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Thursday, 4 July 2013

New wealth fund boss is sign Qatar's overseas ambitions undimmed | Reuters

"The new head of Qatar's sovereign wealth fund, Ahmad al-Sayed, is known and feared as a hard, aggressive negotiator - and his appointment signals the fund's ambitious overseas acquisition plans are likely to continue.

Qatar's newly-crowned emir removed former Prime Minister Sheikh Hamad bin Jassim al-Thani as chief executive at Qatar Investment Authority (QIA) on Tuesday, replacing him with Sayed, a lawyer previously in charge of running the fund's investment arm.

The fund, with estimated assets of $100-$200 billion, has been actively deploying the nation's riches from natural gas in recent years in a string of high-profile assets ranging from German sports-car maker Porsche to British bank Barclays and Swiss lender Credit Suisse."

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IMF Upgrades Russia to Rich | Business | The Moscow Times

"The Russian Federation has been reclassified as a high-income economy by the International Monetary Fund on the basis of a gross national income of $12,700 per capita, Kommersant reported Thursday.

For the past ten years, Russia has been classified as a middle-income economy. The latest figures from the World Bank show that the country has nearly caught up with the majority of developed countries.

The new status may facilitate Russia's entry into the OECD.

However, OECD president Jose Angel Gurria has repeatedly stated that membership in the organization is dependent on compliance with a number of criteria, of which income level is only one.

Russia joins a list of 75 countries with the status of a high-income economy."

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Lionel Barber on Qatar's Investments

Qatar: what next for the world’s most aggressive deal hunter? - FT.com

"
On a visit last year to Qatar Holding’s headquarters, a Gulf banker stepped inside a boardroom, intrigued by what he glimpsed as he walked past. His attention fixed on a set of whiteboards, each scrawled with the names of an array of global companies. This, he suspected, was a shopping list.
Some of the companies, including Valentino, the Italian fashion label, had already been bought by other Qatari investors. So had a stake in Germany’s Siemens, which was also on the boards. Printemps, a French department store, would be snapped up months later."

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The government increased the share capital by 1.4 billion Savings | Newspaper "The Day"

"The Cabinet decided to increase the authorized capital of the State Savings Bank at 1.399 billion USD - up to 17.229 billion USD, according to the Cabinet decision number 469 of July 3, 2013.

"Increase the authorized capital of JSC" State Savings Bank of Ukraine "in the amount of 1,399,944,000 USD by issuing new shares of par value of the existing preserve publicly owned 100% of the shares", - stated in the document.

Ministry of Finance, in accordance with the regulations is to issue government bonds to $ 1.4 billion with a maturity of seven years and an interest rate of revenue at 9.5% per annum.

Earlier, the Cabinet approved a decree according to which the share capital of JSC "Sberbank" has been increased to 291,732,000 USD."

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Russia: inflation fall gives rate cut hope | beyondbrics

"A drop in the Russian inflation rate could pave the way nicely for an interest rate cut later this month.

Consumer prices grew 6.9 per cent in June, the slowest annual rate this year, down from 7.4 per cent in May, the Federal Statistics Service announced on Thursday. The rouble held firm on the news – rising 0.5 per cent against a weak euro and staying flat against the US dollar.

The slowdown still leaves Russian inflation running well above the average for emerging Europe. But it could be enough for the new central bank chairman Elvira Nabiullina to preside over a rate cut at her first rate-setting meeting later this month."

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Kuwait's KIPCO to bid for health insurance company stake | Reuters

"Investment group Kuwait Projects Co (KIPCO) said on Thursday it would bid for a stake in Kuwait Health Assurance Co (KHAC)- the first such announcement since the bidding process opened in April.

KHAC, which wants to sell a 26 percent strategic stake to investors, aims to privatise expatriate health insurance and associated medical care.

KIPCO, which made the announcement in a statement to the stock exchange, is a major regional investment house that holds stakes in media, industrial, financial and real estate companies.

Kuwait Investment Authority, the country's sovereign wealth fund, set the conditions for the sale and opened the bidding process in April."

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FlyDubai Says 50-Plane Order Is Boeing-Airbus ‘Open Race’ - Bloomberg

"FlyDubai, which operates an all-Boeing Co. (BA) fleet, said there’s an “open race” between the U.S. manufacturer and European rival Airbus SAS (EAD) to supply it with 50 narrow-body aircraft worth $5 billion at list prices.
The discount carrier, which currently uses 30 Boeing 737s, is considering the re-engined Boeing 737 Max and Airbus A320neo models and plans to make a choice by November’s Dubai Air Show at the latest, Chief Executive Officer Ghaith al-Ghaith said.
“We will choose what’s best for us and what’s best could be a new type,” al-Ghaith said in an interview at the company’s base in Dubai, United Arab Emirates. “Both aircraft appeal to us. The best decision is the one that costs us the least.”"

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MIDEAST STOCKS-Egypt surges 7.3 pct after Mursi overthrown | Reuters

"Egyptian shares posted their largest one-day percentage gain in more than a year on Thursday after the army ousted former president Mohamed Mursi and an interim president was sworn in.

Cairo's index rose 7.3 percent, trimming its year-to-date losses to 2.3 percent. It was the biggest one-day surge since June 25, 2012, the day after Mursi was declared the country's first democratically elected president.

This week's rebound has erased sharp losses during June that were triggered by severe political unrest. Although the country still faces huge political and economic challenges, many investors feel Mursi's ouster could lead to a more technocratic government which addresses issues such as a sliding currency and ballooning state budget deficit."

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Egypt Yields Drop Most on Record, Stocks Jump on Ouster - Bloomberg

"Egypt’s benchmark bond yield headed for the biggest drop on record and stocks surged after the army deposed President Mohamed Mursi in a move it said aimed to restore stability. The nation’s credit risk plunged.
The yield on the 5.75 percent bonds due in April 2020 tumbled 148 basis points, or 1.48 percentage points, the most since the notes were sold in 2010, to 9.29 percent at 3:47 p.m. in Cairo, data compiled by Bloomberg show. The EGX 30 Index of stocks rallied 7.3 percent, the biggest jump since June 25, 2012, the first trading day after Mursi was declared Egypt’s first democratically elected president. Commercial International Bank Egypt SAE led the gains, surging 10 percent."

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JPMorgan on EM stocks: trust the cycle | beyondbrics


If you still think that markets move in cycles, this could be a good time to buy emerging market equities.

So says Richard Titherington, Chief Investment Officer for emerging market equities at JPMorgan Asset Management. You may lose money in the next three months, as the turmoil in the market works itself out. But on a one-to-three-year view, emerging market shares look good value.

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The Honeymoon Is Over | @REBELECONOMY

"“Let us savour the moment now, and we’ll worry about the future later,” some Egyptians said yesterday hours after Egypt’s military had ousted the country’s president Mohammed Morsi.
Led by General Abdul-Fattah el-Sisi, the army – backed by the heads of Al Azhar, the Coptic Church and Mohamed ElBaradei - moved swiftly and confidently to suspend the country’s Constitution and create an interim government. Crowds erupted in cheers and screams.
Some say the military was working on behalf of the people of Egypt and that the country’s first democratically elected president had to go. Others say the army’s decision was carefully orchestrated, and cannot be described as anything but a military coup."

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Morsi’s year of economic pain | beyondbrics

After the Arab Spring swept Egypt’s former president Hosni Mubarak from power, there would be a tough transition, followed by economic recovery. That was the theory, at least.
The reality is that under now-former president Mohamed Morsi, ousted from power this week, Egypt’s economy has deteriorated. Political impasse may have forced the army’s hand, but the economic problems are arguably as much a factor in Morsi’s removal.
Beyondbrics looks at some of the key economic indicators under Morsi – and at where Egypt goes from here.
Our charts show what has happened since Morsi came to power, except where indicated.
Unemployment (especially among young people) was a big factor in the Arab Spring. Under Morsi, it got worse and is now at around 13 per cent. Whatever the political motives behind widespread protest, joblessness will always heighten tension.

Source: Bloomberg
Meanwhile inflation has also ticked upwards, to more than 8 per cent.

Source: Bloomberg
At the same time, the central bank has allowed the pound to weaken to more than E£7 to the dollar – making exports more competitive but hurting import prices. This means that fuel imports have become more costly and the government has lacked the ability to remove expensive fuel subsidies – something the IMF has made much of. Failure to reach agreement on an IMF deal – now clearly off the table – meant that a much needed $4.8bn loan and other financing didn’t come through.

Source: Bloomberg
As a result, although foreign reserves have been propped up by loans from Qatar and others, they remain low. This is one area where things have not deteriorated under Morsi, but reserves are still at critical levels.

Source: Bloomberg
At the same time, the government’s ability to tackle structural reforms – required by the IMF – has been limited by a spiralling budget deficit, now at nearly 15 per cent of GDP. Although the economy has been growing – something of a surprise, recording 2.1 per cent in Q1 2013 – this is not enough to reduce unemployment. And growth has been largely based on tourism, which may be hit by the current turmoil, and on government services, which added 1.5 percentage points to the annual growth rate, according to Capital Economics.

Source: Capital Economics
So investors have marked a premium on Egypt’s borrowing costs. Yields on the 2020 5.5 per cent bond are now above 10 per cent.

Source: Bloomberg
Although the main equity index, the EGX 30, has seen surges in recent days, it is still down over Morsi’s tenure, and down for 2013 to date as well.

Source: Bloomberg
So where next? For the economy, support from other Gulf countries such as Saudi Arabia and the UAE will be critical as Egypt faces massive external and fiscal financing requirements.
Raza Agha, economist at VTB Capital, spelt out Egypt’s position thus:
Our estimates for Egypt’s gross external financing requirements over FY14 (July 2013 to June 2014) are $19.5bn assuming zero capital flight (i.e. zero errors and omissions on the balance of payments)… On the fiscal side, Fitch expects a general government deficit of 12.2 per cent of GDP in 2013, while annual rollover requirements of public debt are to the tune of 25 per cent of GDP, second to only Lebanon in the region.
So although the focus right now is on who is running the country, the military’s next moves, and possible elections, Egypt’s fate – and avoidance of economic collapse – will be as much determined by the UAE and Saudi Arabia as by domestic politics.

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Price of land for private houses in Kyiv region slightly up in H1, 2013, say experts

"The cost of land for the construction of private houses in Kyiv region from January 4 to July 3 this year had increased by an average of 0.93%, to $3,161 per 100 square meters, SV Development consulting company (Kyiv) said on Wednesday.

"The cheapest district in the region was Fastiv district with an average price of $1,031 per 100 square meters, and the most expensive was KyivSviatoshynsky district, where the average price of land was $4,827 per 100 square meters," reads a statement.

According to the report, when calculating the average price of land, the company in the period analyzed data regarding the cost of land plots for individual housing construction in 14 administrative districts of Kyiv region."

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Egyptian shares surge on opening | beyondbrics

"
Egyptian shares leapt at Thursday’s opening, suggesting investors are happy at the latest turn of events. The benchmark EBX 30 index was up 6.4 per cent as trading started, making up a big chunk of the index’s 9 per cent slide since the beginning of the year.

The surge was the biggest for more than a year and forced a halt to trading, as it broke the Egyptian Exchange’s 5 per cent limit on daily movement in the index.

As Bloomberg reported, the yield on the government’s $1bn of 5.75 per cent securities due in April 2020 dropped 28 basis points to 10.49 per cent."

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Gulf countries split on Morsi’s removal - FT.com

"The ousting of Mohamed Morsi as Egypt’s president has provoked glee in some Gulf capitals but silence from Qatar, highlighting profound divisions across the Arabian Peninsula over the ex-leader’s Muslim Brotherhood movement.
The Gulf regional giant Saudi Arabia and its neighbour the United Arab Emirates welcomed Mr Morsi’s fall, echoing their increasing hostility to the Brotherhood as its power has grown across the Middle East over the past two and half years of uprisings."

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Visegrad Group strongly supports Ukraine on its path to EU - ForUm

"The Visegrad Group strongly supports Ukraine on its path of European integration and encourages the government to remove barriers in the way, President of Poland Bronislaw Komorowski said at the Visegrad Group summit.

"It is extremely important for us that Ukraine has success at the Vilnius summit. We encourage Ukraine to make every effort to remove barriers in the way, and will encourage the EU countries to support Ukraine in this direction," he said.

Komorowski was supported by presidents of Hungary, Slovakia and the Czech Republic. "

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Dubai steps up asset sales to settle debt | Arab News

"Dubai, facing debt repayments of about $ 50 billion over the next three years, is finally getting serious about selling off assets to raise money — a key component of its repayment strategy.
Most investors are now confident that the freewheeling emirate will recover from its 2009-2010 crisis, when a property crash nearly forced state-linked companies to default on billions of dollars of debt.
But until recently, most of the big companies had not followed through on their plans to sell assets as part of debt restructuring deals with creditors. This left a question mark over exactly where Dubai Inc would find the money it needed."

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Dubai’s DEWA May Seek Funds for Power-Plant Expansion, CEO Says - Bloomberg

"Dubai Electricity and Water Authority, the government-owned utility in the Persian Gulf emirate, may seek financing to pay for a power-plant-expansion project, Chief Executive Officer Saeed Al Tayer said.
DEWA, as the company is known, plans to add two natural gas turbines to its M Station facility in a project that may start next year, Al Tayer said in an interview after a news conference yesterday. He didn’t say how much the project to add 400 megawatts of generation capacity would cost or when the utility might need the funds.
Dubai, the second-largest sheikdom in the United Arab Emirates, is boosting generating capacity to meet demand that’s rising about 5 percent a year and plans to develop new sources to lessen reliance on gas. The utility in February sold a $1 billion Islamic bond to repay debt and a month later Al Tayer said the company wouldn’t need external funds until 2015."

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Heartburn in Washington: India Calls Iran “Critical” to their Energy Future « naked capitalism

"It is no secret that the South and East Asian economies have chafed under the multi-layered sanctions adopted by the United States, European Union and United Nations Security council against Iran for its civilian nuclear activities.

Many in the West see Iran’s nuclear efforts as masking a covert weapons program, which Tehran has stoutly denied.

For the moment India, Korea, Malaysia, South Africa, Sri Lanka, Turkey and Taiwan have dodged the penalties accruing from violating U.S. sanctions, as in June 2012, the Obama administration granted exemptions based on reductions of oil purchases from Iran of about 20 percent."

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Texas' Eagle Ford Shale Sparks Oil Boom That Will Top Saudi Arabia - Investors.com

"
Oil: Production data for April show how fracking has shattered not only the shale rock in formations like Texas' Eagle Ford and Permian Basin but also the myths of "peak oil" and petroleum as an energy source of the past.

As Mark Perry notes on his Carpe Diem blog, Texas produced an average of 2.45 million barrels a day (bpd) of crude oil in April, according to the Energy Information Administration (EIA). That's the highest average daily output for Texas in any month since April 1985 — 28 years ago.

In only 2-1/2 years, the Lone Star State has doubled its crude output, making it what Perry dubs Saudi Texas and reversing a 23-year decline that fueled speculation that the maximum rate of petroleum extraction has been, or will soon be, reached."

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Kuwait’s Kipco Soars Most in Year on OSN Valuation: Kuwait Mover - Bloomberg

"Kuwait Projects Co. gained the most in a year after a Kuwait newspaper reported that Arqaam Capital Ltd. valued unit Orbit Showtime Network at $2.5 billion before a possible initial public offering.
The investment company known as Kipco jumped 5.8 percent, the most since July 5, to 550 fils at the close in Kuwait City. The shares have surged 48 percent this year compared with a gain of 34 percent for the Kuwait SE Price Index. The measure rose 0.7 percent today. About 2.5 million Kipco shares traded, or 1.8 times the three-month daily average, according to data compiled by Bloomberg.
Local newspaper Al-Qabas today quoted a June report from Arqaam, valuing pay TV-company OSN, in which Kipco holds a 60.5 percent stake. Arqaam also raised Kipco’s price estimate to 640 fils from 480 fils. The company last month named Rothschild the sole adviser ahead of the potential sale."

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Egypt’s turmoil: in 4 charts | beyondbrics

"A reminder – as if any were needed – of what the markets make of the ongoing political crisis in Egypt that led to the ousting on Wednesday of Mohamed Morsi, the country’s first freely elected president.

Yields on Egypt’s 2020 debt, just shy of 10 per cent a day ago, punched through that barrier to hit a new high of 10.44 per cent on Wednesday.

The cost of insuring Egypt’s 10-year debt against default also hit a new high of 908.3.

Meanwhile the Egyptian pound continues its slide against the US dollar.
And the country’s benchmark EGX 30 stock index is down 9 per cent since June, or nearly 12 per cent this year.
It’s pretty clear no one knows what to make of today’s development. The move by the Egyptian military to oust Morsi, suspend the country’s constitution and install an interim government – while intended to bring an end to the recent chaos – has more likely ushered in a new era of uncertainty for the country. Even as the streets of Cairo erupt in celebration, the euphoria could soon give way to the harsh realities of trying to reconciliate the interests and demands of Egypt’s two main camps – Islamists who support Morsi and liberals and leftists who have been clamouring for his removal.
What happens now is anyone’s guess. Will there be retaliation by Morsi and his Muslim Brotherhood group? Events are still developing but it’s fair to say things in Egypt will stay messy and volatile for at least several more months. Expect this to put more pressure on the currency and foreign investors to remain edgy about re-entering the country."

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Saudi Gazette - GCC firms’ earnings to grow by 9% in Q2

"GCC companies’ earnings were expected to grow nine percent in Q2 2013, SICO’s report titled “GCC Equities – Quarterly Result Preview - 2Q13” said.

“With the exception of the ‘real estate and construction’ sector, profits are expected to grow across the board mainly driven by the petrochemical sector,” it noted.

Strong non-interest income would drive UAE banks’ earnings by 18 percent YoY, while lower trading income and contracting margins (NIM) will suppress KSA and Qatari banks’ earnings growth to a modest four percent in 2Q13, compared to same period last year, it added."

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For flights bonanza, Abu Dhabi offered $50 bn investment - Indian Express

"An offer by Abu Dhabi to invest about $50 billion in India's infrastructure sectors in the coming years was one of the key factors that swayed the government's decision to approve an unprecedented nearly three-fold increase in bilateral entitlements of weekly airline seats between the two destinations, officials claimed Tuesday.

"A host of issues are considered when two countries discuss any increase in bilateral agreements. In this case, a commitment to invest $50 billion in the infrastructure sector of the country by Abu Dhabi was a key reason for us to agree to the increase," a senior government official said after attending a meeting called by Cabinet Secretary Ajit Seth on the issue Tuesday."

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Despite construction boom Qatar property firms struggle | Arab News

"Qatar’s real estate developers are struggling even as the country embarks on huge infrastructure building plans — a warning to investors that despite the billions which the Gulf state is throwing around, they won’t necessarily profit.
A $ 7.1 billion state financial support package announced last month for Qatar's largest listed developer, Barwa Real Estate, and the restructuring of other top developers such as United Development Co. and state-owned Qatari Diar, highlight the industry's weakness.
Barwa and Diar have cut staff and sold assets to manage their debt. Last October Barwa announced plans to sell more assets in Qatar and Egypt to pay down loans."

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UAE tops region in new innovation index report - The National

"The UAE leads the region in Global Innovation Index rankings this year, according to a new report.

The report, produced by Cornell University, Insead and the World Intellectual Property Organisation (Wipo), outlines the business environment to identify the world's most innovative economies.

It assesses a country's institutions, human capital and research, infrastructure and market and business sophistication to gauge its level of innovation input and its knowledge and technology and creative outputs."

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A defiant and wary Prince Al Waleed appears in London court - The National

"The Saudi billionaire Prince Al Waleed bin Talal was urged by a judge to reach a settlement in a high-profile British legal case involving a decade-long dispute over a private jet.

Prince Al Waleed, the nephew of King Abdullah of Saudi Arabia, is fighting a claim for US$10 million by a Jordanian businesswoman, Daad Sharab, who said the sum is owed to her for her role in selling one of the prince's planes to the late Libyan leader Muammar Qaddafi.

After two days of cross-examination in the witness box, the judge Peter Smith asked the prince: "Do you really want to go through a trial where an English court declares you a liar? I might have to decide one or the other of you is lying, or even both of you are lying.""

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OMV turns towards upstream after Nabucco rejection - The National

"A long-held pipeline dream last week came to an end for OMV, the Austrian oil and gas company that is part-owned by Abu Dhabi's International Petroleum Investment Company (Ipic).

The Nabucco pipeline project, and ambitious project to link the Shah Deniz gasfield in Azerbaijan to the European market, was rejected in favour of a rival pipeline.

The decision could have been expected to be a major blow for OMV, the leading company on the project. In fact, the pipeline had been subject to a decade of intense political wrangling and downsizing."

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