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Wednesday, 28 June 2017

Qatar riyal trading falls dramatically amid GCC dispute, say traders | The National

Qatar riyal trading falls dramatically amid GCC dispute, say traders | The National:

"Trading in Qatar’s riyal in the UAE has dropped significantly since the GCC dispute erupted earlier this month, according to foreign exchange dealers. While most of the big exchange houses in the UAE continue to have the capacity to deal in the Qatari riyal some of the smaller companies have stopped as the volumes traded do not make it worth their while, a source said. "The flow has gone down substantially," said an executive at a UAE foreign exchange house who did not want to be named. "We expect trade in the Qatari riyal to remain subdued.""



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The mysterious (and continuing) fall in Saudi foreign reserves | GulfNews.com

The mysterious (and continuing) fall in Saudi foreign reserves | GulfNews.com:

"Net foreign assets at Saudi Arabia’s central bank, a measure of its ability to support its currency, look set to fall sharply this year as oil prices slump and Riyadh expands its sovereign wealth fund to invest abroad. They shrank from a record high of $737 billion (Dh2.71 trillion) in August 2014 to $529 billion at the end of 2016 as the government liquidated some assets to cover the huge budget deficit caused by the fall in oil prices. This year, an austerity drive and a partial rebound in oil prices have helped Riyadh make progress in cutting the deficit — which narrowed 71 per cent from a year ago to 26 billion riyals ($6.9 billion) in the first quarter."



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MIDEAST STOCKS-Dubai underperforms, Egypt's TMGH jumps on appointment of CEO | Reuters

MIDEAST STOCKS-Dubai underperforms, Egypt's TMGH jumps on appointment of CEO | Reuters:

"Stocks prone to speculative trade dragged Dubai's equity index down on Wednesday while Egypt's blue chip developer Talaat Mostafa outperformed on news its former chairman has been pardoned and named chief executive. Dubai's index fell 0.7 percent in the lowest daily volume in one year. Shares of builder Arabtec dropped 8.5 percent; on Wednesday the company said it has raised 1.5 billion dirhams in equity as part of its recapitalisation programme and "extinguished the company’s accumulated losses of AED 4.6 billion as at December 31 2016"."



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Arabtec share prices plunge 9% after capital reduction | GulfNews.com

Arabtec share prices plunge 9% after capital reduction | GulfNews.com:

"Arabtec share prices dropped as much as 9 per cent on Wednesday in the first few hours of trade as the company announced it has completed its recapitalisation programme, which involved a rights issue and capital reduction. Arabtec’s shares were among the most actively traded on the Dubai Financial Market (DFM) on the first day of trade this week after the three-day Eid Al Fitr holiday. The sell-off on Wednesday comes just after Arabtec slashed its capital by Dh4.6 billion to extinguish accumulated losses, thereby also cutting 4.6 billion shares off the bourse. "



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Why Investors Shy Away From Saudi Arabia - Bloomberg

Why Investors Shy Away From Saudi Arabia - Bloomberg:

"As oil prices have slumped into the low $40s per barrel, a new economic model that would offset the losses for the Organization of Petroleum Exporting Countries is more urgent than ever, yet multiple Middle Eastern conflicts are making that tougher to achieve. It's clear that oil, gas, refining and petrochemicals alone cannot provide the jobs and diversification that the Middle East needs. 

Put simply, a continual stream of bad news and threatened disruptions to business deters new investors, especially those from far away who lack the know-how to pick their way through local complexities. The scale of the challenge is stark, even for Saudi Arabia. "



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Saudi CDS hits 5-1/2-month high as spat with Qatar rumbles on | Reuters

Saudi CDS hits 5-1/2-month high as spat with Qatar rumbles on | Reuters:

"The cost of insuring exposure to Saudi Arabian debt rose on Wednesday to the highest level since January as the diplomatic crisis in the Gulf rumbled on. Qatari debt insurance costs also rose while its 2026 sovereign dollar bond slipped to a five-and-a-half month low. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a boycott on Qatar three weeks ago, accusing it of backing militants, then issued an ultimatum, including demands it shut down a Turkish military base in Doha, shutting the Al Jazeera TV channel and curbing ties with Iran."



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OPEC Not In A Hurry To Cut Deeper | OilPrice.com

OPEC Not In A Hurry To Cut Deeper | OilPrice.com:

"OPEC may be mulling over deeper oil production cuts, but they won’t be rushing to make that decision, even though a panel monitoring the cuts will be meeting next month, Reuters reported on Tuesday, citing OPEC delegates and sources familiar with the cartel’s thinking.

Russia is hosting a meeting of five oil ministers from countries supervising the production cut, plus Saudi Arabia in its capacity of OPEC president, on July 24. Although the officials could discuss options to prop up prices and draw down inventories, which may include levying production cuts on currently exempt Libya and Nigeria, OPEC sources do not believe that an outright deeper production cut will be considered soon.

“I doubt it will be considered soon,” one OPEC delegate told Reuters—a comment that leaves room for OPEC to exceed rather than just meet expectations, which was a problem the last go around when OPEC failed to meet the market expectations of cutting deeper."



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MIDEAST STOCKS-GFH helps lift Dubai slightly higher in otherwise quiet region | Reuters

MIDEAST STOCKS-GFH helps lift Dubai slightly higher in otherwise quiet region | Reuters:

"Shares often traded by short-term speculative investors helped take Dubai's stock index slightly higher in early trade on Wednesday in an otherwise quiet region, with some major Gulf markets still on Eid al-Fitr holidays. The Dubai index was up 0.3 percent as GFH Financial , the most heavily traded stock, climbed 4.6 percent on news that it had agreed to exit part of its real estate portfolio, which it said had an "approximate value" of $55 million. The book value of the asset is $20 million. Builder Drake & Scull was up 1.1 percent but insurer Islamic Arab Insurance dropped 4.1 percent."



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Saudi Aramco called on to improve data disclosure ahead of IPO

Saudi Aramco called on to improve data disclosure ahead of IPO:

"A leading governance body has called on Saudi Aramco to disclose closely-held data ahead of its planned 2018 initial public offering, after its new research ranked the kingdom among the world’s most opaque oil-producing nations. The Natural Resource Governance Institute, a non-profit policy group, analysed 74 state-owned enterprises operating in extractive industries as part of a broader assessment into how countries manage their oil, gas and minerals sectors. The world’s biggest copper miner, Codelco of Chile, was ranked the best with a score of 90 out of 100. But Saudi Arabia’s state energy giant, the world’s largest oil producer which pumps roughly one in every nine barrels of crude globally, came in 64th place out of 74 with just 27 points."



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Tuesday, 27 June 2017

Saudi Arabia And Oil Prices: Careful Steering Needed - Bloomberg

Saudi Arabia And Oil Prices: Careful Steering Needed - Bloomberg:

"Until the Panama Canal was expanded last year, tankers traversing its old 109-foot-wide locks might have only a couple of feet to spare on either side.



Their ticklish task of squeezing through the gap without mishap offers a useful metaphor for Saudi Arabia's big problem in trying to manage oil prices -- except, in Saudi Arabia's case, it's more like steering a tanker through the canal wearing a blindfold, and with a mutinous crew.



The canal, in this case, is a range of oil prices; specifically, the range above which U.S. shale frackers let loose and below which they go into hibernation."



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Qatar riyal firms against dollar in forward market | Reuters

Qatar riyal firms against dollar in forward market | Reuters:

"The Qatari riyal strengthened against the dollar on Tuesday in the forward market, following two days of sharp falls caused by the continued standoff between Doha and neighbouring Arab powers. One-month riyal forwards showed the currency marked as firm as 3.751 per dollar, according to Reuters data, after hitting a low of 3.793 on Monday. Three-month forwards also saw the riyal firming up to 3.755 compared to the previous day's low of 3.796. Qatari assets had come under pressure since Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a boycott on Qatar three weeks ago. The four Arab powers accuse Doha of backing militants and issued an ultimatum over the weekend, including demands that Qatar shut down a Turkish military base. "



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Oil's in a Bear Market, and Stocks Will Soon Follow - Bloomberg

Oil's in a Bear Market, and Stocks Will Soon Follow - Bloomberg:

"Saudi Arabia's King Salman recently named his son, Mohammed bin Salman, as his successor. The 31-year-old crown prince plans to modernize the kingdom with his "Vision 2030" economic overhaul aimed at weaning Saudi Arabia off oil via increased private sector activity and foreign investment. His icon-breaking plan is obviously a reaction to the collapse in crude oil prices. It’s badly needed. Almost 80 percent of government revenue comes from oil money. Saudis enjoy a comfortable lifestyle, supported by oil revenues. Two-thirds work for government-related entities, with many in no-show jobs. The youth population is mushrooming, with 45 percent of the total under the age of 25, and the unemployment rate for those between 15 and 24 is 31 percent. GDP has been declining since 2014. Weak crude oil prices also threaten the crown prince’s plan to raise $2 trillion through Saudi Aramco’s IPO. The Saudis assume $60 per barrel for Brent crude in their Aramco calculations versus about $45 today. And the proxy wars with arch-rival Iran in Yemen and Syria are very expensive and never-ending, so with weak oil prices, the kingdom has been forced to borrow heavily from overseas. "



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Monday, 26 June 2017

Oil exporters face fall in foreign exchange reserves

Oil exporters face fall in foreign exchange reserves:

"The foreign exchange reserves of big oil exporting nations have fallen to their lowest level for a decade as weak energy prices force many countries to raid their stockpiles. The decline in reserves highlights the waning clout of some of the world’s leading petro states and how little time they have to diversify their economies before their cash cushions disappear. At the end of 2016, 13 big energy exporters had combined reserves of $967bn, according to data from the International Monetary Fund, well below the peak of $1.26tn at the end of 2013 and the lowest figure since 2006."



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A family coup in Saudi Arabia

A family coup in Saudi Arabia:

"A week ago I heard a faint rumour of an intense quarrel within the Saudi royal family, which was presumed to be focused on an attempt to force King Salman to rein in his son, the 31-year-old deputy crown prince, Mohammed bin Salman, and to return the country to something closer to normality after three years of chaotic ambition and growing instability. I started to draft a piece discussing how such a coup could reshape the oil market and what action Saudi, under new leadership could take to halt the continuing fall in oil prices. Now it seems the rumour was correct but the presumption was mistaken. The winner of the coup was not as expected the crown prince Mohammed bin Nayaf but MbS himself, who has deposed the crown prince and taken full authority over everything including the key role of internal security. Prince Nayef, one of the most experienced and respected of the Saudi leaders, has been shown in a humiliating picture kneeling in supplication. There is something Shakespearean about what is happening. Who better to chronicle the unravelling story of the House of Saud? An ailing king breaks the delicate balance of the ruling family to promote his son — a young man whose vanity can be exploited by every breed of consultant and banker — over the trusted heir apparent. All this against the background of falling revenues from the kingdom’s one source of wealth, hostility from neighbours and sometime friends, in the context of a region split by the revival of religious conflicts. We are somewhere between King Lear and Richard II."



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Qatar Airways’ courtship of American is one for the long haul

Qatar Airways’ courtship of American is one for the long haul:

"Doug Parker may have been left puzzled, concerned and “not happy” after Qatar Airways revealed its plan to buy up to a 10 per cent stake in American Airlines last week. But the US carrier’s chief executive should have also added flattered to his list of emotions. Akbar Al Baker, the outspoken chief executive of the Gulf’s fastest-growing supercarrier, has repeatedly stressed that his strategy is to invest in profitable airlines — “goldsmiths”, as he calls them, rather than “scrap dealers”. The dig at rival Middle Eastern airline Etihad Airways is clear. The Abu Dhabi carrier’s strategy of taking minority stakes in troubled airlines to drive growth has come at a cost. Alitalia, the Italian carrier, is in administration. Air Berlin is on life support. Etihad is in the midst of reassessing its strategy."



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Qatar CDS hit 1-year high after ultimatum issued | Reuters

Qatar CDS hit 1-year high after ultimatum issued | Reuters:

"The cost of insuring exposure to Qatari sovereign debt rose to a one-year high on Monday after neighbouring Arab states, which have imposed sanctions on Qatar, issued an ultimatum, giving Doha 10 days to comply. Five-year credit default swaps (CDS) for Qatar rose 4 basis points (bps) from Friday's close to 115 bps, according to IHS Markit data, the highest level since last June. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain are amongst those who have severed ties with Doha, accusing it of supporting terrorism. "



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Islamic banks in the GCC face a tough year ahead | GulfNews.com

Islamic banks in the GCC face a tough year ahead | GulfNews.com:

"Islamic banks in the GCC are expected to face a tough year ahead as the slowdown in asset growth is likely to persist this year, according to global rating agency Standard & Poor’s. Islamic banks’ asset growth declined to 5.3 per cent in 2016 from 10.7 per cent in 2014. “In our base-case scenario, we assume that asset growth will stabilise at about 5 per cent as governments’ spending cuts and revenue-boosting initiatives, such as new taxes, reduce Islamic banks’ growth opportunities in the corporate and retail sectors. We see banks becoming more cautious and selective in their lending activities, triggering stiffer competition,” said Dr Mohammad Damak, Head of Islamic Finance, S&P Global Ratings. The impact of the slowdown will vary across markets. Although the economic slowdown will likely remain pronounced in Saudi Arabia, Islamic banks’ growth accelerated there in 2016, thanks to their strategy of increasing business among corporates and small and midsize enterprises (SMEs)."



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Oil joke Mexico set for last laugh after exploration bids | The National

Oil joke Mexico set for last laugh after exploration bids | The National:

"An Italian, a Colombian and a Russian walked into Mexico last week – part of the transformation of a country that had long been something of an oil industry joke. Mexico’s latest bid round for shallow-water oil exploration was highly successful – promising more production, and demonstrating the virtues of openness to international investment. The Italian national champion, Eni, won a block in 2015’s "Round One", and has already enjoyed success, finding light oil in March in the shallow waters of the Bay of Campeche, in the south-east. This was the first private discovery in the country for 75 years."



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Sunday, 25 June 2017

Dubai Courts; DIFC Courts; arbitration; | The National

Dubai Courts; DIFC Courts; arbitration; | The National:

"The ability of creditors to enforce foreign arbitration awards against Dubai-based debtors has suffered a potential blow, following a decision by the Judicial Tribunal for the Dubai Courts and DIFC Courts that has given precedence to UAE-based courts.

The tribunal has blocked the DIFC’s courts from recognising and enforcing a London-based arbitration decision, giving precedence to an action being conducted in parallel in a dispute resolution centre of the Dubai Courts.


Following the country’s signature of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention) in 2006, UAE courts are obliged to automatically recognise and enforce international arbitration awards without re-examining the merits of the individual awards."



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Iran's Rouhani backs Qatar, rejects 'siege' | Reuters

Iran's Rouhani backs Qatar, rejects 'siege' | Reuters:

"Iranian President Hassan Rouhani voiced support on Sunday for Qatar in its confrontation with Iran's rival Saudi Arabia and its allies, saying a "siege of Qatar is unacceptable", the state news agency IRNA reported. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut ties with Qatar on June 5, accusing it of support for Islamist militants, an allegation Qatar denies. They have since issued 13 demands including closing Al Jazeera television, curbing relations with Iran, shutting a Turkish base and paying reparations. "



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Sukuk activity faces uncertain future after recovery in first half of 2017 | GulfNews.com

Sukuk activity faces uncertain future after recovery in first half of 2017 | GulfNews.com:

"Against the backdrop of a slowdown in the global Islamic financial services industry, sukuk activity in the GCC region is facing an uncertain future, according to rating agency Standard & Poor’s. Sukuk activity witnessed a strong recovery in the first half of 2017 compared with the same period in 2016, thanks primarily to the jumbo issuances of GCC governments, but analysts are less certain about 2018. “We believe this performance this year stemmed mainly from the good liquidity conditions in the GCC and more generally in the global financial market. Although we expect issuance numbers will stay solid for the rest of 2017, we consider it unlikely that some of the large transactions seen in the first half of the year will be repeated in 2018,” said S&P Global Ratings’ Head of Islamic Finance Dr Mohammad Damak."



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Qatar's emir meets Exxon Mobil Corp CEO: agency | Reuters

Qatar's emir meets Exxon Mobil Corp CEO: agency | Reuters:

"The emir of Qatar met with Exxon Mobil Corp (XOM.N) chairman and CEO Darren Woods in Doha on Saturday for talks on "cooperation," state news agency QNA reported, following a rift between four Gulf states and Qatar that has raised worries about energy supplies. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt on Monday cut ties with Qatar, accusing the country of supporting extremism. Qatar denies the allegations. QNA said the Emir, Sheikh Tamim bin Hamad al-Thani, met with Woods and ExxonMobil Qatar General Manager Alistair Routledge at the Al-Bahar Palace."



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OPEC Looks Totally Bewildered by the Oil Market - Bloomberg Gadfly

OPEC Looks Totally Bewildered by the Oil Market - Bloomberg Gadfly:

"It may be too soon to write OPEC's obituary, but the oil producer club appears in urgent need of late-life care. It shows little understanding of where it is, how it got there or where it's going. While it still manages to collect new members here and there, its core group looks more fragile than at any point in nearly 30 years.The historic output agreements, put together so painstakingly last year, are failing. Nearly 12 months of shuttle diplomacy culminated in two deals that would see 22 countries cut production by nearly 1.8 million barrels a day. Implementation has been better than for any previous output cut, with compliance put at 106 percent in May. A resounding success? Hardly.We're now in the final month of those deals and oil prices are lower than when they were agreed. Not only have producers sacrificed volume, but they earn less for each barrel they do produce."



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Mohammed bin Salman al-Saud: The young hothead who would be king | World news | The Guardian

Mohammed bin Salman al-Saud: The young hothead who would be king | World news | The Guardian:

"The sudden elevation of Mohammed bin Salman to the position of crown prince and heir apparent to his father, King Salman of Saudi Arabia, is a welcome surprise for many Saudis. It is also a matter of deep concern for some of the kingdom’s neighbours, notably Iran, which is locked in a region-wide power struggle with its Arab arch-rival that increasingly risks sucking in the US and Russia. For younger Saudis frustrated by the kingdom’s hidebound traditionalism and inflexible religious laws, Prince Mohammed is seen as a reform-minded new broom who could sweep the country to a brighter, more open future. For critics at home and abroad, he is a dangerous and inexperienced firebrand who could undermine stability and lead Saudi Arabia to unintentional disaster. The most unusual aspect of Prince Mohammed’s rise is his age. At 31, he is more than 25 years younger than his discarded predecessor as crown prince, Prince Mohammed bin Nayef. In a country of 31 million where 70% of people are under the age of 30 and which is accustomed to the rule of old men, the new royal heir represents a significant generational power shift."



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Saturday, 24 June 2017

Qatar says list of demands not realistic - BBC News

Qatar says list of demands not realistic - BBC News:

"Qatar's foreign minister has rejected a list of 13 conditions set by four Arab states for lifting sanctions, saying it is neither reasonable nor actionable. Qatar is under strict sanctions from Saudi Arabia and its allies, Egypt, the UAE and Bahrain. They accuse Qatar of backing terrorism. Among other things, they have demanded the closure of Al Jazeera TV, which is funded by the Qatari government."



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Friday, 23 June 2017

Barclays reels from its costly Qatar cash call

Barclays reels from its costly Qatar cash call:

"John Varley was in his office on the 31st floor of Barclays’ headquarters in London’s Canary Wharf when he called a team of his executives heading for Qatar on the bank’s private jet with some alarming news. The Barclays chief executive had just been told by the UK financial regulator what capital ratio the bank needed to reach in the next few months to escape a government bailout: 8 per cent. The team quickly worked out how much cash it needed to raise to reach that target. The answer was £13bn. It was the second weekend of October 2008, only four weeks after Lehman Brothers filed for bankruptcy in the US, shaking the global financial system. The Barclays team was headed to Qatar on a mission to persuade the gas-rich state for the second time that year to invest billions of pounds to rescue the bank."



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Hedge funds turn from Opec friend to adversary in oil market

Hedge funds turn from Opec friend to adversary in oil market:

"Opec set out to woo some of the biggest oil hedge funds in the industry at the turn of the year, holding private meetings where it laid out plans to cut crude supplies in an attempt to get prices back towards $60 a barrel. It was a dramatic change of tack from an oil cartel that had for years slammed funds as “speculators”, which it accused of turning the world’s most important commodity into a casino. But it was also a recognition that trades placed in Mayfair or Connecticut sometimes wield almost as much influence as the number of supertankers ploughing the sea lanes. Six months on the relationship lies in tatters, with traders rapidly losing faith in Opec’s efforts to end a three-year old oil glut. Brent crude, rather than rallying, has had its worst first half to a year in two decades, dropping by a fifth since January to $45 a barrel."



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Arab states issue Qatar demands | World

Turkish exports to Qatar triple during Gulf crisis: trade minister | Reuters

Turkish exports to Qatar triple during Gulf crisis: trade minister | Reuters:

"Turkish exports to Qatar have tripled from their normal levels to $32.5 million since four Arab countries began boycotting the Gulf state on June 5, Turkey's Customs and Trade Minister Bulent Tufenkci said late on Thursday. Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain accuse Qatar of funding terrorism, fomenting regional instability and cosying up to revolutionary theocracy Iran. Qatar has denied the accusations. They have sent Doha a list of 13 demands including closing Al Jazeera television, reducing ties to their regional adversary Iran and closing a Turkish military base in Qatar, an official of one of the four countries told Reuters."



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Oil stuck in a rut | Markets

Pressure on Qatari currency rises after Saudi-led demands

Pressure on Qatari currency rises after Saudi-led demands:

"Pressure on Qatar’s currency peg heightened on Friday after the Arab states leading a blockade against the kingdom outlined a list of demands that observers said are unlikely to be met, raising the prospect of an extended diplomatic deadlock. The Qatar Central Bank attempts to keep the riyal fixed in an extremely narrow range around 3.64 per dollar, but at publication time the currency was trading at 3.7450 per dollar, having weakened as far as 3.7623 earlier in the morning, according to Bloomberg data. That is its weakest level on record according to Bloomberg data going back to 1988. The central bank has massive foreign exchange reserves and has stated its commitment to supporting the currency in the long term, even if the low liquidity in spot markets means some institutions are trading the riyal outside its normal range."



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Thursday, 22 June 2017

Abu Dhabi Fund Buys 5% of Troubled Commodity Trader Noble Group - Bloomberg

Abu Dhabi Fund Buys 5% of Troubled Commodity Trader Noble Group - Bloomberg:

"An Abu Dhabi fund has taken a 5 percent stake in Noble Group Ltd., the embattled commodity trader searching for a white knight investor.

Goldilocks Investment Co. bought 50.5 million shares in the Hong Kong-based commodity trader on June 20, according to a company filing on Thursday on the Singapore Exchange. The acquisition lifts Goldilocks’s stake to 5.03 percent from 1.18 percent previously.

Goldilocks is controlled by investor Jassim Alseddiqi’s Abu Dhabi Financial Group. It started the $200 million fund last year, saying it targets “undervalued opportunities” in the six Gulf Cooperation Council countries. On Monday, it announced it had bought a stake in troubled U.A.E.-based energy group Dana Gas."



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New Saudi crown prince to maintain oil policy | The National

New Saudi crown prince to maintain oil policy | The National:

"A new crown prince ascends as oil prices slump. The appointment of the 31-year-old Mohammed bin Salman as next in line to the throne of Saudi Arabia can set the direction of Saudi policy – and its massive energy sector – for decades to come. With the kingdom facing an unprecedented confluence of economic and regional political threats, the pace of reform cannot slip. The prince’s rise should not bring any sharp changes in the kingdom’s energy policy – on the contrary, it consolidates approaches that were already clear, under energy viceroy and close confidant Khalid Al Falih. The kingdom’s emerging energy strategy has three pillars. Firstly, with most consequence for other oil producers, the country’s Opec policy and cooperation with non-Opec producers. When Mohammed bin Salman became the deputy crown prince in April 2015, the oil price slump was well under way, and Ali Al Naimi, the oil minister at the time, was encouraging high production to reclaim market share. Just a year later, at the infamous Doha meeting, the prince intervened to prevent an Opec agreement unless Iran agreed to limit its production."



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Fitch: Dana Gas Case Highlights Sukuk Legal Uncertainties | Reuters

Fitch: Dana Gas Case Highlights Sukuk Legal Uncertainties | Reuters:

"Any potential credit rating implications for sukuk arising from Dana Gas's attempt to have its mudaraba sukuk declared unlawful will take time to emerge, and their scope and impact are likely to remain unclear until all relevant proceedings are resolved, if they ever are, Fitch Ratings says. We believe our current assumption that sharia compliance typically does not have credit implications for Fitch-rated sukuk remains appropriate. Resolving the relevant issues could be a complex and drawn-out process with uncertain implications and the potential for a market or regulatory response. Fitch does not rate Dana Gas or its sukuk. Dana Gas publicly stated on 13 June 2017 that it had "received legal advice that the sukuk in its present form is not sharia compliant and is therefore unlawful under UAE law" and that it had started court proceedings in the UAE to have the sukuk declared unlawful and unenforceable. It has proposed restructuring the sukuk "to ensure that it conforms to the relevant laws" and also to take into account "the Company's need to focus on short to medium term cash preservation". Sukuk distributions due on 31 July and 31 October "cannot be paid now that the existing sukuk is deemed unlawful but will be accounted for" as part of the restructured instrument, Dana Gas said. Sukuk regulations have been introduced and updated in several countries in recent years, but standardisation, harmonisation and legal precedents are limited in most jurisdictions. "



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Qatar Seeks 10% of American Air, Escalating ‘Open Skies’ Battle - Bloomberg

Qatar Seeks 10% of American Air, Escalating ‘Open Skies’ Battle - Bloomberg:

"Only weeks after President Donald Trump accused Qatar of funding terrorism, the nation’s flagship airline has made a surprise overture to acquire a major stake in American Airlines.

The move represents a startling turn in a running battle between U.S. carriers and their Persian Gulf rivals, which U.S. airline executives say have unfair advantages because of deep government subsidies. It also comes against the backdrop of renewed efforts by the Trump administration to mediate the simmering crisis between Qatar and some of the closest U.S. allies in the region, notably Saudi Arabia.

Qatar Airways Ltd. is interested in acquiring about 10 percent of American, the U.S. company said in a filing. That would put the state-owned Mideast airline on par with Warren Buffett’s Berkshire Hathaway Inc. among shareholders of the world’s largest carrier. It would also require approval by the board of American Airlines Group Inc. -- a step that is by no means guaranteed given the U.S. company’s vocal efforts to level the playing field in global aviation under so-called Open Skies agreements."



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Oil Lingers Below $43 After Entering Bear Market on Glut Worries - Bloomberg

Oil Lingers Below $43 After Entering Bear Market on Glut Worries - Bloomberg:

"Oil closed below $43 a barrel for a second day as brimming supplies work against OPEC-led efforts to reduce a glut.

Futures edged up 0.5 percent in New York after losing nearly 5 percent since the start of the week. A report Wednesday from the Energy Information Administration showed U.S. oil production increased to the highest since August 2015. A committee of OPEC and non-OPEC members meeting in Vienna this week is said to have wrestled with the issues of increasing production in Libya and Nigeria, coupled with soaring U.S. output."



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MIDEAST STOCKS-Saudi extends rally on new crown prince, MSCI; foreign funds boost Doha | Reuters

MIDEAST STOCKS-Saudi extends rally on new crown prince, MSCI; foreign funds boost Doha | Reuters:

"Saudi Arabia's stock market extended on the previous session's rally on Thursday as investors focused on shares likely to benefit from economic reforms and from MSCI's decision while Qatar rebounded as foreign funds were net buyers. The Riyadh index added 1.2 percent to a 20-month high of 7,426 points in heavy trade. It is now up 6.8 percent in reaction to the appointment of the architect of the economic reform and privatisation plans, Prince Mohammed bin Salman, to crown prince. Previously the 31-year old was deputy crown prince. Some shares which were top gainers on the previous day continued to rally with the only listed miner, Saudi Arabian Mining, surging 9.4 percent. The now crown prince had previously stressed the importance of expanding the mining sector as part of plans to diversify the economy from oil."



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Hard to invalidate Islamic contracts, scholars say amid Dana Gas dispute | Reuters

Hard to invalidate Islamic contracts, scholars say amid Dana Gas dispute | Reuters:

"Some of the top scholars in Islamic finance say it is difficult to declare an Islamic contract invalid because it no longer meets sharia standards, as the United Arab Emirates' Dana Gas is trying to do with $700 million of sukuk. Scholars decline to comment specifically on the case, which Dana has filed at a court in the emirate of Sharjah. The company argues it should no longer make payments on the sukuk because the interpretation of Islamic finance standards has changed since they were issued in 2013, making them "unlawful". But many scholars say Islamic instruments are not subject to reinterpretation if they were originally certified by a competent authority."



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Al Habtoor on Prince Mohammed, Qatar, Expansion Plans - Bloomberg

Al Habtoor on Prince Mohammed, Qatar, Expansion Plans - Bloomberg:

"Khalaf Al Habtoor, founder and chairman at Al Habtoor Group, discusses Saudi Arabia's new crown prince, Washington's stance towards the Gulf, resolving the Qatar crisis, his outlook for his hotel business, the possibility of an IPO and where he's looking for expansion. He speaks exclusively on "Bloomberg Markets: Middle East." (Source: Bloomberg)"



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Too Much Oil Anchors Crude in Bear Market as U.S. Output Swells - Bloomberg

Too Much Oil Anchors Crude in Bear Market as U.S. Output Swells - Bloomberg:

"Oil held its slide into a bear market amid speculation rising U.S. output will blunt OPEC-led efforts to trim a global glut.

Futures were little changed in New York after sinking below $43 a barrel. U.S. oil production increased to the highest since August 2015, according to a report from the Energy Information Administration. Crude and gasoline stockpiles declined last week. Brent in London closed Wednesday more than 20 percent below its January peak, also entering a bear market."



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MIDEAST STOCKS-Saudi shares extend rally on new crown prince, MSCI; Qatar rebounds | Reuters

MIDEAST STOCKS-Saudi shares extend rally on new crown prince, MSCI; Qatar rebounds | Reuters:

"Saudi Arabia's stock market extended on the previous session's rally in early trade on Thursday headed for its highest close in 20 months as investors focused on shares likely to benefit from economic reforms and from MSCI's decision. The Riyadh stock index surged 5.5 percent in reaction to the appointment of the architect of the economic reform and privatisation plans, Prince Mohammed bin Salman, to crown prince. Previously the 31-year old was deputy crown prince. The index was up 1.2 percent in the first hour of trade as some shares which were top gainers on the previous day continued to rally with the only listed miner Saudi Arabian Mining jumping surging its 10 percent daily limit in the first half hour of trade. Banks were also strong with government-majority owned National Commercial Bank jumping 7.3 percent, extending on its 10 percent surge on Wednesday. "



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Wednesday, 21 June 2017

Oil drops to 10-month low; biggest first-half slide in 20 years | Reuters

Oil drops to 10-month low; biggest first-half slide in 20 years | Reuters:

"Oil prices ended down more than 2 percent on Wednesday after hitting a 10-month low in volatile trade, as growing U.S. production and reduced Chinese refinery activity fed mounting concern over the stubborn global crude glut.

U.S. crude futures CLc1 settled at $42.53, down 98 cents or 2.3 percent, after touching a low of $42.13, the lowest intraday level since August 2016. Since peaking in late February, crude has dropped more than 20 percent, with only brief rallies.

More than 1 million front-month crude contracts changed hands on Wednesday, far exceeding the daily average of 560,000 contracts."



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Exclusive: Qatar sovereign fund moves stakes to government, may sell assets - sources | Reuters

Exclusive: Qatar sovereign fund moves stakes to government, may sell assets - sources | Reuters:

"Qatar's sovereign wealth fund has transferred over $30 billion worth of its domestic equity holdings to the finance ministry and may sell other assets as part of a restructuring drive, people familiar with the matter told Reuters. Stakes in 18 companies were transferred earlier this year, before Qatar's diplomatic rift with other Gulf states. The stakes include major holdings in some of the country's top firms such as Qatar National Bank QNBK.QA, telecommunications operator Ooredoo ORDS.QA and Qatar Electricity & Water Co QEWC.QA."



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Saudi Gain Is a Loss for Qatar Reeling From $13 Billion Slump - Bloomberg

Saudi Gain Is a Loss for Qatar Reeling From $13 Billion Slump - Bloomberg:

"Add Saudi Arabia’s government changes to the reasons why investors should steer clear of Qatar.



The diplomatic standoff that’s erased $13 billion from Qatari stocks and pressured the country’s 16-year dollar peg isn’t likely to ease any time soon after Mohammed bin Salman was elevated to crown prince, making him first in line to the Saudi throne. Salman is seen as the main driver of the nation’s political and economic policies since his father became king in 2015, including the blockade of Qatar earlier this month."



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MIDEAST STOCKS-Saudi cheers new crown prince, MSCI news; oil price hits rest of Gulf | Reuters

MIDEAST STOCKS-Saudi cheers new crown prince, MSCI news; oil price hits rest of Gulf | Reuters:

"Saudi Arabia's stock market jumped over 5 percent on Wednesday after the architect of the kingdom's economic reforms was appointed crown prince and index compiler MSCI said it would consider upgrading Riyadh to emerging market status. The stock index surged 5.5 percent, its largest single-day rise since August 2015, to 7,335 points, its highest level since December 2015. Trading volume was the largest this year. Fund managers said the appointment of Prince Mohammed bin Salman, previously deputy crown prince, to be first in line for the throne was not unexpected, but came sooner than anticipated."



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Eni signs deal to carry out feasibility study in Iran

Eni signs deal to carry out feasibility study in Iran:

"Eni has signed a provisional agreement with Iran to carry out feasibility studies on the development of oil and gasfields in the country, with government officials pointing to the move as the latest sign that global companies are not being deterred from investing in the country despite tensions between the country and regional rival Saudi Arabia. Italy’s largest oil and gas group signed a memorandum of understanding on Tuesday with the National Iranian Oil Company (NIOC), the state-owned energy group, to explore a potential investment in the Kish gasfield in the Gulf and the third phase of development of the Darquain oilfield in south-west Iran within the next six months. Iran had signed provisional agreements at the end of last year on the two fields with Royal Dutch Shell, Russia’s Gazprom, Philippines’ PNOC and an Iran’s Ghadir Investment Company."



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MIDEAST STOCKS-Saudi rises sharply on appointment of new crown prince | Reuters

MIDEAST STOCKS-Saudi rises sharply on appointment of new crown prince | Reuters:

"Saudi Arabia's stock market rose sharply in early trade on Wednesday after Deputy Crown Prince Mohammed bin Salman, architect of the kingdom's economic reforms, was promoted to the post of crown prince. The Saudi stock index was 2.2 percent higher after seven minutes of trade. National Commercial Bank, the biggest listed lender, surged 4.8 percent. Prince Mohammed's promotion gives further assurance that key reforms – including a plan to sell a stake in national oil giant Saudi Aramco, and austerity measures to close a budget deficit caused by shrunken oil revenues - will continue."



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Tuesday, 20 June 2017

Saudi Arabia Seen Luring Billions With MSCI Indexes Now in Sight - Bloomberg

Saudi Arabia Seen Luring Billions With MSCI Indexes Now in Sight - Bloomberg:

"Saudi Arabia passed a major barrier to being classified by MSCI Inc. next year as an emerging market, an achievement that may draw billions of dollars to its traded companies through eventual inclusion in some of the biggest global stock indexes.

The kingdom, already boasting the Middle East’s largest equities market, was added to MSCI’s watch list for a potential upgrade in 2018, the index provider announced on Tuesday. More than $1.5 trillion in assets are benchmarked by money managers to the MSCI Emerging Markets index family."



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Dana Gas’s sukuk move is a surprising one | The National

Dana Gas’s sukuk move is a surprising one | The National:

"Dana Gas (DG) made headlines last week with reports that is was announcing that its own sukuk were "unlawful". It does seem a little bit surprising that a company would deem its own securities as unlawful. I mean, doesn’t that open DG up to liability for issuing the "unlawful" sukuk in the first place? The discussion that followed was wide. Indeed, Bloomberg published one article with the title "Why everyone’s talking about Dana Gas’s sukuk", from which I capture some of these facets. One is how DG’s actions would affect the whole sukuk market with Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital, quoted as saying [not paying coupons because the instrument is not Sharia-compliant is] "something that has a much wider implication for the sukuk market in general". The implication appears to be that the apparent manoeuvre by DG to invalidate its own sukuk on Sharia non-compliance grounds harms the whole Islamic finance sector. Indeed, Mr Hussain is further quoted in the article as saying "… clearly the company is trying to squeeze sukuk holders to the benefit of shareholders and that is a strategy that will end up hurting everybody down the road". If this analysis is correct, it could have a detrimental effect on Dubai’s goal of becoming the Global Centre for Islamic Finance."



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Qatar Ranks First for Service With CEO Taking Aim at Blockade - Bloomberg

Qatar Ranks First for Service With CEO Taking Aim at Blockade - Bloomberg:

"Qatar, the Arab state hurt by a Saudi-led campaign to isolate it over ties to Iran, can take solace in the fact that it’s state-owned airline is once again the world’s top-ranked carrier. Qatar Airways reclaimed the No. 1 spot in this year’s Skytrax awards, a coveted list of the leading 100 airlines announced on the second day of the Paris Air Show. Qatar unseated Emirates, the largest long-haul airline, which slipped to second. The rankings are based on an annual passenger survey. Akbar al Baker, Doha-based Qatar Air’s chief executive officer, used the platform to make an impromptu speech in which he condemned the blockade of Qatar, which he had previously likened to the Soviet siege of West Berlin after World War II."



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Qatar can weather boycott, foreign investors won't leave: Qatar Petroleum CEO | Reuters

Qatar can weather boycott, foreign investors won't leave: Qatar Petroleum CEO | Reuters:

"Qatar can stay under a "blockade forever" as it is well prepared and its oil and gas industries will not be affected, the chief executive of Qatar Petroleum said on Tuesday, referring to an economic boycott imposed by several other Arab countries.

The United Arab Emirates (UAE), which along with Saudi Arabia, Egypt and Bahrain have taken measures to isolate Qatar, said the sanctions could last for years unless Doha accepted demands that the Arab powers plan to reveal in coming days.

The Saudi-led alliance accused Qatar, the world's top liquefied natural gas (LNG) producer, of "supporting terrorism" and working secretly with Iran, the arch-foe of Saudi Arabia. Qatar denies the accusations."



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Qatar's Biggest Bank Says Crisis Has Minimal Impact on Business - Bloomberg

Qatar's Biggest Bank Says Crisis Has Minimal Impact on Business - Bloomberg:

"Qatar National Bank QPSC said it expects to meet its earnings targets as the ongoing Saudi-led campaign to isolate the gas-rich Arab state has minimal impact on its operations.

The Middle East’s largest lender by assets is confident it will reach its net profit growth target of 6 percent to 8 percent in the second quarter, the same guidance given to investors in March, according to a senior official at the bank who asked not to be identified because of company policy.

QNB has a good capital base, diversified funding sources and one of the best cost-to-income ratios so the standoff isn’t impacting the bank’s ability to get funding from the international market, the official said."



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Crude Slides Into Bear Market as Oversupply Distress Deepens - Bloomberg

Crude Slides Into Bear Market as Oversupply Distress Deepens - Bloomberg:

"Oil entered the first bear market since August as concerns worsen that OPEC is failing to ease a global supply glut.

West Texas Intermediate crude, the U.S. benchmark, fell more than 20 percent from its highest close this year, meeting the common definition of a bear market. Futures settled at $43.23 a barrel in New York, down from $54.45 on Feb. 23."



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MIDEAST STOCKS-Saudi pulls back before MSCI decision, Qatar hits post-crisis low | Reuters

MIDEAST STOCKS-Saudi pulls back before MSCI decision, Qatar hits post-crisis low | Reuters:

"Gulf stock markets were weighed down by weak oil prices on Tuesday as Saudi Arabia pulled back despite hopes for positive news from index compiler MSCI, while Qatar closed at its lowest level since it was hit by a diplomatic crisis early this month. MSCI was due after the close on Tuesday to announce whether it will launch a review of Saudi Arabia for possible inclusion in its emerging market index; inclusion would bring tens of billions of dollars of fresh foreign money. The Saudi index surged 2.4 percent on Monday after Mohammed El-Kuwaiz, vice chairman of the Capital Market Authority, was quoted as saying by the Asharq al-Awsat newspaper that he expected inclusion by the end of 2018."



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Nigerian banks to take over Etisalat unit after debt default negotiations break down | The National

Nigerian banks to take over Etisalat unit after debt default negotiations break down | The National:

"Etisalat said a Nigerian bank syndicate will take over the Nigerian unit it owns with Mubadala Investment Company and a local partner, after the parties failed to reach a deal over a debt restructuring. The banks had declared default on a US$1.2 billion loan in March and had resisted taking a "haircut" so that the company could continue to operate without a further substantial injection of capital. The loan has a US dollar component and the terms turned against Etisalat Nigeria when the Nigerian currency, the naira, was severely devalued over the last two years."



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UAE President restructures Abu Dhabi Investment Authority's board | GulfNews.com

UAE President restructures Abu Dhabi Investment Authority's board | GulfNews.com:

"President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, issued a decree, in his capacity as the Ruler of Abu Dhabi, restructuring the board of directors of the Abu Dhabi Investment Authority.
As per the decree, the authority will be chaired by Shaikh Khalifa, while board members include His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, Shaikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, Shaikh Hamed Bin Zayed Al Nahyan, Shaikh Mohammad Bin Khalifa Al Nahyan, Mohammad Habroush Al Suwaidi and Khalil Mohammad Sharif Foulathi."



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Qatar Financial Hub Looks Beyond Mideast to Grow Amid Standoff - Bloomberg

Qatar Financial Hub Looks Beyond Mideast to Grow Amid Standoff - Bloomberg:

"Qatar’s financial hub is looking beyond the Middle East and North Africa as the Saudi-led campaign to isolate the gas-rich Arab state threatens to dent regional business. "Our focus has shifted entirely toward markets other than Middle East and North Africa,” Yousuf Al Jaida, chief executive officer of the Qatar Financial Center, told reporters in Doha on Monday. “Current regional developments will not deter us from our growth plans going forward." The Qatar Financial Center is sticking to a target to attract 1,000 firms by 2022 even after canceling an event in Dubai later this year to showcase opportunities for regional companies, Al Jaida said. The center was started by Qatar’s government to foster investment in the Gulf emirate’s financial system."



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Barclays, Former Executives Charged Over Qatar Fundraising - Bloomberg

Barclays, Former Executives Charged Over Qatar Fundraising - Bloomberg:

"Barclays Plc and four former executives were charged with conspiracy to commit fraud regarding the bank’s 2008 capital raising from Qatar as it sought to avoid a bailout during one of the most turbulent periods in financial history. The Serious Fraud Office said Tuesday that former Chief Executive Officer John Varley, former chairman of investment banking for the Middle East Roger Jenkins, ex-wealth chief Thomas Kalaris, and Richard Boath, the former European head of the bank’s financial institutions group, face charges along with Barclays."



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Abu Dhabi fund takes 5 percent stake in Dana Gas | Reuters

Abu Dhabi fund takes 5 percent stake in Dana Gas | Reuters:

"Goldilocks Investment Co, an open-ended equity fund which is part of Abu Dhabi Financial Group, said on Monday it had bought 5 percent of Abu Dhabi-listed gas producer Dana Gas.

The fund was launched last October as a $200 million vehicle with a strategy of taking minority stakes in companies and helping them to restructure and develop. Its brief statement did not say what it intended to do with Dana.

Dana is struggling to recover hundreds of millions of dollars in overdue payments from Egypt and Iraqi Kurdistan. Last week, it proposed a restructuring of $700 million of its Islamic bonds, arguing that the instruments had become illegal under United Arab Emirates law since they were issued.

"



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France's Total to go ahead with major Iran gas project: CEO | Reuters

France's Total to go ahead with major Iran gas project: CEO | Reuters:

"Total will go ahead with development of a giant Iranian gas field this summer, its CEO told Reuters, in the first major western energy investment in the country since Tehran signed an international nuclear deal. Chief Executive Patrick Pouyanne said the French group would make an initial $1 billion investment after the United States extended sanctions relief for Iran under the 2015 agreement. Washington has warned that it could cancel the sanctions waivers if it believes Tehran is not curbing its nuclear program in line with the deal with world powers."



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Qatar says it will not negotiate unless neighbors lift 'blockade' | Reuters

Qatar says it will not negotiate unless neighbors lift 'blockade' | Reuters:

"Qatar will not negotiate with its neighbors to resolve the Gulf dispute unless they first lift the trade and travel boycott they imposed two weeks ago, its foreign minister said, but added Doha still believed a solution was possible. The United Arab Emirates, which along with Saudi Arabia, Egypt and Bahrain imposed the measures to isolate Qatar, said the sanctions could last for years unless Doha accepted demands that the Arab powers plan to reveal in coming days. Qatar has denied accusations by its neighbors that it funds terrorism, foments regional instability or has cosied up to their enemy Iran. The dispute has opened a rift among some of the main U.S. allies in the Middle East, with President Donald Trump backing tough measures against Qatar even as his State Department and Defense Department have sought to remain neutral."



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Oil Halts Slide as Investors Weigh U.S. Stockpiles Against Libya - Bloomberg

Oil Halts Slide as Investors Weigh U.S. Stockpiles Against Libya - Bloomberg:

"Oil halted its slide below $45 a barrel as investors weigh a forecast decline in U.S. crude stockpiles against a revival in output from Libya, which is exempt from the OPEC-led cuts.

Futures rose 0.3 percent in New York after falling 1.2 percent Monday. U.S. inventories probably shrank by 1.2 million barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Libya is pumping the most oil in four years after a deal with Wintershall AG enabled at least two fields to resume production."



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Qatar Wealth Fund to Inject Dollar Deposits in Local Banks - Bloomberg

Qatar Wealth Fund to Inject Dollar Deposits in Local Banks - Bloomberg:

"Qatar’s sovereign wealth fund has injected deposits into local banks to shore up liquidity as an ongoing Saudi-led campaign to isolate the gas-rich Arab state hurts lenders, according to people familiar with the matter. Qatar Investment Authority has placed billions of dollars of cash with Qatari lenders after some banks in Saudi Arabia, the United Arab Emirates and Bahrain started withdrawing funds from the country amid the standoff, the people said, asking not to be identified because the information is private. The exact amount of funding provided by the sovereign fund isn’t clear, they said."



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MIDEAST STOCKS-Saudi continues pre-MSCI rally, rest of Gulf mostly sluggish | Reuters

MIDEAST STOCKS-Saudi continues pre-MSCI rally, rest of Gulf mostly sluggish | Reuters:

"Saudi Arabia's stock market continued rising early on Tuesday before a decision by index compiler MSCI on whether to consider Riyadh for a possible upgrade to emerging market status. Most of the rest of the Gulf was sluggish. MSCI will announce its decision after the close. The Saudi index rose 0.5 percent in the first half-hour; it had surged 2.4 percent on Monday after Mohammed El-Kuwaiz, vice chairman of the Capital Market Authority, was quoted as saying by the Asharq al-Awsat newspaper that he expected Riyadh to be upgraded by the end of 2018. That would be faster than the mid-2019 date which MSCI's past practice would suggest. Tuesday's rise was broad-based, with nine of the 10 most heavily traded stocks gaining. "



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Monday, 19 June 2017

MIDEAST STOCKS-Saudi surges before MSCI decision, UAE's Tabreed soars on Engie buy | Reuters

MIDEAST STOCKS-Saudi surges before MSCI decision, UAE's Tabreed soars on Engie buy | Reuters:

"Saudi Arabia's stock market surged on Monday after a regulatory official was quoted as predicting the bourse would enter MSCI's emerging market index sooner than most investors had expected, while the rest of the region was subdued. Mohammed El-Kuwaiz, vice chairman of the Capital Market Authority, was quoted as saying by the Asharq al-Awsat newspaper that he expected the Saudi market to be included in the index by the end of 2018. MSCI will announce late on Tuesday whether it is putting Saudi Arabia on a list for possible index inclusion. Most funds think Riyadh has done enough to be included, but if MSCI follows its usual timetable, actual entry would occur in mid-2019. However, MSCI has the flexibility to move faster if it wishes."



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OPEC Deal In Jeopardy As Libyan Oil Output Nears 1 Million Bpd | OilPrice.com

OPEC Deal In Jeopardy As Libyan Oil Output Nears 1 Million Bpd | OilPrice.com:

"Libya—whose production has been hampered by civil unrest, political divides, and oil export terminals blockades over the past few years—is now targeting to further increase its oil output. Its most immediate goal is to reach 1 million bpd of production by the end of July, which would further complicate OPEC’s desperate efforts to reduce global inventories and prop up oil prices. And its ambitions seem plausible. Just last month, when OPEC was discussing rolling over the output reduction deal, production-cut-exempt Libya hit its highest daily production level since 2014. Earlier this week, OPEC reported that total cartel production in May was actually higher than in April, with Libya the biggest single contributor to that increase. Analysts warn, however, that Libya’s output increase is not a for-sure thing. Production could sharply drop again, given the political rivalry between factions and the fragile security situation in country. "



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The Qatar crisis has global implications

For the past six years, there have been two Arab worlds. The world of violence and tragedy; and the world of glitz and globalisation. Syria, Iraq, Libya and, to a lesser extent, Egypt — have been engulfed by conflict. But Qatar, Abu Dhabi and Dubai have prospered as global hubs for travel, leisure, business and finance. The booming Gulf metropolises seemed untouched by the violence in the rest of the Middle East. They even profited indirectly, as safe havens in a region in turmoil.
But the wall between the two Arab worlds is breaking down. Saudi Arabia, Bahrain, Egypt and the United Arab Emirates (which includes Abu Dhabi and Dubai) have imposed a blockade on Qatar — claiming that the Qataris have been supporting jihadi movements across the region, and particularly in Syria and Libya. As a result, the illusion that the wealthy Gulf could remain uncontaminated by the wider conflicts in the Middle East has been shattered.
The obvious question is whether the dazzling rise of the Gulf states could be followed by an equally dazzling fall. If that were to happen, the implications would be global.

Saudi Aramco cleans up financials to bolster valuation

Saudi Aramco cleans up financials to bolster valuation:

"Saudi Arabia is seeking to present investors with a pristine set of financials for its state energy giant as the kingdom targets a $2tn valuation ahead of its planned initial public offering in 2018.

The country’s highest authorities are working with Saudi Aramco and its IPO advisers to untangle its finances from those of the state. This involves shifting certain liabilities from the company's accounts to that of the government.

A series of legal instructions from the kingdom’s cabinet — resolutions from the Council of Ministers — have been issued in recent months but not made public, say four people briefed on the matter."



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Saudi Aramco strives to curb its state role before IPO

Saudi Aramco strives to curb its state role before IPO:

"More than 60,000 fans packed into Saudi Arabia’s Shining Jewel sports arena at its opening ceremony in May 2014, before the final of the country’s main football tournament. The inauguration featured a stunning fireworks display in honour of the late King Abdullah bin Abdulaziz Al Saud, who had commissioned the stadium in Jeddah to showcase Saudi’s place as a leading Arab nation. The arena was built swiftly and to a high quality. But the work was not managed by a specialist contractor — it was the endeavour of the state-owned energy behemoth Saudi Aramco. Amin Nasser, chief executive, said on accepting an award for architectural excellence last year that the company “continues to support the progress of the nation”. Projects such as the Shining Jewel reflect how Saudi Aramco’s role stretches far beyond its status as the world’s largest oil company and the source of 70 per cent of the Saudi government’s revenue. Saudi Aramco has been responsible for a significant chunk of the modern kingdom’s vital infrastructure by building schools, hospitals and roads — the company has even worked with the government on a programme to eradicate malaria."



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Etisalat Nigeria negotiates over $1.2 billion bank loan | The National

Etisalat Nigeria negotiates over $1.2 billion bank loan | The National:

"Etisalat Nigeria is still in discussions with Nigerian banks to refinance a US$1.2 billion bank loan, the telecommunications company’s largest shareholder, Mubadala Invesment Company, confirmed on Sunday. Etisalat Nigeria, which is 45 per cent owned by the Abu Dhabi strategic investment firm, has run into difficulties meeting its commitments on the loan, which was arranged by a syndicate of local banks in 2013 and declared in default this past March following two severe devaluations of Nigeria’s currency, the naira. "Etisalat Nigeria remains in ongoing discussions with all stakeholders, including government regulators and its syndicated finance facility lenders," according to a Mubadala official. He declined to comment on reports in several Nigerian news outlets last week that Etisalat Nigeria’s controlling Abu Dhabi partners had threatened to stop supporting the company if the bank syndicate would not agree to new terms, which include taking a significant "haircut" on the loan."



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MSCI to Decide on Saudi Emerging Markets Inclusion - Bloomberg

MSCI to Decide on Saudi Emerging Markets Inclusion - Bloomberg:

"Abu Dhabi Commercial Bank Head of Investment Strategy Luciano Jannelli discusses his outlook for the MSCI's decision on Saudi Arabian emerging market inclusion. He speaks on "Bloomberg Markets: Middle East." (Source: Bloomberg)"



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MIDEAST STOCKS-Dubai's Tabreed surges on Engie investment, MSCI hopes keeps Saudi afloat | Reuters

MIDEAST STOCKS-Dubai's Tabreed surges on Engie investment, MSCI hopes keeps Saudi afloat | Reuters:

"Most stock markets in the Gulf were marginally higher in early trade on Monday, shrugging off weak oil prices as investors focused on local corporate and market news. Shares of Dubai's National Central Cooling Co (Tabreed) surged their 15 percent daily limit to 2.12 dirhams ($0.58) after French power and gas group Engie SA agreed to buy 40 percent stake for 2.8 billion dirhams from majority owner Abu Dhabi's Mubadala. Mubadala will convert its mandatory convertible bonds into shares, with 1.086 billion shares to be transferred to Engie at approximately 2.62 dirhams each."



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Mena private equity industry faces fund-raising challenges | GulfNews.com

Mena private equity industry faces fund-raising challenges | GulfNews.com:

"Fund raising remained challenging for the private equity and venture capital business in the region in 2016 and the conditions are likely to remain the same in 2017, according to Mena Private Equity and Venture Capital Annual Report. Conditions remain challenging due to economic headwinds and geopolitical factors. While seven funds were raised in 2016, the number of closes declined to nine and funds raised were at a low of $582 million. The largest Mena focused fund raised was the Gulf Capital’s $250 million (Dh017.9 million) Gulf Credit Opportunities Fund II, a mid-market focused debt fund. Other major funds raised included the $110-million NBK Mezzanine Fund. "



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If Dana's Sukuk Is Illegal Now, It Was Illegal Then, Lawyer Says - Bloomberg

If Dana's Sukuk Is Illegal Now, It Was Illegal Then, Lawyer Says - Bloomberg:

"Nothing in Islamic finance or the United Arab Emirates’ laws regarding Shariah-compliant debt has changed since Dana Gas PJSC restructured its sukuk about four years ago. "What makes the sukuk illegal now?” asks Rizwan Kanji, a partner at law firm King & Spalding LLP. When the gas producer started negotiations with creditors in 2012, the issue relating to mudarabah structures was “clear and settled,” said the Dubai-based lawyer who specializes in Shariah-compliant deals. Since then, there have been no changes in Islamic finance or related U.A.E. laws, so if the company’s claims that its $700 million bonds are illegal now, then they were illegal when they were issued, he said. Dana Gas said last week it no longer considered its two securities Shariah-compliant under the U.A.E.’s law. A court in Sharjah has since barred bondholders from taking any action against the bonds until it reviews the company’s application to declare its debt “unlawful and unenforceable.”"



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Energy Markets Can Survive This Qatari Blockade - Bloomberg Gadfly

Energy Markets Can Survive This Qatari Blockade - Bloomberg Gadfly:

"The blockade against Qatar is undoubtedly causing difficulties for the citizens on the small Persian Gulf emirate. But its isolation is far from complete, and chinks in the wall are a clear indication that the connections that exist between Qatar and its uneasy neighbors cannot easily be broken. And, it looks like energy markets can survive the policy.Qatar's rulers built the country's independence on exports of hydrocarbons -- particularly natural gas -- and flows of these commodities have been put at risk by the restrictions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.As I noted last week, the precise nature of these restrictions is far from clear. Some authorities in Saudi Arabia and the U.A.E. say any vessel travelling to or from Qatar cannot enter their ports. More recently, the U.A.E.'s Federal Transport Authority limited the ban to those that are Qatari-owned or flagged, and to the loading or unloading of ships trading with Qatar."



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Mubadala in talks to buy stake in hotel group from 1MDB-linked Low: FT | Reuters

Mubadala in talks to buy stake in hotel group from 1MDB-linked Low: FT | Reuters:

"UAE state fund Mubadala Development Co PJSC is in talks with the U.S. Department of Justice for approval to buy the rest of the partially-owned Viceroy Hotel Group from Jho Low, a financier linked by prosecutors to Malaysia's 1MDB corruption scandal, the Financial Times reported on Sunday. Mubadala hoped to finalize a deal, that would need the DoJ's approval, to buy 50 percent of Viceroy Hotel Group "within a matter of days," the Financial Times reported, citing one person aware of the matter. The Abu Dhabi fund already owns 50 percent of Viceroy, which has more than a dozen hotels across the world, while the remainder is owned by Low and affiliates that purchased rights to and interests in the hotel group with funds from 1Malaysia Development Berhad (1MDB), the newspaper said. "



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Qatar won't cut gas to UAE: Qatar Petroleum CEO | Reuters

Qatar won't cut gas to UAE: Qatar Petroleum CEO | Reuters:

"Qatar will not cut off gas to the United Arab Emirates despite a diplomatic dispute and a "force majeure" clause in its contract, the chief executive of Qatar Petroleum told Al Jazeera network, two weeks after some Gulf Arab states severed ties with Doha. CEO Saad al-Kaabi said that although there was a "force majeure" clause in the agreement on the Dolphin gas pipeline, which links Qatar's giant North Field with the UAE, Qatar would not stop supplies for other reasons. "The siege we have today is a force majeure and we could close the gas pipeline to the UAE," he said."



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UPDATE 1-Dubai's DSI to complete capital reduction by end of third quarter | Reuters

UPDATE 1-Dubai's DSI to complete capital reduction by end of third quarter | Reuters:

"Dubai-based contractor Drake & Scull International (DSI) expects to complete a plan to reduce its capital by 75 percent by the end of the third quarter, deferring the process by one month, its chief executive said on Sunday.

The capital reduction is the first phase of a plan to revive DSI's fortunes amid a slump in the Gulf's construction market as governments have cut back on project spending as a result of the fall in oil prices.

Strategic investor Tabarak Investment has become DSI's biggest shareholder after acquiring the shares of former chief executive Khaldoun Tabari, DSI confirmed last week. Tabarak's stake stands at about 18 to 20 percent after the sale, Zawya, a Thomson Reuters service, reported on June 11, citing a source."



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'No Borders, Only Horizons' Qatar Ad Says Amid Shut Gulf Skies - Bloomberg

'No Borders, Only Horizons' Qatar Ad Says Amid Shut Gulf Skies - Bloomberg:

"A Qatar Airways ad called for open skies in a video with stretching horizons and embracing families after Gulf neighbors blocked their airspace to the state-owned carrier amid a diplomatic crisis. “The sky: there should be no borders up here, only horizons,” the ad on YouTube says. “Travel goes beyond borders and prejudice.”"



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Sunday, 18 June 2017

MIDEAST STOCKS-Cheaper oil depresses most of Gulf but MSCI hopes buoy Saudi | Reuters

MIDEAST STOCKS-Cheaper oil depresses most of Gulf but MSCI hopes buoy Saudi | Reuters:

"Most major Gulf stock markets fell on Sunday because of weak oil prices, but hopes that Saudi Arabia will join MSCI's group of emerging markets, which would trigger billions of dollars of fund inflows, buoyed that market. MSCI will announce late on Tuesday whether it is adding Saudi Arabia to a list for possible upgrade to emerging market status; the upgrade, if it happens, would probably not occur before mid-2019. The Saudi index rose 0.9 percent in thin trade as some stocks expected to be targets of incoming foreign funds rose, with Food maker Savloa jumping 5.0 percent to 48.40 riyals, its highest finish since January 2016."



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Saudi’s $250 billion construction market still offers greatest potential, says Meed | The National

Saudi’s $250 billion construction market still offers greatest potential, says Meed | The National:

"Saudi Arabia remains the market with the greatest potential for the region’s construction industry, with more than US$250 billion worth of projects in the pipeline, according to a new report by the regional news service Meed. The kingdom has almost as much work in the pre-execution phase as the GCC’s second and third-biggest markets combined: the UAE has $184bn of work in the pipeline while Qatar has $69bn. Meed said in the new report that after a year of uncertainty in 2016, Saudi Arabia will start to deliver on its promises in 2017. The construction industry in the country almost ground to a halt last year, following a decision to stop awarding new contracts for major government projects until a new network of programme management offices (PMO) was established. Payments to contractors for all but the most essential projects were also halted for the first nine months of the year, placing serious cash-flow pressures on many contractors and leading to tens of thousands of workers for some of the country’s biggest companies being left without pay for months."



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Oil production will get harder to balance as time goes on | The National

Oil production will get harder to balance as time goes on | The National:

"Restoring balance to the oil markets appears as hard as restoring balance to the Force in Star Wars.

After the optimism of last November’s production cuts agreement, low prices are striking back. With Brent crude at a seven-month low, can Opec avoid a rebellion?

The producers’ organisation knew the route to rebalancing would be longer than a few parsecs. Its target has been to bring oil stocks in the OECD (developed) countries, currently 292 million barrels above, down to their five-year average."



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UAE's Dana Gas gets injunction from English court blocking claims on $700 mln sukuk | Reuters

UAE's Dana Gas gets injunction from English court blocking claims on $700 mln sukuk | Reuters:

"Dana Gas said on Sunday it had obtained an injunction from the English High Court of Justice in London restraining holders of its $700 million of sukuk from taking any hostile action against the company in relation to the Islamic bonds. Last week, the company obtained similar injunctions from the Sharjah Federal Court of First Instance in the United Arab Emirates and from the Commercial Division of the High Court of Justice in the British Virgin Islands. The Abu Dhabi-listed energy company announced last week that its outstanding sukuk were not sharia-compliant and were therefore unlawful and unenforceable in the UAE."



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Saudi to transfer employees from troubled Oger construction firm | Reuters

Saudi to transfer employees from troubled Oger construction firm | Reuters:

"Employees of troubled construction company Saudi Oger will be moved to other firms, the Saudi labor ministry said, amid unconfirmed reports that workers there will be laid off from July 31. The ministry said there were 1,200 Saudis among a total of around 8,000 workers at the company, which is owned by the family of Lebanese Prime Minister Saad al-Hariri and has built many huge infrastructure projects in the kingdom, from universities and roads to airports and hospitals. It said it planned to move some 600 Saudi employees to other facilities and would continue to look for jobs for the remaining Saudis working there. It was also working with Saudi Oger to transfer around 6,000 foreign workers to other firms."



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Energy Markets Can Survive This Qatari Blockade - Bloomberg Gadfly

Energy Markets Can Survive This Qatari Blockade - Bloomberg Gadfly:

"The blockade against Qatar is undoubtedly causing difficulties for the citizens on the small Persian Gulf emirate. But its isolation is far from complete, and chinks in the wall are a clear indication that the connections that exist between Qatar and its uneasy neighbors cannot easily be broken. And, it looks like energy markets can survive the policy.Qatar's rulers built the country's independence on exports of hydrocarbons -- particularly natural gas -- and flows of these commodities have been put at risk by the restrictions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.As I noted last week, the precise nature of these restrictions is far from clear. Some authorities in Saudi Arabia and the U.A.E. say any vessel travelling to or from Qatar cannot enter their ports. More recently, the U.A.E.'s Federal Transport Authority limited the ban to those that are Qatari-owned or flagged, and to the loading or unloading of ships trading with Qatar."



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MIDEAST STOCKS-Gulf little changed in early trade, oil price deters activity | Reuters

MIDEAST STOCKS-Gulf little changed in early trade, oil price deters activity | Reuters:

"Gulf stock markets were little changed in early trade on Sunday as low oil prices, with Brent crude just above $47 a barrel, deterred buying and diminished liquidity. The Saudi stock index rose 0.2 percent. MSCI will announce on Tuesday whether it is adding Saudi Arabia to a list for possible upgrade to emerging market status, which could attract fresh inflows of foreign money. Some stocks expected to benefit from such flows rose, with Saudi British Bank climbing 3.3 percent to its highest level since early January."



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Saturday, 17 June 2017

Barclays awaits news on criminal charges over fundraising

Barclays awaits news on criminal charges over fundraising:

"Barclays is considering pleading guilty to criminal charges over its arrangements with Qatar during the financial crisis, but will reserve its final decision until prosecutors make clear what precisely they will level against the bank. The bank and the Serious Fraud Office are locked in frantic last-minute discussions that have seen deadlines slip this week. The SFO previously pledged to make a charging decision by mid-June in a culmination of its five-year investigation into the bank’s £7.3bn fundraising in 2008, when Barclays tapped investors from Qatar and Abu Dhabi to stave off UK government control. Barclays now expects a decision on charges on Tuesday, senior bank sources told the Financial Times. Bloomberg previously reported that the bank was in discussions with the SFO over a guilty plea."



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Private equity firms struggle to raise new funds in the Middle East, says report | The National

Private equity firms struggle to raise new funds in the Middle East, says report | The National:

"The amount of new money raised by private equity and venture capital funds in the region dropped by 41 per cent last year to US$582 million – the lowest figure raised since 2011, according to the Mena Private Equity Association’s annual report. The decline in funding was blamed on the economic climate and regional geopolitical factors affecting external investor perceptions. Total investment value also fell by 24 per cent to $1.13 billion. This was attributed to a drop-off in the number of deals that had an investment value disclosed, which itself was due to a more challenging investment environment, as well as a mis-pricing between buyer and seller expectations."



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Dana Gas bondholders take hard line in testy dispute | The National

Dana Gas bondholders take hard line in testy dispute | The National:

"Dana Gas bondholders have taken a hard line in response to the company in what is turning into a testy dispute over a US$700 million sukuk coming due this year. Dana Gas, the Abu Dhabi Securities Exchange-listed company which is 19 per cent owned by the Jafar family’s Sharjah-based Crescent Petroleum, this week took the unprecedented step of having its sukuk declared to be not compliant with Sharia law. The company also secured an injunction from the court in Sharjah to bar the bondholders from taking legal action, including declaring the company in default, and yesterday sought an additional injunction in the British Virgin Islands to protect the Egyptian assets pledged as collateral on one of its sukuk."



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Friday, 16 June 2017

Neighbours’ blockade on Qatar raises fears for 2022 World Cup

Neighbours’ blockade on Qatar raises fears for 2022 World Cup:

"At the Qatar Foundation stadium in Doha, cranes zigzag over an empty site, one of eight arenas due to host games for the 2022 Fifa World Cup.

Workers, some of whom are wearing hydration backpacks to battle the sapping heat, say it is business as normal. Questions on the impact of the economic blockade facing Qatar are answered with a smile and shrug. “We don’t know what is going to happen further down the line,” said one foreman.

The decision to host the 2022 World Cup in oil and gas-rich Qatar attracted controversy from the start, not least because of the intense summer heat in the desert state where temperatures run to 50C. The smallest country ever to host a World Cup, its reliance on migrant labour to build the stadiums ignited outrage. Now the diplomatic crisis engulfing the emirate threatens the $500m-a-week infrastructure works needed to make sure Qatar is ready for the tournament."



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Thursday, 15 June 2017

Why Everyone's Talking About Dana Gas's Sukuk - Bloomberg

Why Everyone's Talking About Dana Gas's Sukuk - Bloomberg:

"A decision by a Middle Eastern gas producer to declare its own Shariah-compliant bonds unlawful has baffled investors in the $2 trillion Islamic finance industry. Sharjah-based Dana Gas PJSC said Tuesday it no longer considered its two Islamic bonds totaling $700 million issued four years ago as Shariah compliant under the United Arab Emirates’ law. A court in Sharjah has since barred bondholders from taking any action against the company’s securities until it reviews Dana Gas’s application to declare its debt “unlawful and unenforceable.” “As creditors we understand that this is a liquidity and a payment issue not a solvency issue, but clearly the company is trying to squeeze sukukholders to the benefit of shareholders and that is a strategy that will end up hurting everybody down the road,” said Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital Ltd. Even if there were potential developments in Islamic finance that raised questions on the structure, “it is still a debt instrument and money they have borrowed,” he said."



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1MDB Loot Included Picasso, ‘Dumb and Dumber To,’ U.S. Says - Bloomberg

1MDB Loot Included Picasso, ‘Dumb and Dumber To,’ U.S. Says - Bloomberg:

"The U.S. Justice Department is seeking to recover $540 million in assets -- including art works, jewelry and film rights -- that it says were purchased with funds misappropriated from Malaysia’s 1MDB wealth fund. It’s the latest attempt by the U.S. government to seize assets linked to the tainted fund, bringing the total sought by the Justice Department to $1.8 billion. From 2009 through 2015, more than $4.5 billion belonging to 1Malaysia Development Bhd was diverted by high-level officials of the fund and their associates, according to complaints filed Thursday in the Central District of California."



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