ANALYSIS-Gulf stocks plagued by opacity, structural problems

Cheap Gulf bluechip stocks are set to stay off-radar for many foreign investors because of issues over transparency, a ban on short-selling, a lack of diversification and the region's absence from key indexes.

From January 2008 to the end of May 2009, net selling of Dubai-listed stocks by international funds totalled $2.07 billion.

Gulf indexes fell between 28 and 72 percent in 2008 as the region's oil-powered boom faltered. Crude prices slumped from a record high of $147 a barrel in July 2008 to below $35 by December. Oil is now at $65, yet rising revenues will not attract risk-averse overseas funds unless transparency improves.

Recruiter sees grim future for London’s out-of-work bankers

If you are 35 years old, have only ever worked in the City and have lost your job, then the chief executive of Britain’s biggest listed recruitment company has a grim message for you on the prospect of a recovery in financial sector employment: “Those jobs have gone and they’re not coming back any time soon.” Hays chief executive Alistair Cox told the FT he had seen no indication green shoots have taken hold yet in the notoriously competitive City recruitment market.

GCC likely to pump $200bn into renewable energy plans

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The choice of the UAE as the location of the International Renewable Energy Agency (Irena) will provide a strong push to efforts by Gulf and other Arab countries to develop such resources, said officials and analysts.

Although Gulf countries have the biggest conventional hydrocarbon resources, they need to develop other sources to meet a steady growth in domestic consumption and save those resources for future generations.

While they are among the poorest nations in water wealth, the Gulf Co-operation Council (GCC) countries control massive renewable energy potential given their desert nature, which makes them ideal for solar energy generation.

Invest AD attracts $100m for UAE Equities Fund

Invest AD has attracted over $100 million (Dh367 million) to its newly launched UAE Equities Fund from institutional investors, reflecting rising interest in Middle East and North Africa markets.

The company launched the fund to invest in the United Arab Emirates stock markets last month, when it adopted a new name, "Invest AD", to reflect its growing role as a manager of third-party money.

Invest AD, created as the Abu Dhabi Investment Company in 1977 originally to invest on behalf of the emirate's government, has built up strong investment management, private equity, real estate, infrastructure and investment banking teams to serve global clients.

Noor Islamic improves balance sheet

Noor Islamic Bank announced on Monday that its shareholders and board of directors had approved the proposed conversion of the 2008 Ministry of Finance deposits of the UAE Government into Tier-2 capital to further strengthen the bank's balance sheet.

The conversion option was offered to all UAE banks as part of the Ministry of Finance's original Dh50 billion deposit injection and does not result in any issuance of equity shares to the Ministry of Finance.

The bank will achieve a capital adequacy ratio (CAR) in excess of 20 per cent, up from 15.92 per cent as reported on December 31, 2008, and well above the current minimum UAE Central Bank requirement of 10 per cent.

Ras al-Khaimah Starts Marketing Sukuk, Bankers Say

Ras al-Khaimah, one of the seven sheikhdoms in the United Arab Emirates, started investor meetings to sell Islamic bonds, two bankers and an investor said.

Standard Chartered Plc and BNP Paribas are managing the sale, said the bankers who declined to be identified before the transaction is completed. The lead managers are meeting with investors in Dubai today, an investor who participated said.

Sales of Islamic bonds, or sukuk, picked up after plunging in 2008 as tumbling crude oil prices sapped demand from the Middle East. Saudi Electricity Co., the state-controlled power producer, sold 7 billion-riyal ($1.87 billion) worth of sukuk last month in the biggest offer this year. Sukuk worth $13.9 billion were sold last year, following a record $31 billion in 2007, Bloomberg data show. Sales have reached $6.7 billion so far this year.

Europe to sign Nabucco gas pipeline pact

The planned Nabucco gas pipeline, which will take Middle-Eastern gas to Europe, has received a much-needed fillip with a decision by the EU to sign a key agreement next week.

The importance and sensitivity of the international deal were highlighted yesterday, when two of Nabucco’s backers, the Austrian energy group OMV and the German utility RWE, hired Joschka Fischer, the former German minister of foreign affairs, to advise on political communications concerning the €7.9 billion (Dh40.6bn) pipeline’s development.

Austria, Bulgaria, Hungary, Romania and Turkey – the nations through which the pipeline will pass – are to sign the intergovernmental transit agreement in Ankara next Monday.

Ratings agencies study banks

Ratings agencies are starting to scrutinise the balance sheets of UAE banks as the extent of their exposure to two troubled Saudi family conglomerates emerges.

Fitch Ratings, one of the world’s largest agencies, yesterday confirmed the “C” rating of Mashreqbank, based in Dubai, saying its “sizeable” exposure to the Saad and Al Gosaibi groups was “manageable”.

“Mashreqbank should be able to absorb potential credit losses stemming from the exposure given its current profitability and capitalisation levels,” Fitch said.

Classic case of no winners in Iraqi oil licence auction

A popular conspiracy theory about the US invasion of Iraq was that America wanted to seize control of its oilfields to divide them up with western allies and friends in the boardrooms of “Big Oil”.

The truth is, that was never on the cards.

A return to the “good old days” for western colonial powers in oil-rich parts of the Middle East would never have been tolerated by any legitimate post-war Iraqi government or by the international community.

Recovery fears hit shares

Regional stock markets were down Monday and oil prices dropped to their lowest levels in five weeks as investors continued to lose faith in prospects for an early economic -recovery.

US crude dipped as low as US$63.75 Monday, roughly 4 per cent below its level on Thursday, when markets closed for the US Independence Day holiday.

“This could be a correction from overheated expectations of an economic recovery,” JBC Energy of -Vienna said in a research note.

Tailored online games prove a good fit

Across the Middle East, young Arabs are increasingly eschewing the traditional pastimes of their parents and instead hunker in front of computer screens, chatting with friends and playing games.

Since 2000, internet penetration in the region has increased more than tenfold to almost 46m users last year, according to Internet World Statistics. Telecoms operators are rolling out high-speed internet to most of the region, and broadband use has exploded.

Increased bandwidth has allowed online computer gaming to take off.

Jordan seeks oil riches from shale deposits

Oil wealth can be a mixed blessing. Too much black gold tends to crowd out other sectors of the economy by boosting exchange rates and the “unearned” income it provides can encourage dependency among some sectors of society.

For Jordan, such arguments are the stuff of dreams. The country “imports every drop of oil”, in the words of Ala Nuseibeh, chief executive of Kan International Petroleum Services, an Amman-based company.

But that may be about to change. In May, Royal Dutch Shell signed a deal to explore and possibly eventually exploit Jordan’s deep oil shale deposits, which are among the world’s largest.

Don’t Blame it All on Oil! (Re-post)

Following yesterday’s decline, the KSE index plunged 3.64% today, the largest one day fall in the past 9 month. It seems that most of the time analysts try to justify the market’s behavior instead of actually predicting it. A few weeks ago everything seemed fine and every analyst I was talking to was bullish on the market, however, it only took a 2 day fall for them all to change their minds and rationalize the fall as an “expected outcome.”

Many of the justifications might be reasonable, but the fall in oil prices doesn’t convince me that much. On April the 19th oil prices were at $50.33 and the index was 7,528; and on May 10th oil prices were at $58.6 and the index was 7,775; on May 24th oil prices were at $61.6 and the index was 7,859. Is it justifiable that the oil prices are $63 and the index is 7,664? I’m not saying that we are not effected by oil prices but all I’m saying is that the index was at a higher level with lower oil prices.

I hope last year’s scenario doesn’t reoccur this summer because many talk suggests that we will have a ‘W’ shaped recovery i.e. we might test the bottom again.

As for my own beaten up portfolio, I wanted to sell a couple of weeks ago but I didn’t. Although I think its a good time to sell and realize whatever profits we have, I’m still in denial and hoping that this fall is only a small correction and the market will shoot up again.