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Thursday, 25 May 2017

A changing oil market threatens Saudi reform

A changing oil market threatens Saudi reform:

"Even five years ago, Saudi Arabia was in an economically enviable position. A few unsettling trends were unfolding: hybrid and electric cars were becoming more common and oil companies were driving wells across the shale basins of the US. But neither green vehicles nor shale oil was price competitive with their conventional predecessors, and Brent crude, the global oil price benchmark, was over $100. No one envies the Saudi Arabians now. Yes, the Brent price has rebounded from its of 2015-16 lows to stabilise over $50. At the Opec meeting in Vienna this week the delegates agreed to extend production curbs for another nine months. But the long-term supply and demand dynamics for oil continue to be at best unpredictable and at worst simply bearish. This is the reason for, and the greatest threat to, Saudi efforts to reform its unbalanced economy. Saudi Arabia must be weaned off oil; yet that process, which is causing domestic tension, can only be made palatable by oil money."



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Moody’s upgrades Abu Dhabi’s outlook | The National

Moody’s upgrades Abu Dhabi’s outlook | The National:

"Moody’s Investors Service said on Thursday it has upgraded Abu Dhabi’s credit outlook to stable from negative due to the emirate’s ability to diversify sources of revenue during the period of low oil prices as well as signs of a rebound in the economy. At the same time, the rating agency said that it had affirmed the long and short term issuer ratings for Abu Dhabi at Aa2/P-1, one of the agency’s highest credit ratings. "The weaker oil price and its impact on government finances and the economy has prompted a substantial acceleration in reforms containing fiscal pressures and supportive of the emirate’s diversification strategy," it said in a note."



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UAE excise tax ‘may lead to some products disappearing from shop shelves’ | The National

UAE excise tax ‘may lead to some products disappearing from shop shelves’ | The National:

"The introduction this year of excise taxes on sugary drinks and tobacco is expected to have a broad effect on importers, manufacturers and suppliers in the UAE, tax experts said. The Federal Tax Authority said on Tuesday that excise taxes would be introduced in the last quarter of this year at a rate of 100 per cent for tobacco and energy drinks and 50 per cent for sugary fizzy drinks. The authority will open tax registration in the third quarter of the year for companies that produce, import or store these products."



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Ex-Google Exec Gets $500 Million From STC for Mideast Tech Deals - Bloomberg

Ex-Google Exec Gets $500 Million From STC for Mideast Tech Deals - Bloomberg:

"Saudi Telecom Co. has created a $500 million technology fund to be run by ex-Google executive Abdulrahman Tarabzouni to invest in areas like artificial intelligence and virtual reality. STV, as the fund will be known, already has a pipeline of potential deals it is looking at and the first could be completed before the end of the year, Tarabzouni said at a press conference in Riyadh. The fund is looking to make investments over the next four to five years and more money could be allocated to it in the future, Saudi Telecom Chief Executive Officer Khaled Biyari said. Investor interest in the Middle East’s technology industry is picking up after Amazon.com Inc. paid $580 million to buy e-commerce firm Souq.com. Dubai-based business tycoon Mohamed Alabbar raised $1 billion to create an e-commerce company called Noon, and said he had separately raised $1 billion to make technology investments."



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Abu Dhabi's Masdar Starts Trash-Energy Venture in Nearby Sharjah - Bloomberg

Abu Dhabi's Masdar Starts Trash-Energy Venture in Nearby Sharjah - Bloomberg:

"Abu Dhabi’s renewable energy company Masdar formed a joint venture to build a power plant that runs on garbage as the United Arab Emirates seeks to diversify its sources of electricity. Masdar, as Abu Dhabi Future Energy Co. is known, created Emirates Waste to Energy Co. in partnership with Bee’ah, the government-owned waste management company in nearby Sharjah, the companies said Thursday in a statement. Their first project will be a 30-megawatt power plant to process 300,000 tons of solid waste a year."



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Saudi Aramco to spend $18 billion on growth in the Americas: Motiva | Reuters

Saudi Aramco to spend $18 billion on growth in the Americas: Motiva | Reuters:

"Saudi Aramco plans to spend $18 billion over the next five years to expand its operations in the Americas, focusing on its U.S. oil refining subsidiary Motiva Enterprises, Motiva said on Thursday. Motiva is exploring opportunities to increase refining capacity, branch into chemicals and expand its commercial operations, marketing and branded presence over the next five years, the company said in a statement. Motiva became a wholly owned subsidiary of Saudi Aramco on May 1 with the split of a 19-year partnership between Aramco and Royal Dutch Shell Plc (RDSa.L)."



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Crude Slumps Below $50 as Market Is Underwhelmed by OPEC Deal - Bloomberg

Crude Slumps Below $50 as Market Is Underwhelmed by OPEC Deal - Bloomberg:

"Oil fell below $50 after OPEC stuck to the most predictable outcome at a meeting in Vienna.

Futures closed 4.8 percent lower in New York as the Saudi Arabian-led group and its allies delivered only what had already been telegraphed for days: an agreement to extend output cuts for nine months, without deepening them or saying what will happen after March 2018.

"The Saudis have been trying to put a happy face on this thing," said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. "But this is all they could get, and that’s disappointing to the market.""



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MIDEAST STOCKS-Qatar's Ezdan tumbles on delisting approval, Saudi set back by oil | Reuters

MIDEAST STOCKS-Qatar's Ezdan tumbles on delisting approval, Saudi set back by oil | Reuters:

"Shares of Qatar's largest property developer plunged 10 percent on Thursday after its shareholders gave preliminary approval to take the company private, while a dip in crude oil took the Saudi equity index lower in its final hour of trade. Ezdan Holding Group, with majority ownership by the ruling al Thani family, said shareholders who are against the de-listing, whether they attended the meeting or not, can exit their positions within 60 days. The company said it will hire an independent expert to look at it its assets and to assess the fair value of the company. The stock closed at 13.95 riyals on Thursday."



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EM bonds are rallying again | Markets

Opec agrees to extend historic supply cuts into 2018

Opec agrees to extend historic supply cuts into 2018:

"Opec will extend its production cuts into 2018, as the oil cartel and its allies attempt to end a three year supply glut that has hammered crude prices. The cartel agreed to prolong supply curbs for another nine months during a ministerial meeting on Thursday in Vienna, two Opec delegates familiar with the discussions said. The agreement, which is expected to be ratified later today by Russia and other producers outside Opec, will see the 1.8m barrel a day accord first agreed in late November extended to March 2018."



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Abu Dhabi co-pay hits Mediclinic revenue | The National

Abu Dhabi co-pay hits Mediclinic revenue | The National:

"Mediclinic International, which owns Abu Dhabi’s Al Noor Hospitals Group, said that its underlying earnings per share plunged by 19 per cent in the financial year that ended in March as the South African healthcare provider suffered from regulatory changes in the emirate. The London-listed group said in a statement that its underlying earnings per share dropped to 29.8 pence from 36.7 pence. Its shares fell by 5.64 per cent to £8.2 in afternoon trading. Abu Dhabi last year issued new insurance rules, where Emiratis were required to pay for a greater proportion of their private-sector treatment, starting from July, eroding earning potential of number of healthcare providers. But the emirate said this month it was reversing its policy for Emiratis in Abu Dhabi holding Thiqa health insurance cards, exempting them from paying 20 per cent of private treatment costs."



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Exclusive: Dubai looking into forming $1 billion shipping investment fund - sources | Reuters

Exclusive: Dubai looking into forming $1 billion shipping investment fund - sources | Reuters:

"Dubai is looking into creating a $1 billion investment fund focused on shipping to develop the Gulf city's maritime sector and ride out a global industry downturn, three finance sources familiar with the plans say.

The sources said the Dubai Maritime City Authority, the government entity responsible for developing the maritime industry in the emirate, was examining ways to establish a fund to provide financial investment support to Dubai-based firms.

"There is interest in this idea (from Dubai). At this stage it is fact finding," one source said."



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OPEC Poised for `Safe Bet' of Nine-Month Extension of Oil Cuts - Bloomberg

OPEC Poised for `Safe Bet' of Nine-Month Extension of Oil Cuts - Bloomberg:

"OPEC and its allies were poised to extend their production cuts for an additional nine months after last year’s agreement failed to clear a global supply glut or deliver a sustainable price recovery.

Nine months with the same level of production “is a very safe and almost certain option to do the trick,” Saudi Arabian Oil Minister Khalid Al-Falih said at the opening session at the meeting in Vienna. “It’s likely we’ll be balanced earlier than later.”  Six months after forming an unprecedented coalition of 24 nations and delivering output reductions that exceeded all expectations, some of the world’s largest oil producers faced the fact that they’d fallen well short of their goal. Oil prices fell after ministers arrived at the meeting venue."



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MIDEAST STOCKS-Qatar's Ezdan tumbles on initial plan to de-list, DXBE weighs on Dubai again | Reuters

MIDEAST STOCKS-Qatar's Ezdan tumbles on initial plan to de-list, DXBE weighs on Dubai again | Reuters:

"Shares of Qatar's largest listed real estate developer tumbled in early trade on Thursday after saying its shareholders had given preliminary approval to take the company private while DXB Entertainments continued to drag Dubai's index down. Ezdan Holding Group, which is owned mainly by government related parties, dropped 7.3 percent. The company said that disapproving shareholders, whether present or absent from the meeting, can exit their positions within 60 days of the preliminary decision. The company, which is a constituent of the MSCI emerging market index, said it had hired a company to reach a fair valuation of its assets, based on the closing price on April 3, which was 15.08 riyals. It will announce the result once the valuation process has been completed."



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