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Monday, 30 June 2014

Mid-Year Emerging Markets Update | Mark Mobius

Mid-Year Emerging Markets Update | Mark Mobius:



"As I’ve often said, investing in emerging markets requires patience, long-term perspective, and selective stock-picking. I think many investors focus too much on the short-term. As long-term investors, we view short-term bouts of volatility as an opportune time to find potential bargains for our portfolios, and we certainly experienced that in the first half of the year. Sentiment in emerging markets seemed to be at a particularly low point at the very start of the year, coming off a weak 2013. As the US Federal Reserve (Fed) started tapering its quantitative easing program, fears seem to have surfaced that  liquidity would dry up, and concerns about potentially slower growth in China this year gave some investors pause. Headlines of conflict and violence in countries including Ukraine, Turkey, Thailand and Nigeria also affected overall investor sentiment in the first half of the year, along with doubts about the readiness of Russia to host the Winter Olympics and Brazil to host the FIFA World Cup. On the brighter side, India’s market saw a post-election resurgence of hope, China’s economy did not experience a hard landing and the upgrade of Qatar and United Arab Emirates to emerging markets status from frontier appeared to fuel investor interest. We believe emerging markets overall are now in what could be classified as a “recovery phase” after 2013’s underperformance, barring no further unexpected shocks.



We believe it’s important to look at the big picture as an investor in emerging markets. During the last 10 years, there have been only three years when emerging markets underperformed developed markets, 2013 being one of them.1 In the first half of 2014, emerging markets have generally outperformed developed markets,2 and I would say that we’re in a sweet spot in terms of emerging markets’ recovery. And, we think a number of frontier markets, the even lesser-developed subset of emerging markets, look particularly attractive right now."



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Another Dismal Day for the UAE ETF | ETF Trends

Another Dismal Day for the UAE ETF | ETF Trends:



"On news the militant group Islamic State in Iraq and Syria (ISIS) has declared itself an official Islamic state and amid increased speculation of a bursting property bubble, shares of the iShares MSCI UAE Capped ETF (NasdaqGM: UAE) are down 4.4% Monday on volume that is already close to the daily average.



UAE's glum Monday showing not only makes the newly minted ETF the day’s worst-performing non-leveraged fund, but extends a decline of nearly 26% since June 6, putting the $55.9 million ETF firmly in bear market territory. [Iraq Violence Plagues UAE ETF]



In Dubai, the benchmark DFM General Index tumbled 4.4%, sending stock there to the worst monthly performance since November 2008. “The index is now poised for its first loss in a quarter since June 2012, with none of the regularly traded stocks in the 30-member gauge trading above their 50-day moving average,” reports Laurence Dodds for The Telegraph.



iShares MSCI UAE Capped ETF
"



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Mideast funds become more cautious on equities -survey | Reuters

Mideast funds become more cautious on equities -survey | Reuters:



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Ukraine poised to sign gas supply agreement with Russia | CIS Tran Finance

Ukraine poised to sign gas supply agreement with Russia | CIS Tran Finance:



"Ukraine is poised to sign a gas agreement with Russia based on proposals made by the European Commission during negotiations in Kiev.



The commission proposed a repayment scheme in which Ukraine would pay Russian gas giant Gazprom $1 billion, settling the rest in six payments over the rest of the year, News.az reports.



The commission also recommended that the price be adjusted according to seasonal demand, meaning $300 per 1,000 cubic meters of gas during the summer and $385 during the winter."



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Daily chart: Bigger big banks | The Economist

Daily chart: Bigger big banks | The Economist:

The world's top banks are changing their strips
A DECADE ago, Europe counted five banks among the world's top ten. Today there is only one, HSBC. During that time Chinese banks not only made the list, but vaulted into the top two places, according to annual rankings by The Banker released on June 30th. Last year China Construction Bank shoved aside America's JPMorgan Chase to become second largest in terms of tier-one capital. ICBC (formerly known as Industrial and Commercial Bank of China) kept the top spot; with more than $200 billion, it is also the world's most profitable bank. Though Japan's Mitsubishi UFJ Financial Group is close to leaving the list altogether, until 2007 its $117 billion heft would have made it the world's biggest bank. Despite regulations designed to keep banks' ambitions modest so that none are too big to fail, today's groups are larger than ever. Global banking profits are at a record high of $920 billion—a third from Chinese banks alone.


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Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble - Bloomberg

Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble - Bloomberg:



"Dubai shares declined, posting the biggest monthly retreat in almost six years, as investors fled property stocks.



The DFM General Index (DFMGI) lost 4.4 percent to 3,942.82 at the close, bringing its monthly loss to 22 percent, the most since November 2008. It entered a bear market last week after the shares plunged 20 percent from their peak in May. Emaar Properties PJSC (EMAAR), the developer with the biggest weighting on the measure, decreased 3.7 percent. Arabtec Holding Co. (ARTC), the United Arab Emirates’ largest listed contractor, fell 10 percent, the most allowed in a day. 




The U.A.E.’s central bank on June 8 warned that the country’s real estate market may be overheating, spurring the stocks’ first quarterly retreat since the three months ended June 2012. A restructuring at Arabtec stoked concern the market’s property-led gains in the past two years were overdone."



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Dubai stocks drop another 4.4 per cent to lose 22 per cent in June « ArabianMoney

Dubai stocks drop another 4.4 per cent to lose 22 per cent in June « ArabianMoney:



"The Dubai Financial Market rout continued into Ramadan with another 4.4 per cent decline today in the general index, and closing the biggest monthly retreat in almost six years, down 22 per cent to 3,942.



Emaar Properties, the developer with the highest weighting in the index fell by 3.7 per cent. Arabtec, the largest listed contractor, fell 10 per cent, hitting the daily limit."



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EconoMonitor : EconoMonitor » Understanding Turkey: Volatile Politics, but No Crisis Ahead

EconoMonitor : EconoMonitor » Understanding Turkey: Volatile Politics, but No Crisis Ahead:

Key takeaway – Over the next five years, AKP is likely to stay in power, and Prime Minister (PM) Erdoğan is likely to rule the country either as President or PM. Frictions with the opposition will persist: the weakening of democratic institutions is likely to unsettle the civil society and create political headwinds in the Parliament, constraining and delaying policy-making. Yet, a major political crisis is unlikely.
A. AKP to keep ruling amid political frictions and weakening institutions.
Erdoğan and AKP to rule over the next five years … In the March 2014 local elections, AKP won 43.5 percent of the votes, a decline from the 49 percent of the 2011 general elections – but an improvement if compared to the 38 percent secured in 2009, in the previous local elections. Well organized and structured, AKP is able to unite right-leaning, conservative, and Islamic voters across the country (Figure 1) and crystallize the aspirations of the underprivileged. Led by PM Erdoğan and in power over the past 12 years, AKP has steadily reached out to the silent low-income majority, offered an identity and political inclusion to the religious rural, and – by successfully managing the economy – contributed to the making of an increasingly sizable middle-class. The two main opposition parties are unable to provide viable alternatives. The center left, Western-leaning social-democratic CHP has reduced its platform to an “anti-Erdoğan” agenda, while the nationalist, conservative MHP is unable to attract AKP voters. The latest polls suggest that little has changed since the March elections: support for AKP is at around 44 percent, with CHP at 28 percent, MHP at 15 percent and the Kurdish party at around 6 percent.
Figure 1 – Over the past 12 years, AKP has consolidated right-leaning, Islamic voters (Turkey – Past eight elections, distribution of votes (%))
Source: Election Board, Authors’ calculations, 2014.
Note: Center-right parties – DPDYPANAP, and GPLeft-leaning parties – CHPDSP, and İPNationalist parties – MHPBBP, and BTPIslamic parties – SPKurdish Parties – BDP (formerly DTP) and HDP, arguably a leftist party as well.


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GCC Countries Still Too Reliant On Oil and Gas Revenues, S&P Says - Middle East Real Time - WSJ

GCC Countries Still Too Reliant On Oil and Gas Revenues, S&P Says - Middle East Real Time - WSJ:



"High oil prices have always been a double-edged sword for the Persian Gulf countries.



The region’s vast hydrocarbon reserves allowed for the rapid development of these countries’ economies and still provide an indispensable source of income. But over the years, the overreliance on energy-related revenues means governments have largely failed in designing more dynamic economic systems that ensure the creation of sufficient jobs and promote non-oil activities that would still be viable in the long run when reserves dry up.



The solution, economists and policymakers have always maintained, lies in economic diversification away from oil."



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Russia and Saudi Arabia – the new Gulf partnership? | @Russia_Direct

#Russia and #Saudi Arabia – the new Gulf partnership? | Russia Direct:



"Recent weeks have seen an escalation of violence in the Middle East, with ISIS advancing into Iraq and effortlessly taking over large swathes of territory there. The growing instability in the region has highlighted the enormous shifts taking place within established political alliances.



At a time when the White House is considering sending military aid to Baghdad, Russian Foreign Minister Sergey Lavrov is visiting Saudi Arabia – a longtime U.S. ally in the region and key stakeholder in the Iraqi crisis.



Russia has been looking to play a bigger role in the Middle East, but Moscow’s inability to win over the Gulf – the key to influencing the Middle East – has continuously prevented it from replacing the United States as a reliable partner to the regional powers. Against this backdrop, Lavrov’s visit to Saudi Arabia has presented Moscow with an opportunity to prove to the Gulf countries that it is in fact the Kremlin, and not the White House, that nowadays holds sway over a troubled Syria and disobedient Iran."



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Global capital expenditure by companies still stalling

-- Global capital expenditure by companies still stalling - http://www.ft.com/cms/s/0/113201e4-0028-11e4-a3f2-00144feab7de.html posted via mobile

China -- A is for opportunity - YouTube

China -- A is for opportunity - YouTube: ""



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AAII: Pessimism is at 6 Month Lows | PRAGMATIC CAPITALISM

AAII: Pessimism is at 6 Month Lows | PRAGMATIC CAPITALISM:



"These sentiment surveys are notoriously difficult to utilize in any investment strategy, but there are times when they reach extremes when I think their data is more telling than at most other times.  In the case of the recent AAII readings, pessimism is at a 6 month low.  Here’s more from Charles Rotblut:



Pessimism among individual investors is now at a six-month low, according to the latest AAII Sentiment Survey. Neutral sentiment remains at an unusually high level, while optimism is slightly below its historical average.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.0 percentage points to 37.2%. The rebound is not big enough to keep optimism from being below its historical average of 39.0% for the 13th time in the past 15 weeks, however."


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Robin Mills: Opec’s spare oil capacity a cushion – for now | The National

Robin Mills: Opec’s spare oil capacity a cushion – for now | The National:



"The most recent Opec meeting, on June 11, was as casual as a post-World Cup brunch. Opec ministers breezed into Vienna, declared that markets were well supplied, affirmed their 30 million barrels per day (bpd) production ceiling, and were off again. Just two days earlier, Iraqi insurgent forces had swarmed into Mosul.



Would Opec have decided differently had it had more time to react to the dramatic events in Iraq? Probably not. The organisation’s 3.3 million bpd of official spare capacity is concentrated anyway in Saudi Arabia, with some in its allies the UAE and Kuwait – the task of meeting any supply crisis will fall to the Gulf triumvirate. They have already been filling the gap left by Libya, then Iran, for the past three years.



This leads to two competing narratives. One points to the need for record output from Saudi Arabia, to more robust demand than expected, from the US in particular, to disappointing supply from non-Opec countries outside North America, and to risks to Iraqi output. The International Energy Agency (IEA), mostly representing rich-country oil consumers, said that markets were “considerably tighter than they were a year ago”."



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Sawiris say no change to EFG Hermes offer | GulfNews.com

Sawiris say no change to EFG Hermes offer | GulfNews.com:



"Egypt’s Beltone Financial and billionaire Naguib Sawiris said on Sunday they would not change their offer to buy 20 per cent of EFG Hermes investment bank at 16 Egyptian pounds ($2.24) per share.



Beltone and Sawiris’s New Egypt Investment Fund are offering around $257 million for the EFG stake in a bid that could help revive dealmaking in Egyptian equities after three years of stagnation following the overthrow of Honsi Mubarak in 2011.



EFG Hermes, which appointed Cairo-based HC Securities and Investment this month to evaluate the fair value of its shares, said on Saturday an independent financial adviser had set its fair share price at £22.93, higher than the offer by Beltone and Sawiris’s New Egypt Investment Fund."



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A broader perspective to Nakheel’s turnaround | GulfNews.com

A broader perspective to Nakheel’s turnaround | GulfNews.com:



"Nakheel had been at the centre of Dubai’s building boom, but when things went wrong, it was squarely blamed for being the principal destroyer of that boom. The post-2008 phase saw the rise of a new star in Arabtec, which symbolised resurgence in the Dubai property market.



Now in what turns out to be the ultimate paradox, the former destroyer is helping salvage the situation for Dubai when the market’s new darling has sunk into an abyss, triggering one of the worst sell-offs in the stock market and raising alarms about an impending crisis.



The international media is raising the pitch on the sell-off, comparing it to the beginning of a property bubble similar to the 2008 crash. Analysts have interpreted the Arabtec debacle as a confirmation of the froth that has been forming in the market for a while. And some of the comments have echoed the anti-Dubai tinge that had characterised the post- 2008 crash analysis, particularly in the western media."



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Moscow-to-New York Rally Fueled by Ukraine Progress - Bloomberg

Moscow-to-New York Rally Fueled by Ukraine Progress - Bloomberg:



"Russian stocks in Moscow, London and New York are headed for the biggest quarterly gain since September amid signs the Ukraine crisis is winding down and as oil prices surged on rising tension in the Middle East.



The Bloomberg index of the most-traded Russian stocks in the U.S. is set for a 9.1 percent gain since March while the Market Vectors Russia (RSX) exchange-traded fund has surged 12 percent. The Russian Depositary Index of companies listed in London rose 12 percent for the three months and the Micex Index is up 7.9 percent.



Ukraine extended a cease-fire with pro-Russian rebels last week, adding to efforts aimed at quelling a conflict that sparked a selloff in Russian equities in March and April. The U.S. and European Union have refrained from imposing deeper sanctions against President Vladimir Putin even as they accuse his government of helping separatists in eastern Ukraine. Crude oil, Russia’s biggest export, has gained 3 percent this month as sectarian violence erupted in Iraq."



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Sunday, 29 June 2014

Iran seeks closer trade ties with UAE as nuclear talks lift mood - FT.com

Iran seeks closer trade ties with UAE as nuclear talks lift mood - FT.com:



"Jamshid, a leading Iranian importer of basic commodities, was outraged when authorities in the United Arab Emirates refused to renew his residence permit, ending his decade-long business in Dubai.



It was in 2012 and US banking sanctions over Iran’s nuclear programme had been tightened. International banks closed accounts of Iranian nationals to protect their own interests."



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Gulf’s free zones help spur economic diversification - FT.com

Gulf’s free zones help spur economic diversification - FT.com:



"The Middle East has propelled the development of free zones in recent decades. In a region where red tape and complicated regulations deter investors, free zones, offering respite from usual tax regimes and operating under their own laws, have transformed trade and investment, spawning new industries and diversifying economies.



Dubai, in the United Arab Emirates, is home to 22 free zones, more than anywhere else in the region, if not the world. The sector-specific enclaves have become hubs attracting 19,000 companies, from multinational banks to global media, creating some 200,000 jobs. Cementing its leadership in the sector, the UAE has established the World Free Zones Organisation to bring all free zones under one roof."



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MIDEAST STOCKS-Gulf markets slip as volumes drop with Ramadan | News by Country | Reuters

MIDEAST STOCKS-Gulf markets slip as volumes drop with Ramadan | News by Country | Reuters:



"Most bourses in the Gulf declined on Sunday as many retail investors withdrew from the markets with the beginning of Ramadan and trading volumes plunged. 




Dubai was the biggest loser, sliding 2.4 percent as daily trading volume shrank 59 percent.



"The market is very slow, with very low trading volumes, which is expected" during Ramadan, said Ali Adou, portfolio manager at The National Investor in Abu Dhabi."



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Dubai Shares Head for Worst Quarter Since 2012; Qatar Drops - Bloomberg

Dubai Shares Head for Worst Quarter Since 2012; Qatar Drops - Bloomberg:



"Dubai stocks extended declines, heading for their worst quarter in two years, as some investors judged shares too expensive. Qatar’s index also dropped.



The DFM General Index (DFMGI) fell 1.3 percent to 4,168.95 at 11:18 a.m. in the emirate, bringing the retreat since the end of March to 6.3 percent and on course for the first quarterly loss since the three months ending June 2012. Arabtec Holding Co. (ARTC), the United Arab Emirates’ biggest listed construction company, lost 3.6 percent. Deyaar Development PJSC slid 2.9 percent. Qatar’s QE Index slipped 1.4 percent to 11,648.42, the lowest level since March 31.



Dubai’s index has tumbled 18 percent this month. It entered a bear market on June 23 after dropping 20 percent from a high in May. The losses cut its estimated price-earnings ratio to 14, from a peak of 19 in May. That compares with a ratio of 11 for the MSCI Emerging Markets Index, according to data compiled by Bloomberg."



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Still Long on UAE Stocks? Be on Guard, Says Citi - Middle East Real Time - WSJ

Still Long on UAE Stocks? Be on Guard, Says Citi - Middle East Real Time - WSJ:



"Dubai flaunts the world’s tallest building, man-made islands, glitzy resorts and giant shopping malls as calling cards to the world. But it seems to grab more eyeballs with the shocks it sends out every once in a while to international investors.



Last week, its stock market did it again. After a nearly 18-month rally, the benchmark Dubai Financial Market Index tumbled almost 7% on Tuesday, and has now lost 17% this month since being upgraded, as part of the U.A.E., to emerging status by index compiler MSCI. Small change lost, some would argue, given the market is still up a whopping 160% since early 2013.



It, however, raises a difficult question. Bubble?



MSCI UAE Index from 2012 and Nasdaq from 1998, rebased to 100 at peak.
 
Citi
"



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Abu Dhabi's Waha Capital buys into Dubai's National Petroleum Services | Reuters

Abu Dhabi's Waha Capital buys into Dubai's National Petroleum Services | Reuters:



"Abu Dhabi investment firm Waha Capital said on Sunday it had bought a 20.56 percent stake in Dubai-based oilfield services firm National Petroleum Services for $76 million, as part of an increased emphasis on the region's energy sector.



In April, a consortium of Gulf-based investors including Fajr Capital and Arab Petroleum Investment Corp (APICORP) agreed on a deal to acquire NPS; Fajr said at the time that the deal was worth over $500 million.



Waha said in its bourse statement on Sunday that it was part of the consortium and that the deal, with a total equity value of $370 million, had now closed. It did not explain the difference between its valuation of the acquisition and the figure given earlier by Fajr."



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BBC News - Britain should stay in EU to protect economy, CBI says

BBC News - Britain should stay in EU to protect economy, CBI says:



"The success of the UK economy depends on staying in the EU, the head of the country's biggest business group says.



Confederation of British Industry (CBI) director general John Cridland told the Observer EU membership supported jobs, growth and the UK's "competitiveness". 




His comments come after Prime Minister David Cameron lost a vote on the next president of the European Commission."



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UAE hotels off the pace as FDI grows | The National

UAE hotels off the pace as FDI grows | The National:



"Foreign direct investment in the UAE is growing, but the hotels sector is lagging.



“FDI in the hospitality sector is slower than the real estate sector because there is still a lack of transparency on transactions,” said Joe Sita, the chief executive of IFA Hotel Investments. Kuwait’s IFA has projects such as the Fairmont Palm, Mövenpick Laguna in Jumeirah Lakes Towers and Kingdom of Sheba complex on the Palm.



“As long as we continue to face this issue, it will remain difficult for foreign and institutional investors to build a complete enough picture of the market to dive in, despite the fact that they know Dubai is certainly worth investing in.”"



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Five factors that can shore up debt markets in Dubai | The National

Five factors that can shore up debt markets in Dubai | The National:



"It is six years away, but already Expo 2020 is stimulating increased economic activity across Dubai. To anyone living and working in Dubai, the signs are apparent. Investment in infrastructure in advance of the Expo is already helping to accelerate Dubai’s resurgence as a regional trade hub and as a magnet for regional capital.



However, it is unlikely that Expo 2020 alone will drive the much-needed development of the local debt markets. Even though spending on new projects and initiatives to service the projected influx of visitors could require the issuance of high-yielding bonds, and even though limited funding from the debt markets is already under way, the Expo will not be the principal driver for the bond markets over the next couple of years.



Instead, five other factors will be central."



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EFG Hermes says Beltone-Sawiris bid 30% below fair share price | GulfNews.com

EFG Hermes says Beltone-Sawiris bid 30% below fair share price | GulfNews.com:



"EFG Hermes said on Saturday an independent financial adviser had set its fair share price at 22.93 Egyptian pounds ($3.21) whereas the price offered by Beltone and New Egypt Investment Fund for a stake in the bank was 30 per cent lower.



The bid for a stake in the Egyptian investment bank could help to revive deal making in Egyptian equities after more than three years of stagnation following the overthrow of Hosni Mubarak in 2011.



EFG Hermes appointed Cairo-based HC Securities & Investment this month to evaluate the fair value of its shares and help shareholders decide whether to accept an offer to acquire a 20 per cent stake in the bank at 16 pounds per share."



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Saturday, 28 June 2014

Times of Oman | News :: Economic fundamentals of Sultanate robust: Central Bank of Oman

Times of Oman | News :: Economic fundamentals of Sultanate robust: Central Bank of Oman:



"The Oman's gross domestic product (GDP) at current prices grew by 2.8 per cent during 2013, compared to 11.5 per cent in 2012, according to preliminary data regarding national accounts, the latest annual report of the Central Bank of Oman (CBO) revealed.



Nominal GDP contributed by the hydrocarbon sector registered a marginal decline of 1.0 per cent, primarily due to decline in crude oil prices, even though crude oil production increased during the year. The hydrocarbon sector accounted for around 50 per cent of the nominal GDP during 2013. The nominal GDP from non-hydrocarbon activities, key to the diversification process, witnessed a growth of 7.6 per cent during the year under review.



Within the non-hydrocarbon activities, the growth in GDP originating from the non-petroleum industrial activities slowed down from 5.5 per cent in 2012 to 2.8 per cent in 2013. Services sector with a share of around 37.3 per cent in nominal GDP during 2013 posted a growth of 10 per cent against 15.1 per cent in the previous year. The agriculture and fishing sector showed a growth of 8.6 per cent in 2013 as compared to 9.0 per cent in 2012, the CBO report stated."



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Moody's holds Russia's sovereign bond rating at Baa1, cuts outlook to 'negative' | Russia Beyond The Headlines

Moody's holds Russia's sovereign bond rating at Baa1, cuts outlook to 'negative' | Russia Beyond The Headlines:



"The review of Russia's government bond rating that Moody's Investors Service started two months ago amid the escalation of the Ukrainian crisis has ended up in a compromise solution: the rating outlook has been cut to 'negative' but the rating itself has been held at Baa1 level, although there were some signs back in March that it could be downgraded by one or even two levels.



Moody's reported on March 28 that Russia's Baa1 rating was put on review with the prospect of being downgraded because of the weakening economy and growing geopolitical risks. The agency said then that, if it decided to downgrade the rating, the most likely scenario would be its lowering by one level. It warned, however, that, if there were signs that the current events could cause serious turmoil, Russia's rating could be lowered by more than one level as well.



The agency said it could hold Russia's sovereign rating if the tension was alleviated or an anti-crisis decision was made capable of improving the prospects of the country's economic growth."



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Chief Investment Officer - Where in the World is the Kuwait Investment Authority?

Chief Investment Officer - Where in the World is the Kuwait Investment Authority?:



"“The Kuwait Investment Authority [KIA] has always been a black box. No one knows what goes in, what comes out, and what is going on inside. But it was here before everyone else; it is still here—and it is growing.”



I am on the 30th floor of one of the skyscrapers in Kuwait’s capital city which was constructed—painstakingly slowly—during the financial crisis. I am talking to a senior financier who deals with the small state’s largest national wealth fund. We are drinking sweet tea and overlooking the Arabian Gulf. He, like the others I have arranged to meet, has agreed to tell me what he knows about the KIA’s activity on the strict understanding that his identity will not be revealed.



“Many people work with the KIA: It is a huge investor in a very small country. But it is also a government agency and thus avoids any kind of publicity,” he says. “In Kuwait it takes years to build up a relationship, but it can be ruined in an instant—and no one wants that.”"



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GCC talking to UAE, Oman on monetary union: Kuwait - Emirates 24/7

GCC talking to UAE, Oman on monetary union: Kuwait - Emirates 24/7:



"Gulf oil produces who are members of the monetary union are talking to the UAE and Oman in a bid to persuade them to join the union, Kuwait’s finance minister said in press comments on Saturday.



Anas Al Saleh said the monetary union members — Kuwait, Saudi Arabia, Qatar and Bahrain — have been  involved in negotiations with the two countries to expand the union which was launched in 2010.



He told the Saudi Arabic language daily 'Al Eqtisadiah' that the four members are pushing ahead with the monetary union but said some “technical points” need to be cleared."



'via Blog this'

Barwa sells $2.5bn Commercial Avenue stake as bailout continues - Doha News

Barwa sells $2.5bn Commercial Avenue stake as bailout continues - Doha News:



"One of Qatar’s largest real estate firms continued to sell off its assets to the country’s sovereign wealth fund this week with the offloading of a massive retail development near the Industrial Area.



Barwa Real Estate Co. said in a regulatory filing that it had sold its 95-percent stake in Barwa Commercial Avenue for QR9.02 billion (US$2.45 billion) to Labregah Real Estate Co., a wholly owned subsidiary of the Qatari Diar Real Estate Investment Co. The other 5 percent is owned by the Qatar government.



The move was part of an existing debt payment plan that required Barwa to sell QR20 billion ($5.49 billion) worth of assets to the Diar. It has helped expand the government’s already extensive influence on the local real estate market in the process."



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Betting on big data - YouTube

Betting on big data - YouTube: ""



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Dark pools ... in 60 seconds - YouTube

Dark pools ... in 60 seconds - YouTube: ""



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ICD hopes to cap year with mandate for $1b Pakistan sukuk | GulfNews.com

ICD hopes to cap year with mandate for $1b Pakistan sukuk | GulfNews.com:



"The private sector arm of the Islamic Development Bank announced a flurry of initiatives this week and hopes to advise on the mandate for Pakistan’s $1 billion (Dh3.67 billion) Islamic bond, which would cap a landmark year for the Jeddah-based institution.



The Islamic Corporation for the Development of the Private Sector (ICD) and Karachi-based Burj Bank have applied to be advisers on the sovereign deal, meeting with Pakistan’s finance ministry earlier this week.



A ministry statement also said that it would review the applications starting next week.
"



'via Blog this'

Russian Stocks Advance as Gazprom Gains Before Payout; TMK Falls - Bloomberg

Russian Stocks Advance as Gazprom Gains Before Payout; TMK Falls - Bloomberg:



"The Micex Index (INDEXCF) rose for the first time in three days as investors bought energy company stocks OAO Gazprom and OAO Surgutneftegas to qualify for dividends.



The equity gauge gained 0.3 percent to 1,477.32 by the close in Moscow, giving a 0.6 percent drop in the week. Gazprom added 1.3 percent, while Surgutneftegas increased 0.4 percent. OAO TMK slumped 4.8 percent, the biggest loss since March 13, on concern approval by the Russian pipemaker’s board to sell new stock may dilute the stakes of existing shareholders.



The dividend cutoff dates for Gazprom and Surgutneftegas, which have a combined 19 percent weighting in the index, come on July 16 and July 15, respectively. The Micex slid 3 percent in the two previous days as the U.S. and European Union raised pressure on Russia to help end violence in eastern Ukraine."



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Emerging Markets Show Biggest Premium Since ’12 With ETFs - Bloomberg

Emerging Markets Show Biggest Premium Since ’12 With ETFs - Bloomberg:



"Nobody likes missing a bull market, even if it’s happening half a world away. 




With stocks rising from Sao Paulo (IBOV) to Moscow to Istanbul, asset managers have piled almost $11 billion into developing-nation exchange-traded funds listed in the U.S. this quarter, the most since 2012, according to data compiled by Bloomberg. That’s sent the premium of the biggest -- Vanguard Group Inc.’s FTSE Emerging Markets ETF -- to an average 0.2 percentage-point over its underlying assets, the widest gap in two years.



Investors are returning to developing-nation ETFs after pulling $31 billion from them in the year through March on concern that the end of easy-money policies from central banks and flare-ups of violence from Thailand to Ukraine would destabilize markets. Stocks in emerging economies are outperforming developed for the first time in six quarters, climbing 5.2 percent, while all but three of 296 emerging-market sovereign dollar bonds tracked by Bloomberg gained in the first half, the broadest rally in at least three years, the data show.

"



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Putin Defends South Stream Pipeline « Caspian Research Institute

Putin Defends South Stream Pipeline « Caspian Research Institute:



"Russian President Vladimir Putin is pushing back against Western opposition to his country’s planned South Stream pipeline that would allow Moscow to ship natural gas to European countries without going through Ukraine.



The Russian president spent six hours earlier this week in Vienna where he signed an agreement for the pipeline’s construction in that country.



Putin defended Austrian and Bulgarian cooperation on the pipeline project against political attacks from the West."



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Friday, 27 June 2014

Turkmenistan Seeks Gas Markets | Eurasia Review

Turkmenistan Seeks Gas Markets | Eurasia Review:



"Turkmenistan, sitting on top of one of the globe’s biggest reserves of natural gas, is looking for new markets and delivery routes.



The British consultancy Gaffney, Cline and Associates, put the reserves of the Galkynysh field in Mary Oblast alone at between 13.1 trillion and 21.2 trillion cu. m. Furthermore, estimates of gas reserves are going up.



“Geological exploration has shown that [Galkynysh] has more gas than previously announced,” Oil and Gas and Mineral Resources Minister Mukhammetnur Khalylov said."



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Guest post: Ukraine sets course for Europe – beyondbrics - Blogs - FT.com

Guest post: Ukraine sets course for Europe – beyondbrics - Blogs - FT.com:



"Ukraine, along with Georgia and Moldova, has signed far-reaching free trade and association agreements with the European Union. This is a landmark agreement for Ukraine and will be transformational.



Petro Poroshenko, Ukraine’s president, has indicated that his country aims for EU membership but this is a long-term goal, likely 10 to 15 years away at least. Ukraine is realistic and understands the changing politics in the EU, which goes against further enlargement as nationalism builds in EU member states. But as with Turkey, the EU accession process is more important than the end result. The process will transform Ukraine by providing a key anchor for reform. It will enable Ukraine to adapt to European core values including the rule of law, democracy and a market economy. This is what the Maydan demonstrations were all about.



Many people (surprisingly even in the west) argue that the EU was wrong in making Kiev decide between east and west and is therefore responsible for the subsequent violent developments in Ukraine. They also argue that Ukraine would benefit by being placed between east and west, as a conduit for trade between the two. I could not disagree more. This is simply naive."



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ITAR-TASS: Russia - Russia seeks to develop energy, investment cooperation with Qatar — Putin

ITAR-TASS: Russia - Russia seeks to develop energy, investment cooperation with Qatar — Putin:



"Russia seeks to develop energy and investment cooperation with Qatar, Russia’s President Vladimir Putin has said.  “We hope for restoring comprehensive cooperation with Qatar as soon as possible. Energy and investments are our priorities,” Putin said at a ceremony of receiving credentials from foreign ambassadors on Friday.



“We also stand for security in the Persian Gulf and other trouble spots in the Middle East,” he said.



Relations between Russia and Qatar complicated in 2011, when Russian Ambassador Vladimir Titorenko was assaulted by Qatar airport security and customs officers. Following the incident Russia lowered the level of diplomatic relations with Qatar."



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Qatar Will Make You Rich - iShares MSCI Qatar Capped ETF (NASDAQ:QAT) | Seeking Alpha

Qatar Will Make You Rich - iShares MSCI Qatar Capped ETF (NASDAQ:QAT) | Seeking Alpha:



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The Dubai Market Dropped 25 Percent. It's Still Overvalued - Businessweek

The Dubai Market Dropped 25 Percent. It's Still Overvalued - Businessweek:



"Dubai’s stock market is in the midst of an epic crash. After falling 6.7 percent on Tuesday, the biggest drop since August, Dubai’s largest stock index, the DFM General Index, is down 25 percent from its peak in May.



A sell-off that steep usually presages a nice buying opportunity, but it looks as if Dubai stocks might have further to fall. Relative to other emerging market stock indices, Dubai’s remains overvalued.



Bloomberg | Dubai stocks remain pricey 
                     

As Bloomberg’s Chart of the Day shows, based on a ratio of price to current annual earnings, Dubai’s DFM General Index is 37 percent more expensive than the MSCI Emerging Market Index. Unless you think that Dubai’s fundamentals are stronger than they currently appear, any buying opportunity might be a few weeks away."



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Builder’s shaky foundations dent UAE’s credibility | Considered View | Breakingviews

Builder’s shaky foundations dent UAE’s credibility | Considered View | Breakingviews:



"The shaky foundations of the most prominent builder in the United Arab Emirates have dented the country’s credibility. Shares in Dubai-based Arabtec, which helped erect the world’s tallest tower in the emirate, have more than halved since May 15, wiping almost $4.9 billion off its market value. The debacle is a warning to investors attracted by the UAE’s new emerging market status.

"



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Russian economy avoids recession | Russia Beyond The Headlines

Russian economy avoids recession | Russia Beyond The Headlines:



"Russian GDP grew by 1.1 percent in the first five months of this year, according to estimates  by the Economic Development Ministry. Economic Development Minister Alexei Ulyukayev says this trend will continue until the end of the year. “In order to have 0.5 percent growth for the year, there should be zero growth the rest of the time, and there is no reason for that,” he said.



In April, the Economic Development Ministry lowered its baseline economic growth forecast for 2014 from 2.5 percent to 0.5 percent, which implies a technical recession (a situation in which the economy contracts for two quarters in a row based on seasonally adjusted data).



The New Economic School and Renaissance Capital’s Macro Monitor shows that GDP may have risen by 0.9 percent year-on-year in the second quarter, as in the first quarter. Adjusted for seasonality, GDP may have gone from shrinking in the first quarter to growing 1.3 percent in the second. For 2014 as a whole, the monitors anticipate 1.6 percent economic growth, which is the highest known forecast."



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Rosneft Signs Oil Deal With BP | News | The Moscow Times

Rosneft Signs Oil Deal With BP | News | The Moscow Times:



"Rosneft signed its second major agreement with BP on Friday since sanctions were imposed on the Russian oil company's chief executive, a close ally of President Vladimir Putin, over the Ukraine crisis.



The five-term agreement, signed in Khabarovsk in Russia's Far East in the presence of BP's chief executive, Bob Dudley, will supply the British company with up to 12 million tons of oil products which can be replaced by oil, Rosneft said.



It said the deal assumed a prepayment of at least $1.5 billion which had been arranged by leading global financial institutions. Rosneft did not disclose the name of the banks but said supplies could start in July."



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Qatar shares head for worst month since 2009 | Business , Regional | THE DAILY STAR

Qatar shares head for worst month since 2009 | Business , Regional | THE DAILY STAR:



"Qatar’s shares fell, heading for the worst month in more than five years amid lingering concerns it might lose the right to host the 2022 football World Cup.



The benchmark QE Index tumbled 2.4 percent to 11,816.50, the lowest since March 31. The shares have lost 14 percent so far in June, poised for the biggest monthly drop since February 2009. Shariah-compliant lender Masraf Al Rayan led the decline with a 4.8 percent retreat. A FIFA panel looking into the awarding of the tournament to Qatar will issue a report in July into the possibility of corruption.



“Investors are still fretting about the World Cup” and foreign institutions continue to take money out of the market, said Bobby Sarkar, head of research at Qatar National Bank Financial Services."



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Etihad ready to embark on final stages of Alitalia stake purchase | The National

Etihad ready to embark on final stages of Alitalia stake purchase | The National:



"Etihad Airways has outlined the final steps required for it to seal the acquisition of a 49 per cent stake in Alitalia.



The steps will require a matter of months, the airline said.



In an emailed statement yesterday, Etihad said the remaining steps are: completing the transaction documents; finalising of the conditions precedent; applying for regulatory approval; and final shareholder and board approvals."



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Arabtec resumes decline on Dubai Financial Market | The National

Arabtec resumes decline on Dubai Financial Market | The National:



"Arabtec’s decline resumed yesterday as the company’s shares dropped a further 5.4 per cent to close at Dh 3.10, wiping out signs from Wednesday that a recovery in the builder’s stock might be under way.



The Dubai Financial Market, on which Arabtec trades, was mostly flat over the course of the day, closing down 0.7 per cent at 4,222.75.



Emirates NBD had a strong day on the exchange, gaining 7.3 per cent – followed by Commercial Bank of Dubai, which gained 4.4 per cent, and Dubai Islamic Insurance and Reinsurance, which gained 1.9 per cent."



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NBAD facilitates UK’s debut Sovereign Sukuk | GulfNews.com

NBAD facilitates UK’s debut Sovereign Sukuk | GulfNews.com:



"The National Bank of Abu Dhabi, NBAD, has successfully executed the UK government’s debut Sukuk issue in its capacity as Joint Lead Manager and Joint Book runner.



This ground breaking investment vehicle is the first-ever Sovereign Sukuk by a non-Islamic country and the first ever offered to the public in Pounds Sterling. The deal is for £200 million and has a maturity of five years. The offering was 11.5 times oversubscribed and was very well received by the investor community, and in particular by major institutional and Islamic accounts.



“This mandate confirms NBAD’s position as a leading Debt Capital Markets and Sukuk House and is testament to our capability to deliver innovative term financing solutions for our customers,” said Alex Thursby, the Group Chief Executive Officer of NBAD."



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Former Soviet Nations to Seal European Ties - Bloomberg

Former Soviet Nations to Seal European Ties - Bloomberg:



"Ukraine will be joined by fellow ex-Soviet republics Georgia and Moldova in tying their future to the European Union, risking a widening rift with Russia that threatens to hit their economies.



The three countries will today sign free-trade agreements with the 28-nation bloc and Georgia and Moldova will also sign association agreements. Ukraine inked that accord in March after the Kremlin’s opposition helped derail a previous attempt last November, sparking protests that turned deadly and lead to the ouster of President Viktor Yanukovych three months later.



Former Soviet countries are deciding on political and economic alliances as the crisis in Ukraine reverberates in the region. While Belarus and Kazakhstan last month joined Russia to form the Eurasian Union, the three countries signing deals in Brussels are anchoring themselves with the EU. They may face economic measures from their former Soviet partner, which has protested being left out of the negotiations."



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Emerging Markets Show Biggest Premium Since ’12 With ETFs - Bloomberg

Emerging Markets Show Biggest Premium Since ’12 With ETFs - Bloomberg:



"Nobody likes missing a bull market, even if it’s happening half a world away. 




With stocks rising from Sao Paulo (IBOV) to Moscow to Istanbul, asset managers have piled almost $11 billion into developing-nation exchange-traded funds listed in the U.S. this quarter, the most since 2012, according to data compiled by Bloomberg. That’s sent the premium of the biggest -- Vanguard Group Inc.’s FTSE Emerging Markets ETF (EMB) -- to an average 0.2 percentage-point over its underlying assets, the widest gap in two years.



Investors are returning to developing-nation ETFs after pulling $31 billion from them in the year through March on concern that the end of easy-money policies from central banks and flare-ups of violence from Thailand to Ukraine would destabilize markets. Stocks in emerging economies are outperforming developed for the first time in six quarters, climbing 5.2 percent, while all but three of 296 emerging-market sovereign dollar bonds tracked by Bloomberg gained in the first half, the broadest rally in at least three years, the data show.

"



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Rusal Seeks Court Approval of Debt Plan After Lender Backing - Bloomberg

Rusal Seeks Court Approval of Debt Plan After Lender Backing - Bloomberg:



"United Co. Rusal will apply for court backing for a restructuring of two loans, for $4.75 billion and $400 million, after winning support for its plans from the majority of creditors.



Rusal, the world’s biggest aluminum producer, will seek approval from courts in England and Jersey to pursue the plan, supported by 94 percent of its lenders, the Moscow-based company said. The so-called scheme of arrangement can be used when at least 75 percent of creditors by value approve of restructuring, Rusal said. 




To allow extra time for negotiations with the 6 percent of holdout creditors, or until the courts make a ruling, a majority of the lenders said they will defer demands for repayment until the end of October, Rusal said. The original debt waiver accord was due to expire on July 7."



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Oil Heads for Weekly Drop as Iraq Unrest Spares Southern Output - Bloomberg

Oil Heads for Weekly Drop as Iraq Unrest Spares Southern Output - Bloomberg:



"Brent and West Texas Intermediate crudes headed for the first weekly declines since violence erupted in northern Iraq, as the crisis has so far spared oil output from OPEC’s second-largest producer.



Futures were little changed in London and poised for a 1.4 percent weekly loss. Iraqi forces held the Baiji oil refinery in the north of the country after repelling the latest attack by Islamist militants. Fighting hasn’t spread to Iraq’s south, home to more than three-quarters of its production. U.S. crude stockpiles rose last week, while analysts in a Bloomberg News survey had forecast a fall.



“We haven’t seen any real escalation, and there is still oil coming out of the south of the country,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “Oil will probably continue to drift lower.”"



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Thursday, 26 June 2014

MICEX reacts to the political events in #Ukraine | @RussiaBeyond The Headlines

MICEX reacts to the political events in Ukraine | Russia Beyond The Headlines:



MICEX reacts to the political events in Ukraine

Natalia Mikhaylenko, special to RBTH
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Barclays conduct questioned again - YouTube

Barclays conduct questioned again - YouTube: ""



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BoE to the rescue? - YouTube

BoE to the rescue? - YouTube: ""



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Gazprombank Follows Sberbank With 1 Billion Euro Bond Sale - Bloomberg

Gazprombank Follows Sberbank With 1 Billion Euro Bond Sale - Bloomberg:



"OAO Gazprombank is selling euro-denominated bonds today, becoming the second Russian issuer to tap markets for a benchmark-sized Eurobond since President Vladimir Putin’s annexation of Crimea.



The Moscow-based lender plans to issue 1 billion euros ($1.4 billion) in five-year securities at a yield of 4 percent, according to a person familiar with the deal, who asked not to be identified because they are not authorized to speak about it. That’s down from an initial guidance of about 4.375 percent, the person said.



“This is still attractive for a five-year euro paper,” Sergey Dergachev, a senior portfolio manager who helps oversee about $10 billion in emerging-market debt at Union Investment Privatfonds GmbH in Frankfurt, said by e-mail. Dergachev said he participated in the offering."



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Ukraine Says Won't Budge in Gas Talks With Russia - WSJ

Ukraine Says Won't Budge in Gas Talks With Russia - WSJ:



"Ukraine said on Wednesday that it would be willing to resume talks with Russia to end a dispute over natural gas soon, but that no definitive solution was likely in the current climate.



During a visit to Brussels, Ukraine's energy minister, Yuri Prodan, also signaled that Kiev wouldn't settle its gas debts until both sides had agreed on a new price.



Asked about the likelihood of reaching a permanent deal to break the deadlock, he said: "In today's reality, we have to say it would be a preliminary agreement.""



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MIDEAST STOCKS-Dubai rally short-lived as Arabtec falls back | Agricultural Commodities | Reuters

MIDEAST STOCKS-Dubai rally short-lived as Arabtec falls back | Agricultural Commodities | Reuters:



"Shares in Dubai construction firm Arabtec fell again on Thursday after a bounce in the last session, taking the steam out of a rally on the emirate's bourse. Other Gulf markets were mixed in thin trade ahead of Ramadan.



Arabtec dropped 5.5 percent, erasing the previous day's gains while trading volume in the stock halved. Dubai's benchmark slipped 0.7 percent, after rising as much as 1.0 percent early in the session.



After swinging wildly this month in response to Arabtec's gyrations, the Dubai index is down 22 percent from its multi-year peak in mid-May, though still up 25 percent year-to-date. With the Ramadan lull about to begin and few fresh, positive catalysts on the horizon, the market will stay vulnerable to profit-taking, fund managers believe."



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LUKoil to Invest $30 Billion in Iraq | News | The Moscow Times

LUKoil to Invest $30 Billion in Iraq | News | The Moscow Times:



"Russia's No.2 crude oil producer LUKoil expects oil production to peak at Iraq's giant West Qurna-2 oilfield in 2019 at 1.25 million barrels per day, a company official said in a presentation Thursday.



Ravil Maganov, who oversees LUKoil's exploration and production, also said total investment in the field, located in the south of Iraq, was expected to exceed $30 billion.



LUKoil started production at the field in March."



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Gazprom to Lose $3 Billion if EU Sells Gas Back to Ukraine | News | The Moscow Times

Gazprom to Lose $3 Billion if EU Sells Gas Back to Ukraine | News | The Moscow Times:



"Gazprom would lose nearly $3 billion in 2016 if the EU accepts a Ukrainian proposal to begin large-scale reverse gas flows through Slovakia to Ukraine, a UralSib report said Thursday.



In late April, Ukraine and Slovakia signed a reverse flow agreement that would make use of an old, unused pipeline to begin exporting 2 billion cubic meters, or bcm, to Kiev in October. Exports to Ukraine along this pipeline would rise to 8 bcm by early 2015.



According to a Kommersant report, Ukrainian energy officials recently forwarded a plan before the EU Commission that would allow Ukraine to increase reverse flows via Slovakia to 30 bcm."



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What would an oil price shock mean for EM? – beyondbrics - Blogs - FT.com

What would an oil price shock mean for EM? – beyondbrics - Blogs - FT.com:



"Although the violence in Iraq has so far had a muted impact on global oil markets, if prices continue to rise there could be some nasty consequences in store for the more fragile of emerging market economies (see chart below).



And while a spike would hurt countries that rely on energy imports, it won’t necessarily translate into quick and easy economic gains for EM hydrocarbon exporters, say analysts.



The price of a barrel of Brent crude has risen from $109 to $114 since large swaths of Iraq began falling to extremist militias of the Islamic State of Iraq and the Levant (Isis) two weeks ago."



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UPDATE 1-Gazprom in talks to buy Abu Dhabi's OMV stake - source | Reuters

UPDATE 1-Gazprom in talks to buy Abu Dhabi's OMV stake - source | Reuters:



"Russia's Gazprom is in talks to buy Abu Dhabi's 24.9 percent stake in Austrian oil and gas firm OMV, a source familiar with the talks told Reuters on Thursday. 




"Talks were held but they have yet to decide on pricing," the source said, confirming comments from an Austrian member of parliament, who told Kurier newspaper and Reuters he had "concrete indications" that Abu Dhabi fund IPIC and Gazprom had held discussions on the issue.



Austrian state holding company OIAG, which holds 32 percent of OMV in a shareholder pact with International Petroleum Investment Co (IPIC) and coordinates any shareholding changes, said it had seen no sign that IPIC wanted to exit.

"



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Sanofi-led group buys Globalpharma stake from Dubai Investments - Yahoo!7

Sanofi-led group buys Globalpharma stake from Dubai Investments - Yahoo!7:



"French drugmaker Sanofi is leading an investor group buying a 66 percent stake in the Globalpharma unit of Dubai Investments , the Gulf-based diversified investment group said on Thursday.



Under the agreement, Globalpharma will be managed as a Sanofi company and will become the platform to manufacture and promote its generic drugs portfolio in the Middle East.



No purchase price was given in the bourse filing in Dubai, but Dubai Investments - which will retain the remaining 34 percent of the firm - said the deal had generated an internal rate of return of 26 percent over a ten-year period.

"



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Special report: Poland's successes - YouTube

Special report: Poland's successes - YouTube: ""



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Manchester council Sir Howard Bernstein ADUG £1bn 6,000 houses deal - Manchester Evening News

Manchester council Sir Howard Bernstein ADUG £1bn 6,000 houses deal - Manchester Evening News:



"The boss of Manchester council has hailed a ‘momentous week’ that has seen it secure a £1bn deal with the owner of Manchester City that will see 6,000 new homes built.



The M.E.N told how the 10-year agreement had been struck with the Abu Dhabi United Group, which will lead to the formation of a joint-venture called Manchester Life.



It aims to build homes on council-owned land between the Eithad Stadium and the fringes of Manchester city centre, starting with a first wave of 830 properties in Ancoats and New Islington."



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Unrest, Muted SWFs Slow Middle East M&A Activity - Middle East Real Time - WSJ

Unrest, Muted SWFs Slow Middle East M&A Activity - Middle East Real Time - WSJ:

Most investment bankers in Dubai’s financial center will tell you their pipeline – the transactions they are working on – is robust and that the Middle East’s post-crisis deal climate is improving. However, data for the first six months of 2014 suggest the regional dealmaker’s optimism is still premature.
The value of Middle Eastern mergers and acquisitions sunk to its lowest level in almost a decade, Dealogic data show. Transactions involving a Mideast buyer or seller fell to $23.6 billion in the first six months of this year to date, down 13% compared to the same period in 2013. Europe, by contrast, saw deal activity rebound in the same period.

Dealogic
As always, the usual caveats apply: in a region were volumes are relatively thin a few big deals have the ability to change the picture while some transactions may have been carried out privately and are therefore not included. Still, deal activity appears tepid and there are a handful of reasons behind the Middle East’s weak M&A performance.
Some advisors will point to the region’s fragile political climate which is deterring investors from making investment decisions and pushing ahead with plans to acquire or divest a business.
“Without a doubt, the fact that most of the region is at war does not help,” said Ziad Awad, a former Merrill Lynch managing director and chief executive of Awad Advisory, an independent Dubai-based M&A firm. The pickup in violence in Iraq, the Syria conflict and the change of government in Egypt all contributed to the negative sentiment even if the economies of the oil-exporters in the Persian Gulf remain unscathed.
But there are other factors in play. Sovereign wealth funds, notably the Qatar Investment Authority, have also been relatively quiet in the past year.
“Another factor is reduced outbound SWF acquisitions, which is itself linked back to their increased focus on investing at home,” Mr. Awad said.
The dearth of M&A transactions has been plaguing investment banks in the Middle East since the global crisis hit the region in 2009. Banks that came to financial centers such as Dubai and Doha were forced to trim down their staff with many seasoned bankers returning to London or moving on to Asia while others set up their own boutiques to advise on smaller transactions.
Most international banks still retain a limited M&A presence in the region but more complex and large cross-border transactions are inevitably overseen by their colleagues in London or other large financial hubs.
“Offering M&A services in the region helps raise a bank’s profile but is not necessarily a profitable line of business,” said Ashok Aram, chief executive for Deutsche Bank Middle East and North Africa. “Capital markets and risk management services are more crucial for your regional P&L,” he said.
Two of the largest transactions so far this year involved Qatar’s previous prime minister and former head of its acquisitive sovereign wealth fund, Sheikh Hamad bin Jassim, who invested in Deutsche Bank, while another investment vehicle of his acquired Heritage Oil.
Deutsche Bank ranked number one on the Dealogic league table for Mideast M&A in terms of deal value followed by J.P.Morgan and Goldman Sachs.
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