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Friday, 6 September 2013

EM fund flows: the exodus continues | beyondbrics

EM fund flows: the exodus continues | beyondbrics:

The exodus from emerging markets continued apace with bond and equity funds tracked by EPFR suffering net outflows of $4.4bn in the week to Wednesday.

While the outflows were less than the $5.8bn recorded the week before, it’s hard to put a positive spin on what is essentially another large outflow.

Equity funds that invest in emerging markets were the big losers of the week, with investors pulling out $4.4bn while EM dedicated bond funds – now suffering its 15 consecutive week of losses – recorded $1.61bn in net outflows.

“Amid high uncertainty about Fed policy, we will likely have to wait at least few more weeks before inflows come back to EM,” said Jane Brauer, quantitative FI strategist at Bank of America Merill Lynch."

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Barclays: Saudi Arabia refocusing Aramco’s strategy - Oil & Gas Journal

Barclays: Saudi Arabia refocusing Aramco’s strategy - Oil & Gas Journal:

"Saudi Arabia, with domestic oil use trimming exports and threatening the kingdom’s trade position, is refocusing the strategy of its national oil company, according to a Barclays analyst.
James C. West writes in a research note that Saudi Aramco is emphasizing natural gas development, pursuing opportunities in unconventional resources, and trying to become a technological leader.
The new push for on natural gas in part represents an attempt to displace subsidized oil in power generation. Saudi oil use increased to 2.9 million b/d, 25% of production, in 2012 from 1.6 million b/d, 17% of production, in 2000.
With internal consumption rising, Saudi Arabia has less oil available for the exports on which its economy and external accounts depend."

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Ukraine’s reserves: enter the danger zone | beyondbrics

Ukraine’s reserves: enter the danger zone | beyondbrics:

Crunch time is fast approaching for Kiev. Central bank reserves have plunged deeper amid an already grim economic picture. And it could all get much worse if a trade row brewing with Russia escalates.

According to government figures released on Friday, Ukraine’s central bank reserves plunged by a whopping 4.7 per cent in August, putting fresh pressure on officials to patch up stretched state finances by securing a multi-billion dollar bailout from the International Monetary Fund.

FX reserves at the National Bank of Ukraine fell by $1.1bn to $21.7bn, bringing the year-to-date decline in central bank stockpiles to nearly 12 per cent and dangerously below 3 months of imports.
Source: Dragon Capital

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Guest post: G20, business and corruption – time for action | beyondbrics

Guest post: G20, business and corruption – time for action | beyondbrics:

"By Andrei Bougrov and Brook Horowitz of the B20 Task Force on Transparency and Anti-Corruption

When the Russian government took over the G20 presidency at the beginning of 2013, the B20 – a group of business leaders from the major companies of G20 countries – was invited to set up a Task Force to engage in a dialogue with the G20 on corruption. After six months of intensive work, the companies in the B20 Task Force came up with a number of recommendations which have been presented to the G20 leaders in advance of the St Petersburg summit.

The recommendations that have emerged look more like an action plan than recommendations. The discussions were dominated by a conviction that in fact something can and must be done about corruption, that business has a critical leadership role to play, and that the B20, with its convening of the developed and the emerging economies, is an appropriate forum to jump-start this process. During our deliberations, we quickly shifted from talk-shop mode to implementation mode, setting ourselves an ambitious goal to move “from declaration to action”."

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Russia’s proposed price freeze: don’t do it | beyondbrics

Russia’s proposed price freeze: don’t do it | beyondbrics:


So, Russia is considering price freezes to provide some relief for stretched household budgets and get the country’s economy going again. Investors are likely to be dismayed. Ordinary Russians should be, too.

Reuters reported that Dmitry Medvedev sent a directive to ministries on Friday asking them to look into the impact of a freeze in regulated prices of services such as gas, electricity and rail transport for the whole of 2014.

This from Reuters:

The Russian government is used to using its control of such costs for political purposes. In a bid to boost electoral support before [Vladimir] Putin’s return to the presidency for a third term last year, it delayed rises in regulated costs for six months, shortly after the first major street protests against Putin.
But it now faces a more difficult equation of how to reheat an economy that has been battered by five years of financial turmoil in Europe and, more fundamentally, by Russia’s failure to reduce its huge dependence on oil, gas and other commodities."

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Shell sees no risks to investing in Ukraine| Ukrinform

Shell sees no risks to investing in Ukraine| Ukrinform:

Shell sees no risks for the funds invested in Ukrainian projects to develop gas fields, Shell vice-president for relations with public authorities Sean Rooney said at the V International Economic Forum “Investments. Innovations. Kharkiv Initiatives” on Friday in Kharkiv.
"We are comfortable working in Ukraine. We see that the government in Ukraine respects the investments which we invest. In addition, fearing for our own investments, we seek stability. The Ukrainian government works well with us in this direction, and so far I do not see any risks," he said.
According to Rooney, the company is more concerned at whether gas deposits will be discovered at the Yuzivska field.
"The main danger regarding the hydrocarbon exploration is geology: that is, will we find gas or not, will it be effectively from the point of view of the economy to produce this gas," he added.
A reminder that Shell is engaged in the exploration of gas fields in Kharkiv region."

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The EU association agreement - Maidan #Ukraine #EU

The EU association agreement - Maidan:

"Sep 6th, 2013 | By JeffMowatt | Category: Economics, European Union, Human Rights, News

I offer a supportive voice to that of Taras Danko, who wrote recently:

“The mechanisms of EU’s Eastern Partnership should provide the facilities for assisting Ukraine in order to eliminate the domino effect on other European economies. While the macroeconomic steps that could be taken are quite clear – free markets, elimination of corruption, rule of law, improved investment climate – the particular branches of industries, SMEs, as well as major corporations also need their own action plans for getting into the safe waters. The EU expertise as well as technical assistance to Ukraine can do a lot in this respect.”

In 2008, through an initiative known as the EU Citizens Consultation, such a support program was proposed, with a primary focus on the childcare system. It drew attention to the HIV epidemic which had become a threat to all Europe:

In 2012 it was drawn to the attention of EU Commissioner Michel Bernard through the democratic process of a complaint channelled through MEP Sir Graham Watson.

I leave it for Ukrainians to decide to what extent they will experience democracy as a result of this agreement"

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Guest post: help emerging markets help themselves | beyondbrics

Guest post: help emerging markets help themselves | beyondbrics:

By Gerardo Rodriguez of BlackRock

Investing in emerging markets has never been boring. Recent market volatility has spawned various comments on the future of the asset class as a whole. Stronger fundamentals have made emerging markets more resilient and safer places to invest. But the challenging external environment and imminent tapering by the Fed is exposing some of the weak spots of EMs. The adjustment of relative prices is a necessary condition for the rebalancing that is required. However, there are risks that the correction goes too far and the asset class falls into a vicious cycle.

The IMF played a key role during the acute phase of the crisis in 2009, in essence helping innocent bystanders from getting into this sort of bad equilibrium. It should again stand ready to help emerging economies to prevent the current market adjustment from becoming a generalised balance of payments and financial crisis in some countries. A lot of effort and resources have gone in the design of new precautionary instruments at the Fund. This is the ideal time to put them to work."

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Billion dollar tiles - RAK Ceramics UAE - CNN video

Billion dollar tiles

Jomana Karadsheh takes a look inside the world's largest ceramics factory.

Cub Energy Inc. Updates Operations in Ukraine and Converts Krutogorovskoye Licence to 20-Year Production Licence -

Cub Energy Inc. Updates Operations in Ukraine and Converts Krutogorovskoye Licence to 20-Year Production Licence -

"Cub Energy Inc. ("Cub", or the "Company") (TSX VENTURE:KUB) reports on its operations activities in Ukraine and that KUB-Gas LLC ("KUB-Gas"), a partially-owned subsidiary in which Cub has a 30% ownership interest, has successfully converted its Krutogorovskoye Licence to a 20-year production licence.

Mikhail Afendikov, Chairman and Chief Executive Officer, stated:

"The conversion of the Krutogorovskoye license into a 20-year production license is a significant milestone for the company and opens the way for the full development of the license area. This conversion enhances our ability to increase production on our Eastern Fields.""

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The week ahead: On borrowed time

Hotels in MENA saw a fall up to 64 percent | Positions and Promotions

Hotels in MENA saw a fall up to 64 percent | Positions and Promotions:

"Hotels in the Middle East and North Africa (MENA) failed to register high occupancy levels in July 2013, a HotStats survey by TRI Hospitality Consulting Middle East, showed. Hotels in Dubai and Abu Dhabi registered declining revenues and profits in July.

In Dubai, occupancy declined 12.5 percent to 54.6 percent, which pushed revenue per available room (RevPAR — a benchmark for performance) to fall 16.8 percent. Average room rates (ARR), however, was up 2.2 percent to $196.87.

As a result of declining room and food and beverage revenues, total revenue per available room (TrevPAR) in Dubai dropped 10.7 percent to $242.98 compared to a year ago. Profitability declined 63.6 percent to $37.35. Meanwhile in Abu Dhabi, occupancy grew slightly by 0.5 percent to 50.1 percent, as per the survey."

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Single GCC visa urged by Swiss official |

Single GCC visa urged by Swiss official |

"A senior Swiss official has called on the Gulf Cooperation Council (GCC) to introduce a Schengen-type visa system to facilitate visits from foreign business travellers and investors, according to Saudi Arabia’s English daily Arab News.
Addressing the GCC-Swiss Forum in Geneva this week, Erwin Bollinger, deputy head of foreign economic relations, was quoted as saying the move would help save a lot of time and energy.
“The situation now is that if a Swiss businessman wants to visit GCC states, which are all located in the Gulf region, he has to visit embassies of these countries to get visas,” he said.
“It would be easy for GCC states to adopt the Schengen visa system,” he added.
The Schengen system allows travel between its 25 member countries (22 European Union states and three non-EU members), making movement “much easier and less bureaucratic.”"

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Saudi Arabia denies alleged Fox News statements - English | Front Page

Saudi Arabia denies alleged Fox News statements - English | Front Page:

"Saudi Arabia denied on Thursday reports that Foreign Minister Prince Saud al-Faisal made any statement about Egypt to Fox News after online news outlets reported that al-Faisal told the U.S. news channel that Saudi Arabia would not be supporting Egypt financially forever.
“Referring to statements attributed to Prince Saud al-Faisal, Minister of Foreign Affairs, and quoted allegedly by Fox News, an official source at the Ministry of Foreign Affairs said that those statements are incorrect completely,” according to a statement by the Saudi Press Agency.
“The source added that the Minister of Foreign Affairs did not make recently an interview or speak to Fox News or other mass media,” the agency added."

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BBC News - Iran nuclear: Firms' asset freeze annulled by EU court

BBC News - Iran nuclear: Firms' asset freeze annulled by EU court:

Western sanctions have undermined the Iranian rial
The EU's top court has ruled that the EU should unfreeze the assets of seven Iranian banks and other businesses hit by sanctions.

The European Court of Justice (ECJ) said there was insufficient evidence that the businesses concerned were involved in nuclear proliferation.

Post Bank Iran, Iran Insurance Company and Export Development Bank of Iran are among those listed by the ECJ.

EU and US sanctions are aimed at curbing Iran's nuclear programme."

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Ukraine relies on association with EU - Rybak| Ukrinform

Ukraine relies on association with EU - Rybak| Ukrinform:

Verkhovna Rada Chairman Volodymyr
The Ukrainian authorities rely on association with the European Union, but realize that it is necessary to continue systemic reform to sign the Association Agreement.
Verkhovna Rada Chairman Volodymyr Rybak said this at a meeting with Chairman of the Seimas of Lithuania Vydas Gedvilas in Vilnius on Friday, the press service of the Verkhovna Rada reported.
"European integration of Ukraine is our civilization choice, a plan of Ukraine's development, and the leadership of the state made a stake on association with the EU," the speaker said.
He said that at various levels there is "an understanding of the need to further advance systemic reform to create favorable conditions for the signing of the agreement." In particular, the issue concerns the areas that are constantly in the field of view of the EU, in particular, justice reform, the creation of a stable electoral system, the fight against corruption, and the improvement of the business environment."

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The Wrap: US indebted to Egypt, Libya Lawless and In Economic Ruin | @REBELECONOMY

The Wrap: US indebted to Egypt, Libya Lawless and In Economic Ruin | REBEL ECONOMY:


  • EGYPT 

US faces substantial losses if Egypt aid halted - Reuters

Finally a story that reflects pragmatic ties between the US and Egypt that go far beyond the politics. Washington has been considering whether to continue its US $1.23 billion in military assistance, but while the aid institutionalises the political links between the two countries, the money at stake is arguably much more costly if this bond was broken.

A particularly talkative senior Pentagon official told Reuters:
“There’s a whole bunch of contracts out there. The bills keep coming in and we’ve got to be able to pay them somehow otherwise we go in default.”
Apparently last year, when the Obama administration decided to continue military aid to Egypt despite its failure to meet pro-democracy goals, US officials cited as one of their reasons the fact that the termination costs could have exceeded $2 billion."

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China, Russia agree on terms of multi-billion dollar gas deal — RT Business

China, Russia agree on terms of multi-billion dollar gas deal — RT Business:

AFP Photo / China Out
The long-awaited major gas contract between Russia and China is close to being sealed. The nations' energy corporations signed a string of agreements on energy cooperation on Thursday.

The signings took place after President Vladimir Putin and his Chinese counterpart Xi Jinping met at the G20 summit in St. Petersburg.

Russia’s Gazprom and the China National Petroleum Corporation (CNPC) signed basic conditions for the long-term deal. Russia will supply at least 38 billion cubic meters of gas per year to China, Gazprom said in a press release.  The agreement terms cover the start date and volume of gas deliveries, the take-or-pay level, the amount of guaranteed payments, and the gas transfer point. However, the companies didn’t specify a solution to the main stumbling block – the issue of price.

Gazprom reported that the deal is expected to be finalized by the start of 2014. The project also envisages the construction of a new Russian pipeline to China by 2018."

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Sunland loses appeal against court verdict on multi-million dollar Dubai property deal | Herald Sun

Sunland loses appeal against court verdict on multi-million dollar Dubai property deal | Herald Sun:

Businessman Matthew Joyce was jailed on corruption charges in Dubai. Picture: Siddarth Siva/TWAMSource: Supplied
GOLD Coast property developer Sunland has lost an appeal against a court decision that it was not misled over a failed multi-million-dollar Dubai property bid that led to two Australian businessmen being jailed there on corruption charges.

The Court of Appeal today upheld an earlier decision Sunland was not misled when it paid $14 million to a company so it could win control of a block of land on Dubai's waterfront.

"On 1 October 2007 Sunland entered into an agreement with Dubai Water Front, a government-owned land owner in Dubai, to buy land in Dubai for the equivalent of approximately AUD $63 million," the Court of Appeal said today.

"Sunland contended that it was induced by misleading and deceptive conduct on the part of Prudentia and its then managing director, Angus Reed ... and on the part of Matthew Joyce," the Court of Appeal said."

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Emerging Markets Walk The Tapertalk

Emerging Markets Walk The Tapertalk:

"Those bumbling politicians would be good value if they taxed us less. The Coalition's internet censorship policy was released 'in error'. The irony is so brilliant it hurts.

Better still, the guy responsible for it, Malcolm Turnbull 'read the policy for the first time when it was released'. Shadow Treasurer Joe Hockey had no idea the policy even existed on TV last night.

It's only the law they're dealing with folks. And remember, ignorance isn't a defence...unless you're a politician.

We're going to be introducing our own filter here at the Daily Reckoning, not that our publisher knows about it yet. Instead of porn, it will filter politics.

So while we can, let's mention the coalition's planned reduction of foreign aid. Right now, our government borrows money from emerging countries and then gives it back in foreign aid. Well, that was until recently, anyway. It looks like emerging markets are dumping their reserve assets, including Aussie dollars, before we can cut their foreign aid. They're doing it to try and defend the value of their currency. So why not make the rest of the situation a bit more sensible and stop sending borrowed money back to where it came?"

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Moldova Is Still Not Ready to Say Goodbye to Gazprom | Eastbook - blog on EU Eastern Partnership

Moldova Is Still Not Ready to Say Goodbye to Gazprom | Eastbook - blog on EU Eastern Partnership:

"During his July visit to Chisinau, Romanian President Traian Basescu announced that the construction of the over 50 km long gas pipeline is to begin on August 27. It will connect the Romanian city of Iasi with Ungheni in Moldova. The government in Chisinau hopes that this relatively small – with estimated costs of around € 26 million – project will allow to put an end to the Russian monopoly on gas supplies to Moldova as soon as at the end of 2013, robbing Moscow of the ability to affect the Moldovan policy with “a gas bogeyman”. Unfortunately, all the signs indicate that before gaining the real independence from Gazprom, Moldova will have to wait much longer and do much more.

The article is a reply to “Moldova: Bidding Farewell to Gazprom
authored by Paul Pryce

Gazprom Facility. author: greg westfall. source: Flickr

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Saudi Gazette - US gas via Panama frightens LNG exporters worldwide

Saudi Gazette - US gas via Panama frightens LNG exporters worldwide:

"The United States is set to grab the first and biggest chunk of unfilled extra Asian demand for shipped gas between now and 2025 with help from a widened Panama Canal and prices that rivals could struggle to match.

A surge in US natural gas production, thanks to the shale revolution, means proposed new liquefied natural gas (LNG) projects in Australia, East Africa, Canada and Russia can no longer count on exporting to the United States and will now have to focus more on sales to Asia.

Now, the distance to ship US LNG from the Gulf of Mexico to Asia is set to be fall to about 9,000 miles from 16,000 after expansion work makes the Panama Canal big enough for LNG tankers."

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EU panel backs UAE visa-free travel bid - The National

EU panel backs UAE visa-free travel bid - The National:

"A panel in the European Parliament has recommended that visa restrictions should be lifted for UAE nationals wanting to travel to Europe.

The recommendations came in a report submitted to the parliament's committee on civil liberties, justice and home affairs.

"There is no risk of illegal immigration," said the report author Mariya Gabriel to a meeting of the committee, the state news agency Wam reported."

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Syrian stock exchange prepared for the worst - The National

Syrian stock exchange prepared for the worst - The National:

People walk at the entrance of the Damascus Securities Exchange.
Khaled al-Hariri / Reuters
The head of Syria's stock market says the bourse has made adequate contingency plans to enable the continuity of its operations in the event of a US-led military strike.

"Since the unrest began two years ago, we have strengthened our business continuity operations and made sure that the exchange can be operated remotely," said Mamoun Hamdan, the chief executive at the Damascus Securities Exchange (DSE) in a telephone interview.

"I can assure you, that if there is an attack, we will remain open for business, and investors will continue to trade their shares. As long as the internet is working and the central bank is running, then we are OK.""

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Dubai stock index posts biggest swings in the world on Syria fears - The National

Dubai stock index posts biggest swings in the world on Syria fears - The National:

Dubai's stocks posted the biggest swings in the world in the past month as concern that the United States is moving closer to a military strike against Syria led investors to exit this year's best-performing index.

The DFM General Index's 30-day volatility, a measure of fluctuations in Dubai's equities gauge, rose to 32.9 at 12.28pm on Tuesday, the highest since March 2012 and the most among 72 indexes around the world. That is two points above the Philippines and three above Japan and marks the biggest spread in more than three years to the MSCI ACWI Index of emerging and developed-world stocks.

The benchmark index in Dubai has dropped 14 per cent since reaching a five-year high on August 25, as the US president Barack Obama called for military intervention in Syria over a chemical attack"

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Emaar in pole position for Formula One team Lotus - The National

Emaar in pole position for Formula One team Lotus - The National:

The company that built Burj Khalifa will join Microsoft, Unilever and Coca-Cola
as sponsors of the Lotus F1 team featuring Kimi Raikkonen. Patrik Stollarz / AFP
Emaar Properties has become the latest Arabian Gulf-based corporation to make a mark on the international sporting scene, after striking a sponsorship deal with the Formula One team Lotus.

The Dubai-based developer of Burj Khalifa and The Dubai Mall announced yesterday that it would be an official partner with the Lotus F1 team, in a two-year deal commencing with this week's Italian Grand Prix in Monza.

The partnership is one of Emaar's first forays into the international sporting arena. The company has previously sponsored Dubai World Cup horse racing, and the Dubai Desert Classic golf tournament. It also sponsored the one-off Indian Masters golf tournament in New Delhi in 2008."

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