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Tuesday, 27 December 2011

Saudi Arabia: spend it while you can | beyondbrics –

While most western governments are by now checking ministry sofas for any loose change that might have been lost in the creases, Saudi Arabia increased spending by 25 per cent this year – and has still been able notch up budget surplus north of $81bn, or 14 per cent of the kingdom’s annual economic output.

Emboldened, the kingdom now plans to raise government spending further next year, to an all-time budget high of SR690bn next year, according to the 2012 fiscal plan approved on Tuesday. A planned SR250bn splurge on housing projects comes on top, as the money needed has already been deposited at the central bank.

It is, as Jadwa Investment, a local investment house, says in a research note – with some understatement – an “expansionary budget”.

Saudi Arabian Light Crude Prices to Fall 12% Next Year, NCB Says - Businessweek

Prices of Arabian Light oil, the major type of crude exported by Saudi Arabia, are expected to fall by 12 percent next year as demand declines, according to National Commercial Bank, the kingdom’s largest bank by assets.

Arabian Light will average $95 a barrel next year from an average 2011 price of $107.80, the Jeddah-based lender said in an e-mailed report today. This year’s price rose 39 percent from last year, according to the report.

Saudi Arabia’s average oil production may fall to 8.8 million barrels a day next year from 9.2 million as demand from Europe weakens, the bank said.

Saudi Electricity to launch transmission firm in Jan | Reuters

State-controlled Saudi Electricity Co (SEC) plans to launch a transmission subsidiary in January as it splits up into six companies to encourage competition, state news agency SPA reported on Tuesday.

After the restructuring, SEC will be a holding company and will retain full ownership of the six companies, which include four power generation firms, one firm for distribution and another one for transmission.

The cost of the restructuring programme is estimated at around 200 million riyals ($53.3 million), Ali Bin Saleh al-Barrak, SEC's chief executive told SPA.

Iran will block oil passage if sanctions applied | Al Akhbar English

Iran will block the transit of oil through the key Strait of Hormuz if the West imposes sanctions on Iranian oil exports, Iran's Vice President Ali Rahimi warned on Tuesday.

The remarks were reported by Iranian news agency, IRNA, as Iran conducts 10-day navy war games near the Strait of Hormuz.

"If sanctions are adopted against Iranian oil, not a drop of oil will pass through the Strait of Hormuz," Rahimi was quoted as saying.

MENA stock markets close - December 27, 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)

Dubai Shares Rise Most in Two Weeks on Speculation Drop Overdone - Bloomberg

Dubai’s shares rose, with its benchmark stock index headed for its largest gain in two weeks, on bets a drop this month is overdone.
Emaar Properties PJSC, (EMAAR) builder of the world’s tallest skyscraper, gained as much as 2 percent. Arabtec Holding Co. (ARTC), the United Arab Emirates’ biggest construction company, snapped a five-day losing streak. Dubai’s DFM General Index (DFMGI) edged up 0.5 percent to 1,336.70 at 11:33 a.m. in the emirate. The measure is down 3.2 percent this month.
“These are regular market consolidation moves which come after every sharp sell-off,” said Vipin Karnani, a financial analyst at Al Fahim Group in Abu Dhabi. “Most of the stocks have reached their support zones and thus are getting some bids.”

Oman Asks Iran to Return Three Rented Oil Tankers, Mehr Reports - Bloomberg

Oman asked Iran to return three oil tankers that operated with the Iranian fleet for two years, the state-run Mehr news agency reported.
Iran will return the tankers soon, the agency said, citing an unidentified oil official.
Oman agreed two years ago to rent 10 tankers to Iran under an accord between National Iranian Oil Co. and Oman Shipping Co. SAOC , the state-run news agency said.

Oman's Renaissance approves $130 mln capital hike | Reuters

Renaissance Services' board has approved plans to raise new capital to help fund expansion, the Omani oil services company said on Tuesday.

The new capital, which will be worth up to 50 million rials ($129.87 million), will be raised through a privately-placed quasi-equity instrument open to both new and existing investors, Renaissance said in a statement to the Muscat bourse.

No timing for the issue, which still requires the approval of both regulators and shareholders, was given. Bank Muscat has been appointed as financial adviser for the offering.

Saudi Oil Break-Even Price Rise to $71.5 Next Year, NCB Says - Bloomberg

Saudi Arabia’s break-even price to balance next year’s budget will rise to $71.5 a barrel from $70.9 this year, according to National Commercial Bank, the kingdom’s largest lender by assets.
Saudi Arabia, the world’s largest crude exporter, is expected to produce 9.2 million barrels a day on average in 2011, Jarmo Kotilaine, the bank’s chief economist, said today in response to e-mailed questions. The lender, known as NCB, forecasts the country’s average oil production to fall to 8.8 million barrels a day in 2012, he said.
The Organization of Petroleum Exporting Countries signaled in its meeting in Vienna on Dec. 14 that it’s prepared to allow Saudi Arabia, the biggest member, to keep pumping crude at near the highest rate in at least 30 years, while increasing its combined output limit to 30 million barrels a day.

Build confidence, they will come - The National

Confidence is the key ingredient missing in the UAE property market.

Buyers are wary of further price declines, questionable developer practices and a legal and regulatory system that often seems unresponsive to their concerns.

Regaining that confidence will take more than a few flowery press conferences and reports suggesting prices are "stabilising". Action is needed on a basic level to convince the international community that Dubai is a stable market.

A year to remember that some would rather forget - The National

Sectors in the UAE had a mixed year as the Arab Spring provided opportunities for some industries and challenges for others. Overall, though, 2011 has left most companies in the country in better shape than they were in last year. The National’s business reporters recall the highs and lows
The global economic landscape was dominated by two big worries this year: the European debt crisis and the fiscal deadlock in the US. Both concerns combined to put the brakes on growth in the developed world. A more pressing concern in the Middle East has been the spreading of unrest across Tunisia, Egypt, Bahrain, Yemen, Libya and Syria. An exodus of foreign investment, a slump in business activity, and a drain on government spending rocked the economies of affected countries. The UAE was spared the unrest, with its economy expected to expand by 3.3 per cent this year, according to the IMF. - Tom ArnoldEconomy
This year was all about delivery for UAE developers who started projects at the peak of the market. In Abu Dhabi, the first towers were opened on Reem Island and more projects were completed on Raha Beach. To woo buyers, developers Sorouh and Aldar launched rent-to-own schemes, the first of their kind in the capital. In Dubai, more than 15,000 homes were completed, providing house-hunters with a variety of new choices. Rents and home prices continued to decline in both Abu Dhabi and Dubai as more supply came on line. But there were signs of stabilisation in some neighbourhoods, as buyers and renters sought out prime properties at newly affordable prices. - Kevin Brass
Two world events - the accident at Japan's Fukushima Daiichi nuclear plant and Libya's eight-month civil war - defined 2011. On the green front, the Emirates lined up the largest financing package for a regional renewables project for its Shams 1 solar plant. But alternative energy was not immune to the financial downturn, with Abu Dhabi's clean energy company Masdar cutting staff and changing its plans for a "carbon-neutral" city to "low carbon". - April Yee
One of the most recent and memorable headlines in the technology sector included the death of Apple's co-founder, Steve Jobs. Globally, his name was the ninth most popular search on Google this year. Earlier in the year, however, the Arab Spring became a significant catalyst for the industry by bolstering the popularity of social networking sites such as Facebook, Twitter and YouTube. New, strategic partnerships were formed, including one between Nokia and Microsoft in the smartphone space, while some of the most significant acquisitions included Google's purchase of Motorola Mobility and Skype's sale to Microsoft. - Neil Parmar
Moves to offer more financial support to small businesses in past years have been bolstered by efforts to give the sector additional structure this year. Banks continued to expand the range of products and services available for small and medium-sized enterprises (SMEs), while the government set new guidelines to help secure them more money. The nine principles of the corporate governance code are voluntary, but some new changes were forced on businesses. - Gillian Duncan
Many retailers across the Emirates have experienced their best year in 2011, as consumer confidence returned following the financial crisis and tourists flooded the country's malls. The overall retail market has grown for the first time since the global downturn, according to Euromonitor International, a research and information company. Corner shops in the capital, meanwhile, were told they must begin renovating their stores to the standard of large supermarket chains such as Lulu or Carrefour or face losing their licences to trade.- Rory Jones
Big orders and industry tie-ups were the highlights of Gulf commercial aviation during the year. Gulf carriers managed to navigate their way through headwinds posed by higher oil prices, the Arab Spring and - in the latter half of the year - a slowing global economy. Etihad Airways, Emirates Airline and Qatar Airways all booked multibillion-dollar orders for new aircraft to build their aircraft capacity in the mid to late part of the decade. Etihad also expanded its reach in Europe this month by paying US$95 million (Dh348.9m) to become the largest shareholder in Air Berlin, the continent's six-largest carrier. - Tom Arnold
One of the main factors affecting tourism in the region this year was the Arab Spring. While countries including Egypt and Syria experienced sharp declines in the number of tourists this year, the UAE benefited because it was considered a safe destination. In particular, there was a surge in the number of tourists from the GCC to Dubai and Abu Dhabi. Both emirates experienced growth in the number of hotel guests over last year. Abu Dhabi is forecast to have hosted about 2 million guests this year, up from 1.81 million last year. The UAE tourism sector is also attracting a far more diverse range of visitors, with Asian markets such as India and China growing strongly, helped by the fact that hotel rates have become much cheaper. - Rebecca Bundhun
A dramatic rescue of Dubai Bank, followed by a forced acquisition by Emirates NBD, underscored lingering doubts about the UAE's slow recovery this year from the financial crisis. Hidden debts swelled at Dubai Group and resolution of debt problems looked far off, while restructurings at Al Jaber Group caused a headache for lenders in the capital. Meanwhile, the Central Bank imposed new rules to rein in the freewheeling lending of the boom years and protect consumers from excessive fees. And investment banks battened down the hatch as the euro-zone's sovereign debt crisis raged, then withdrew staff from the Gulf as tens of thousands of job were cut. - Gregor Stuart Hunter
In short, a horrible year. Investors fled Middle Eastern stocks during the Arab Spring. About half of the UAE's brokerages went bust as volumes dwindled and investment banks scaled back equity research and sales teams. The UAE and Qatar failed to secure an upgrade to emerging-market status from the index provider MSCI not once, but twice. Draft rules on short-selling, securities lending and market-making may go some way towards reviving local trade. But a long-awaited merger of the UAE's bourses remained on the starting blocks. Tamweel's return to trading after a three-year absence was a lone bright spot. - Gregor Stuart Hunter
The Arab Spring prompted losses in advertising revenues in the key market of Egypt. Zubair Siddiqui, the managing director of the media agency UM Dubai, said Egypt's advertising market recovered, but there was still an overall decline over the year as a whole. "The real drops were close to 65 to 70 per cent in absolute numbers. It was devastating: Most agencies had to let go more than 50 per cent of their people. But then it came back, and the overall drop is anywhere between 25 and 30 per cent," he said. This prompted a wider malaise elsewhere in the region, with overall advertising revenues set to be flat or lower than last year. Despite this, there were new media launches, such as Read, the free newspaper distributed on the Dubai Metro. - Ben Flanagan
The telecommunications industry faced a tough year. Several regional companies focused on boosting revenues from data use, amid tighter competition on voice calls and the need for heavy investment in infrastructure. The majority of regional telecoms companies posted a negative performance during the year, according to Shuaa Capital. Etisalat faced a particularly tumultuous year. In March, it abandoned a US$12 billion (Dh44.08bn) bid for Zain Group. The company also pulled out of a bid for Syria's third mobile licence, and faced problems with its India operation. But as with other telecoms companies in the region, Etisalat is pinning its hopes on infrastructure investment: the company has invested Dh6bn in fibre-optic and 4G mobile networks. - Ben Flanagan
Sovereign wealth funds
SWFs and state-owned development vehicles in the Gulf had an active year despite stress in the global economy and the regional political tumult. Aabar Investments, owned by Abu Dhabi's International Petroleum Investment Company, made one of the biggest transactions of the year in May, when it put about US$1 billion (Dh3.67bn) into Glencore, the commodities giant. The Abu Dhabi Investment Authority, one of the world's biggest sovereign funds, also made a number of big deals, including buying a 9.9 per cent stake this month in Thames Water, the UK's biggest water utility. Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, spent the year building up its aerospace division and adding to its portfolio of assets. - Asa Fitch
The development of the UAE's industrial base continued apace this year, with major expansions announced by a pair of the sector's biggest players. Emirates Aluminium, a joint venture between Mubadala Development and Dubai's Dubal, said it would proceed with a US$3.8 billion (Dh13.95bn) second phase of construction set to increase the smelter's production capacity from about 750,000 tonnes of the metal year to 1.4 million tonnes. Emirates Steel, the country's biggest steel-maker, is also forging ahead with a $500 million expansion that it expects to complete next year. - Asa Fitch

Qatari economy to lose steam in 2012 - Emirates 24/7

Qatar appears to be heading for an end of its economic euphoria as growth in its GDP is projected to dip to only around six per cent in 2012 from an expected 19 per cent in 2011 and similar high rates in previous years.

IMF figures showed the Gulf country’s real GDP, which has recorded one of the world’s highest growth rates over the past decade, leaped by nearly 17 per cent in 2010 and is forecast to pick up by about 19 per cent in 2011.

The report expected GDP growth in the world’s third largest gas power to dive to nearly six per cent in 2012 but gave no reason the sharp fall apart from saying Qatar is still enforcing a moratorium on gas development projects.

gulfnews : Dubai budget shows strong desire to get a grip on debt

The global financial crisis of 2008 taught governments and financial institutions that it pays to be cautious and remain conservative.
The Dubai Government's Dh32.25 billion budget for 2012 can be seen in this context. It is much smaller in size, compared to the previous budgets. It is, no doubt, conservative.
The budget reflects "continued efforts to raise the efficiency of government spending through increasing productivity and improving economic and social returns", as stated by the government.

gulfnews : Abu Dhabi, Qatar bonds attract investors

Middle East government bonds weathered regional turmoil and spillover from Europe's debt crisis in 2011, led by debt from oil producers Qatar and Abu Dhabi.
Regional bond yields declined by more than the emerging markets average this year, with Middle East yields down 24 basis points, or 0.24 of a percentage point, to 4.94 per cent, according to the HSBC/Nasdaq Dubai Middle East Conventional Sovereign US Dollar Bond Index. Emerging-market debt fell 10 basis points to 5.86 per cent, JPMorgan Chase & Co. data show.

Telecoms operator a must-du for investors - The National

Emirates Integrated Telecommunications Company is an earnings powerhouse.

The company, also known as du, is a top pick among telecommunications stocks for next year, with its continued strength in earnings, low valuations and prospects for dividends.

"We continue to favour single-country telecoms operators, focused on organic growth opportunities, coupled with increasing free cash flows and dividends," said Simon Simonian, an analyst at Shuaa Capital, based in Dubai. "The number two telecoms player in the UAE" meets this criteria, he added.