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Friday, 5 July 2013

Saudi Gazette - MENA turmoil could cause oil price spike

"Much of the world’s oil production comes from the Middle East and North Africa (the MENA region). For example, of the 12 OPEC (Organization of Petroleum Exporting Countries) member nations, eight are located in the Middle East or North Africa.

Because of the concentration of the world’s oil produced from the MENA region, geopolitical unrest in the area could threaten oil supplies.

The price of oil is higher Friday amid ongoing concerns that the crisis in Egypt might affect Mideast supplies."

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Saudi Gazette - Competition, overcapacity harm GCC takaful sector

"The Gulf Cooperation Council (GCC) insurance markets are now overpopulated with insurers, Standard & Poor’s Ratings Services said. This is giving rise to overcapacity with the predictable, and expected, response of price competition in the insurance market. Insurance companies require considerable capital investment to become established, and new, usually small, companies are under pressure to deliver healthy returns to their investors.

In the short-tail lines of motor and medical insurance that predominate in GCC markets, underpricing will become evident very quickly and S&P believes this is in part evidenced by the poor technical results of the takaful sector.

S&P estimates that in 2012, the takaful combined ratio (loss ratio plus wakala fee expense ratio) in the UAE rose to 115 percent from 109 percent in 2011. In the first quarter of 2013, this deteriorated markedly to 143 percent. Net claims costs are not so out of line with the market norms as represented by the conventional sector. "

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India-UAE agreement on air services pact may be revoked | Business Standard

"The Union government might revoke the civil aviation ministry's memorandum of understanding (MoU) with its Abu Dhabi counterpart for offering additional airline seats under a bilateral air services arrangement.

This is likely to impact the much-awaited revision of the shareholders' agreement between India's private airline company, Jet Airways, and Abu Dhabi's flag carrier, Etihad Airways, for the latter to buy 24 per cent stake in the Naresh Goyal-promoted airline for a little over Rs 2,000 crore (around $380 million). The agreement was signed on April 24.

Although the Jet-Etihad deal has already run into several regulatory issues, Prime Minister Manmohan Singh's insistence that the bilateral arrangement with Abu Dhabi be discussed in the Cabinet has added further uncertainty to it."

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Polish banks form m-payment JV | beyondbrics

"A lot of the leading innovations in payment systems are coming from the world’s more peripheral financial markets, a trend reinforced by a recent decision by six Polish banks to band together to create a mobile phone-based payment system.

The six, led by PKO BP, the country’s biggest bank, are setting up a joint venture that will allow clients with a special smartphone application to make payments debiting their bank accounts using one-time codes generated by the mobile phones.

The codes can be punched into a merchant’s debit/credit card pin pad, or they can be used to send money from one account to another or to another person to withdraw funds from an ATM."

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Bulgaria: IMF gives cautious praise | beyondbrics

"The government besieged, protesters and police packing the streets, an ongoing air of uncertainty over the country’s future – name the country. Not Turkey, or Egypt, but Bulgaria. But while demonstrators rage against the newly-appointed prime minister, the Balkan country has received a remarkably upbeat report from the International Monetary Fund, which praised the country’s economic stability and policies.

At the end of a regular staff visit on July 3, Michele Shannon, IMF Mission Chief for Bulgaria issued a statement that may give a fledgling, fragile and beleaguered government some succour.

“Despite the unsettled political situation, hard-earned macroeconomic and financial stability—which has helped to insulate Bulgaria from the severest effects of the global crisis—has been maintained,” Shannon said. “Domestic uncertainty and global market turbulence in recent weeks have not had a significant market impact on Bulgaria, with bond yields and credit-default swap spreads remaining in line with other strong performers in eastern Europe.”"

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After 22 years, UAE branches of defunct BCCI finally liquidated - The National

"The UAE branches of Bank of Credit and Commerce International (BCCI) have been liquidated some 22 years after the fraud-hit lender was shut down in one of the biggest banking scandals of the time.

The Central Bank yesterday issued a statement confirming the liquidation of BCCI's local branches. It also instructed the Ministry of Economy to register completion of the liquidation and strike the branches from the Commercial Registry.

BCCI gained notoriety for widespread fraud and illegal activities that ultimately led to its closure in the early 1990s.Regulators from the UK, Luxembourg and the Cayman Islands closed the bank in 1991 after uncovering the laundering of drug money and other fraudulent transactions."

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Ukranian News - NBU's Foreign Reserves Down 5.7% To USD 23.1 Billion In June

"The foreign reserves of the National Bank of Ukraine reduced by 5.7% or USD 1,397.95 million in June, amounting to USD 23,143.8 million as of June 30.
The National Bank of Ukraine announced this in a statement.
According to information from the National Bank of Ukraine's the bank's foreign reserves amounted to USD 21,697.50 million as of June 30, its IMF reserve position amounted to USD 0.030 million, its special drawing rights USD 14.32 million, and its gold reserves USD 1,431.95 million.
Since the beginning of 2013 (January-June) the National Bank of Ukraine's reserves decreased by 5.7% or USD 1,402.39 million from USD 24,546.19 million to USD 23,143.8 million.
According to the latest data from the NBU, the foreign reserves of the bank amounted to USD 24,541.75 million as of the end of May.
As Ukrainian News earlier reported, the foreign reserves of the National Bank of Ukraine reduced by 2.8% or USD 701.16 million in May, amounting to USD 24,540.64 million as of May 31.
In 2012, the foreign reserves of the National Bank of Ukraine reduced by 22.8% or USD 7,248.42 million, from USD 31,794.61 million to USD 24,546.19 million."

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The week ahead: An old tradition, going fast - YouTube

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Diageo: will 25.02 per cent of United Spirits be enough? | beyondbrics

"After an eight-month, three-step investment process, Diageo, the world’s largest distiller, has declared itself “the major shareholder” in United Spirits, the company that controls nearly 60 per cent of India’s drinks market.

But is that quite fair? “Major” shareholder? With a 25.02 per cent stake, Diageo still falls well short of majority shareholding and that creates questions around control.

UK-based Diageo has replaced the maverick Indian business tycoon, Vijay Mallya, from his position as the largest shareholder in the business that was set up by his father."

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Guest post: Egypt’s long road ahead | beyondbrics

"The fall of President Mohamed Morsi this week has been greeted with a sense of catharsis and cautious excitement by millions of middle class Egyptians who had grown weary of his polarising and incompetent rule. Investors also appear to have taken heart, driving up the beleaguered Egyptian stock market by 6 per cent in response to Morsi’s departure.

However, Egypt is in a deeply precarious position, politically and economically, and the prospects for improvement are bleak. In many ways, the challenges today are greater than those that faced the country after the ouster of Hosni Mubarak just two and a half years ago.

When the military sacked Mubarak, Egypt emerged from authoritarian rule in need of two things: political consensus and wise leaders. Both were essential to guide the country’s first uncertain steps towards a stable, democratic political culture. It got neither."

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EM bond funds: flood becomes a trickle | beyondbrics

"After the worst-ever weekly outflow for emerging market bond funds, with $5.6bn draining away, fund managers have rightly been worried about what the latest figures would show.

As it happens, investors have regained some of their nerve: in the week to July 3, EM bond funds suffered a much smaller $960m of outflows, according to bankers citing data from EPFR, the research company.

As Barclays put it, “this is a clear improvement from the previous week and suggests that the negative performance of June (marking a poor quarter end performance) has not triggered accelerated selling.”"

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[video] Trouble ahead for Turkey | beyondbrics

"The rally in Turkish stocks came to a halt in May. Erik Nielsen, chief economist at UniCredit, explains why to Ferdinando Giugliano of the FT and looks at the dilemma Istanbul faces of controlling its current account deficit while boosting growth." '
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Qatar miffed by jump in India-Abu Dhabi airline seats, FM told PM - Indian Express

"Members of Parliament, it seems, are not the only ones irked by the controversial increase in weekly airline seat entitlements between India and Abu Dhabi.

India's energy partner Qatar was also disappointed with the speedy approval to the India-Abu Dhabi pact and the sentiment was conveyed to Finance Minister P Chidambaram in May by Qatar's then Emir, Sheikh Hamad bin Khalifa Al Thani, and Minister for Economy and Finance, Youssef Kamal.

"They are disappointed that there has been no follow up after the conclusions arrived at when the Emir visited India in April 2012. In particular, they are disappointed that no action has been taken on the promise to enhance bilateral rights to Qatar Airways but some steps have been taken in favour of Etihad airline," Chidambaram wrote to Prime Minister Manmohan Singh after visiting Qatar on May 18-19."

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