Bahrain's offshore investment houses raked in the money during a five-year long oil boom, but the impact of the global financial crisis on the Gulf Arab region has swept away a business model that relied on fees from raising money for property and private equity projects.
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WHAT HAPPENED?
Dubai's real estate bubble burst late in 2008, with prices falling sharply in the Emirate and at least capping growth in other markets in the region, including Bahrain.
As oil prices dwindled, investors held on to their money for much of 2009, leading to the collapse of the regional placement market for property and real estate projects.
The lack of corporate transparency in the region, highlighted by debt woes at Saudi groups Saad [SAADG.UL] and Ahmad Hamad Algosaibi & Bros (AHAB) that surfaced in May, has worried investors.
Wednesday, 18 November 2009
First Gulf's bond gets over $1bln in orders
Abu Dhabi-based First Gulf Bank, the emirate's second-largest lender by market capitalization, has received more than $1 billion in orders for a planned three-year, dollar-denominated bond, a banker familiar with the deal said Wednesday.
Price guidance has been set at 275 basis points over mid-swaps, he told Zawya Dow Jones.
"The order book will probably close either tonight or tomorrow morning London time," he said. "It's seen more than $1 billion in orders."
Price guidance has been set at 275 basis points over mid-swaps, he told Zawya Dow Jones.
"The order book will probably close either tonight or tomorrow morning London time," he said. "It's seen more than $1 billion in orders."
Kuwaiti Shares Fall to Lowest in 8 Months Led by Zain, Agility
Kuwaiti shares dropped to the lowest level in eight months as Business Standard said a group that’s seeking to buy a stake in Zain may split up and after Agility fell for a second day following an indictment in the U.S.
Zain, the country’s biggest mobile-phone provider, dropped to the lowest since May after Business Standard reported that India’s Bharat Sanchar Nigam Ltd. may exit a group that’s negotiating to buy a 46 percent stake in the company. Agility had the biggest two-day drop since January. Aref Investment tumbled to a 10-month low after it posted a third-quarter loss. The Kuwait Stock Exchange Index lost 1 percent to 6,705.30, bringing the decline this year to 14 percent.
“The Kuwait market has been weak for political reasons, and this week the slow drift downward really started to accelerate as we got very negative news from two corporate heavyweights,” said Akram Annous, deputy fund manager at Al Mal Capital PSC in Dubai. “The Zain news, considering all the speculation in the share price over the past couple of months, is not what you want to see.”
Zain, the country’s biggest mobile-phone provider, dropped to the lowest since May after Business Standard reported that India’s Bharat Sanchar Nigam Ltd. may exit a group that’s negotiating to buy a 46 percent stake in the company. Agility had the biggest two-day drop since January. Aref Investment tumbled to a 10-month low after it posted a third-quarter loss. The Kuwait Stock Exchange Index lost 1 percent to 6,705.30, bringing the decline this year to 14 percent.
“The Kuwait market has been weak for political reasons, and this week the slow drift downward really started to accelerate as we got very negative news from two corporate heavyweights,” said Akram Annous, deputy fund manager at Al Mal Capital PSC in Dubai. “The Zain news, considering all the speculation in the share price over the past couple of months, is not what you want to see.”
Qatar $7 Billion Bond Sale Signals Strong Demand for Gulf Debt
Qatar’s $7 billion bond sale, the biggest this year from an emerging market borrower, signals “strong” demand for debt offerings from the oil-rich region, Commerzbank AG said.
“The Qatari sale is certainly one of the biggest single transactions in the last many years,” said Luis Costa, an emerging markets debt strategist at Commerzbank in London. “The size clearly shows that there is further space for Middle East credit.”
Dubai last month raised $1.93 billion through the biggest Islamic bond sale from the Gulf region this year, while Tourism Development & Investment Co., a state-owned developer of hotels in Abu Dhabi, raised $1 billion from a five-year Islamic bond issue. Commercial Bank of Qatar, the country’s second-biggest bank by assets, sold $1.6 billion of bonds on Nov. 10.
“The Qatari sale is certainly one of the biggest single transactions in the last many years,” said Luis Costa, an emerging markets debt strategist at Commerzbank in London. “The size clearly shows that there is further space for Middle East credit.”
Dubai last month raised $1.93 billion through the biggest Islamic bond sale from the Gulf region this year, while Tourism Development & Investment Co., a state-owned developer of hotels in Abu Dhabi, raised $1 billion from a five-year Islamic bond issue. Commercial Bank of Qatar, the country’s second-biggest bank by assets, sold $1.6 billion of bonds on Nov. 10.
Qatar formalises tax changes
Qatar, the gas-rich peninsula in the Arabian Gulf, plans to slash the corporate tax rate levied on foreign companies to boost international investments and help diversify its economy away from hydrocarbons.
The state-run Qatar News Agency reported on Tuesday that Qatar has passed a new tax law, which is believed to formalise plans to lower the tax rate on foreign companies to 10 per cent from the current 35 per cent, effective from next year.
Soaring liquefied natural gas revenue has helped Qatar dodge the global recession and attracted an influx of foreign companies keen to benefit from the small peninsula’s financial windfall.
The state-run Qatar News Agency reported on Tuesday that Qatar has passed a new tax law, which is believed to formalise plans to lower the tax rate on foreign companies to 10 per cent from the current 35 per cent, effective from next year.
Soaring liquefied natural gas revenue has helped Qatar dodge the global recession and attracted an influx of foreign companies keen to benefit from the small peninsula’s financial windfall.
Part US-owned Qatar Exchange goes online for foreigners, stocks cheap as GDP surges (Re-post)
There are limits on foreign holdings in Qatari companies of up to 25 per cent but for most stocks foreigners do not hold more than 10 per cent so there is room for foreigners to buy more. All that is required is for foreign buyers to open a brokerage account in person and fund it. Then they can trade on the Qatar Exchange or buy and hold these stocks........
Agility Fraud Case Examined
Bloodshed. The KSE weighted index closed down -4.74% yesterday and is down another 2.2% as of Wednesday 10:15 AM. Agility was accused yesterday in an $8.5Bn fraud and conspiracy case by the US government. The indictment will prevent Agility from bidding for contracts during the legal proceedings but the suspension doesn’t preclude it from completing current contracts. This is a severe blow for the company as it derives 75% of its EBIDTA from US government contracts (Cheuvreux estimates). Moreover, this is a calamity for an already weak Kuwait SE sickened by the potential collapse of the Zain sale deal and constant political unrest. Needless to say, Agility closed limit-down yesterday and is currently also trading limit-down. It also dragged the top 3 Kuwait Stock Exchange index heavyweights Zain, NBK, and KFH limit-down with it.
As acting U.S. Attorney for the Northern District of Georgia Mr. Shelnutt elaborates, “The indictment alleges PWC submitted false information and manipulated prices to overcharge for food. This indictment is only the first step. Our investigation of entities and persons who have defrauded the United States and our military is ongoing.” According to reports, an initial appearance and arraignment for the company is set for Nov. 20 in Atlanta. Prosecutors said they were unsure who would be representing the company in that proceeding. It will be peculiar to see what Agility has to say at the initial appearance.
The Agility crisis is significant for several reasons:..........
India's BSNL not to join Zain consortium
Indian state telecom firm Bharat Sanchar Nigam Ltd is unlikely to join a consortium looking to buy a 46 percent stake in Kuwaiti telecom Zain, the Business Standard reported on Wednesday, citing unnamed sources.
Talks with India's Vavasi Group and Malaysia's Al-Bukhary have fallen through over valuations and Vavasi is expected to announce a new consortium partner in a a week or two, the newspaper said.
BSNL and another state-run firm Mahanagar Telephone Nigam Ltd have previously said they were examining a proposal to join the consortium.
Vavasi group Managing Director Farid Afruddin declined to comment, the paper said. BSNL Chairman Kuldeep Goyal could not be immediately reached for comment.END
Talks with India's Vavasi Group and Malaysia's Al-Bukhary have fallen through over valuations and Vavasi is expected to announce a new consortium partner in a a week or two, the newspaper said.
BSNL and another state-run firm Mahanagar Telephone Nigam Ltd have previously said they were examining a proposal to join the consortium.
Vavasi group Managing Director Farid Afruddin declined to comment, the paper said. BSNL Chairman Kuldeep Goyal could not be immediately reached for comment.END
Global firms seek fund managers from Mena
Demand for fund managers in the Middle East and Africa (Mena) is growing as financial firms worldwide look for investment opportunities in emerging markets, senior executive of an investment company told Emirates Business.
Fund managers in the region who have experience in Mena markets would be able to make better decisions and more companies expecting to launch their Mena-focused funds are looking for talent that exists here, said Daniel J Barnett, Chief Executive Officer, Revere Capital Advisors.
The company also plans to come up with an emerging markets fund by the middle of next year.
Fund managers in the region who have experience in Mena markets would be able to make better decisions and more companies expecting to launch their Mena-focused funds are looking for talent that exists here, said Daniel J Barnett, Chief Executive Officer, Revere Capital Advisors.
The company also plans to come up with an emerging markets fund by the middle of next year.
Metals strategy receives US$100m boost
The Abu Dhabi Government took a major step forward in its efforts to forge the metals industry into a pillar of its economy following the signing of agreements to set up a US$100 million (Dh367m) aluminium plant at Taweelah.
Abu Dhabi Basic Industries Corporation (ADBIC) and Gulf Extrusions agreed to jointly build an aluminium extrusions plant, complementing a smelter that will begin producing metal within weeks.
The plant is the second major “downstream” facility planned for a cluster of metals firms that will transform aluminium produced at the Emirates Aluminium (EMAL) smelter into usable consumer products. The extrusions plant will produce 50,000 tonnes per year of material for use in buildings and cars, the two firms said.
Abu Dhabi Basic Industries Corporation (ADBIC) and Gulf Extrusions agreed to jointly build an aluminium extrusions plant, complementing a smelter that will begin producing metal within weeks.
The plant is the second major “downstream” facility planned for a cluster of metals firms that will transform aluminium produced at the Emirates Aluminium (EMAL) smelter into usable consumer products. The extrusions plant will produce 50,000 tonnes per year of material for use in buildings and cars, the two firms said.
Central Bank says lending has fallen
Banks set aside an extra Dh1.2 billion (US$326.7 million) last month to cover loan defaults as lending contracted from the previous month for the first time since July.
The Central Bank figures challenge claims from banks that they are willing to lend to businesses again after emerging from the worst of the financial crisis.
“Banks continue to be hesitant to lend and demand just isn’t picking up in Dubai,” said Janany Vamadeva, an analyst at HC Securities and Investment.
The Central Bank figures challenge claims from banks that they are willing to lend to businesses again after emerging from the worst of the financial crisis.
“Banks continue to be hesitant to lend and demand just isn’t picking up in Dubai,” said Janany Vamadeva, an analyst at HC Securities and Investment.
Aabar shifts to New York for its latest acquisition
Aabar Investment, a company controlled by the Abu Dhabi Government, is helping fund the development of a 73-storey luxury apartment building and hotel in New York City.
Khadem al Qubaisi, the chairman of Aabar, confirmed the company had paid Extell Development for a majority stake in a project rising at 157 West 57th Street in Manhattan, just a block away from Central Park and next door to Essex House, a hotel owned by the Jumeirah Group of Dubai.
Mr al Qubaisi said the deal with Extell, the company of the development giant Gary Barnett, could be the start of several property projects in New York.
Khadem al Qubaisi, the chairman of Aabar, confirmed the company had paid Extell Development for a majority stake in a project rising at 157 West 57th Street in Manhattan, just a block away from Central Park and next door to Essex House, a hotel owned by the Jumeirah Group of Dubai.
Mr al Qubaisi said the deal with Extell, the company of the development giant Gary Barnett, could be the start of several property projects in New York.
Oil Demand Growth to Slow, But OPEC to Raise Capacity
Qatar, for example, is set to raise its oil-production capacity early next year from an existing field known as Al Shaheen. The more than $6 billion expansion project brightens the revenue prospects of the Mideast state but highlights a bigger problem brewing for its partners in the Organization of Petroleum Exporting Countries.
After keeping a tight tether on supply in recent years by cautiously investing, the 12-nation cartel finds itself battling an untimely convergence of lackluster consumption that magnifies its own rising supply capacity -- which may in turn reignite old battles between members over market share and ultimately push oil prices lower.
UAE to look at farmland deals in Ukraine
A United Arab Emirates delegation plans to visit Ukraine in two weeks' time to look at opportunities to lease farmland for food security, Ukraine President Viktor Yushchenko told Reuters.
Gulf countries, mainly reliant on food imports, have increased efforts over the last year to buy or lease land in developing nations to secure food supplies.
"I have agreed with the President of the UAE that an official delegation will be coming to Ukraine in two weeks' time to look at opportunities of investing in the agriculture sector," Viktor Yushchenko told Reuters during a visit to UAE capital Abu Dhabi this week.
Gulf countries, mainly reliant on food imports, have increased efforts over the last year to buy or lease land in developing nations to secure food supplies.
"I have agreed with the President of the UAE that an official delegation will be coming to Ukraine in two weeks' time to look at opportunities of investing in the agriculture sector," Viktor Yushchenko told Reuters during a visit to UAE capital Abu Dhabi this week.
Abu Dhabi's IPIC in talks to buy Bayer unit
Abu Dhabi's International Petroleum Investment Co (IPIC) is in talks to buy Bayer's MaterialScience division, chemicals trade publication ICIS reported, citing IPIC Managing Director Khadem al-Qubaisi.
IPIC was in talks with a further four European and US chemical makers, and expects to close a European acquisition by the first quarter of 2010, IPIC said in its online edition on Tuesday.
A Bayer spokesman told Reuters the company would not comment on "market speculation."
IPIC was in talks with a further four European and US chemical makers, and expects to close a European acquisition by the first quarter of 2010, IPIC said in its online edition on Tuesday.
A Bayer spokesman told Reuters the company would not comment on "market speculation."
Kuwait slips in global corruption index
For a second consecutive year, Kuwait dropped in a global corruption ranking assessing 180 countries, according to a leading graft watchdog. Transparency International (TI), a non-partisan global organization, released yesterday the world index that measures corruption levels in the domestic and public sectors. In TI's annual global Corruption Perception Index (CPI), Kuwait slipped further from 65 to 66 place in a roster of 180 countries. According to the Berlin-based organization fighting worldwide corruption, Kuwait hit the bottom spot as the most corrupt country in the Gulf, following Jordan (49) and Tunisia (65). Kuwait ranks ninth in the Middle East and North African region.
Speaking to the Kuwait Times from Berlin, Tamara Kamhawi, Program Coordinator for Africa and Middle East at TI, said that CPI is a 'perception index' based on surveys which assess corruption in the public sector and if there has been enough effort from the government to crack down on corruption. Stressing that CPI should not be viewed as an annual comparison, she explained that CPI assesses the perception of the corruption problem in Kuwait by the private sector, businesspeople and analysts.
She explained that in the Middle East and North Africa region, only six countries scored five (on a scale from zero) or above (perceived to be "highly clean"), and 13 countries scored below five (perceived to be highly corrupt), identifying that the perception of corruption remains a serious problem in the region. In her words, these ranks indicate that the region "is still suffering from an endemic problem of corruption that has not yet been tackled properly," Kamhawi said.
Speaking to the Kuwait Times from Berlin, Tamara Kamhawi, Program Coordinator for Africa and Middle East at TI, said that CPI is a 'perception index' based on surveys which assess corruption in the public sector and if there has been enough effort from the government to crack down on corruption. Stressing that CPI should not be viewed as an annual comparison, she explained that CPI assesses the perception of the corruption problem in Kuwait by the private sector, businesspeople and analysts.
She explained that in the Middle East and North Africa region, only six countries scored five (on a scale from zero) or above (perceived to be "highly clean"), and 13 countries scored below five (perceived to be highly corrupt), identifying that the perception of corruption remains a serious problem in the region. In her words, these ranks indicate that the region "is still suffering from an endemic problem of corruption that has not yet been tackled properly," Kamhawi said.
DNO shares jump on RAK Petroleum interest
Shares in Norwegian oil producer DNO International ASA (DNO.OL) rose on Tuesday after DNO said it rejected interest from UAE-based RAK Petroleum PLC to buy DNO's treasury shares at a premium to the stock market price.
RAK, based in the northern emirate of Ras al-Khaimah in the UAE, said it held 45.25 million shares in DNO, or 5 percent of the total, after buying 8,000 shares on Monday.
RAK said it had informed the board of DNO that it was also interested in purchasing for cash, at "a meaningful premium" to the current market price, substantially all the treasury shares held by DNO together with any rights of issuance.
RAK, based in the northern emirate of Ras al-Khaimah in the UAE, said it held 45.25 million shares in DNO, or 5 percent of the total, after buying 8,000 shares on Monday.
RAK said it had informed the board of DNO that it was also interested in purchasing for cash, at "a meaningful premium" to the current market price, substantially all the treasury shares held by DNO together with any rights of issuance.
UN set to regulate 'farmland grabs'
The United Nations has started drawing up a code of conduct to regulate overseas investment in farmland, but the voluntary rules will not be ready for at least a year.
The code is the first attempt to control the growing trend of so-called "farmland grab" deals, which involve rich countries such as Saudi Arabia and South Korea investing in overseas farming to boost their own food security.
The trend gained prominence after an attempt by South Korea's Daewoo Logistics to secure a large chunk of land in Madagascar contributed to the collapse of the African country's government.
The code is the first attempt to control the growing trend of so-called "farmland grab" deals, which involve rich countries such as Saudi Arabia and South Korea investing in overseas farming to boost their own food security.
The trend gained prominence after an attempt by South Korea's Daewoo Logistics to secure a large chunk of land in Madagascar contributed to the collapse of the African country's government.