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Monday, 26 September 2016

UAE’s market cap is simply not enough | The National

UAE’s market cap is simply not enough | The National:

"I am in New York, the primary financial centre in the world, visiting asset managers. The smallest of these managers has a total of about US$500 billion under management. According to the World Bank, the total market capitalisation of domestic listed companies in the UAE was about $195bn at the end last year. The UAE has two primary stock markets, a federal level market regulator in the SCA and at least two offshore financial centres in the DIFC and ADGM, each of which is regulated independently of the other and the SCA.


Maybe looking at total numbers doesn’t make sense as different countries have different GDPs. Fortunately for us the World Bank provides market size as a percentage of GDP. For the UAE, the total market cap of domestic listed companies is 53 per cent of GDP as of the end of last year; for the US it was 140 per cent. For Singapore, a country often held up as a model for the UAE to learn from if not emulate, market cap is 219 per cent of GDP.


For Saudi Arabia, which many assume lags the UAE in fin­ancial innovation, the number is 65 per cent. What saddens me is that the world average is 99 per cent and in terms of the size of our markets relative to GDP we are roughly half the global average."



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Saudi Arabia bond sale set to test investor appetite | The National

Saudi Arabia bond sale set to test investor appetite | The National:

"Saudi Arabia’s upcoming international sovereign bond sale will be a litmus test of global investment appetite for the Arab world’s largest economy as it embarks on a plan to wean itself off oil dependency.

The kingdom, the world’s largest crude exporter, is said to have mandated Citigroup, JP Morgan and HSBC to manage what is expected by market participants to be a US$10 billion to $15bn bond sale. The timing of the issue is as yet unconfirmed but it could be early next month according to media reports.


That would make it the biggest ever such sale in the region. Pricing is difficult to anticipate as it will be the first ever international sale for the kingdom and there are a number of push and pull factors that may swing the coupon higher or lower, bond investors say."



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Saudi Aramco evaluating foreign exchanges for 2018 | GulfNews.com

Saudi Aramco evaluating foreign exchanges for 2018 | GulfNews.com:

"Saudi Aramco is looking at a number of foreign exchanges, including London, New York and Hong Kong, for a partial listing of the oil giant in 2018, chief executive Amin Nasser said on Monday.
The state-oil firm plans to list as much as 5 per cent on Saudi Arabia’s stock exchange, the Tadawul, and at least one foreign exchange as part of efforts to wean the country’s economy away from hydrocarbon sales.
“This thing will happen in 2018,” Nasser told reporters at a conference in Dubai. He said “other exchanges” were also under consideration without disclosing where."



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How Close Are Iran and Saudi Arabia to an Oil Deal? - Bloomberg

How Close Are Iran and Saudi Arabia to an Oil Deal? - Bloomberg:

"Scott Bauer of Trading Advantage and Bloomberg's Alix Steel examine oil price expectations if Iran refuses to freeze production. They speak in today’s “Futures in Focus” on "Bloomberg ‹GO›." (Source: Bloomberg)"



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Dubai could create its own demographic dividend

Dubai could create its own demographic dividend:

"The solution to Dubai’s economic challenges might be right under its nose. The tiny emirate, the most diversified sheikhdom in the Gulf, has been affected like most of the region by low prices for the oil exported mainly by its neighbours. One way to offset that impact might be to address an imbalanced workforce that is too reliant on expatriates. They make up 22 out of every 23 active workers, according to calculations based on official data. Dubai could even do worse than turn some of its skilled foreign workers into actual citizens.

About half of Dubai’s $143 billion pile of debt has to be repaid by the end of the decade, according to the International Monetary Fund. That is almost double the United Arab Emirates’ forecast revenue from exporting oil this year. One of seven semi-autonomous sheikhdoms in the U.A.E., Dubai has endured the 53 percent fall in oil prices over the past two years relatively unscathed, but some belt tightening is inevitable. The Financial Times reported on Sept. 12 that Istithmar World – a government investment company – has made most of its staff redundant to save money."



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Iran downplays chances of oil deal, UAE keen on freeze | Reuters

Iran downplays chances of oil deal, UAE keen on freeze | Reuters:

"Iran downplayed on Monday the chances of OPEC and non-OPEC oil producers clinching an output-restraint deal in Algeria this week even though several other members of the group said they still hoped for steps to tackle a price-eroding glut of crude.

Oil prices have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels."



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Saudi Arabia slashes ministers' pay, cuts public sector bonuses | Reuters

Saudi Arabia slashes ministers' pay, cuts public sector bonuses | Reuters:

"Saudi Arabia will cut ministers' salaries by 20 percent and scale back financial perks for public sector employees in one of the most drastic measures yet by the energy-rich kingdom to save money at a time of low oil prices.

The measures, disclosed in a cabinet statement and royal decree broadcast on state-run Ekhbariya TV on Monday, constitute the first pay cuts for government employees, who make up about two-thirds of working Saudis.

"The cabinet has decided to stop and cancel some bonuses and financial benefits," read a line of text on Ekhbariya, as a minister read to assembled ministers and royals, including King Salman, a list of cuts in various grades in the civil service."



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MIDEAST STOCKS-Saudi banks rally on central bank monetary action | Reuters

MIDEAST STOCKS-Saudi banks rally on central bank monetary action | Reuters:

"Saudi banking shares rallied on Monday after the central bank said it would deposit about 20 billion riyals ($5.3 billion) at commercial lenders and introduce two new money market instruments to fight a surge in market interest rates caused by low oil prices.

Riyadh's main index climbed 0.7 percent as three-quarters of the banking shares rose. Blue-chip lenders Samba Financial Group and National Commercial Bank gained 1.7 percent and 2.7 percent respectively.

Banking shares have been underperforming the general index for several months, hit by an illiquid construction sector, which makes up a large portion of corporate loans. Samba, for example, is trading at a 26 percent discount to its average fair value as estimated by 13 analysts, according to Reuters data."



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How will Twitter’s suitors reap its value? — FT.com

How will Twitter’s suitors reap its value? — FT.com:

"Twitter may finally be running out of time.

News at the end of last week that Google and cloud software company Salesforce have both held preliminary discussions about a possible acquisition have underlined waning Wall Street confidence in the social media group’s attempts to reinvigorate growth and maintain its independence.

Fifteen months after the return of co-founder and product visionary Jack Dorsey, Twitter has failed to come up with the new ideas needed to reach a wider group of users. It also admitted after its last quarterly earnings that it was not doing enough for advertisers to justify its current pricing."



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Oil market has low expectations for Opec production deal - FT.com

Oil market has low expectations for Opec production deal - FT.com:

"Saudi Arabia has set out its terms to join the first co-ordinated Opec production cut since the financial crisis. The only problem for an oversupplied oil market is few think it will be achieved.
As the world’s largest oil producers descend on Algeria this week for crunch talks on ending a two-year old supply glut, Opec’s biggest members remain far apart.
Several Opec delegates have sought to manage expectations saying the meeting would be informal and would only lay the groundwork for the next official Opec meeting in November, or perhaps a follow-up gathering next month."



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Qatar withdraws from race for Grosvenor House and New York Plaza - FT.com

Qatar withdraws from race for Grosvenor House and New York Plaza - FT.com:

"The Qatar Investment Authority has abandoned talks to buy London’s Grosvenor House Hotel and two hotels in New York, increasing the likelihood that the trophy properties will be acquired by the UK’s richest men, the Reuben brothers.
The QIA’s withdrawal, confirmed by three people briefed on the situation, prolongs the troubles of India’s Sahara Group, which owns the Grosvenor House and majority stakes in New York’s Plaza and Dream Downtown hotels."



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Sharjah fashions itself as a magnet for start-ups | The National

Sharjah fashions itself as a magnet for start-ups | The National:

"From Amman to Cairo, several cities have been tipped as the Silicon Valley of the Arab world. But there is a new contender for the crown as the region’s star start-up centre: Sharjah.

Many of the UAE’s most dynamic entrepreneurial ventures have sprung up in Dubai, making it a magnet for the regional offices of established global players like Facebook, Twitter and LinkedIn.

But two new initiatives designed to boost Sharjah’s start-up status could result in the Middle East’s elusive Silicon Valley edging northwards."



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Pain persists without an Opec agreement | The National

Pain persists without an Opec agreement | The National:

"As Opec and Russia are preparing to meet in Algiers to discuss the prospect for an output agreement, oil producers have been watching their fiscal revenues slump. Failure to agree would only prolong the macroeconomic crisis faced by some and the fiscal predicament of others. Supply and demand-side factors suggest that the oil price is likely to stay low for longer than initially thought. But at this point, it’s easier to address supply-side dynamics.


The collapse of the oil price has exposed the mismanagement and dysfunctions sustained during the boom years. On a large scale, the size and probable persistence of this external shock means that all oil exporters will have to further adjust by reducing spending and increasing revenue.

Venezuela’s economy is in perpetual crisis. Economic mismanagement and the low oil price have led to shortages of foods like corn and rice, which it once easily imported using the national oil company’s vast foreign currency revenues. Essential medicines such as antibiotics have disappeared. The economy is set to contract by 10 per cent by the end of the year and is already experiencing triple-digit inflation. The price of bread alone has doubled from month to month, now about 50 cents a loaf in many places, at a time when the oil workers here say they are making less than a dollar a day because of the inflation. The state oil company is hobbled by debt, two thirds of its exports go to paying off its lenders. The desperate condition of Venezuela’s state oil company has international oil traders concerned that its collapse could shock an otherwise oversupplied global market."



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Oil Holds Near $45 as Saudi Offer Opens Door to Future OPEC Deal - Bloomberg

Oil Holds Near $45 as Saudi Offer Opens Door to Future OPEC Deal - Bloomberg:

"Oil held near $45 a barrel as Saudi Arabia’s offer to cut output opened the door to a future OPEC deal, even though the kingdom doesn’t expect an agreement this week when members of the group meet.

Futures added 0.1 percent in New York after slumping 4 percent on Friday. While Saudi Arabia and Iran didn’t reach an agreement after two days of preparatory talks in Vienna, the Saudis did offer to pump less crude if Iran caps output, according to two people familiar with the negotiations. Saudi Arabia proposed to cut its production to January levels, Algerian Energy Minister Noureddine Boutarfa said Sunday."



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MIDEAST STOCKS-Saudi banks rally on central bank monetary action | Reuters

MIDEAST STOCKS-Saudi banks rally on central bank monetary action | Reuters:

"Saudi banking shares rallied on Monday after the central bank said it would deposit about 20 billion riyals at commercial lenders and introduce two new money market instruments to fight a surge in market interest rates caused by low oil prices.

Riyadh's main index was up 0.6 percent after 15 minutes of trade as four-fifth of the banking shares rose. Samba Financial Group was the top gainer in the industry, up 2.3 percent to 18.20 riyals ($4.85).

Banking shares have been underperforming the general index in several months, hit by an illiquid construction sector, which makes up a large portion of corporate loans. Samba, for example, is trading at a 26 percent discount to its average fair value as estimated by 13 analysts, according to Reuters data."



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