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Friday, 11 January 2013

Why the fund flow data should make you cautious | FT Alphaville

It’s a big theme: investors of all colours have reportedly been pouring money into equity funds of late. In fact, over the past week money has been flowing into stocks at the fastest rate since September 2007, according to EPFR.

Which should give all investors pause for thought.

Consider the following chart from Mark Diver at Nomura. Click to enlarge.














Yes, extreme moves like this are a contrarian indicator.

Nomura’s model is showing the most bullish sentiment since February last year – and Diver says that extreme levels on the indicator have tended to prove a useful signal for equity market returns on a 12-week forward view. But he adds that other indicators that he follows — such as the bank’s Composite Sentiment Indicator — are still carrying neutral readings. So the evidence is mixed.

Wise to tread carefully though…End

Nothing surprises us anymore | FT Alphaville

A h/t to Mark Dow for the spot. That’s Citi’s US Economic Surprise Index threatening to turn negative after a decent run in positive territory.

















Mark said on his blog:

Remember, a positive reading of the Index suggests that economic releases have been, on balance, beating consensus. So a lower positive number means less positive surprise. It doesn’t mean negative surprise until it crosses zero. 
We’re approaching zero pretty fast.
Nothing surprises us anymore | FT Alphaville

Dubai Group settles lawsuit on way to wider $10 billion debt deal | Reuters

Dubai Group, a struggling unit of the ruler of Dubai's personal investment firm, has settled with banks who brought legal action against it to secure repayment of their share of $10 billion of debt, raising hopes a wider restructuring can now go ahead.

Royal Bank of Scotland (RBS.L), Commerzbank (CBKG.DE) and South Africa's Standard Bank (SBKJ.J), later joined by Egypt's Commercial International Bank (COMI.CA), began court moves in September after nearly two years of talks on reorganizing the company's obligations failed to yield an agreement.

Under terms presented to the banks in December, Dubai Group's parent Dubai Holding - the investment arm of Sheikh Mohammed bin Rashid al-Maktoum - will buy out their debt plus that of any others in the same syndicate of lenders wishing to exit early for 18.5 cents in the dollar, said two sources with direct knowledge of the agreement.
Dubai Group settles lawsuit on way to wider $10 billion debt deal | Reuters

Irrational equanimity ahead of US cliff 3D



About the State Budget for the Fiscal Year 2013 | Oman Observer

The locl media described the expenditure budget of the Sultanate of RO 12.9 billion ($33.54 billion) for the fiscal year 2013 as historical, due to the increase of about RO 3 billion in the spending amount compared to the year 2012. This current expenditure makes up for 63 per cent of the total spending, including RO 3.6 billion for defence and security sector which represents 27.9 per cent of the total spending. These figures sparked a debate when recently presented to the Majlis Ash’shura Council when the members demanded a cut of RO 350 million, or 10 per cent and to be directed to other urgently needed projects in the education, health and other sectors.
About the State Budget for the Fiscal Year 2013 | Oman Observer

bb review: Emerging Markets Rule, by Mauro Guillen and Esteban Garcia-Canal | beyondbrics

Will 2013 be the year in which EM multinationals become the real role models of the global marketplace? The authors of Emerging Markets Rule certainly think so. They say leading EM companies will inspire their peers around the world with alternative ways of doing business.

“What began as a necessity – a kind of guerilla warfare against the corporate superpowers – has now evolved into best practices and is on its way to becoming what everyone needs to know,” write the authors, Mauro Guillen and Esteban Garcia-Canal, management professors at Wharton Business Shool and the University of Oviedo in Spain, respectively. “Simply put, down is up. The weak have become the strong.”

Among others, the authors cite Haier of China, which became the world’s biggest appliance manufacturer in less than 30 years, Orascom of Egypt, which has made itself a $5bn telecome provider by running operations in countries like Bangladesh, Congo and North Korea, and Bimbo of Mexico, the world’s biggest baker. How have they done it?
bb review: Emerging Markets Rule, by Mauro Guillen and Esteban Garcia-Canal | beyondbrics

Hello 2013: EM’s need a new yardstick for well-being rather than growth | beyondbrics

What is the best way to measure a nation’s economic progress? For many decades, most of us have tended to focus on one benchmark: gross domestic product (GDP), which measures national income. There’s no question that income growth is central to economic development. But it has become just as clear that GDP per capita alone is not a sufficient measure of progress.

Indeed, GDP is even more a priority for emerging economies, given the focus that economists and policy makers put on growth. Developed economies have the luxury of relative wealth already, so the debate on questions of inequality and well-being is more active. That isn’t always the case for emerging markets.
Hello 2013: EM’s need a new yardstick for well-being rather than growth | beyondbrics

Iraq threatens to seize oil shipments, sue dealers | News , Middle East | THE DAILY STAR

Iraq has threatened to seize oil exports made without its consent and sue companies dealing in what it sees as contraband crude just days after the country's self-rule Kurdish region began unilaterally exporting oil.

The spokesman for Iraq's Kurdish regional government, Safeen Dizayee, confirmed Friday that the largely autonomous territory began shipping oil unilaterally to Turkey in the past few days. He declined to say how much was being shipped abroad.

The move appears to have triggered Baghdad's threat. A statement quietly posted a day earlier on the website of the State Oil Marketing Organization warned that Iraq may confiscate what it sees as oil cargoes "smuggled across borders," and sue sellers, buyers and companies that transport the crude.
Iraq threatens to seize oil shipments, sue dealers | THE DAILY STAR

BBC News - Qatar's football investment 'more than sport'

Lebanon’s tourists: Can they be lured back? | The Economist

LITTLE more than a stone’s throw from Europe’s capitals lies a place where visitors can ski in the morning and enjoy dinner by the sea in the evening; trek among ancient ruins one day and sample world-class local wines the next. Yet tourists are coming to Lebanon in ever fewer numbers. In a bid to lure them back, the government this week launched a 50-day campaign to boost the country’s image as the perfect holiday destination. Discounts of up to 50% are available on airfares on the national carrier and in hotels across the country.
Lebanon’s tourists: Can they be lured back? | The Economist

Is Saudi Arabia starting to panic? | FT Alphaville

Some excellent market commentary from Olivier Jakob at Petromatrix on Friday morning regarding the current state of oil market (dis)equilibrium and the potentially precarious position of Saudi Arabia.

Our emphasis:

Is Saudi Arabia starting to panic? 
Yesterday it was widely leaked that the Saudi crude oil production level in December was at 9.0 myn b/d , a drop of -0.5 myn b/d versus November and -1.1 myn b/d below the peaks of 2012 (April and June). The official Saudi production number is supposed to be released on Jan 20th but the number shown yesterday were precise enough that we have to assume that it is the official number that was leaked.
Is Saudi Arabia starting to panic? | FT Alphaville

5 Reasons Natural Gas Won’t Be an Environmental and Economic Savior | Alternet tks @TaraLohan

If you’re hoping the natural gas boom means we’ve solved our environmental and economic woes, you’re going to be disappointed. While natural gas produces less nitrogen oxides and carbon dioxide when burned compared to coal or oil, the end product is only part of the story. The natural gas boom in recent years has been fueled by extreme extraction methods like fracking that are posing a new slurry of environmental problems before the gas even makes it to consumers.

If you look at the complete picture of how we extract natural gas today, you begin to realize pretty quickly that we aren’t going to be able to drill our way out of the climate crisis without creating an even bigger mess in the process. The list of impacts from fracking is huge, but here are five to kick off the conversation:
5 Reasons Natural Gas Won’t Be an Environmental and Economic Savior | Alternet

Indian aviation: choose your partners | beyondbrics

“Malaysian beauty in search of an Indian partner to start a family with.”

“Impoverished Indian gentleman with a battered reputation in search of a companion to set him back on track. Fair complexion, good family.”

India’s aviation industry is awash with lonely hearts in search of a partner. Tony Fernandes, chief executive of Malaysia-based AirAsia, and Vijay Mallya, chairman of India’s Kingfisher Airlines, may be a good match in terms of their flamboyant personalities – but that’s where the likeness ends.
Indian aviation: choose your partners | beyondbrics

First Oman Islamic bank start operations - Markets - ArabianBusiness.com

Bank Nizwa, Oman's first dedicated Islamic bank, has opened its doors to the public to start a new era for banking in the sultanate.
The launch was announced after the release of the Islamic Banking Regulatory Framework by the Central Bank of Oman.
Sayyid Amjad Mohammed Ahmed Al Busaidi, chairman, Bank Nizwa, said: "The Islamic Banking Regulatory Framework, laid down by the CBO has positioned the economy of the nation towards achieving greater success.
First Oman Islamic bank start operations - Markets - ArabianBusiness.com

Kuwait Energy to expand across region - The National

Kuwait Energy will continue to expand this year, according to the chief executive Sara Akbar.

"We have big development plans for our existing assets," said Ms Akbar.

"This is our year for exploring and more development. A number of projects we have had in the pipeline will go into execution phase."
Kuwait Energy to expand across region - The National

Emirates Islamic Bank to seek Dh1.5bn in offering - The National

Emirates Islamic Bank is preparing a cash call to investors, seeking to raise Dh1.5 billion (US$408 million) as it combines operations with the lender Dubai Bank.

Topic Islamic finance Sheikh Mohammed bin Rashid Emirates NBD Tamweel Finance Dubai Financial Market
The Islamic lenderexpects to begin the rights issue on January 25 and will run until February 3, it said in a filing to the Dubai Financial Market on Wednesday.

The bank's capital will be raised to Dh3.93bn through the offering of 1.5 billion shares - more than doubling the total float - at Dh1 each.
Emirates Islamic Bank to seek Dh1.5bn in offering - The National

Top Saudi telcos eke out Q4 profit gains | GulfNews.com

Saudi Arabia’s top two telecom operators will show the rewards of their efforts to cut costs and lure customers to more costly contracts when they post results later this month.
Saudi Telecom Co (STC) and Etihad Etisalat (Mobily) dominate an increasingly saturated home market and are having to get smarter to drive growth. Both are trying to move users on to more lucrative contracts and consume more profitable data services, but earnings growth is likely to have been sluggish in the most recent three months.
STC’s fourth-quarter profit will rise by a slim 1.4 percent to 2.37 billion Saudi riyals ($630 million), according to the average forecast of analysts polled by Reuters, while Mobily’s will likely increase 5.1 per cent to 1.78 billion riyals.
Top Saudi telcos eke out Q4 profit gains | GulfNews.com

Hello 2013: keep buying EM bonds but remember due diligence | beyondbrics

In a year of headline-induced market volatility, driven by the ebb and flow of risks across the world’s major global markets, emerging market debt closed the year as the best-performing asset class in the world.

This was a remarkable, yet unsurprising development. As it became increasingly clear that global central banks were committed to keeping interest rates low, increased investor demand for higher-yielding emerging markets (EM) assets pushed record levels of capital into EM debt.

As we look ahead, this trend should continue in 2013. A key beneficiary will be emerging markets’ high yield – a rapidly-developing EM segment that includes high-yield corporate borrowers as well as lower-rated sovereigns and frontier markets.
Hello 2013: keep buying EM bonds but remember due diligence | beyondbrics

Suit against Dubai Group dropped - FT.com

Four lenders including the Royal Bank of Scotland have dropped a lawsuit against Dubai Group after agreeing to restructure debts owed by the Dubai ruler’s troubled investment firm.
The deal, which is contingent on Dubai Group agreeing a broader deal with other creditors over $6bn owed to banks, would mark the end of an embarrassing saga for the emirate as its recovery gathers pace.
The parent of Dubai Group, Dubai Holding, has agreed to pay back the dissenting creditors at 18.5 cents a dollar and to take over their debt once the investment firm’s 35 other banks agree to a longer-term restructuring deal, bankers say. Dubai Group, owned by Sheikh Mohammed bin Rashid Al Maktoum, declined to comment.
Suit against Dubai Group dropped - FT.com

Korean bank boosts trade links with UAE - The National

Korea Development Bank has established a foothold in Abu Dhabi, in the latest sign of the strengthening business links between the UAE and South Korea.

Topic South Korea Mashreqbank Nuclear energy Finance
The Seoul-based lender, wholly owned by South Korea's government, inaugurated its Abu Dhabi representative office at a ceremony at Etihad Towers yesterday.

As Song Sehoo, a 16-year-old winner of Korea's Got Talent, serenaded a room packed with Emirati and Korean businessmen, a signing ceremony for the next deal was being prepared next door - a strategic alliance between Korea Exchange Bank and Dubai's Mashreq.
Korean bank boosts trade links with UAE - The National

CORRECTED-UPDATE 8-Oil rises after Saudi Arabia cuts output | Reuters

Oil futures rose on Thursday on news that top world oil exporter Saudi Arabia had cut back production in response to flagging demand, and after China reported strong demand for its exports.

U.S. crude futures rose to a 16-week high of $94.70 a barrel before settling at $93.82, up 72 cents on the day. Brent crude rose as high as $113.29 a barrel before settling at $111.89, up 13 cents.

OPEC's top producer slashed oil production by 700,000 barrels per day (bpd) to 9 million bpd during the last two months of 2012, according to industry sources. Major customers for Saudi crude said the cuts were driven by lower demand.
Oil rises after Saudi Arabia cuts output | Reuters