properties PJSC, was rescued by Dubai’s government in May after loan losses increased. Dubai Holding, a company owned by Dubai’s ruler, held a 70 percent stake in Dubai Bank, while Emaar Properties PJSC owned the rest.

Government pledges support for UAE banks - The National

The federal Government is ready to offer support to the UAE banking system in the unlikely event Europe's debt crisis widens into a full-blown credit crunch, says the Minister of Economy.

Europe's banking system showed new signs of stress yesterday as France, Belgium and Luxembourg were forced to nationalise Dexia Bank, the world's largest lender to municipal authorities. "Our exposure there is very small," Sultan Al Mansouri said yesterday, adding UAE institutions did not have large holdings of European sovereign debt. Still, a government committee was prepared to provide more aid for local banks in the unlikely event Europe's crisis spread, he said.

"[The support mechanisms] will always be there," he added.

Saudi gold miner shines for investors - The National

Saudi Arabian Mining Company is catching the eye of investors looking to benefit from the recent gold rally.

The metals producer, also known as Ma'aden, earns 95 per cent of its revenues from gold with 9.2 million ounces of potential reserves, two recent mine discoveries and plans to triple its gold production by 2015. Ma'aden sells gold on the spot market at the London Metal Exchange.

Ma'aden's shares, listed on the Saudi Tadawul exchange, have surged 15 per cent since the start of this year, tracking gains in the spot gold market. "For retail investors, buying Ma'aden's stock is as good as buying gold," said Hisham Tuffaha, the head of asset management at the Bakheet Investment Group, based in Riyadh.

gulfnews : Islamic bodies eye corporate funding opportunities

Islamic financial institutions operating in the region are keen to tap into the long term corporate financing opportunities, including project finance that exist in the market, bankers told a gathering of Islamic finance experts and corporate treasurers in Abu Dhabi yesterday.

The International Summit on Islamic Corporate Finance (ICFS 2011), which opened yesterday at the Le Royal Meridien in Abu Dhabi, saw leading Islamic bankers and corporate borrowers engage in innovative discussions that focused on boosting deal flow in the Islamic corporate finance space.

The summit dwelt on how to capitalise on the increasing demand for Islamic finance from the business sector as a diversified component of their funding mix.

gulfnews : UAE has limited exposure to crises

The sovereign debt crisis in Europe and issues currently confronting the US economy are challenges for all nations of the world, though the UAE is relatively better equipped through its prudent policies to handle any difficulties arising from the situation, said a top official.

Speaking at a press conference yesterday at the World Economic Forum Summit on the global agenda in the UAE capital, Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said: "Our exposure there [in the US and Europe] is very limited. [However] we are ready to face any difficulties that might arise for the UAE's financial institutions and banks."

Al Mansouri said living in an "interconnected world means events in one country can significantly impact others"

U.A.E. Bank Provisions Surge, May Hamper Earnings: Arab Credit - Businessweek

Provisions taken by banks in the United Arab Emirates for non-performing loans increased to the highest level in more than a year and may damp earnings for the country’s lenders in the third quarter.

Provisions for non-performing loans rose 11 percent in the first eight months of 2011 to 49.2 billion dirhams ($13.4 billion) in August, the highest since at least April 2010 when Bloomberg began tracking U.A.E. banking data.

“Profits will be affected because specific provisions in the third quarter of 2011 are likely to be higher than in the same period last year,” Shabbir Malik, Dubai-based research associate at EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank, said in an e-mailed answer to questions yesterday. “Provisions are still high because businesses continue to restructure their debt.”