Saudi Stock Market Weekly Report - 10-June-2009

Sovereign wealth funds back BlackRock move to acquire Barclays Global Investors

The Kuwait Investment Authority (KIA), the Government of Singapore Investment Corporation (GIC) and the China Investment Corporation (CIC) contributed $2.8bn of the $6.6bn cash element of the deal that will create the world's largest money manager and was first reported in the Sunday Telegraph

In addition to the cash, Barclays will receive 37.8m BlackRock shares, giving it a 19.9pc of stake in the sprawling US money manager and two seats on the board that will be filled by Barclays chief executive John Varley and president Bob Diamond.

To deliver on the purchase, BlackRock said it had "received commitments from a group of institutional investors to purchase 19.9m shares at the closing of the transaction for a total of $2.8bn".

Jump on board while Air Arabia stock takes off

Shareholders in Air Arabia are two-time losers.

The stock was sold early last year as the price of oil soared, apparently in recognition that fuel accounts for much of an airline’s costs. But when oil dropped out of sight after that, Air Arabia sank even faster and farther as investors seemed to conclude that business prospects in the oil-dependent Middle East would suffer.

When sentiment toward a stock is so glum that all news is bad news, it’s time to take inventory of the ways the company might not be getting its due. There are plenty in the case of the low-cost airline – enough to persuade several investment advisers that it will not remain a low-cost stock for long.

Opec focuses on cutting extra supply

Opec’s crude output climbed last month, as oil prices surged but economic recovery remained elusive, the group controlling 40 per cent of the world’s oil supply has confirmed.

The developments, outlined yesterday in the latest Opec monthly oil market report, increase pressure on the 12-member oil exporters’ group to maintain discipline to mop up a glut on the international market.

“Efforts to reduce the excess supply is the key factor in supporting market stability and should help to gradually bring commercial inventories back to more healthy seasonal levels by the end of the year,” Opec said in the report.

Mubadala signs Kazakh oil exploration deal

ConocoPhillips, JSC National Company KazMunaiGas (KMG) and Mubadala Development Company PJSC (Mubadala) have signed joint exploration and development deals for the Nursultan Block (N Block) offshore Kazakhstan.

KMG as majority owner will hold a 51 per cent interest in the subsoil use contract and the remaining 49 per cent will be shared equally between Conoco-Phillips and Mubadala, the statement by its business unit, Mubadala Oil and Gas, said.

The project will be operated by a Kazakh firm which will be jointly owned by the participants in proportion to their equity.

UAE wants to invest in infrastructure sector in India

UAE is looking for more opportunities for investment in the infrastructure and other areas in India.

This was conveyed by Foreign Minister of UAE Sheikh Abdullah Bin Zayed Al Nahyan who met External Affairs minister S M Krishna today and discussed bilateral relations, regional and multinational issues.

He is on a two-day official visit here from June 11. Acknowledging the contribution made to economies of both the countries by 1.5 million Indian present in UAE, the ministers also explored new avenues of cooperation, especially in the domain of trade and economy.

Gaddafi courts Italian investors

Muammar Gaddafi on Friday courted Italian investors with a promise of priority treatment, saying oil-rich Libya could act as a gateway to fast-growing Africa.

“Italian companies will have priority in Libya and we will not favour the supply of gas and oil to other countries at the expense of Italy,” the Libyan leader told an enthusiastic audience at Confindustria, the Italian business lobby, in Rome.

Libyan officials confirmed that Libya, which has built a $70bn sovereign wealth fund on its oil and gas exports, planned to spend $12bn on attracting foreign investment, including five-year tax breaks, free trade zones, cash grants and joint venture projects.

Iran vote brings tense stand-off

Iran’s presidential election was heading for a tense stand-off on Friday night as state news agencies declared Mahmoud Ahmadi-Nejad, the firebrand incumbent, had been re-elected with more than half the ballot, while his closest challenger alleged widespread fraud.

Mir-Hossein Moussavi, the moderate former prime minister, claimed he had actually won the election and appealed to Iran’s supreme leader, Ayatollah Ali Khamenei, “not to allow irregularities”.

A landslide victory for Mr Ahmadi-Nejad would enrage a large part of the Iranian population because it would appear to contradict the huge street rallies that had been taking place every night, as people expressed their dissatisfaction with the current government and cheered on Mr Moussavi.