#GCC and #MiddleEast Finance News: 4 Oct 2011

Tuesday 4 October 2011

AFP: Arab Spring sparks sharp fall in foreign investment

The flow of foreign direct investment into the Arab world is expected to slump by 17 percent in 2011, with countries that saw popular uprisings worst hit, a pan-Arab organisation said on Tuesday.

FDI inflows into 21 Arab nations are forecast to fall to $55.1 billion this year compared to $66.2 billion in 2010, the Kuwait-based Arab Investment and Export Credit Guarantee Corp. said in a report.

Egypt, where mass protests overthrew President Hosni Mubarak in February, is expected to experience the biggest drop from $6.4 billion last year to a mere $500 million in 2011, a 92-percent slide, the report said.

IPIC wants MAN to help Ferrostaal get funding | Reuters

The International Petroleum Investment Company (IPIC), one of Abu Dhabi's sovereign wealth funds, called on Germany's MAN SE to help ensure their jointly-held Ferrostaal unit can fund itself.

IPIC said on Tuesday that Ferrostaal needs temporary loan guarantees worth 126 million euros to continue running its business, and asked the German industrial group to provide to Ferrostaal's creditors 30 percent of the sum -- a proportion that is equivalent to its stake.

IPIC, which owns the remaining 70 percent of the plant construction and engineering service provider, said MAN did not agree to its request, a statement the German company promptly denied.

MENA stock markets close - October 4, 2011

Exchange

Status

Index

Change

TASI (Saudi Stock Market)

5965.13

-0.98%

DFM (Dubai Financial Market)

1387.31

-1.44%

ADX (Abudhabi Securities Exchange)

2496.99

-0.87%

KSE (Kuwait Stock Exchange)

5804.3

-0.13%

BSE (Bahrain Stock Exchange)

1167.04

-0.22%

MSM (Muscat Securities Market)

5556.75

-0.44%

QE (Qatar Exchange)

8157.48

-1.61%

LSE (Beirut Stock Exchange)

1227.43

-0.18%

EGX 30 (Egypt Exchange)

4025.72

-1.26%

ASE (Amman Stock Exchange)

1970.37

-0.54%

TUNINDEX (Tunisia Stock Exchange)

4695.65

0.32%

CB (Casablanca Stock Exchange)

11457.6

0.16%

PSE (Palestine Securities Exchange)

479.49

-0.28%

UAE's Etislalat mulls partnerships, licences to expand | Reuters

Emirates Telecommunications Corp. (Etisalat) is open to partnerships or obtaining new licences as it seeks to expand into different markets, the United Arab Emirates carrier said on Tuesday.

Available mergers and acquisition opportunities are decreasing despite an ongoing need for consolidation within the industry, Ahmed bin Ali, Etisalat's senior vice president for corporate communications, said on the sidelines of a business conference.

"Competition is healthy and good for customers but if we are overdoing it, it will be miserable for customers. Price wars (mean) less services will be introduced, less investment," Ali said, adding that regulators can play a role in helping small players consolidate with other operators.

Dubai Shares Fall for a 5th Day on Europe Debt Crisis; DFM Drops - Businessweek

Dubai’s benchmark index fell for a fifth day, its longest losing-streak in more than four months, as disagreement among policy makers over how to resolve Europe’s debt crisis dimmed the outlook for the global economy.

Emaar Properties PJSC, developer of the world’s tallest skyscraper, decreased 2.7 percent. Dubai Financial Market PJSC, the only Gulf Arab stock market to sell shares to the public, sank to the lowest intraday level since 2009. The DFM General Index slipped 1.4 percent to 1,387.72, the lowest since March 8, at 11:25 a.m. in Dubai. About 33 million shares traded in Dubai today, compared with this year’s daily average of 112 million shares. Emerging markets dropped, with the MSCI Emerging Markets Index, declining 1.6 percent.

“Fears are still related to Europe debt, especially with the indecision between Europe’s policy makers,” said Samer Darwiche, a financial analyst at Gulfmena Investments in Dubai.

Mobius: the Mideast bull | beyondbrics | News and views on emerging markets from the Financial Times – FT.com

The Middle East has found its biggest bull and he’s a heavyweight: Mark Mobius.

Amongst the confusion of the region’s protests and crackdowns the exuberant executive chairman of Franklin Templeton’s emerging markets group is thrilled about investing in the Middle East.

Political unrest, uncertainty and the subsequent government spending drives have created investment opportunities in the region, he says. From property companies in the United Arab Emirates, to commodity stocks in Libya, Templeton is actively scanning the Middle East markets for cheap deals.

Egypt's OCI secures $1.9 bln in credit facilities | Reuters

Egypt's Orascom Construction Industries (OCI), the country's biggest listed company, said on Tuesday its fertiliser subsidiaries had signed credit facilities worth $1.9 billion with international and local banks.

The group plans to use the facilities to refinance its existing credit facilities.

OCI plans on separating its fertiliser and construction businesses into two legal entities under a single holding company. It said in a statement that the credit facilities would help it carry out the split.

Limitless Said to Get Sixth Extension on $1.2 Billion Loan - Bloomberg

Limitless LLC received a sixth extension on a $1.2 billion loan as the real-estate developer controlled by state-owned Dubai World works on a restructuring plan, two bankers familiar with the plan said.

The extension is conditional on talks between Limitless and creditors making sufficient progress, with Jan. 31 set as a deadline for a deal to be reached, one of the bankers said, declining to be identified because the information is private. The last extension on the syndicated loan expired on Sept. 30.

“Private discussions continue with our lenders,” Limitless said in an e-mailed response to questions. The Islamic loan, originally maturing in March last year, got two three- month, one six-month, one four-month and one two-month extensions.

Indonesia, Taqa, Tamweel, Qatar, Bahrain: Islamic Bond Alert - Bloomberg

The following borrowers are expected to sell Islamic bonds, which use asset returns to pay investors to comply with the religion’s ban on interest.

Global sales of sukuk climbed to $17.9 billion in 2011, from $11.8 billion a year earlier, according to data compiled by Bloomberg.

INDONESIA: The government may postpone a plan to issue global Islamic bonds this year because of market conditions, Bisnis Indonesia reported, citing Finance Minister Agus Martowardojo. Indonesia is waiting for the right timing to sell the debt, Bhimantara Widyajala, a director at the debt management office, said on Sept. 28.

UAE Sept business activity picks up from 15-mth low, UAE Economy - Maktoob News

Growth in private sector business activity in the United Arab Emirates picked up in September from a 15-month low, but the improvement was minor, a purchasing managers' survey showed on Tuesday.

The HSBC UAE Purchasing Managers' Index (PMI), which measures the performance of the OPEC member's manufacturing and services sectors, rose to 52.11 points from August's 50.95, the survey of 400 private sector firms showed. The 50-point level separates growth from contraction.

"It's good to see a pick-up in the headline index after four consecutive months of decline, particularly as the gain was driven by strong growth in new orders," said Simon Williams, chief economist for the Middle East and North Africa at HSBC.

Qataris unmoved by wealth managers - The National

Their Brooks Brothers suits immaculately pressed, their boots polished and gleaming, the investment managers gathered at the Grand Hyatt in Doha lacked just one crucial element - the million-dollar smile.

Representatives of the wealth management industry have flooded the Gulf in recent years in an effort to find new clients. But so far, Qatari investors are taking little notice.

Qatar, where the economy is growing at 41.8 per cent and which has been named the world's richest nation per capita by the IMF, is hardly short of cash.

gulfnews : Outlook bleak until end of year

European shares experienced a miserable start to the fourth quarter yesterday after the Greek government said it would miss its deficit targets.

The bleak economic outlook is not expected to improve in the lead-up to Christmas with analysts predicting further volatility across global equity indexes over the next three months.

The pan-European FTSEurofirst 300 index suffered its biggest quarterly fall since the 2008 collapse of Lehman Brothers in the period from July 1 to September 30, 2011. Britain's FTSE 100 index had its worst quarterly drop since third quarter 2002, losing £212 billion in value.

Qataris unmoved by wealth managers - The National

Foreboding from Opec official - The National

The UAE's Opec governor has warned of dark days ahead for the global economy and urged oil producers to prepare for a potential slump in demand.

Ali Al Yabhouni's comments yesterday came as Greece revealed its deficit was larger than originally stated and European politicians grappled with the debt crisis.

"There are ominous clouds on the horizon that represent a major downside risk," Mr Al Yabhouni told industry executives in Dubai. "We have to remain alert, ready to respond to changing situations, in particular to growing concerns over the economy and its inevitable impact on oil demand."

Stalled Jordan project gets $240m from Abu Dhabi - The National

An Abu Dhabi company is injecting US$240 million (Dh881.4m) to restart a tourism project in Jordan's Red Sea city of Aqaba.

Work stopped on the development almost three years ago.

The Abu Dhabi company, which was not named, is investing the money in the Saraya development, says Mohammed S Turk, the chief executive of Aqaba Development, which is a stakeholder in Saraya. The project includes hotels to be managed by Dubai's Jumeirah Group and Starwood Hotels and Resorts, as well as a Wild Wadi water park, apartments, villas and a convention centre.

Emirates Prods Boeing to Keep ‘Head of Steam’ on 777 Jet Upgrade - Bloomberg

Emirates, the world’s biggest international airline, is pushing Boeing Co. (BA) to press ahead with improvements to its 777, even as it finishes work on an all-new airplane and updated designs for two others.

The planemaker needs to come up with a better version of the 777 in the next six months and have it ready to enter service by 2018, Emirates President Tim Clark said yesterday in an interview after two days of meetings with Boeing executives in Seattle.

He said he’s been asking for two years for a twin-aisle plane that will fly more passengers and freight greater distances and be at least 10 percent cheaper to operate. Those savings would be similar to what Boeing is promising for two smaller planes: the 787, entering service this month more than three years late and billions of dollars over budget, and the 737 MAX, scheduled to be ready in 2017.

Qatar’s offer for Greek gold will be hard to refuse - The Globe and Mail

Qatar is getting Greek gold for a steal. The financing offer to European Goldfields () will buy the world’s richest country at least 27 per cent of the Canadian miner for a fraction of its mooted July valuation. But the company’s shareholders will have to think hard before turning down Qatar’s audacious near-$1-billion (U.S.) foray into gold.

A seven-year $600-million secured loan facility will finance European Goldfields’ entire project portfolio, focused on mines located in recession-hit Greece, at 7 per cent over Libor (London Interbank Offered Rate). For daring to lend where no Western bank would dare, Qatar will receive warrants worth almost 17 per cent of European Goldfields on a pro-forma basis.

Qatar also bought a further 9.9 per cent of shares from a subsidiary of indebted Greek construction firm Ellaktor and another shareholder for around $173-million. At $9.5 a share, that values European Goldfields at less than $75 per ounce of its 24 million ounces of gold equivalent resources. A developed miner like rival Randgold Resources trades at several times that amount.

Tiny Qatar’s Big Plans May Change U.S. Mideast Policy: Meghan O’Sullivan - Bloomberg

Qatar, a country of fewer than 2 million people set on a peninsula smaller than Connecticut, seems an unlikely candidate to become a regional power. Yet with little fanfare and less warning, tiny Qatar has emerged as one of the Middle East’s most influential states.

As the U.S. struggles to understand and predict the new contours of the region, it would be wise to pursue even closer ties to this regional maverick.

Even with its demographic and geographic limits, Qatar has several assets that turn out to be in short supply elsewhere in the Middle East and to be of strategic value, given the tumult in the region.

Damas to complete repayment in 3 years

Dubai-based jeweller Damas International aims to sell some assets of its founders within three years as part of a 600 million dirham ($163.4 million) repayment agreement, the company's CEO said.

Damas said in May it had signed a repayment agreement with its founding Abdullah brothers and creditors that cleared the way for selling certain assets of the founders.

"We're hoping that (the assets can be sold) within three years," Damas CEO Anan Fakhreddin told Reuters on the sidelines of a news conference.

Saudi Arabia May Tap Reserves for Spending Plans: Arab Credit - Businessweek

Saudi Arabia, the world’s largest oil exporter, may be forced to tap its reserves to fund spending programs as oil prices drop below the kingdom’s breakeven budget price.

King Abdullah this year announced a $130 billion plan to create jobs and build homes after uprisings toppled leaders in Tunisia, Egypt and Libya. While officials haven’t said whether they’ll sell debt or draw on reserves, as they did two years ago, an oil price below an $85 to $90 breakeven level as estimated by Citigroup Inc. may force them to act.

The central bank’s total assets fell 0.3 percent to 1.93 trillion riyals ($515 billion) in August from July, according to data from the Saudi Arabian Monetary Agency. It was the first monthly decline since February, when the assets fell 0.4 percent. The Riyadh-based bank didn’t respond to telephone calls and a fax seeking comment on the reason for the decrease.