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Tuesday, 25 February 2014

Ukraine Economy Hangs on Investments From Exxon to Shell - Bloomberg #EuroMaidan

Ukraine Economy Hangs on Investments From Exxon to Shell - Bloomberg:

"The world’s largest oil companies from Royal Dutch Shell Plc to Exxon Mobil Corp. are likely to reassess deals to drill in Ukraine where political crisis is threatening a promising source of new profits as well as the country’s drive for energy independence.

Shell and Chevron Corp. signed agreements last year to drill unexplored shale formations in Ukraine, offering the chance to upgrade the country’s energy infrastructure and boost domestic production, thus reducing the amount of gas imported from Russia. Before the crisis erupted last year, Exxon, the largest U.S. oil company, was also close to signing a pact to explore the Black Sea."

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MIDEAST STOCKS-UAE shares resume bull run; Qatar, Egypt slip | Reuters

MIDEAST STOCKS-UAE shares resume bull run; Qatar, Egypt slip | Reuters:

"* Union Properties leads Dubai up on foreign ownership change

* Qatar's Nakilat falls after Q4 earnings disappoint

* Qatar Islamic Bank tumbles as it goes ex-dividend

* But strong Mesaieed Petrochemical debut expected on Wednesday

* Moody's report hits Egyptian banks

By Nadia Saleem and Raya Atallah

DUBAI, Feb 25 (Reuters) - United Arab Emirates stock markets surged on Tuesday, resuming their bullish momentum after a sluggish start to the week, while weak earnings ahead of a new share listing weighed on Qatar. Other regional markets were mixed.

Dubai's index rose 1.8 percent, taking its 2014 gains to 24.5 percent - though it has remained in a range since hitting a five-year high on Feb. 17.

Shares in Union Properties led trading volumes and jumped 5.0 percent. The firm on Monday proposed increasing the limit on foreign investors' ownership of it to 25 percent.

Firms in the UAE and Qatar are preparing for an upgrade of their markets to emerging market status by index compiler MSCI, which will take place at the end of May. This is expected to draw about $500 million worth of passive foreign funds to each market, and more money in other types of funds."

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Frank Kane: Between a black rock and a hard place | The National

Frank Kane: Between a black rock and a hard place | The National:

"How should UAE and regional markets react to the news that BlackRock, the American investment institution reckoned to be the biggest asset manager in the world, has scaled back its buying of shares in Dubai and Abu Dhabi?

The company said it was reducing its exposure to UAE markets after detecting what it called signs of “speculative excess that warrants caution” in local markets. Other big global investors might feel the pressure to follow BlackRock’s example, some local market professionals fear.

The Dubai and Abu Dhabi markets experienced small declines on the day the BlackRock view was made known, but recovered the following day, suggesting that many think it a storm in a teacup."

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Top UAE lawyer’s little message with big implications | The National

Top UAE lawyer’s little message with big implications | The National:

"Journalists at a casual event last week – the launch of a book jointly published by Jumeirah hotels group and the legal firm Al Tamimi & Co about doing business in Dubai – got rather more than they bargained for.

After some fairly standard comments about the emirate’s economic recovery and the improving prospects in the run up to Expo 2020, Husam Hourani, Al Tamimi’s managing partner, dropped a small bombshell into the sedate proceedings: One Dubai firm, with a minority government shareholding, was planning to seek approval for an initial public offering on the Nasdaq Dubai stock market that would kick-start the Dubai financial markets and herald a string of flotations both in the UAE and overseas."

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Will Ukraine aid come quickly enough? | Brussels blog #EuroMaidan

Will Ukraine aid come quickly enough? | Brussels blog:


A slide from a January 2014 investor presentation
by the Ukrainian finance ministry
First of all, just how much financial trouble is Ukraine in?

Almost all major economic powers were out on Monday saying that any aid package would have to wait for a full International Monetary Fund programme. But such “stand-by agreements” can take months to negotiate – and IMF officials have made clear they want a new government firmly in place before those negotiations can begin, so that may mean we’re waiting until after May’s presidential elections.

So will Ukraine make it until then? Analysts are dubious, and the Ukrainian finance ministry’s declaration on Monday that they are seeking bilateral loans from the US and Poland in the next week or two certainly implies that they’re not sure they can make it that long either.

One key metric to watch is Ukraine’s foreign currency reserves, which for those not seeped in international finance is about as close to a national bank account for emerging market economies as you can get. If Ukraine runs out of reserves of dollars, it can’t pay any of its bills to foreign creditors – such as bondholders or gas providers – and essentially goes broke."

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Ukraine: time for Gazprom to enter the stage? | beyondbrics #EuroMaidan

Ukraine: time for Gazprom to enter the stage? | beyondbrics:

"As the dust settles after the ousting of Ukrainian president Viktor Yanukovich, few doubt that Moscow is ready to protect its interests in this cash-strapped country through economic levers. Gazprom, Russia’s natural gas monopoly, will be front and centre in this process.

 After he decided not, after all, to sign an association agreement with the European Union in November, Yanukovich agreed a $20bn support package with the Kremlin. As part of the deal, Gazprom cut its price to Ukraine by a third, to $268.50 per thousand cubic metres of gas.

 On Monday, Dmitry Medvedev, Russia’s prime minister, said legally binding agreements must be fulfilled. “The decision adopted in the gas sphere has concrete time periods for implementation. What will happen after these expire is a question for discussion with the leadership of Ukrainian companies and the Ukrainian government, if one emerges there,” he said."

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Russian Banks Can Easily Absorb Credit Losses in Ukraine | Business | The Moscow Times

Russian Banks Can Easily Absorb Credit Losses in Ukraine | Business | The Moscow Times:

"Russian banks could easily absorb any credit losses stemming from Ukraine's crisis from their earnings this year, a managing director at credit rating agency Moody's in Moscow said.

Ukraine this week appealed for $35 billion over two years to hold up its economy following the ouster of President Viktor Yanukovych. Its economy flatlined in 2013 and the hryvna currency has slid 8 percent in three months.

"The biggest risks [to Russian banks] is that their assets in Ukraine will become nonperforming," Yaroslav Sovgyra, associate managing director at Moody's who manages a team of analysts, said.

"[Ukrainian] currency devaluation may contribute to that but the credit risk is the biggest [risk]."

Moody's estimated in a December report that the exposure to Ukraine of four Russian banks — Gazprombank, Vnesheconombank, Sberbank and VTB — was around $20 billion to $30 billion."

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Cathay Pacific, Qatar Airways form strategic alliance | Plane Talking

Cathay Pacific, Qatar Airways form strategic alliance | Plane Talking:

"Oneworld alliance members Cathay Pacific and Qatar Airways have formed a strategic alliance on the route between their respective hubs Hong Kong and Doha starting 30 March.

While this is not immediately relevant to most Australian travellers, it is a reminder in terms of trade links of the importance of Hong Kong as a major capital raising market and the phenomenal growth of the Middle East economies.

The joint statement says Cathay Pacific will operate its service with an Airbus A330-300. The fleet choice of Qatar Airways has not been given, but the possibilities include A330s and Boeing 777s at this stage."

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Ukraine: a few charts to bear in mind | beyondbrics #EuroMaidan

Ukraine: a few charts to bear in mind | beyondbrics:

While the focus in Ukraine has turned to government formationRussia’s response, and chase-the-president, it’s worth keeping an eye on some of the economic charts.
Here’s a run down.
1) The exchange rate
Another big devaluation on Tuesday, with the hryvnia now down to 9.7 to the dollar, a fall of 6 per cent. The formerly tightly-managed currency is normalising quickly, though it could still have far to fall.
Analysts think the hryvnia could slide as low as 11 or even 12 to the dollar. As Chris Weafer of Macro Advisory said in a note, “a level closer to 12.0 against the US$ is more realistic given current circumstances”.
Source: Reuters

2) Foreign exchange reserves
Russia’s bail out cash looks like a small blip on this chart from the IIF, which estimates that foreign exchange reserves may fall as low as $12bn by end-February.
Source: IIF
From the IIF:
Foreign exchange reserves fell precipitously to as low as $16 billion, or just two months of imports at the end of January. Reserves fell despite the accumulation of another $0.6 billion in payment arrears to Gazprom for natural gas imports from Russia since the start of 2014. Recent partial data suggest that reserves may have fallen further to perhaps $12 billion by late February as deposit withdrawals have accelerated sharply and demand for foreign exchange by residents has surged. The deferral of the second $2 billion disbursement of the Russian $15 billion bailout initially planned for late January and a slew of rating downgrades that have put Ukraine’s sovereign credit rating at a near-default level have led to a further increase in risk premia, with CDS spreads well above 1,000 bps and sovereign spreads at 800-900 points.
3) Trade partners at risk
Handy chart from Nomura:
Source: Nomura
The black and grey dots show how much each country matters to Ukraine; the pink and red bars show how much Ukraine matters to each country. There’s no getting away from the significance of Russia, both ways.
4) Russia’s gas
These two charts from Commerzbank show the EU’s reliance on Russian gas, and how it gets there.
Source: Commerzbank
As analyst Simon Quijano-Evans notes:
a complete stop to Ukrainian transit gas from Russia could only be compensated by around half, mainly through an increase in flows through the Nord Stream pipeline that goes to northern Germany from Russia. That is, of course, assuming Russia continues to supply gas to the EU.
5) Bank exposure
Who’s been lending to Ukraine? In this chart from Commerzbank, Austrian and Italian banks stand out as clearly the most exposed.
Source: Commerzbank

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Protest by airlines may halve Dubai’s plea for 20,000 extra seats - The Economic Times

Protest by airlines may halve Dubai’s plea for 20,000 extra seats - The Economic Times:

"NEW DELHI: Concerns from Indian carriers on the quantum of increase in bilateral seat entitlements requested by Dubai, may result in the Emirati city getting only half of its initial request of enhancing weekly entitlements by 20,000 seats.

A top official of the civil aviation ministry told ET, that officials of various ministries met as part of an Inter Ministerial Group on Monday where a "couple" of airlines including Air India had raised concerns against Dubai's request of enhancing bilateral seat entitlements by 20,000 seats per week.

"The concerns of the Indian airlines will need to be addressed," said the official of the civil aviation ministry. "We will need to restart negotiations with Dubai and a meeting will be set up by the Joint Secretary Prabhat Kumar very soon. "

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Guest post: what can the EU do to help Ukraine? | beyondbrics #EuroMaidan

Guest post: what can the EU do to help Ukraine? | beyondbrics:

"Developments over the last few days in Ukraine make it clear that Ukrainians want to live in a modern European state that enjoys the same standards as their western neighbours. It is almost forgotten today that the people who took to the streets of Kiev in November 2013 did so to protest against their government’s decision to ditch an Association Agreement with the European Union. The protest was sustained for three months, most of the time in freezing cold weather and with the protesters being exposed to the brutal use of force by security services and government-paid groups of criminals. There is no other country in Europe where people put so much passion and are prepared to sacrifice their lives for the sake of the European idea."

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Money talks: February 24th 2014 - YouTube #EuroMaidan

Money talks: February 24th 2014 - YouTube: ""

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Tesco and mid-market brands capture hearts and minds in UAE | The National

Tesco and mid-market brands capture hearts and minds in UAE | The National:

"The UAE’s luxury malls may have captured the headlines in 2013, but it is the middle-market sector and affordable clothing outlets that have been growing fastest.

F&F, the budget clothing line of the British supermarket chain Tesco, will open its latest store in Al Hamra mall in Ras Al Khaimah today, with a further three stores, all in Abu Dhabi – World Trade Center Mall, Bawabat Al Sharq Mall and Dalma Mall – to open before June.

“We open in RAK tomorrow and we opened in Khalidya Mall on 11 February, top line sales are about 12 per cent ahead of plan right now,” said Troy Zunckel, the general manager at F&F."

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Real estate: Nakheel repays debt 18 months early |

Real estate: Nakheel repays debt 18 months early |

"Nakheel has instructed the repayment of Dh2.35 billion in bank debt 18 months ahead of schedule.

The company said that the early repayment is part of a Dh6.8 billion debt due in September 2015.

The repayment reflects the company’s strong financial performance since its restructuring, as well as the strength of the local real estate market and improving economic conditions in the UAE. It also highlights investors’ growing confidence in Nakheel.

Ali Rashid Lootah, chairman of Nakheel, said that the developer continues to successfully meet, and sometimes outperform, commitments in its post-restructuring business plan."

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Acting Ukraine President May Seek New Government Today - Bloomberg #EuroMaidan

Acting Ukraine President May Seek New Government Today - Bloomberg:

"Ukraine’s acting president, Oleksandr Turchynov, told parliament he expects lawmakers to vote today on a national unity government led by a prime minister people would trust.

Turchynov, an opposition politician who was elected parliament speaker Feb. 22, indicated yesterday that he expects to move quickly to fill the government vacuum so officials can seek the economic aid needed to fend off default, even as Russia questioned the legitimacy of the political transition.

“The new government’s task is to stop the country’s slide, to stabilize the currency rate, to ensure timely salary and pension payments, to win back investors’ trust and to create new jobs,” Turchynov said. “Another priority is to return to the European integration path.”"

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