Middle East equity markets are braced for another rocky week, with volatile global exchanges likely to dictate direction in the absence of compelling local factors to distract investors from negative news about the world economy.
The focus on the global economy means a declining pool of active traders is not discriminating much between the fundamental factors behind individual Middle East stocks. Instead, it is trying to ride the ebbs and flows of global sentiment to make a quick profit on the most liquid names.
Long-term investors and funds remain largely inactive, so markets are listless and will lack direction until a clearer picture emerges of the chances of a U.S. recession and the ultimate consequences of the euro zone debt crisis.
Friday 9 September 2011
Middle East Crude-Oman jumps to 6-mth high | Reuters
Oman crude values jumped to their highest since the Libyan civil war broke out six months ago, boosting sentiment across the Middle East crude market ahead of the Northern Hemisphere's peak heating season.
The notional premium of Oman crude climbed to about $1.50 a barrel to Dubai quotes on Friday, up from $1.30 a day earlier and discounts of 30 cents a month ago, tracking rising values in the Dubai Mercantile Exchange.
Refiners are still holding back from showing buying interest
for November cargoes as industry gatherings in Singapore wind down following the Asia-Pacific Petroleum Conference this week.
The notional premium of Oman crude climbed to about $1.50 a barrel to Dubai quotes on Friday, up from $1.30 a day earlier and discounts of 30 cents a month ago, tracking rising values in the Dubai Mercantile Exchange.
Refiners are still holding back from showing buying interest
for November cargoes as industry gatherings in Singapore wind down following the Asia-Pacific Petroleum Conference this week.
Qatar: the price of patronage | beyondbrics – FT.com
It must be nice to be a Qatari bureaucrat. The country’s government recently gave salary and pensions raises of between 50 and 120 per cent to public sector workers – something other employers are wholly reluctant to hand out these days.
But the move shows how even stable Gulf governments, circa the Arab spring, are finding it harder than ever to move away from a culture of patronage towards economic diversification.
Saudi Arabia led the spending binge with pledges of $120bn and the promised creation of new government jobs after unrest swept north Africa. Money was then pledged by the Gulf Cooperation Council for Oman and Bahrain following unrest there. Qatar now will lift military salaries and pensions depending on rank, with 60 per cent raises for other public employees.
But the move shows how even stable Gulf governments, circa the Arab spring, are finding it harder than ever to move away from a culture of patronage towards economic diversification.
Saudi Arabia led the spending binge with pledges of $120bn and the promised creation of new government jobs after unrest swept north Africa. Money was then pledged by the Gulf Cooperation Council for Oman and Bahrain following unrest there. Qatar now will lift military salaries and pensions depending on rank, with 60 per cent raises for other public employees.
Brent oil steady near $115 on storms, US jobs package | Reuters
Brent crude oil edged up towards $115 a barrel on Friday, after falling more than a dollar in the previous session, supported by storm threats and uncertainty about U.S. President Barack Obama's latest plan to revive the world's largest economy.
Brent for October delivery was on track for a weekly gain of more than 2 percent, trading up 27 cents at $114.82 a barrel by 0505 GMT.
U.S. crude oil nudged four cents higher to $89.09 a barrel and was set for a gain of more than 3 percent this week.
Brent for October delivery was on track for a weekly gain of more than 2 percent, trading up 27 cents at $114.82 a barrel by 0505 GMT.
U.S. crude oil nudged four cents higher to $89.09 a barrel and was set for a gain of more than 3 percent this week.
Gulf plans to launch VAT remain at technical stage - Maktoob News
Plans to introduce a value-added tax for Gulf Arab oil exporters remain at a technical stage with the timing of the long-considered project still undecided though 2012-2015 have been tentatively discussed as potential launch dates, officials said.
Six Gulf Arab crude producers have been mulling the joint VAT plan over the past five years, aiming to trim their budget dependence on volatile oil prices, expand tools to steer hydrocarbon-reliant economies and reform their low-tax systems.
"It is only at the discussion stage," Younis al-Khouri, undersecretary and director general at the United Arab Emirates finance ministry, told Reuters on the sidelines of a meeting of Arab finance ministers in the UAE capital on Wednesday.
Six Gulf Arab crude producers have been mulling the joint VAT plan over the past five years, aiming to trim their budget dependence on volatile oil prices, expand tools to steer hydrocarbon-reliant economies and reform their low-tax systems.
"It is only at the discussion stage," Younis al-Khouri, undersecretary and director general at the United Arab Emirates finance ministry, told Reuters on the sidelines of a meeting of Arab finance ministers in the UAE capital on Wednesday.
gulfnews : Developers fear new recession; bullish on UAE
Developers are dreading a global double-dip recession and keeping an eye out for any warning signals.
Masoud Al Awar, CEO of Tasweek Real Estate Marketing and Development, said the motto for developers used to be "pretend and extend" — expanding their projects despite the market's oversupply — while in 2011 that changed to "delay and pray".
"By delay, I mean waiting to see whether there is a double-dip recession in the world. Praying is hoping that there won't be one."
Masoud Al Awar, CEO of Tasweek Real Estate Marketing and Development, said the motto for developers used to be "pretend and extend" — expanding their projects despite the market's oversupply — while in 2011 that changed to "delay and pray".
"By delay, I mean waiting to see whether there is a double-dip recession in the world. Praying is hoping that there won't be one."
Quieter autumn ahead for Dubai property with prices falling again « ArabianMoney
After the recovery and stabilization of Dubai property prices in the first half of the year this autumn is shaping up to be rather different with a tougher global economic environment putting a squeeze on purchases by foreigners and new supply continuing to flood onto the market.
Dubizzle.ae, the UAE listings website has 22,590 units available for rent and 17,482 for sale. There have apparently been around 2,000 new properties delivered so far this year, though talk of 20,000 units in 2011 looks very wide of the mark.
Dubizzle.ae, the UAE listings website has 22,590 units available for rent and 17,482 for sale. There have apparently been around 2,000 new properties delivered so far this year, though talk of 20,000 units in 2011 looks very wide of the mark.
NBAD looks steady despite global fears - The National
National Bank of Abu Dhabi touts its reputation as one of the safest banks in the world for retail customers.
The bank's shareholders should feel just as safe.
For now, the signs at NBAD are promising.
The bank's shareholders should feel just as safe.
For now, the signs at NBAD are promising.
Kuwait, Qatar Criticized As Terror Finance Hubs - Corruption Currents - WSJ
Key to stemming the flow of funds to terrorists is working with international partners, but what if your partners don’t do anything about it?
That seems to be the message U.S. officials sent to Kuwait and Qatar during a symposium at the Treasury Department on Thursday about counter-terrorist financing. Each country was tagged as not doing enough — or anything — about stopping the flow of terrorism dollars.
Kuwait and Qatar “unfortunately have become permissive environments for extremist fundraising,” said David Cohen, Treasury undersecretary for terrorism and financial intelligence.
That seems to be the message U.S. officials sent to Kuwait and Qatar during a symposium at the Treasury Department on Thursday about counter-terrorist financing. Each country was tagged as not doing enough — or anything — about stopping the flow of terrorism dollars.
Kuwait and Qatar “unfortunately have become permissive environments for extremist fundraising,” said David Cohen, Treasury undersecretary for terrorism and financial intelligence.
What Is MGM Resorts Worth? (MGM)
MGM Resorts (NYSE: MGM ) has taken the wrath of my articles for over a year now. The U.S.-based gaming company has been on my list of worst investments in gaming, a short sale in my own portfolio, and a company whose decisions I constantly question.
So today the question is: What is MGM Resorts really worth?
MGM's crown jewel
First, let's try to value the company's most valuable asset -- its 51% stake in MGM China. The company has one casino, and the prospect of building another one on the Cotai Strip in five years or so. In the past year, MGM China has generated $226.2 million of operating income for MGM.
I usually like to use enterprise value/EBITDA but since operating income, not EBITDA, was reported for most of the last year we'll use that instead. If we use an enterprise value/OI multiple of 15 times to 18 times -- more generous than EV/EBITDA multiples of competitors -- that would give me an enterprise value of $3.39 billion to $4.07 billion. Now we back out the $174 million in net debt at MGM China, which gives me an equity stake of $3.22 billion to $3.90 billion for MGM.
So today the question is: What is MGM Resorts really worth?
MGM's crown jewel
First, let's try to value the company's most valuable asset -- its 51% stake in MGM China. The company has one casino, and the prospect of building another one on the Cotai Strip in five years or so. In the past year, MGM China has generated $226.2 million of operating income for MGM.
I usually like to use enterprise value/EBITDA but since operating income, not EBITDA, was reported for most of the last year we'll use that instead. If we use an enterprise value/OI multiple of 15 times to 18 times -- more generous than EV/EBITDA multiples of competitors -- that would give me an enterprise value of $3.39 billion to $4.07 billion. Now we back out the $174 million in net debt at MGM China, which gives me an equity stake of $3.22 billion to $3.90 billion for MGM.
gulfnews : Private-sector growth in UAE hits 15-month low
Growth in private sector business activity in the UAE plummeted to a 15-month low in August as output stagnated and new order growth fell to its lowest rate in a year, according to the HSBC Purchasing Managers' Index (PMI) released yesterday.
Analysts predict the negative trend will continue and gradually improve by November.
The HSBC PMI, which measures business activity of 400 private firms in the UAE across manufacturing, services, construction and retail sectors, dropped to 50.9 points in August from 53.3 points in July. In marked contrast, the PMI was 57.5 points in April — the highest level recorded since the index was started in August 2009 —with 50 being the no-change mark.
Analysts predict the negative trend will continue and gradually improve by November.
The HSBC PMI, which measures business activity of 400 private firms in the UAE across manufacturing, services, construction and retail sectors, dropped to 50.9 points in August from 53.3 points in July. In marked contrast, the PMI was 57.5 points in April — the highest level recorded since the index was started in August 2009 —with 50 being the no-change mark.
After Gaddafi: A spent force - FT.com
In the shadow of the US embassy in London’s leafy Mayfair district is a smart Georgian townhouse with a discreet brass nameplate: Dalia Advisory Limited. This is the London office of the Libyan Investment Authority at Upper Brook Street, a well-heeled parade that is home to some of the world’s most powerful hedge funds and secretive financiers.
Inside Number 11, the walls are bare, the rooms spartan and the carpets newly laid. For months, the office has stood empty. Barely a year ago, however, it was a staging post for the billions of dollars in investments Libya’s cash-rich wealth fund was making around the world.
When Muammer Gaddafi’s second son and heir apparent, Seif al-Islam, backed the establishment of the $65bn LIA in January 2007 it quickly became a high-profile vehicle for the regime’s efforts to re-engage with the global economy. “If you wanted to invest in the past, no one would take your calls. Now bankers fly on their private jets to see us,” Mohammed Layas, chairman of the LIA, said at the time.
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