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Tuesday, 27 November 2012

Financing challenge overhangs huge Dubai projects | Reuters

Dubai is reviving massive real estate projects as its economy recovers from a corporate debt crisis, but this time around, constraints on financing are likely to slow the pace of its building boom.

Memories of the crisis will keep many investors cautious about stumping up money before projects are completed. That will leave the plans heavily dependent on bank loans and the bond markets - and the global climate is not favourable for banks.

Official announcements over the past few days have recalled the heady days of the mid-2000s, when Dubai was building some of its most flamboyant projects, including the world's tallest skyscraper and an archipelago of man-made islands.

Qatar move comes at bad time for Barclays -

Qatar Holding, the Gulf state’s direct investment arm, has chosen to take profits on its Barclays warrants at a time when the outlook for western investment banking is increasingly challenged.
The gas-rich Gulf state remains the biggest shareholder in the UK bank, with 6.7 per cent, but it decided to cash in its warrants on Monday, allowing it to make a profit without selling down its stake.

U.A.E. Mulls Allowing 100% Foreign Ownership of Companies - Businessweek

The United Arab Emirates government is reviewing a draft commercial law allowing full foreign ownership of some companies, according to an Abu Dhabi official.

“We recognize the importance of the foreign companies to have 100 percent ownership, but within specific rules and conditions,” Mohamed Omar Abdulla, undersecretary of the Abu Dhabi Department of Economic Development, said in an interview in Dubai today.

The measure applies to some industries outside of free zones, Abdulla said. The Abu Dhabi government and others within the U.A.E. are reviewing the draft, he said, without specifying when it will be passed. Foreigners make up about 90 percent of the nation’s 8.3 million population, according to 2010 government estimates.

Irrational exuberance, Dubai-style « parallel universe

This morning, this headline popped into my regular Dubai Google Alert:

“Dubai plans $2.7 bln theme park complex”

Excellent, I thought to myself. This is the remainder of the resurrection of Dubailand, the part that features a medley of theme parks across the size of New York City, now with a six-times-as-big replica of the Taj Mahal. But the story actually referred to an entirely new complex of theme parks, this one being beside Jebel Ali port.

The $2.7 billion development will “include an adventure park featuring Hollywood brands, a marine park, a children’s park and a night safari,” according to Reuters. “Meraas has formed partnerships with several major film studios in Mumbai to obtain content for the Bollywood Parks section, which will include a theatre showing Broadway-style musicals.”

MENA stock markets close - November 27, 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)

UAE banks prepared for Basel III |

High capital levels amongst UAE banks indicate that the UAE banks and financial institutions are unlikely to be significantly worried about stricter international rules requiring them to sustain the amount of cash they keep as reserves.
The UAE banking system is stable and has a high level of adequacy with high capital and liquidity, Sultan Bin Nasser Al Suwaidi, UAE Central Bank governor, told the Gulf News on Tuesday.
“The UAE will be applying Basel III gradually until the year 2019 and the UAE banks have no problem if Basel III is applied as they have high liquidity, no cash problems and their capital are already high,” said Al Suwaidi.

Mega project announcements leave Dubai business community unsure what to think « ArabianMoney

The Dubai business community has been left uncertain of what to think of a series of mega project announcements this week from the Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum.

Some fear a return to the runaway project launches of the 2003-8 real estate boom, others think the government is launching projects that will never happen, or at least only slowly and on a much smaller scale than past mega projects.

The go ahead for the Mohammed bin Rashid City with its huge central park and the world’s largest mall has brought back worries about massive off-plan sales and property speculation. But it is a joint venture with Emaar Properties whose project roll-outs have always been cleverly timed and well executed.

MIDEAST STOCKS-Saudi falls to fresh 10-mth low; Gulf mixed - Yahoo! News

Saudi Arabia's bourse fell for a 12th session in 14, slumping to a fresh 10-month low on Tuesday on lingering concerns over King Abdullah's health, while other regional markets closed mixed.
Banks lead declines on the kingdom's index, which fell 1.3 percent to its lowest close since Jan. 23.
Heavyweight lender Al Rajhi Bank dropped 3.1 percent to its lowest level since July 2009. Alinma Bank
slipped 2 percent and Banque Saudi Fransi lost 1.4 percent.

Morocco seeks airline partner from Gulf or beyond | Reuters

Morocco would rather pursue a strategic partnership for Royal Air Maroc, with an airline from one of the Gulf states or beyond, than sell a stake in its flag carrier, government ministers said late on Monday.

A government source last month said that partnership proposals included the sale of a minority stake to a leading Gulf airline.

"No decision has been taken yet, but my opinion is that it is better to do a partnership rather than sell a stake," Tourism Minister Lahcen Haddad said on the sidelines of a tourism conference in Rabat.

Egypt: market stabilises – for now | beyondbrics

Egypt’s stock market seems to have stabilised since its dramatic 9.6 per cent fall on Sunday, triggered by the latest round of political turmoil. On Monday, the EGX30 index rose 2.6 per cent and was trading flat in the early afternoon, Cairo time, on Tuesday.

But the political confrontations of the last few days are a reminder that Egypt’s leaders are a long way from giving priority to the economy. The International Monetary Fund programme announced last week is anything but a done deal.

As Heba Saleh reported for the FT, president Mohamed Morsi has failed to convince the opposition legal experts of the merits of his decree last week giving his decisions immunity from judicial review.

OECD slashes 2013 growth forecast -

The OECD has slashed its forecast for growth in the world’s advanced economies in 2013 and warned that the risk of a serious global recession cannot be ruled out.
In its economic outlook, published on Tuesday, the OECD said it expected growth of 1.4 per cent next year in the group of 34 wealthy economies that make up the membership of the Paris-based organisation – down from 2.2 per cent forecast in May – and called for several of its members to step up their policy response.

IMF cautions Egypt on loan -

The International Monetary Fund said on Tuesday that finalisation of an agreement for a crucial $4.8bn loan to Egypt will depend on economic conditions in the country remaining unchanged.
In a carefully worded statement the IMF underlined that the loan would depend on the government’s ability to issue a revised budget adopting agreed tax and spending reforms, and on continued assurances from foreign partners that they would fulfil their commitments to provide additional finance.

MIDEAST DEBT-Financing challenge overhangs huge Dubai projects | Reuters

Dubai is reviving massive real estate projects as its economy recovers from a corporate debt crisis, but this time around, constraints on financing are likely to slow the pace of its building boom.

Memories of the crisis will keep many investors cautious about stumping up money before projects are completed. That will leave the plans heavily dependent on bank loans and the bond markets - and the global climate is not favourable for banks.

Official announcements over the past few days have recalled the heady days of the mid-2000s, when Dubai was building some of ts most flamboyant projects, including the world's tallest skyscraper and an archipelago of man-made islands.

UPDATE 1-Abu Dhabi's IPIC to raise $2.9 bln in bond | Reuters

International Petroleum Investment Co (IPIC), the investment vehicle owned by the Abu Dhabi government, will price a $2.9 billion dual-currency bond, at tighter guidance than earlier indicated, due to strong demand.

IPIC, rated AA, plans to issue a $750 million three-year dollar-denominated portion, and 1.65 billion euros ($2.14 billion) across two tranches, arranging banks said on Tuesday.

Final guidance for the $750 million portion was set at a spread of 135-140 basis points over midswaps. Guidance for the two euro-denominated tranches, which carry maturities of 5.5 years and 10.5 years, was set at a spread of 145-150 bps and 195-200 bps over midswaps, respectively.

Morocco hopes Qatar, European investors drawn to Maroc Telecom | Reuters

Morocco is hoping investors from Qatar or Europe will take a stake in part state-owned Maroc Telecom if France's Vivendi follows through on reported interest to sell out, a government minister said late on Monday.

Last month, Vivendi asked Credit Agricole and Lazard to gauge appetite for its 53 percent stake in the North African operator without giving them a formal mandate for the sale, sources familiar with the matter told Reuters.

Reports have suggested Qatar Telecom, the telecoms group controlled by Qatar, is interested in making a bid. Vivendi has declined to comment. Morocco's government is the second largest stakeholder in Maroc Telecom, with 30 percent.

Kuwait’s CBK Chief Sees Credit Growth Constrained by Weak Demand - Bloomberg

Commercial Bank of Kuwait said it expects local credit growth to remain constrained on reduced company demand, its chief executive said.
“A lot of companies have excess capacity already and therefore they will use their existing credit lines,” Nuhad Saliba, the bank’s chief executive officer, said in an interview in Kuwait City on Nov. 26.
Borrowing by the private sector in OPEC’s third-biggest producer increased at the slowest pace in at least 17 years in 2011 as political wrangling deterred a $110 billion state development plan. The central bank on Oct. 4 cut the key interest rate by 50 basis points to 2 percent to spur growth.

STOCKS NEWS MIDEAST-Property stocks lift Dubai; Kuwait up again - Yahoo! News Maktoob

Property-related stocks help lift Dubai's measure from Monday's one-week low, while Kuwait's market extends gains ahead of Saturday's elections.
Emaar Properties adds 0.5 percent, while builder Arabtec and mortgage lender Tamweel each climb 0.9 percent.
The emirate's index rises 0.4 percent to 1,595 points, up 17.9 percent year-to-date.

UPDATE 1-Kuwaiti lender KFH eyes 20 pct capital hike | Reuters

Kuwait Finance House (KFH), the Gulf state's largest Islamic lender, will recommend a 20 percent capital hike to shareholders, the company said in a bourse filing on Tuesday, which will help boost capital ratios and fund expansion.

The company's board of directors decided on Monday to make the recommendation when it holds its annual general meeting, with proceeds to fund the bank's expansion both at home and internationally, KFH said.

Any capital issue also requires approval from the country's regulator. A potential capital increase will boost KFH's paid-up capital to 348.5 million dinars ($1.24 billion) from 290.4 million dinars, Al Watan newspaper reported on Tuesday.

Abu Dhabi's IPIC sets guidance on 3-yr dollar bond; euro to follow | Reuters

International Petroleum Investment Co (IPIC), the investment vehicle owned by the Abu Dhabi government, will price a dual-currency three-tranche bond on Tuesday, and has released price talk for the dollar-denominated portion.

IPIC, rated AA, plans to issue a three-year dollar-denominated portion, and two euro-denominated pieces carrying maturities of 5.5 and 10.5 years, arranging banks said on Monday.

Price indications for the dollar portion was released at 2 percent, later on Monday evening. Guidance for the euro-denominated tranches is expected on Tuesday morning, London time, according to lead arrangers.

Commentary: The Great Oil Fallacy | The National Interest

Among the unchallenged verities of U.S. politics, the most universally accepted is that of the crucial strategic and economic significance of oil, and particularly Middle Eastern oil. On the right, the need for oil is seen as justifying an expanded and assertive military posture, as well as the removal of restrictions on domestic drilling. On the left, U.S. foreign-policy is seen through the prism of “War for Oil,” while the specter of Peak Oil threatens to bring the whole system down in ruins.

The prosaic reality is that oil is a commodity much like any other. As with every major commodity, oil markets have some special features that affect supply, demand and prices. But oil is no more special or critical than coal, gas or metals—let alone food.

Let’s start with some numbers. The United States currently uses about nineteen million barrels a day, of which about eleven are imported, mostly from within the Western Hemisphere. Imports from the Persian Gulf supply about 15 percent of total U.S. oil demand, a share that has declined over time.

Exclusive - Egyptian investor seeks to put stamp on Telecom Italia - Yahoo! News Maktoob

Egyptian entrepreneur Naguib Sawiris aims to shake up debt-laden Telecom Italia and steer it towards expansion in Brazil if shareholders warm up to his proposal for a 3 billion euro (2.4 billion pounds) cash infusion.
The billionaire tycoon, who got to know Italy well when he owned the third-biggest mobile operator Wind, has put on the table a capital increase that could make him one of the biggest shareholders in Telecom Italia.
Details on the structure of the proposed transaction are scarce, but Sawiris told Reuters that he proposed that the capital increase be open to all shareholders, not just himself, and that it should be conducted around the current market price of 0.70 euros per share.

BRIEF-Investcorp completes sale of FleetPride to TPG for over $1 bln - Yahoo! News Maktoob

Investcorp Bank :
* Bahrain's Investcorp says completes sale of truck parts distributor FleetPride to TPG for over $1 billion
* Says sale unlocks $500 mln of distribution proceeds for Investcorp and its investors

How to avoid global recession - Mohamed El-Erian, of PIMCO

Mohamed El-Erian, of PIMCO, considers how to avoid global recession in 
the Bagehot Lecture at The Economist's Buttonwood Gathering 
on October 24th 2012.

Long road ahead for Gulf hubs - The National

The global funds industry has long been better at taking money out of Arabian Gulf financial capitals than putting it into them.

Dubai and Doha want that to change. Competition between the two is heating up as they bid to attract big-name fund managers and win top billing as money management hubs.

But attempts to lure the foreign institutions through regulatory improvements and, in the case of Qatar, other commercial carrots have so far yielded few asset-management trophies.

High time private sector takes emiratisation to heart |

Emiratisation, whether in the banking or other sectors, needs to be looked at comprehensively — starting from the educational curricula, which should be linked to the skill sets required for the job market.
Officials and academicians also need to identify the key issues, be it the attitude, ability of the job seekers or the private sector’s unwillingness to absorb them. Either way, there seems to be a problem that should be tackled. After all, this is a country where foreign professionals are working hand-in-hand in a diverse cultural environment without any problem. Emirati workforce could create the right synergies for the private sector, as being UAE nationals, they could bring extensive local knowledge and their local connections could help private companies in expanding businesses.
Most private companies hire UAE nationals to handle their legal and immigration processes. This attitude should also change. Over the past few decades, Emirati professionals have demonstrated their abilities in helping companies grow.

Investment rules to be subject to interpretation |

Drafting of law is both an art and science. Legalese being what it is, with all its repertoire of terms, cause and effects, including but not limited to the aforesaid, there would hardly be a situation or condition that it cannot tie in within its ambit. The more clumsy the law reads, there would be that much less confusion in its implications. A well-drafted law is one that leaves very little scope for interpretation.
The new investment fund regulations (IFR) issued by the UAE Securities and Commodities Authority (SCA) are so simple and straightforward that a lot of things already depend on interpretations. In fact, there is so much of ambiguity that senior members of the drafting team have begun holding workshops on the possible interpretations of what the rules state.
The IFRs are primarily targeted at firms and their representatives approaching clients in the UAE for investment in their products and securities. The need to rein in briefcase investment managers and bucket operators who fleece unsuspecting retail investors and institutions with their fancy offers has been felt for long and the new regulations are meant to introduce accountability on the part of these fly-in and fly-out experts.

Modern legislation to enhance UAE competitiveness |

Modern legislation and smooth data collection process is required to improve UAE’s ranking in the world competitiveness reports, Abdullah Lootah, Secretary General of Emirates Competitiveness Council (ECC), told Gulf News in a special interview.
He said: “What is required to enhance the UAE competitiveness is to update the legislation and provide sufficient data.”
“The next step is to further update key federal and local rules and regulations which is vital for intensified business activity and growth.”

RPT-UPDATE 1-Mahindra hopes for quick Aston Martin deal - Yahoo! News Maktoob

Aston Martin, purveyors of fast cars to a fictional British spy and to real-life billionaires, could be partly owned by India's Mahindra and Mahindra by the end of the week if the Mumbai tractor moguls have their way.
But much is unclear as the British maker of James Bond's sports cars, its Kuwaiti owner and a rival Italian bidder keep their own counsel. "There are a lot of moving parts here," a person with direct knowledge of the matter told Reuters on Monday, adding the Mahindras hoped to strike a deal this week. The source told Reuters that an initial 40-percent stake could rise to 50 percent for a total price unlikely to top $400 million.
Kuwait's Investment Dar, which led a private acquisition of the luxury brand from Ford in 2007, denied on Sunday that it was reviewing two bids for 50 percent after sources said Mahindra had outbid Italian investor InvestIndustrial.

Tea with the FT: Tirad Mahmoud -

Tirad Mahmoud, chief executive of Abu Dhabi Islamic Bank, defies Gulf stereotypes.
As a Qatari citizen, he has chosen not to take the easy route to work for one of Doha’s banks. Neither does he opt for the traditional white-collared dress of the country and instead wears a suit.
He makes no attempt to hide behind the oft-quoted jargon of Islamic finance.

Bahrain's GIB picks banks for possible dollar bond | Reuters

Gulf International Bank (GIB), a lender majority owned by the Saudi Arabian government, has picked six banks to arrange investor meetings ahead of a potential benchmark-sized, dollar bond, lead arrangers said on Tuesday.

Bahrain-based GIB picked itself, as well as JP Morgan Chase Inc, National Bank of Abu Dhabi, Barclays Plc, Standard Chartered Plc and Societe Generale to arrange the deal, it said.

Benchmark-sized deals are typically at least $500 million in size.

Dubai Risking Bubble Redux With Lowest Rates - Businessweek

Dubai, the desert sheikdom where home prices have plunged 65 percent since 2008, risks re- inflating its property bubble with the help of mortgage lenders offering easy terms and the lowest rates ever.

“I don’t like it when I see mortgages going back to 90 percent lending, that’s not good for the industry,” said Abdul Aziz Al Ghurair, head of the United Arab Emirates’ Bankers’ Association and chief executive officer of Dubai’s Mashreqbank PSC. (MASQ) “We don’t want to encourage people to gamble.”

Banks slashed interest rates to the lowest on record and reduced down-payment requirements this year as borrowing rose and home prices rebounded in parts of Dubai. HSBC Holdings Plc (HSBA)’s Middle East unit offers some of the lowest rates at 3.99 percent, down from a high of 9.5 percent in 2009. Standard Chartered Plc and Barclays Plc have similar rates with deposits of 15 percent to 20 percent.

Dubai Group cuts half of staff in cost-cutting move - sources | Reuters

Dubai Group, part of the ruler of Dubai's personal empire, has cut half its staff of about 30 people as part of cost-cutting measures in its $10 billion restructuring, three sources told Reuters on Monday.

Among those to leave the firm is Chief Investment Officer Trevor Regan, who joined the company in December 2011, one of the sources said, speaking on condition of anonymity as the information is not public.

"We can confirm that a number of staff have been made redundant as part of the constant cost review process, this will not impact the management of our investment portfolio," a Dubai Group spokesman said in an emailed statement.

Dubai Duty Free won’t raise any more cash |

Dubai Duty Free, world’s largest single-operation travel retailer that recently raised $1.7 billion from a consortium of lenders to part finance Concourse 4 at the Dubai International Airport, will not seek fresh funding to support Dubai airport’s expansion, a top official said.
Dubai International Airport is currently undergoing a Dh28 billion expansion — it’s fourth phase — that will help raise the airport’s passenger handling capacity to 90 million by 2017.
“None of the banks were willing to lend us $3 million when we set up Dubai Duty Free in 2003. However, two months ago, 26 banks raised $1.7 billion for us to support infrastructure works at the Dubai International Airport,”

Qatar Warrants Sale Knocks Barclays Stock -

Barclays BARC.LN -5.39% PLC's biggest shareholder, Qatar Holding, Monday cashed in on an investment in the bank that was struck during the financial crisis, leading to a selloff in the lender's stock.

The Qatari sovereign-wealth fund said it "monetized" 379 million warrants it held on Barclays shares, but didn't identify its counterparty in the transaction. Deutsche Bank AG and Goldman Sachs Group Inc. said later that together they had sold 303.3 million shares—worth around $1.2 billion at the selling price of 244 pence a share—in connection with the Qatar deal.

Neither bank was willing to comment further. The sale of stock by the banks pushed Barclays shares lower. The stock closed down 5.4% at 240.5 pence.