Saturday, 19 December 2009
Middle East ETFs Make A Comeback
When U.S. investors returned from a Thanksgiving break last month, they were greeted by chaos in Dubai, as the government moved to restructure Dubai World, its corporate flagship, and temporarily halt debt payments to certain creditors. The announcement threw up red flags around the world, with the most bearish of investors speculating that Dubai would be the first domino to fall, setting off a wave of crises in debt-laden emerging markets. Hardest hit were the stock markets in the UAE and the surrounding region, which plummeted as fear trumped reason and investors punished stocks and bonds alike as they raced to digest information and assess the potential damage.
In the weeks since the first announcement of a restructuring, the dust has settled and movements by Gulf states governments has put the minds of some investors at ease. Initially, outrage over Dubai’s assumption that its oil-rich neighbors would step in to plug any financial holes was rampant. But that is exactly what is now happening, as Abu Dhabi has stepped in to provide a $10 billion lifeline to Dubai, giving the state sufficient breathing room to fend off creditors who were reportedly prepared to push the entity into default. It was reported that the support came in the form of a five year bond charging an interest rate of only 4%, well below a market rate for a borrower on the verge of disaster.
Middle East ETF Recovery
After sliding by more than 10% as news of the pending disaster broke, Middle East ETFs have staged remarkable recoveries in recent sessions, clawing their way back to almost where they were before Thanksgiving:.............
In the weeks since the first announcement of a restructuring, the dust has settled and movements by Gulf states governments has put the minds of some investors at ease. Initially, outrage over Dubai’s assumption that its oil-rich neighbors would step in to plug any financial holes was rampant. But that is exactly what is now happening, as Abu Dhabi has stepped in to provide a $10 billion lifeline to Dubai, giving the state sufficient breathing room to fend off creditors who were reportedly prepared to push the entity into default. It was reported that the support came in the form of a five year bond charging an interest rate of only 4%, well below a market rate for a borrower on the verge of disaster.
Middle East ETF Recovery
After sliding by more than 10% as news of the pending disaster broke, Middle East ETFs have staged remarkable recoveries in recent sessions, clawing their way back to almost where they were before Thanksgiving:.............
Japan to start stockpiling UAE oil in energy security practice
Japan will start stockpiling crude oil produced in the United Arab Emirates on Monday under an accord that stipulates that Tokyo could receive emergency supplies with priority in the event of a global supply shortage, the Japanese government said Friday.
The first batch of shipments from Abu Dhabi, one of the emirates, is to arrive in Kagoshima Prefecture, southwestern Japan, on Monday, where Abu Dhabi National Oil Co. borrows a storage tank from the government, said the Natural Resources and Energy Agency.
The capacity of the tank is 600,000 kiloliters.
The Abu Dhabi government proposed the project in March. The accord, signed in June between Japan and the oil-rich emirate, is the first such agreement for Tokyo.
The partnership is also expected to benefit Abu Dhabi with the aim of expanding its shipments to other East Asian countries, Japanese officials said.
The UAE is the second-biggest oil exporter to Japan after Saudi Arabia. Its supply accounts for nearly 25 percent of Japan's overall oil imports.END
The first batch of shipments from Abu Dhabi, one of the emirates, is to arrive in Kagoshima Prefecture, southwestern Japan, on Monday, where Abu Dhabi National Oil Co. borrows a storage tank from the government, said the Natural Resources and Energy Agency.
The capacity of the tank is 600,000 kiloliters.
The Abu Dhabi government proposed the project in March. The accord, signed in June between Japan and the oil-rich emirate, is the first such agreement for Tokyo.
The partnership is also expected to benefit Abu Dhabi with the aim of expanding its shipments to other East Asian countries, Japanese officials said.
The UAE is the second-biggest oil exporter to Japan after Saudi Arabia. Its supply accounts for nearly 25 percent of Japan's overall oil imports.END
Qatar Raises Volkswagen Stake;Gets Porsche Board Seat
Qatar's sovereign investment fund said Friday it has exercised its options to acquire Volkswagen AG (VOW.XE) shares and increased its voting stake to 17% as planned.
"As a long-term strategic investor, we continue to believe that the investment in VW and the envisaged combination of Porsche SE and VW represents a unique investment asset," Qatar Holding LLC's Chief Executive Ahmad Al-Sayed said in a statement.
Separately, Porsche Automobil Holding SE (PAH3.XE) said Friday that Qatar's Sheikh Jassim Bin Abdulaziz Bin Jassim Al-Thani is set to succeed Hans-Peter Porsche on the German sports-car maker's supervisory board as of Jan. 29.
As part of the complex merger between Volkswagen and Porsche, which is due to be finalized in 2011, Qatar has become Volkswagen's third anchor shareholder and acquired a 10% voting stake in Stuttgart-based Porsche from the Porsche and Piech owner families.
Volkswagen's two largest shareholders are Porsche Holding with a 51% stake and the German state of Lower Saxony with a stake of just above 20%.
Last week, Volkswagen acquired a 49.9% stake in Porsche's core sports-car operations for EUR3.9 billion and confirmed that the merger is expected to be finalized in 2011. Porsche will use the EUR3.9 billion mainly to repay liabilities. Porsche tried to take over full control of Volkswagen, but the deal backfired when credit markets collapsed and Porsche's debt ballooned. Volkswagen is now driving the deal.
As the next step, Volkswagen plans to buy the Porsche Holding Salzburg retail operations. Porsche's sports-car operations are poised to be integrated into Volkswagen as the company's 10th brand along with nameplates such as Audi, Skoda and Seat.END
"As a long-term strategic investor, we continue to believe that the investment in VW and the envisaged combination of Porsche SE and VW represents a unique investment asset," Qatar Holding LLC's Chief Executive Ahmad Al-Sayed said in a statement.
Separately, Porsche Automobil Holding SE (PAH3.XE) said Friday that Qatar's Sheikh Jassim Bin Abdulaziz Bin Jassim Al-Thani is set to succeed Hans-Peter Porsche on the German sports-car maker's supervisory board as of Jan. 29.
As part of the complex merger between Volkswagen and Porsche, which is due to be finalized in 2011, Qatar has become Volkswagen's third anchor shareholder and acquired a 10% voting stake in Stuttgart-based Porsche from the Porsche and Piech owner families.
Volkswagen's two largest shareholders are Porsche Holding with a 51% stake and the German state of Lower Saxony with a stake of just above 20%.
Last week, Volkswagen acquired a 49.9% stake in Porsche's core sports-car operations for EUR3.9 billion and confirmed that the merger is expected to be finalized in 2011. Porsche will use the EUR3.9 billion mainly to repay liabilities. Porsche tried to take over full control of Volkswagen, but the deal backfired when credit markets collapsed and Porsche's debt ballooned. Volkswagen is now driving the deal.
As the next step, Volkswagen plans to buy the Porsche Holding Salzburg retail operations. Porsche's sports-car operations are poised to be integrated into Volkswagen as the company's 10th brand along with nameplates such as Audi, Skoda and Seat.END
The world’s next economic hot spot?
A bailout by neighboring emirate Abu Dhabi has apparently stabilized Dubai’s financial crisis. But the longer-term economic impact—on Dubai and other nations—could grow more serious. Professor of Finance and Insurance Jeffrey Born says the possibilities range from a prolonging of the recession in some Western economies—especially the United Kingdom—to a more serious credit crisis for Islamic economies.
When people think of Dubai, they think of extravagance. Can you give us a brief historic perspective on the financial rise of the United Arab Emirates?
On an area of the Arabian Peninsula on the south coast of the Persian Gulf lie seven sheikdoms that formed a confederation known as the United Arab Emirates (UAE) in 1971, when a 100- year protective treaty with Great Britain expired. Dubai is the second-largest emirate and it takes its name from the major port city located on the Gulf. The confederation members use a common currency, the UAE dirham, but each has its own legal system and constitutional monarchy. Oil, discovered in the early 1960s, accounts for 25 percent of the UAE’s total GDP, which rose to $206 billion in 2008. For comparison, when formed, the UAE had a GDP of approximately $1.5 billion. Linkage of the UAE dirham to the U.S. dollar has led to significant inflation, but nonetheless, real growth rates have been amongst the highest in the world since the mid 1970s, and the creation of OPEC.
Bahrain Aluminum Producer Files Suit Against Sojitz
Bahrain's state-owned aluminum producer, in a civil lawsuit, accused Japanese commodities-trading giant Sojitz Group of paying nearly $15 million in bribes over 13 years to gain discounts on aluminum prices.
The complaint filed by Aluminum Bahrain BSC, known as Alba, in U.S. District Court in Houston, says Sojitz paid "below-market" prices or received "handling fees" to defraud Alba. The complaint was filed on Friday.
The U.S. Justice Department is investigating allegations that Sojitz employees paid bribes, according to people familiar with the matter. The U.S. probe originated from information turned over by Bahraini authorities, who have been conducting their own probe into the allegations.
The complaint filed by Aluminum Bahrain BSC, known as Alba, in U.S. District Court in Houston, says Sojitz paid "below-market" prices or received "handling fees" to defraud Alba. The complaint was filed on Friday.
The U.S. Justice Department is investigating allegations that Sojitz employees paid bribes, according to people familiar with the matter. The U.S. probe originated from information turned over by Bahraini authorities, who have been conducting their own probe into the allegations.
Dubai World's banks expect formal standstill request
Bankers expect Dubai World to make a formal request for a standstill on its $26 billion debt at Monday's creditor meeting, but it could be more than a month before banks agree, bankers said on Friday.
Banks are expected to support Dubai World's [DBWLD.UL] request, but what happens next will depend on the information they receive about the health of its finances, as the scale and complexity of the restructuring and its political overtones put creditors in uncharted territory.
"You can't bet on it, because anything could happen; it could be anything from a complete write-off to 100 percent recovery," a senior banker said.
Banks are expected to support Dubai World's [DBWLD.UL] request, but what happens next will depend on the information they receive about the health of its finances, as the scale and complexity of the restructuring and its political overtones put creditors in uncharted territory.
"You can't bet on it, because anything could happen; it could be anything from a complete write-off to 100 percent recovery," a senior banker said.