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Monday, 24 June 2013

EM sell-off: where are the bottom-fishers? | beyondbrics

EM sell-off: where are the bottom-fishers? | beyondbrics: "Those hoping that bargain hunters would bring some respite to the sell-off in emerging market assets were left disappointed on Monday.

The MSCI Emerging Markets Index fell for the fifth consecutive day, dropping 1.7 per cent to 885.39 – a 12-month low.
"

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MIDEAST STOCKS-Regional markets slip as global gloom weighs | Reuters

"Regional bourses fell on Monday as renewed selling pressure on global shares sparked a profit-taking spree, extending losses since the U.S. Federal Reserve said it would cut back a stimulus programme.

The U.S. central bank's plans and fears Chinese policy may be tightening sent the dollar sharply higher on Monday, while world shares extended last week's dismal performance.

Saudi Arabia's index, the largest regional market, fell 0.8 percent, cutting 2013 gains to 10.3 percent."

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Harvard Grad Swaps Morgan Stanley for Sheikhdom as Deals Dry - Bloomberg

"After a decade of dealmaking at Morgan Stanley (MS) in the Middle East, Peter Fort swapped Dubai’s International Financial Centre for a career promoting investment into one of the United Arab Emirates’ lesser-known sheikhdoms.
“When I first got the call about the position, it took a lot of convincing for me to take a look at it,” said Fort, who heads up Ras Al Khaimah’s free zone, and is an adviser to the emirate’s government, an hour’s drive north of Dubai. “But when I did my research I realised that Ras Al Khaimah is at an inflection point and I feel I can make a difference here.”"

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Nabiullina Seeks Growth Options as Russian Economy Stumbles - Bloomberg

"Russia’s central bank will embrace new approaches to fostering economic growth, including by improving access to credit, Elvira Nabiullina said as she takes over the chairmanship from Sergey Ignatiev today.
“I would say the policy should be continuity, but taking into account new challenges,” Nabiullina, 49, said in an interview in her office in central Moscow before taking over at Bank Rossii. “Slowing economic growth is a reality that the central bank will need to consider.”
Weakening the ruble or succumbing to calls for lower interest rates as a quick fix to boost demand are “dangerous” options, Nabiullina said. The central bank is already contributing to the goal of promoting growth by reducing inflation and developing financial markets and shouldn’t cave in to “temporary changes or political factors” when making interest rate decisions, she said."

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Qatar’s Emir to Hand Over Power to Son, Al Jazeera Says - Bloomberg

"Qatar’s Emir Sheikh Hamad Bin Khalifa Al Thani told his family he’ll hand over power to his son, state-owned Al Jazeera reported, in the biggest leadership shake up in 18 years in the world’s richest country.
British-educated Sheikh Tamim, 33, has steadily acquired a prominent role in Qatar since his appointment as crown prince in 2003. He serves as chairman of the Qatar Investment Authority, the country’s primary sovereign wealth fund, and headed Qatar’s bid for the 2020 Olympics.
Sheikh Tamim “is a legacy builder,” Michael Stephens, a researcher at the Royal United Services Institute in Doha, said prior to the announcement. “He’s not there to cause ruptures in the policy. He’s very much part and parcel of the initiative of his highness.”"

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France calls for increased investment from Qatar - FT.com

"French President Fran├žois Hollande used a weekend visit to Qatar to call for more investment from the gas-rich Gulf state to boost job creation in France.
Mr Hollande told business leaders he hoped more Qatari money could be lured into France’s services and industrial sectors, with a reciprocal rise in French companies implementing the grand development ambitions of this fast-growing Gulf state.
“We have reached a balance (of bilateral investments) and wish to preserve that and want to increase the volume of that exchange,” he told a news conference in Doha, noting that France was trailing behind the UK and Germany in the race to lure Qatari petrodollars."

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Poland’s banks: a tax shocker ahead? | beyondbrics

"Polish banks’ earnings are set to take a hit next year after the lower house of parliament approved a new quasi tax, which could take away up to 8 per cent of the sector’s earnings.

MPs voted on Friday to approve aproposal to create a stabilization fund that will be used to bailout banks threatened with insolvency. The fund will be managed by the Bank Guarantee Fund (BGF), which was set up in February 1995 to guarantee bank deposits and prevent banks from going under.

Every Polish bank will be required to pay a fee of between 0.05-0.2 per cent of risk-weighted assets. The exact fee will be set annually by the BGF after taking into account “the situation in the financial sector and the macro environment”."

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Saudi company’s growth mirrors kingdom’s history - FT.com

"Zamil Group, the family conglomerate headquartered in Al Khobar, the eastern province of Saudi Arabia, has seen it all.
Founded in the 1920s, its growth tells the tale of the big family businesses that dominate the otherwise government-led economy of Saudi Arabia.
Over the decades it has been catapulted from obscurity to become a regional giant, benefiting, like other Saudi companies, from the oil boom and subsequent leap in government spending."

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Dubai Stocks Drop to Lowest Since May Amid Emerging-Market Rout - Bloomberg

"Dubai’s benchmark stock index slumped to its lowest in more than a month, leading declines in the Middle East, amid an emerging-market rout after China signaled it will maintain efforts to curb credit.
The DFM General Index lost 1.9 percent to close at 2,255.97 in Dubai. The measure, the second-best performer this year after Ghana’s among 93 benchmarks tracked by Bloomberg, plunged as much as 5.1 percent as volume fell to about a third the 30-day average. Abu Dhabi’s ADX General Index retreated 1.1 percent.
“The higher you rise the faster you fall,” Mark Watts, head of the National Bank of Abu Dhabi’s asset management group, said by phone today. “The United Arab Emirates has had a stupendous year-to-date performance, so it’s only natural that if people are looking to lighten up on emerging-market exposure they will target the ones that have risen the highest.”"

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Egypt to borrow US$500 million from Saudi Arabia | Egypt Independent

"Egypt will sign a deal with Saudi Arabia to obtain a loan of US$500 million to finance its budget deficit, Egyptian Planning Ministry Amr Darrag said on Monday, according to Reuters.

The ministry cited Amr Darrag as saying that Egypt is negotiating with Saudi Arabia to get the loan.

The state budget deficit is expected to reach LE200 million in the fiscal year 2012-2013, which will end in the next few days."

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Nepal: open for business | beyondbrics

"The fund managers may be fleeing emerging markets, but the pioneers are still forging ahead.

Regus, the world’s largest provider of flexible workspaces, on Monday added a 100th country to its books – and launched an office in Nepal. Like its precedessors the Kathmandu centre will offer office space and services to local and international businesses.

Mark Dixon, Regus chief executive, said:"

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Kuwait's United Real Estate raises 60 mln dinars via bond | Reuters

"Kuwait's United Real Estate Co said on Monday it had raised 60 million dinars ($211.9 million) in a bond sale which it would mainly use to refinance existing paper.

The sale of the five-year bonds, which were issued in fixed and floating rate tranches, was oversubscribed by almost 50 percent, the company said in a statement.

One tranche will pay a fixed annual rate of 5.75 percent while the other will pay 3.25 percent over the central bank's discount rate, it said. The bonds will mature in June 2018."

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Russia: Luxoft looks to IPO despite market turmoil | beyondbrics

"With international equity markets in turmoil the timing of Luxoft’s IPO would seem to be poor. Add to that Luxoft is the international arm of leading Russian software developer IBS and Russian stocks are among the least popular in the emerging markets.

But Anatoly Karachinsky, the founder and president of IBS says the crisis has actually been good for business.

“The slowing global economy is not a big issue as a slowdown drives management to dramatically cut costs looking for more efficiency. Software is an easy way to cut the costs in most businesses,” Karachinsky said at an interview during last week’s St Petersburg international economic forum."

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Dubai accelerates asset sales as US$30 billion debt deadline looms - bi-me.com

"Dubai, which teetered on the brink of default in 2009, is accelerating asset sales as more than US$30 billion of debt repayments come due next year.

Dubai Financial Group yesterday agreed to sell its stake in consumer lender Dubai First to First Gulf Bank PJSC (FGB) for 601 million dirhams (US$163 million). Dubai Holding LLC plans to sell its 35% stake in Tunisie Telecom, the country’s ministry for information and communication technologies, said June 21.

The second largest of the seven sheikhdoms that comprise the United Arab Emirates, Dubai is seeking to take advantage of a rebounding economy to regain investor confidence after its near default on US$25 billion of debt roiled markets almost four years ago."

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Guest post: investors test the new emerging markets world order | beyondbrics

"It is no secret that emerging economies have evolved enormously over the last decade: stronger institutions, sounder macroeconomic policies and resilient banking sectors have enabled local financial systems to develop in an unprecedented manner. This has helped a majority of these countries to turn the page on past crises and become much more attractive places to invest.

But the picture is now changing. As monetary policy in the US approaches an inflection point and the dollar strengthens, this new world order is being put to the test. Indeed, the market correction that began this spring is a good reminder of the complexity and variety of these many markets.

The case for making investments in the developing world a more strategic component of institutional portfolios rests on a simple and powerful premise: the ongoing rebalancing of global economic power. Yet one can’t make the portfolio case for emerging markets without also acknowledging that this is a transition of historic dimensions, marked by advances and setbacks."

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Qatar prepares for leadership handover | World news | guardian.co.uk

"Qatar seems to be preparing its population of nearly 2 million for new leadership, with the emir and prime minister apparently ready to step down.

The tiny country, the world's largest exporter of liquefied natural gas, is a global investment powerhouse, a growing force in international media and sport, and a financial backer of Arab Spring revolts.

The Qatari-owed al-Jazeera television channel said the emir, Sheikh Hamad bin Khalifa al-Thani, 61, would meet ruling family members and decision makers on Monday "amid reports that he intends to hand over power to his crown prince, Sheikh Tamim"."

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Does Fed policy tightening mean Dubai real estate has just seen another top? « ArabianMoney

"Dubai real estate last topped out in September 2008 as the global financial crisis enveloped the world and liquidity dried up. Are we about to see a repeat performance as the Fed and China tighten global liquidity prematurely and crash financial markets again?

It is always tempting to say this time is different, but experience teaches us this is seldom true. House prices in Dubai are now back to the peak levels of 2008, particularly in the favored coastal villa compounds."

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Why the Oil States will bankrupt US shale oil if prices fall below $70 « ArabianMoney

"Global commodity prices slipped sharply last week with WTI crude falling to $93 a barrel, just $23 off the price that leaves the booming US shale industry bankrupt with prices that no longer cover its operating costs.

Will the Oil States beat the fracking revolution after all? The lowest cost producer always wins in any market competition, that’s the iron law of economics. Gulf States need $2 a barrel to break even, not $70."

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GUEST ARTICLE: Do IT with Poland – IT sector as powerhouse of Polish economy | EmergingMarkets.me

"A strong Polish representation at this year’s E3 Expo in Los Angeles is a good reason to take a closer look at the dynamically growing Polish sector of new information and communication technologies. It was not without a reason, that during his last visit to Poland in 2011, President Obama received a collector’s edition of a cult video game Witcher 2, as a memorial gift from Polish Prime Minister Donald Tusk. The Poles are proving to be extremely talented IT specialists, programmers and video game creators and the IT/ICT sector is becoming their new national speciality."

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Qatar GDP growth rate seen at 5% this year, 4.9% in 2014

"Bank of America Merrill Lynch has maintained Qatar’s GDP growth rate at 5% this year and 4.9% in 2014 even as BOAML forecasts a rise in CPI inflation to 2% this year and 2.5% in 2014.
BOAML’s forecast is in line with an earlier International Monetary Fund (IMF) projection of 5.2% growth in Qatar’s economy this year mainly on the back of robust non-hydrocarbon growth.
The IMF had also seen a “strong economic outlook” for Qatar in the medium term and the report indicated the country’s nominal GDP would exceed $191bn this year compared with $184.7bn in 2012."

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Dubai First deal is a win-win for both sides - The National

"Back then, there was no shortage of personal credit in the UAE market, with banks and credit-card companies falling over themselves to offer products to consumers intoxicated by the boom. There was always going to be tough competition for Dubai First.

As it turned out, the boom was nearing its end, with the credit crunch of 2008 turning into the credit crisis of 2009. Dubai First's launch projections were turned on their heads, and it became a matter of survival. To have achieved and maintained a 4.5 per cent share of the UAE credit market in such circumstances is no mean achievement.

Having stuck with it so long in the face of adversity, the decision to sell the business is a brave one."

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Tough times loom large for investors in sukuk - The National

Investors in Islamic bonds are poised for a nerve-racking time when fixed-income markets reopen today, after UAE sukuk yields hit their highest level all year on Friday.
Bond yields move in the opposite direction from prices and are heavily influenced by US treasury bond rates.Average yields for Islamic bonds on the HSBC/Nasdaq Dubai UAE US dollar sukuk index rose 40.8 basis points and closed higher still at 4.48 per cent on Friday, the highest level since January last year. Funds tracking the index are now making losses, with total returns on the index down 1.4 per cent year-to-date.
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