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Thursday, 20 June 2013

IMF points to progress in aid talks with Egypt - Your Middle East

"The International Monetary Fund said Thursday it was making progress in talks with Egyptian authorities on a potential loan but that technical issues such as subsidies remain.

"Our work with the Egyptians is producing increased understanding on many of the remaining issues," IMF spokesman Gerry Rice said.

The spokesman, speaking at a regularly scheduled news conference, said that the IMF was working "constructively" with the authorities with the hope of a swift conclusion of loan negotiations."

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UPDATE 1-Russia's RDIF in $2 bln investment fund with Abu Dhabi | Reuters

"Russia's state-backed private equity fund, the Russian Direct Investment Fund, and Abu Dhabi-based Mubadala Development Co are setting up a $2 billion fund to invest in projects in Russia, the parties said on Thursday.

Each side will contribute $1 billion and the fund will focus on investments in various industry sectors, they said.

The RDIF was created to give major foreign investors greater comfort in Russia's uncertain business environment and is investing with private equity, strategic investors and sovereign wealth funds."

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Russia joins the rout | beyondbrics

"Having attracted less interest from investors in the good times, Russia has made fewer headlines in the recent emerging markets turmoil than its fellow Brics – Brazil, India and China.

But its currency, bond and equity markets have suffered quite badly in the sell-off triggered by the US Fed’s plans to end quantitative easing. And sharp falls on Thursday prompted by a sudden sell-off in crude raise questions about Moscow’s ability to keep Russia’s flagging oil-fuelled economy moving in the coming months.

The rouble fell by 1.5 per cent on Thursday against the dollar and the RTS $-denominated stock index by 3.75 per cent. The yield on Russia’s eurobonds due March 2030 jumped 49 basis points to 4.16 per cent on Thursday, the highest level in more than a year."

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Corporate watch: Egypt’s Mansour Group wants to emerge from the shadows | beyondbrics

"It’s hard to move in Egypt without being influenced by the Mansour Group – although most consumers wouldn’t know it. Whether you’re buying a phone, servicing your car, doing the week’s shop or eating at McDonalds, the Mansour Group is probably involved in the background.

Now its chairman is keen for the company to come out of the shadows. “We need to promote the Mansour Group as a global brand at some stage,” Mohamed Mansour tells beyondbrics. “It’s high time we had that kind of presence.” The question is how – and which parts of the Mansour Group of companies to emphasise.

Try branding a group this diverse: it has distrubution, sales and service businesses for autos, retail goods and industrial equipment, in Egypt, Iraq, Libya, Saudi Arabia and the UAE, as well as six sub-Saharan African countries and parts of Europe. It operates over 90 McDonald’s chains; distributes audiovisual and household products; it sells office equipment; and distributes marine, mining, and construction equipment."

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EBRD to Russia, Customs Union: Don't repeat EU mistakes | Russia Beyond The Headlines

"Russian and Western officials universally lauded the Customs Union of Belarus, Kazakhstan and Russia at a panel on economic integration at the St. Petersburg International Economic Forum (SPIEF).
“In 2012, Russia's trade growth within the Customs Union significantly overtook its growth in the rest of the world,” said Tatiana Valovaya, Minister for Integration and Macroeconomics of the Eurasian Economic Commission (EEC).
“If our overall growth in foreign trade totalled about three percent last year, growth within the Customs Union exceeded nine percent. The annual growth in trade of manufactured goods within the Customs Union has gone from 18 percent at its founding three years ago to 23 percent now.”"

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Gazprom Eyes China Deal | Business | The Moscow Times

"Gazprom expects to sign an agreement in September on the basic terms of a deal to provide gas supplies to China and aims to conclude the deal by the end of this year, the company said.

"We have moved forward in talks, [but] the pricing formula is still under discussion," said a spokesman.

Gazprom said its chief executive officer, Alexei Miller, and the chairman of China National Petroleum Corp (CNPC), Zhou Jiping, had met in Moscow "to discuss the issues of long-term gas supply deal."

In March, Gazprom and China signed a memorandum of understanding on supplies of 38 billion cubic meters of Russian gas to China each year via a pipeline, starting from 2018."

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MIDEAST STOCKS-Gulf markets slip on Fed but continue to outperform | Reuters

"Gulf stock markets retreated on Thursday after the U.S. Federal Reserve said it would start cutting back its bond-buying stimulus this year, but the region reacted more calmly to the Fed than most of the world.

MSCI's benchmark emerging markets index was down 3.3 percent in the late Gulf afternoon. But Gulf markets performed much better, with Dubai closing only 1.4 percent lower and Qatar dropping 1.0 percent. Saudi Arabia was shut for the weekend.

Budget and current account surpluses in the Gulf, as well as its currency pegs to the U.S. dollar and solid economic growth backed by strong consumer spending as well as high oil prices, are shielding the region from the worst of the global turmoil, fund managers said."

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Hungary Yields Jump Most in 17 Months on Fed: Budapest Mover - Bloomberg

"Hungary’s bond yields headed for the biggest jump since January 2012 and the forint plunged as U.S. Federal Reserve said it may phase out the stimulus that has stoked a global debt rally in past months.
Yields on benchmark 10-year government bonds jumped 35 basis points, or 0.35 percentage point, to 6.31 percent at 12:56 p.m. in Budapest, the highest since June 11. Hungary’s currency depreciated 1.6 percent to 299.55 per euro by 12:27 a.m. in Budapest, extending its three-day decline to 3 percent, the second-biggest among the 24 emerging-market currencies tracked by Bloomberg after the Mexican peso.
Emerging-market assets plummeted after Chairman Ben S. Bernanke said the Fed may start reducing bond purchases this year and halt the program around mid-2014 as long as the world’s largest economy performs in line with its projections. Hungary’s Monetary Council, which cut its main rate to a record 4.5 percent by last month, is “ready to act” if the financial market environment was to “fundamentally reverse,” newspaper Napi Gazdasag reported, citing policy maker Janos Cinkotai."

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Persian Gulf Bonds Drop as Stocks Get Caught in Fed Selloff - Bloomberg

"Persian Gulf bonds and stocks fell, with Qatari debt headed for a record drop, after the Federal Reserve said it may reduce monetary stimulus this year, sparking a global sell-off in emerging-market assets.
Qatar’s 2020 bond yield soared 31 basis points, or 0.31 of a percentage point, to 3.1 percent, while Bahrain’s 2022 notes yielded 5.88 percent, up 37 basis points. Oman’s benchmark MSM 30 Index (MSM30) fell the most in almost three months, leading declines in the six-nation GCC, where Qatar’s QE Index also retreated 1.1 percent. The BGCC200 Index of regional stocks lost 0.3 percent at 1:21 p.m. in Dubai.
Equity indexes in the oil-exporting GCC, which are among three of the top-five best performers in the world this year, succumbed to some of the selling pressure that drove the MSCI Emerging Markets Index down the most since November 2011 today. Fed Chairman Ben S. Bernanke said yesterday the central bank may start reducing bond purchases and end the program in 2014 should risks to the U.S. economy abate."

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U.A.E. Regulator Talks up Bourse Merger - Middle East Real Time - WSJ

"Chatter about a possible merger between rival stock exchanges in Dubai and Abu Dhabi refuses to subside. After almost a month since the tie-up buzz resurfaced, the local market watchdog has finally reacted, the regulator’s comments only serving to fan the speculation further.

The noise started a couple of weeks before MSCI Inc.’s annual market classification review announcement in mid-June, apparently after some innocuous comments by U.A.E. government officials on an “imminent” cross-emirate company merger.

The MSCI promotion was clinched. Meanwhile, two aluminum companies, based in Dubai and Abu Dhabi, also agreed to merge."

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EM currencies: all-time low tracker | beyondbrics

"Some all-time lows for EM currencies on Thursday:

Turkish lira, intraday low of 1.932 to the dollar, latest 1.922

Indian rupee, intraday low of 59.975, latest at 59.6175

Pakistani rupee, intraday low of 98.83, latest 98.83"

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ECONOMICS - Dollar hits all-time high against Turkish Lira, stock exchange plunges after FED remarks

"The U.S. Dollar reached an all-time high at 1.9290 Turkish Liras while Turkey’s stock exchange plummeted more than 4 percent in the morning session after the U.S. Federal Reserve (FED) put forward a timetable for turning off the taps on its $85 billion-a-month bond-buying program.

After the announcement of the FED’s decision, today the dollar broke two records over a day by first climbing to 1.9205 liras and then to 1.9290 liras.

The exchange rate and the basket retreated from historically high levels as Turkey’s Central Bank announced it had opened two exchange sale tenders – the first worth $50 million and the second $75 million – adding that it might open a new intra-day tender if needed. "

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EXCLUSIVE: Russia’s BCS gets UK regulatory go-ahead for business, plans hires

The London-based arm of Russian broker BCS has received British regulatory authorisation for brokerage business and plans a series ...
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MIDEAST DEBT-Bahrain between rock and hard place in bond decision | Reuters

"Bahrain faces a dilemma in coming days as it decides whether to issue a sovereign bond at a time of extreme volatility in global markets. It is a dilemma which issuers confront around the world - but in Bahrain's case it looks particularly acute.

The island kingdom, which is alone among the six oil exporters of the Gulf Cooperation Council in running a sizeable budget deficit relative to its economy, this week completed investor roadshows in the United States, Middle East and Europe for a potential bond issue of at least $500 million.

Since then, the rout in global debt markets has worsened, after U.S. Federal Reserve Chairman Ben Bernanke said on Wednesday that the U.S. economy was strong enough for the Fed to begin slowing the pace of its bond-buying stimulus this year. He signalled an end to the programme by the middle of 2014."

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EBRD could provide 25-30% of its total financing in hryvnias

"The European Bank for Reconstruction and Development (EBRD) could provide 25-30% of its total financing to Ukraine in hryvnias.

“We give around 30% of general financing in Russia over the past year in Russian rubles. I think that we could provide 25-30% of our total financing in Ukraine in hryvnias,” EBRD's Director for Local Currency and Capital Markets Development Andre Kuusvek said at a press conference on Wednesday.

He said that EBRD plans to start crediting in hryvnias this year."

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Hungary’s muni-bond “haircut” – the government speaks | beyondbrics

"As beyondbrics wrote on Wednesday, the Hungarian government’s latest austerity package includes a “tax” on local government bonds held by banks that looks suspiciously like a haircut.

Gabor Orban, state secretary at the finance ministry, responded on Thursday to a beyondbrics request for comment. He says the ministry had thought of giving bondholders a haircut but pulled back for “technical reasons”. His full comment follows."

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Kuwait Finance House says 20 percent capital increase oversubscribed | Reuters

"Kuwait Finance House (KFIN.KW) (KFH), the Gulf Arab state's largest Islamic bank, said on Thursday its 20 percent capital increase had been oversubscribed by shareholders, without providing specific details.

The bank was raising 319 million dinars ($1.12 billion) from the sale of 639 million new shares at 0.5 dinars each - a 35.9 percent discount to the closing price at the start of June, when the offer period was announced.

The share sale, which ran for two weeks from June 5, will boost KFH's paid-up capital by 64 million dinars and would fund the bank's expansion and strengthen its balance sheet."

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A word of caution on Qatar and UAE status upgrade -

"Last week’s upgrade of the Qatari and UAE stock markets to emerging market status by MSCI, the index provider, was a long time coming but is highly welcome nonetheless.
The time taken to attain EM status reflects the rigour of the MSCI process and the importance which investors attach to the classification. It has been a long road for everyone – exchanges, regulators, custodians, brokers and asset managers. But, if it was easy, investors would not value it.
The result is that institutional players are now looking at the Gulf again and in some cases are investing for the first time in five years. As a result of the upgrade, we expect that $430m will flow into Qatar and $370m into the UAE markets from passive index investors over the course of the next year."

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