Saturday, 15 October 2011
Al Rajhi Bank (RJHI), Saudi Arabia’s largest publicly traded lender by market value, strengthened the most in a week. Saudi Holland Bank jumped the most in seven months after posting four- fold profit increase. Saudi Basic Industries Corp. (SABIC), the world’s biggest petrochemicals maker, surged to the highest price in three weeks.
The 148-company Tadawul All Share Index (SASEIDX) rose 0.9 percent to 6,161.39, the highest intraday level since Sept. 18, at 12:52 p.m. in Riyadh. Seven shares rose for every stock that dropped.
The sovereign debt troubles in the euro zone, sluggish growth of the global economy and a recognition that they may have lent too freely in the past are prompting banks to become more cautious in their lending, and to demand tangible assets as backing for loans rather than implicit guarantees.
"The financing environment currently is certainly not conducive for borrowers in the region," said Suketu Sanghvi, head of structuring and investments at Essdar Capital, an investment banking and fund management firm in Dubai.
Sitting in the poolside restaurant at the Trump International hotel in Las Vegas, my eye was taken by a saying by the inimitable 'Donald’ etched into a floor-to-ceiling mirror: 'As long as you’re going to be thinking anyway, think big.’
Opened in 2008, the Trump International stands back from Las Vegas Boulevard, the main thoroughfare known as the Strip. With its 1,250 rooms and 50 penthouse suites on 64 storeys, the Trump is far from being the largest of the steroid-pumped hotel resorts along the Strip – it does not even boast a casino – and yet, standing in its perfect isolation, its windows clad in 24ct gold, it resembles nothing so much as a huge shimmering tombstone, a metaphor for the near-death experience that Las Vegas, where 'thinking big’ is what they do, has gone through in recent years.
Beside the Trump Tower is a vacant lot that was once the site of the New Frontier hotel. Opened in 1942 – the second hotel to open on the Strip, and in Las Vegas terms a building of outstanding historical importance – the New Frontier was the scene of Elvis Presley’s first Las Vegas appearance in 1956, and was briefly owned by Howard Hughes. In 2007 it was imploded – in the traditional Las Vegas style – to make way for a new $8 billion luxury hotel, provisionally named the Las Vegas Plaza, which was originally scheduled to open in December 2011. But the developers, hamstrung by the financial paralysis that has engulfed the town, have yet to break ground.
Bahrain’s economy has struggled since the start of protests earlier this year. Capital is fleeing the country, with many companies halting their business operations in Bahrain.
While much of the world suffered through global recession, Bahrain’s economy was considered strong prior to the unrest earlier this year. Despite lagging oil production, the government had moved to bolster its position by diversifying its investments, building the country’s heavy industry and tourism sectors and investing in Western ventures. Bahrain’s Islamic financial sector is one of the strongest in the region. A 2005 free trade agreement between Bahrain and the US further contributed to Bahrain’s rapid growth, which outpaced many of its neighbors.
Bahrain had recently taken steps to privatize government sectors like transport, telecommunications, and financial services, in an unprecedented move among Gulf states. When the 2008 world financial crisis struck, the government took swift measures that affected the entire financial sector, in the hope of preventing Bahrain from slipping into the world recession. The economy’s fundamentals were sound enough to ensure growth of an estimated four percent throughout 2009.
Mabanee, a property company listed in Kuwait, has one building, and that single asset is set to become the biggest of its kind in the Middle East.
Due to be completed in 2015, The Avenues, in Kuwait City, will surpass Dubai Mall as the largest shopping centre in the region and analysts say its growth will increase Mabanee's share price nicely in the near future.
If they release more flats on to the market, it is likely to drive down sale and rental prices. But they also need to release the apartments to generate revenue. "It is a dilemma," said Craig Plumb, the head of research for Jones Lang LaSalle. "They need the cash flow, which they can only get from releasing product.
"At the same time they recognise the market is oversupplied."
An estimated 10 billion barrels of oil deposits are up for grabs in an auction set for early next year. But the contract model says companies will be paid in dollars rather than being rewarded with a share of the crude they find. Such terms are not designed to motivate drilling, say industry executives.
"They are not conventional terms for exploration. Some people would even say these are not ideal terms for exploration," said Elias Kassis, the managing director for Iraq exploration and production at the French oil giant Total. "We're currently looking at the technical aspects as well as the contractual model to evaluate risk and reward."
Rashed Al Fahim, the managing director for the group, says that an initial public offering (IPO) for the entire conglomerate is out of the question but that some of the separate businesses could be listed in the next few years.
"We can't list our name as a business," he said. "We have many separate interests that we are grooming for public listing, but not the group itself. I think this business should still be a family business but have a proper corporate structure."
One of the names that have been closely linked to the sale of the prime real estate holding at Elliniko is that of the Qatar Investment Authority (QIA), which has already shown significant interest in Greece, with two large investments already completed, one canceled and another in the works.
The first of these is the QIA’s investment of 500 million euros in the new Alpha-Eurobank, which is scheduled to start operating in the new year, the result of the merger in August of Alpha Bank SA, Greece’s third-largest lender, and EFG Eurobank Ergasias SA. The second is to the tune of 1 billion euros in mining firm European Goldfields, which was announced earlier this month.