Fund flows: surfing the EM wave | beyondbrics – FT.com

It was a bumper week for EM equity funds, which attracted inflows of $5.7bn in the week to Wednesday, according to the latest data from EPFR Global, the Boston-based fund-tracker (see chart after the break).

That’s more than double the inflow of $2.6bn in the previous week and a reversal of the $2.7bn and $2.2bn that flowed out from EM equity funds looking backwards over the previous two weeks.

Brad Durham of EPFR said conversations with fund managers had revealed a clear change in investor sentiment over the past ten days or so.

* username: rupertbu

The Demographic Black Swan In Saudi Oil Exports

Oil importing nations have long treated Saudi Arabia as an infinitely deep well of crude oil supplies. In 2005, Matt Simmon’s book Twilight in the Desert did much to call attention to the possibility of diminishing production from the desert kingdom’s aging wells. More recently, cables released by wikileaks highlight the possible overstatement of Saudi oil reserves. Excellent commentary and links to detailed information covering these issues can be found in a recent post on The Oil Drum.

What much of this discussion ignores, however, is that oil exports from Saudi Arabia depend on more than just production — they are a function of both production and internal consumption. This post will focus on the existing trends of energy consumption within Saudi Arabia and how they will impact future exports, whatever future production levels may be.

Long Term Trends

Consumption of energy within a nation is dependent upon the interplay of population, standard of living and energy efficiency of the economy. Of the three, only population can be measured and reported in simple, uncontroversial units: “# of persons”. It seems obvious but it bears stating explicitly that “In an industrial society, more people implies more energy.” This growth paradigm is of course the fundamental axiom of our current financial and economic systems.

Figure 1) from the Gas Trends databrowser shows Saudi Arabia’s rapid growth from a population of 5 million in 1965 to 25 million in 2010. The large influx of foreign workers seen in the late 70′s has been trending downward since 1980 with a large exodus seen in 1990-91 during the first Gulf War. Natural growth has slowed somewhat with total fertility rates dropping from 5.0 births per woman in 1995 to 2.9 births in 2005. Yet the population is still projected to reach 27 million in 2015 and 32 million in 2025.^[1] At that point the Saudi population will be larger than the combined populations of Australia and New Zealand.

Image: Oil Drum

Saudi fiscal position strong despite $93bn handouts - Fitch - ArabianBusiness.com

Fitch Ratings on Friday affirmed Saudi Arabia's long-term local and foreign currency issuer default ratings (IDR) at AA-, with stable outlooks.

It said the recent decision by King Abdullah to deliver about $93bn in handouts would not harm the kingdom's economic position.

But Fitch did question whether plans to raise the minimum wage for public sector workers would damage the initiative to get more Saudis working in the private sector.

Oil at $124 a barrel, gold at all-time high | beyondbrics – FT.com

The price of one-month Brent crude hit $124 a barrel on Friday, up $1.48, as investors worried about the long-term impact of the conflict in Libya.

The rising price has fuelled inflationary concerns, helping the price of gold to an all-time high. If that’s not enough, the price of silver hit its highest since 1980.

Meanwhile markets in Asia seemed to largely ignore the 7.1 earthquake in Japan late on Thursday. The MSCI Asia ex Japan was slightly up at 0.4 per cent.

Fund Flows: Emerging Markets Are Back

Emerging market (EM) funds reported their best week of inflows since the middle of November last week as investors consider the under-performance of the asset class since early January to have been excessive. A total of $5.7bn was invested in EM funds last week. Russia funds again dominated, taking over $400m of new money with only slightly over 50% coming via ETF fund flows.

Asia’s markets have shrugged off concerns about the latest Japanese earthquake and are trading higher this morning. Oil, and most industrial metal prices are also higher so Moscow’s bourses should regain the losses suffered during the last of trade yesterday. The Nikkei is up 1.5% in early afternoon trade.

One-month Brent is trading higher at $123.4 p/bbl and WTI is at $111.01 p/bbl. Copper is 1.0% better in Shanghai trade. Theprice of gold is slightly better at $1,466.0 per ounce and the euro is up from yesterday’s close at $1.4394.

gulfnews : MAF Holding plans bond issue to raise capital

One of the Gulf's largest mall developers and exclusive franchisee of hypermarket chain Carrefour, Majid Al Futtaim (MAF) Holding has taken initial steps towards issuing bonds, a senior executive said yesterday.

The company did not elaborate on its plans for a potential bond sale, but three sources said it was in talks with a small group of banks to discuss the process of issuing debt.

"We have obtained credit ratings as the first step in our preparatory work to raise capital through a bond issue. We will announce further details in due course," said Daniele Vecchi, senior vice-president for group treasury at the firm in a statement to Reuters.

Kuwait Energy may put off IPO due to unrest - The National

Kuwait Energy, the private oil and gas producer focused on the Middle East and North Africa (Mena), may defer plans for an initial public offering (IPO) of its shares on the London Stock Exchange amid regional political unrest.

The company may also be forced to delay planned oil and gas exploration in Yemen but is forging ahead with projects in Iraq and Egypt.

"We've always said our IPO will be subject to market conditions and we know the market conditions aren't ideal as far as the Middle East region is concerned," said Paul Ditchburn, the vice president of planning and portfolio management at Kuwait Energy.

The courage of her convictions - The National

In the testosterone-fuelled world of investment banking, few would expect to encounter a woman calling the shots. Fewer still would expect to find her in Saudi Arabia.

As the chief executive of Gulf One Investment Bank, Dr Nahed Taher, 46, is among a handful of women who have reached the highest echelons of the sector.

But she says her rise to the top of the corporate ladder is a tale that many Saudi women can replicate nowadays.

Emaar estimate cut due to Egypt exposure - The National

Emaar Properties, the largest developer in the region, has had its price target cut 13 per cent by Deutsche Bank, which yesterday cited uncertainties in Egypt.

"Even if events remain fluid and the impact on the property sector is difficult to gauge at this stage, we believe the Egyptian real estate market is likely to remain uncertain for some time," the bank's analyst, Nabil Ahmed, wrote in a note to clients. "This is a major setback to Emaar's international diversification story given that Egypt is its largest market outside of Dubai and the most visible growth area."

Mr Ahmed said the company claimed Egypt would account for almost half of international deliveries by 2013, and a third of total units handed over.

Dubai to sell future Salik receipts to finance projects - The National

Dubai is to raise US$800 million (Dh2.93 billion) by selling future receipts from road tolls to finance infrastructure projects across the emirate.

The receipts will be packaged into securities and sold to investors.

"This shows the Government is thinking outside the box about how to raise money and should be perceived positively by the market," said Chavan Bhogaita, the head of credit research, international capital markets, for National Bank of Abu Dhabi (NBAD).

Mubadala seeks auditors for increased oversight - The National

Mubadala Development is facing a challenge recruiting internal auditors because of to a global shortage of audit professionals.

Mubadala, a strategic investment company owned by the Abu Dhabi Government, and Dubai World are among companies stepping up their internal checks and balances.

"There's a global shortage of internal auditors," said Joe Ioculano, the head of internal audit at Mubadala.

Dubai property fraud: Need for caution (1) - Daily Independent

With an earned status of an international business and re-export centre, Dubai, one of the seven emirates in the United Arab Emirates, is a cosmopolitan and multi-ethnic city and widely acclaimed as the business, social, and tourism capital - the business hub of the Middle East. It is situated in the Arabian Gulf, but far away from the Middle East’s political hotspots. The city is reputed for its business-friendliness, notably government policies that allow one hundred percent (100%) repatriation of capital and profit. Dubai has over twenty-year track record of strong economic growth, infrastructural development and political stability.

It has over time been a ceaseless attraction for foreign investors, especially those that seek to invest in real estate. Real estate projects in Dubai generally take the form of master communities managed by master developers. Master developers provide the infrastructure and divide the land into plots. The plots are normally sold by a master developer to smaller property developers who transform the plots into residential or commercial centres, ranging from tall towers to secluded buildings and villas.

The property and real estate market has no doubt shown a marked improvement in Dubai’s Gross Domestic Product, GDP. The promising return on investment in real estate in the city has in the recent past attracted teeming tourists to it from several parts of the world. With world-record attractions such as the largest shopping mall, the first underwater hotel, the tallest building and various other attractions in the city, Dubai has experienced rapid growth and a resultant real estate boom, which peaked in the middle of 2008. Prior to this time, plots and villas were generally sold off-plan and could be resold with the developer’s consent.

FT Alphaville » IMF wakes up to oil price rises…

… and not a moment too soon.

It’s been quite a couple of days for oil prices, with front month WTI crude hitting $110 on Thursday for the first time in more than two years:

Why? Take your pick: Gaddafi making gains in Libya, Nigerian elections, a good day of economic news in the US (initial weekly jobless claims down, consumer credit up andsame-store sales beating expectations), or something else.

No idea, though it does seem the right occasion to link to chapter 3 of IMF’s latest World Economic Outlook. The chapter is titled “Oil Scarcity, Growth, and Global Imbalances”, and its main point is sobering indeed:

The increases in the trend component of oil prices suggest that the global oil market has entered a period of increased scarcity. The analysis of demand and supply prospects for crude oil sug- gests that the increased scarcity arises from contin- ued tension between rapid growth in oil demand in emerging market economies and the downshift in oil supply trend growth. If the tension intensi- fies, whether from stronger demand, traditional supply disruptions, or setbacks to capacity growth, market clearing could force price spikes, as in 2007–08.

The report does not include the use of the word “transitory”.

* username: rupertbu