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Thursday, 27 December 2012

Egypt: cancelled debt issue and downgrade cements poor December | beyondbrics

Increasing stress in the Egyptian economy was underlined on Thursday as the central bank cancelled a major sale of treasury bills.

The offer was supposed to raise 6bn Egyptian pounds ($969m) through 2bn pounds worth of six month bills and 4bn pounds worth of one year bills, and its cancellation sent the Egyptian pound tumbling to its lowest value since 2004. Add in the a recent ratings downgrade, and it’s a tough December for Egypt.

The downgrade of Egyptian government debt by Standard and Poor’s on 24 December was from B to B-, six ratings below the BBB- investment grade. The downgrade comes amid continued political instability as the Muslim Brotherhood government led by Mohamed Morsi attempts to push through a new constitution in the face of opposition from secular parties. In a statement S&P said:

MENA stock markets close - December 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)

MIDEAST STOCKS-Egypt shares rebound; Gulf mkts mixed | Reuters

Egypt's bourse bounced from a nine-day low on Thursday, as foreign investors' buying interest continued to support stocks despite political instability and economic worries. Gulf markets were mixed amid a lack of positive catalysts.

Cairo's benchmark index rose 2.2 percent and closed very near its intra-day high, extending its 2012 gains to 49.6 percent.

Shares in Telecom Egypt climbed 3.1 percent, after the Egyptian regulator said it would grant the landline monopoly a licence by mid-2013 to provide mobile services.

Kuwait's Burgan Bank issues record 100 mln dinar bond | Reuters

Kuwait's Burgan Bank said on Thursday it had completed a 100 million dinar ($356 million) bond sale, the largest local currency bond issue ever conducted by a company in the country, and would use the funds to strengthen its capital base after buying Eurobank's Turkish arm Tekfen.

The bond issue was "nearly four times oversubscribed", Salah al-Fulaij, chief executive of NBK Capital, told a news conference. His company was joint lead manager for the sale along with KAMCO, a unit of Kuwait Projects Co (KIPCO) .

"Since the onset of the global economic crisis, Kuwait's bond market has been starved of quality bond offerings, so it is crucial that local banks help to stimulate supply," Burgan's chairman Majed al-Ajeel said in a statement.

Saudi Arabian Stocks Are The Value Story for Next Year, VTB Says - Bloomberg

Shares in Saudi Arabia will offer the “value story” across emerging markets next year as stable oil prices and government spending are set to lure investors to the Arab world’s largest stock market, according to VTB Group.
“We expect the first half to be bullish for Middle East and North Africa equities and see Saudi Arabia as the value story for 2013 across the emerging market space,” analysts Digvijay Singh and Alexey Zabotkin at VTB Capital Plc, the London-based investment-banking arm of VTB, wrote in a research note today, with an overweight recommendation on the kingdom. Oil prices, infrastructure spending and dividend yields are among catalysts that will help boost share prices, they said.
Saudi Arabia, the world’s biggest oil exporter, is embarking on about $500 billion in government spending and projects including the world’s tallest tower in Jeddah. The Saudi benchmark Tadawul All Share Index (SASEIDX) gained 7 percent this year, lagging the 15 percent gain for the MSCI Emerging Markets Index. (MXEF) The Saudi index offers a dividend yield of 3.6 percent compared with 2.7 percent for MSCI EM Index.

Single Gulf Currency: Closer to reality Asharq Alawsat Newspaper (English)

The draft Gulf Cooperation Council [GCC] single currency project – which represents the most controversial and contentious issue being discussed by the GCC – has now entered a historic phase in terms of implementation, according to reports. This comes after the GCC’s 33rd summit called for initiatives with announced deadlines to be put forward to transition towards a state of greater financial and economic integration between GCC states.

The lack of resolution regarding the single Gulf currency is one of the leading obstacles to GCC economic integration. As a result, GCC states are likely to step up their meetings over the forthcoming months with the objective of reaching an agreement to resolve the single currency issue.

Well-informed Gulf sources told Asharq Al-Awsat that resolving the single currency issue is a goal that many GCC states are seeking to achieve, adding “there will be no Gulf Union in the economic sense without a single currency. There are some obstacles that have prevented the resolution of this issue, and this is something that must be remedied in light of the recommendations of the GCC summit that is taking place in Manama over the current week.”

Saudi Arabia Must Review Its Oil Subsidies, Former Adviser Says - Bloomberg

Saudi Arabia will need to reduce fuel subsidies that are becoming an ever-greater fiscal burden as its population grows, a former adviser to the country’s oil minister said.
The world’s biggest exporter of crude has a domestic fuel subsidy bill exceeding 162 billion riyals ($43 billion) a year, according to Mohammad Al-Sabban, an independent Saudi-based economist and energy consultant. Citigroup Inc. said in a report Sept. 4 that the kingdom may need to import oil by 2030 if its domestic crude use continues to outpace gains in production.
“Reviewing fuel prices in Saudi Arabia is inevitable if not a priority,” Al-Sabban said Dec. 20 by e-mail from the Red Sea coastal city of Jeddah. “Rapid growth in consumption is a real problem that can’t continue in any way. There is a general conviction on that on all levels in the kingdom.”

STOCKS NEWS MIDEAST-Dubai extends gains as small-caps rise - Yahoo! News Maktoob

Dubai's small-caps help the bourse extend gains as retail investors dominate, but elsewhere Gulf markets close
mixed amid a lack of local drivers. There is little institutional activity as many investors are away on holidays.
Deyaar Development and Ajman Bank rise 2.9 and 3.0 percent respectively. Dubai Financial Market, the Gulf's only listed bourse, advances 3.7 percent.
Shares in Shuaa Capital close 2.1 percent higher at 0.595 dirhams after wild trading which saw them soar as high as 0.67 intra-day. The stock surged 15 percent on Wednesday.
The company declined to comment on the share price move and traders said they knew of no major, fundamental news behind it; instead, they said, short-term traders appeared to be speculating with it in response to the volatility.

STOCKS NEWS MIDEAST-Egypt bounces from 9-day low; Telecom Egypt up - Yahoo! News Maktoob

Egypt's bourse bounces from a nine-day low, once again showing its resilience in the face of political
instability and economic worries. Turnover is thin but local investors are net buyers, stock exchange data shows.
Cairo's benchmark index rises 1.3 percent to 5,367 points, extending its 2012 gains to 48.5 percent.
Shares in Telecom Egypt gain 1.9 percent, having risen as much as 3.0 percent in early trade, after the Egyptian
regulator said it would grant the landline monopoly a licence by mid-2013 to provide mobile services.

India, China helped Dubai's economy to rebound - Indian Express

The rebound in economic growth of Dubai has largely been due to the fiscal policies and monetary stimulus undertaken by the UAE federal authorities besides the resilience of its major trade partners, India and China, says a report.

The report,`Dubai Economy 2012', released by the Dubai Economic Council (DEC), said the UAE city has recorded steady growth over the past two years with an increase in growth rate from 2.8 per cent in 2010 to 3.4 per cent in 2011.

This is against a contraction in GDP growth of 2.4 per cent in 2009.

PRAGMATIC CAPITALISM – The Migration Out of Mutual Funds….

Sober Look posted a good story yesterday on the outflows from mutual funds (see details below).   This is one of the tidal wave trend changes in the investment business.  Mutual funds are a dinosaur product.  The higher fees, reduced tax efficiency, lack of liquidity, and weak performance continues to hurt the industry.  And this is only just beginning.  There’s still $24 trillion in global mutual funds just waiting to find a new home.  This tidal wave of money will flow out of mutual funds and into ETFs and other more client friendly products and approaches in the coming decades.

Next up – investors will realize most hedge funds are largely the same thing (with higher fee structures).  But that trend change might take a few more decades of underperformance and data…..Here’s more via Sober Look:

“2012 was another rough year for equity mutual funds business. In spite of relatively strong stock market performance, retail investors continued to pull their money out. This trend has been in place for quite some time (see discussion), but has accelerated this year. The outflows from US equity mutual funds were roughly $154bn this year.”

Russian publication to connect with regional audience |

Investment opportunities against the backdrop of closer economies ties between Russia and the UAE was spotlighted in ‘Russia Beyond the Headlines’ (RBTH), a supplement from the publication house of Rossiyskaya Gazeta. It is the first title brought out by the latter in the UAE and distributed through Gulf News (for the English language version) and Al Khaleej (in Arabic).
“We publish supplements in 22 countries and such influential newspapers like The Wall Street Journal, The New York Times, The Washington Post, The Daily Telegraph, Le Figaro and others are among our partners,” said Eugene Abov, the supplement’s publisher and deputy general director at Rossiyskaya Gazeta. “But the project could not be considered truly global without such an important geopolitical region as the Middle East.”
Gulf News’ managing editor, Mohammed Almezel, sees it turning into a win-win situation. “We are proud to be partners with RBTH, which is an attractive, well-researched and well-written product that is, in my opinion, an essential read for all those who want to know about Russia.

Al Habtoor Says IPO Delayed on Scarce Investment Prospect - Bloomberg

Al Habtoor Group LLC, controlled by billionaire Khalaf Al Habtoor, postponed an initial share sale because it didn’t see sufficient opportunities to invest the proceeds and may consider reviving the plan in 2014.
“We didn’t find an opportunity that would give us good return to give shareholders,” Al Habtoor said in a Dec. 23 interview at his office in Dubai. “We looked at safe markets, like Germany and Britain and we found that in the areas we know, there is nothing but recession.”
The company will rely on cash from operations to fund projects including a new skyscraper with more than 800 luxury apartments on a canal in Dubai, he said. Construction of the tower will start in late 2013 or early 2014 and is set to be completed two years later. He said a decision hasn’t been made on whether the 800 homes would be rented or sold.

Green energy can lead to stability and development |

In the past few years, the GCC countries have individually dealt with the consequences of the close relationship between economic development and climate change. This issue has been significantly affecting economic and social development programmes as well as the provision of energy sources and economic diversification.
This new approach is called by some as the “green economy”, based on the foundations of sustainable development that ensure the permanent supply of clean energy and raw materials necessary for growth — by preserving available resources without harming the environment and reducing the negative impact of climate change on development.
These efforts have been receiving growing attention. The United Nations, recently held its 18th climate change conference in Doha, where four GCC states — the UAE, Saudi Arabia, Qatar and Bahrain — filed a historic joint submission to the United Nations Framework Convention on Climate Change (UNFCCC), pledging to bring forward climate-smart economic diversification plans.

Shaikh Hamdan lauds Dubai’s growth |

Dubai’s economy has recovered from the slowdown of 2009 and the global financial crisis as its core sectors are driving its growth, a latest report by Dubai Economic Council said.
“This rebound in economic growth was largely due to fiscal and monetary stimulus packages undertaken by the UAE federal authorities as well as the Government of Dubai,” the report says.
“Moreover, the resilience of Dubai’s major trade partners, especially India and China, has also contributed to this positive development as shown in a report issued by the Dubai Economic Council (DEC), entitled Dubai Economy 2012.”

Concourse A to create thousands of jobs |

Concourse A (Erstwhile known as Concourse 3), the world’s first purpose-built Airbus A380-dedicated facility of its kind, will help create a between 5,000 to 6,000 jobs when it opens within the next three months, officials say.
Paul Griffiths, Chief Executive Officer of the Dubai Airports, told Gulf News that his team is gearing up for the opening of the new concourse. “It’s a whole new facility opening up and we are all excited about it. If things work out as planned, we are planning to open it during the first quarter of 2013.”
Dubai Airports currently employs 3,600 people. “Although we are the operator of the terminal, I assume the three largest stakeholders, Emirates, Dubai Duty Free and Dubai Airports and others will have employed between 5,000 to 6,000 people over a period,” he said.