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Wednesday, 13 June 2012

Spotlight on Iraq as Opec meets - The National

One year ago, the most anticipated arrival to the Opec meeting was Libya.

The country was in the grip of civil war - but still managed to send an envoy to the gathering.

This year the spotlight is on Iraq, under Opec's quota system for the first time in 13 years after years of being exempt because of sanctions and war.

World Bank warns Mena growth will drop by half - The National

Growth in the Middle East and North Africa (Mena) will slow by nearly half this year, the World Bank said yesterday.

The warning came as it pointed to fresh risks across the region and a deteriorating outlook in the euro zone.

The institution forecast economic expansion in the Mena region of 0.6 per cent, down from 1 per cent last year. The impact of sanctions on growth in Iran and continued GDP declines in Syria and Yemen were among the main reasons for the lower forecast it said. But it warned that threats to the region from the euro zone loomed large.

gulfnews : Gulf states seek solar energy

After decades of relying on fossil fuels to build their cities in the desert, some oil and gas rich nations of the Gulf are now turning skywards to the sun to meet future energy demands.
Ambitious multi-billion-dollar projects to harness the power of the region's year-round blazing sun have already been announced by Saudi Arabia, Qatar and the UAE.
Global energy summits are being held in the region's desert capitals while whole communities, research institutes and businesses devoted to the production, promotion and application of renewable energy are being built.

gulfnews : Prospects of emerging GCC bourses

It has been two years since the UAE and Qatar submitted their bids to Morgan Stanley Capital International (MSCI) for promoting their stock markets from frontier to an emerging market status. The delay in MSCI’s decision on the upgrade of UAE and Qatar stock markets is attributed to many reasons. Saudi Arabia is also seeking to have its stock market upgraded too.
MSCI decision will have significant implications and give a strong boost to GCC stock markets, especially with regard to attracting foreign investors to these bourses.
In fact, there is a complete separation between the performance of GCC economies and that of their bourses –in a very rare phenomenon in financial markets, since the stock market is a mirror of economy. But, the situation in the GCC countries is quite different as the performance of stock market is unrelated to the good performance of economy, which is supported by high oil prices.

Booming Dubai art market forced to shift gears | Reuters

Dubai has discovered there really are some things money can't buy.

After a decade of petrodollar-driven success that has established it rapidly as a regional financial, trade, tourism and retail centre, the emirate has hit a speed bump in an unexpected arena - art.

Burgeoning enthusiasm for collecting art convinced many that Dubai was about to become an overnight sensation in the international market, putting a gloss of sophistication on the cultural life of the emirate.

gulfnews : Five jailed, fined in Tamweel graft case

Five former executives were handed different jail terms and ordered to pay nearly Dh45 million which they appropriated from Tamweel in one of the longest-standing trials of graft cases since 2008.
Following nearly three years of deliberations before the Dubai Appeal Court, Presiding Judge Mustafa Al Shennawi yesterday convicted Tamweel’s ex-CEO, Emirati A.A., and his two countrymen, A.N. [the ex-commercial president] and S.M. [former executive director], along with two Jordanians, F.K. [investment department’s ex-director of Tamweel] and Bonyan Holding’s ex-board chairman A.S. of abuse of office and committing financial irregularities.
The case was also handled by the Dubai Court of First Instance between 2008 and 2010.

Analysis: Sliding oil price rebalances Middle East economy | Reuters

Ziad Makhzoumi, chief financial officer of Arabtec ARTC.DU, the United Arab Emirates' biggest construction firm by stock market value, thinks the region's economy will probably ride out weak oil prices comfortably. But he sees a risk.

If oil drops below the price at which energy-exporting countries in the Gulf can balance their state budgets - a scenario which he thinks unlikely - infrastructure and other building projects will slow down or in some cases halt.

Fortunately, "governments are more prudent and forecast better now than they did many decades ago, and can juggle things to maximize the use of limited funds or make their cash go longer," Makhzoumi told Reuters.

MENA stock markets close - June 13, 2012

 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)

MIDEAST STOCKS-Kuwait at 4-month low as tensions weigh; Saudi up - Yahoo! News Maktoob

Kuwait's benchmark slumped to a 4-month low on Wednesday as ongoing political uncertainty in the Gulf state weighed on investor sentiment, while other regional bourses were largely muted.
The country's index dropped 1.7 percent to its lowest close since Feb. 12, following the resignation of a second minister in less than a month on Tuesday.
Social Affairs and Labour Minister Ahmed al-Rujaib resigned on Tuesday, the second cabinet minister to quit in less than a month.

ANALYSIS-Retail boom no bonanza for UAE banks - Yahoo! News Maktoob

Thursday night - the beginning of the weekend - and thousands have flocked to Dubai's Mall of the Emirates, one of the largest shopping centres in the world, to shop, eat, watch a movie or a have a few runs down the indoor ski slope.
It's a similar story - minus the ski slope - at Dubai Mall, another of the emirate's 'mega-malls'. It attracted 54 million visitors in 2011, a 15 percent year-on-year growth; by contrast, New York City welcomed 50.5 million visitors last year.
"People are spending more than they were last year and there is more buoyancy and confidence in the market," said Vipen Sethi, chief executive of Landmark Group, a retail conglomerate with a presence in 17 countries across the Middle East, Africa and South Asia.

Saudi's SABIC to repay 8 bln riyal sukuk early - statement - Yahoo! News Maktoob

Saudi Basic Industries Corp on Wednesday said it intends to repay an 8 billion riyal ($2.13 billion) Islamic bond, or sukuk, ahead of maturity, from internal cash balances.
The petrochemicals giant sold the 20-year sukuk in 2007 in a deal which was arranged by HSBC's Saudi Arabian unit. The bond had a call option after five years, allowing SABIC to repay investors early, a Saudi-based banker told Reuters.
The company said in a statement to the Saudi stock exchange that it will purchase the assets in accordance with the terms and conditions of the sukuk, which will stop trading on June 16.

Private equity investment spree expected -

The Middle East’s private equity funds, which have long lagged behind their global peers, have built up at least $5bn in capital ready to invest in new opportunities, industry leaders said this week. They will also increase endeavours to make new investments this year.
The so-called “dry powder” has been building for years, as private equity funds – which occupy a smaller segment of the financial sector than similar funds in the developed world – raised cash faster than they spent it. But many in the business say a global trend of banks selling assets to raise capital, combined with new economic opportunities in the region, could combine to spur a rush of investment by the funds.

Bahrain expected to launch sovereign bond -

Bahrain is expected soon to launch a sovereign bond issue, testing appetite for the troubled economy as it seeks to recover from the impact of last year’s unrest.
Initial indications are that the expected $1.25bn, seven to 10-year tenor bond would receive strong demand in Bahrain and Saudi Arabia as banks seek to put rising liquidity to work, though broader interest may lag behind, market participants say.
Bankers say the decision to launch the bond has not been finalised, but they expect it to proceed soon to catch a window of opportunity that could be closed by more eurozone problems.

MIDEAST MONEY-Bahrain economic reforms takes hit as hardliners battle uprising - AlertNet

Bahrain's economic reforms - once hailed as the most ambitious in the Gulf - seems to have stalled as hardliners in the Sunni ruling family who see Shi'ite protesters as a threat to the state bring the programme under their wing.

Hawks within the Al Khalifa family asserted themselves after a pro-democracy protest movement led by the majority Shi'ite population erupted last year following successful revolts in Egypt and Tunisia.

They swept aside a political dialogue with opposition parties offered by Crown Prince Salman, introducing a period of martial law, detaining thousands and staging military trials.

UPDATE 1-Abu Dhabi's IPIC 2011 net profit slumps 96 pct | Reuters

Abu Dhabi's International Petroleum Investment Company (IPIC) reported a 96 percent slump in 2011 full-year profit on Wednesday, as market volatility and currency exchange risks weighed on its investment portfolio.

The government-owned investment vehicle made a net profit of $44.7 million last year, a company statement said, down from $1.3 billion in the prior-year period.

But profit from continuing operations, an indicator of core business performance, surged to $540 million in 2011, up over 350 percent from the previous year, according to the statement.

UAE Central Bank sees rise in suspicious transactions | Reuters

Financial firms in the United Arab Emirates have reported a 25 percent increase in "suspicious" transactions in the first five months of this year as the Gulf state steps up vigilance against money laundering, a senior central bank official said on Wednesday.

At least 1221 suspicious transactions were reported as of the end May compared to 978 transactions reported during the same period last year, figures provided by the central bank showed.

In 2011, suspicious transactions reported totaled 2576 compared to 2781 in 2010, t he central bank figures showed.

NewsWires : euronews : the latest international news as video on demand

A Kuwaiti walks into a lost and found bureau and says he is searching for the Gulf state’s vaunted 30 billion dinar ($107 billion) economic development plan.

The cartoon in the Kuwait Times captures frustration at a long-running political row which has engulfed the major oil producer, distracting from economic reforms and stalling legislation.

Political infighting between the parliament and government has forced the resignation of two cabinet ministers in less than a month and threatens to draw in more of their cabinet colleagues.

Persian Gulf Stocks: Saudi Basic Industries and Kingdom Holding - Bloomberg

Saudi Arabia (SABIC)’s Tadawul All Share Index (SASEIDX) gained 0.3 percent to 6,744.53 at the 3:30 p.m. close in Riyadh, bringing this week’s advance to 1.3 percent. Dubai’s benchmark DFM General Index (DFMGI) rose 0.6 percent to 1,477.86.

Global gas glut extends into 2011 as coal surges: BP | Reuters

The global natural-gas glut extended into 2011 as high prices diminished demand in Europe and drove use of cheaper coal, accelerated by Germany's decision to abandon nuclear power, BP said in its latest Statistical Review of World Energy 2012.

World gas production grew by 3.1 percent while consumption lagged behind at 2.2 percent, extending a period of oversupply as demand in recession-hit Europe fell by a record 9.9 percent last year.

Coal consumption grew by 5.4 percent last year.

BREAKINGVIEWS-Iran's oil sanctions are just beginning to hurt - Yahoo! News Maktoob

Iran's sanction pain is just beginning. Oil revenue in the Islamic Republic may have fallen by nearly one third, or $35 billion, on the back of a slowdown in exports and declining prices. With U.S. sanctions set to tighten and China's apparent readiness to go along, Tehran's budget could be thrown deep into the red.
Sanctions are squeezing hard. The harshest of the U.S. and European measures don't formerly kick in until the end of the month yet crude oil exports have already fallen to 1.5 million barrels per day (bpd), according to industry sources, compared to 2.5 million bpd last year.
With an average price of Brent crude for the year to date at $121, Iran might generate $67 billion of oil revenue this year with the current level of exports, compared to an estimate of more than $100 billion last year.

BREAKINGVIEWS-OPEC can't afford to give residents cheap oil - Yahoo! News Maktoob

Bargain price oil is a standard perk for residents of crude-exporting nations. To the governments which set the low domestic price, such subsidies look like a way to buy popularity without any cash outflow. But the practice is expensive for members of the Organization of the Petroleum Exporting Countries, which meets in Vienna this week.
It's well past time for a change.
Overall the 12 countries guzzle 57 percent more oil than a decade ago, according to figures from Deutsche Bank, with Saudi Arabia using nearly twice as much. Smaller members have been on the same course. Consumption has trebled in Angola, doubled in Ecuador and climbed 55 percent in Venezuela. OPEC members also seem to be becoming less efficient. Oil usage per head is up 24 percent since 2000, Deutsche says, while it is flat for the globe as a whole.
The habit of doling out cut-price crude to citizens is largely to blame. Thanks to excise taxes, drivers in developed economies generally pay much more than the market price per gallon of petrol. Thanks to sub-market prices, OPEC motorists pay much less, and have little financial incentive to ration their use.

Emirates to repay $550 mln Islamic bond in full - paper - Yahoo! News Maktoob

Dubai's Emirates, the fast-expanding Gulf airline, will repay in full a $550 million Islamic bond maturing later in June, a senior executive told local newspaper Gulf News.
The sukuk that matures on June 16, will not be refinanced, Emirates' President Tim Clark said in a interview
with the Dubai-based paper in Beijing.
"No, we are not refinancing the $550 million (bond). We are just about to repay the sukuk," he was quoted by the paper.

FT Alphaville » Why Saudi Arabia wants to bathe the world in affordable oil

Thursday’s Opec meeting is expected to be a cracker. Supply is relatively abundant right now, but Saudi Arabia wants the quota raised. Iran, Venezuela, and a bunch of other Opec members fearful for their export receipts definitely do not want that.

The FT’s Guy Chazan writes that it’s expected to be a tussle that Saudi and its Gulf state allies will lose, despite their considerable power within the cartel. The point, some industry watchers maintain, is just to send a message that Saudi’s got this: that is, it won’t let high oil prices worsen the risk of a global slowdown. A message it probably sees as very necessary as the Iranian sanction deadline draws nearer, and the world economy looks more fragile.

But is there more to it than just jawboning? Oil watcher and economist Phil Verleger has some reasons why Saudi Arabia’s insistence on raising production quotas is a sincere bid to keep prices under control, and would willingly risk prices falling below its own “break even” price. He summarised his reasons this way:


It’s one thing when Jeff Gundlach, a bond manager, calls a bottom in natural gas as he did last month.  It’s a whole other story when an energy billionaire calls the bottom. Boone Pickens was on CNBC today saying natural gas prices have likely seen their lows. He says:

“You’re gonna tighten this thing up.  Looking out at summer next year at 3-plus (dollars), I think that’s where you’re gonna be. Yeah, I think you’ve bottomed out on natural gas prices.”

The primary drivers here?  Shutting down oil rigs and the decline in coal production should benefit natural gas demand. Additionally, Pickens says the USA has to stop exporting wealth to OPEC and start tapping the resources the USA has here.  And nat gas is his primary focus regarding these comments.

UPDATE 1-Aramco, Dow petchem JV picks banks for project sukuk-sources | Reuters

Sadara, the $20 billion petrochemical joint venture between oil giant Saudi Aramco and Dow Chemical, picked four banks to manage the Islamic bond, or sukuk, portion of its multi-billion dollar fundraising, three sources said on Tuesday.

Deutsche Bank, Riyad Bank, Alinma Bank and Bank Al Bilad have been mandated for the deal, likely to be denominated in riyals, which will be only the second project finance sukuk ever to be raised in Saudi Arabia.

Earmarked to raise around $1.4 billion, the sukuk is not expected to be marketed until next year, two sources said.