#GCC and #MiddleEast Finance News: 10 Oct 2011

Monday 10 October 2011

Abu Dhabi economy set to see 5% growth next year - ArabianBusiness.com

Abu Dhabi's economy is expected to expand by up to five percent next year, not far from the long-term target rate of 6 percent annually, and the government will continue spending to support growth, a government official said on Monday.

The UAE member, which sits on 10 percent of global oil reserves and accounts for 90 percent of UAE oil output, felt the pinch of the global financial crisis in 2009 after crude prices tumbled from 2008 record highs.

With an oil price recovery in 2010, the economy, which depends on oil production for 57 percent of gross domestic product, picked up speed again.

U.A.E. in ‘Early Stages’ of Implementing 5% VAT, Official Says - Businessweek

The United Arab Emirates may set a value-added tax of 5 percent as part of a regional plan, the Finance Ministry’s Younis Haji Al Khouri said in Dubai today.

The process is still in “its early stages” as the U.A.E. just completed a study on the effects of the VAT both socially and economically, undersecretary of the Ministry of Finance Al Khouri said in an interview.

It will take three years to fully implement the tax from the time its general principles are agreed upon collectively with the Gulf Cooperation Council, he said. The implementation will take place “beyond 2013,” he said.

Dubai to cut shopping malls down to size - FT.com

For many, they are the symbol of Dubai, a destination of tour buses, celebrated in the emirate’s promotional literature and visited by millions each year. But now developers in the emirate say it may be time to move away from fabled mega-malls and concentrate instead on building smaller-scale retail centres.

In recent years developers such as Majid al-Futtaim and Emaar have opened centres such as Mall of the Emirates (“Shopping is just the beginning”) and Dubai Mall (“Everything you desire”), to the point where the malls compete to attract footfall. Developers have used anything from aquariums to ski slopes to attract shoppers to the emirate’s estimated 2.5m sq m of retail space.

But vacancies within existing malls stood at about 15-30 per cent in the second quarter of this year and no new large malls are expected to be completed before 2014, according to Jones Lang LaSalle, the property consultants.

MENA stock markets close - October 10, 2011

Exchange

Status

Index

Change

TASI (Saudi Stock Market)

6136.97

0.61%

DFM (Dubai Financial Market)

1389.57

-0.62%

ADX (Abudhabi Securities Exchange)

2498

-0.07%

KSE (Kuwait Stock Exchange)

5847.6

-0.08%

BSE (Bahrain Stock Exchange)

1153.88

-0.89%

MSM (Muscat Securities Market)

5566.9

0.05%

QE (Qatar Exchange)

8284.79

0.21%

LSE (Beirut Stock Exchange)

1205.44

-0.37%

EGX 30 (Egypt Exchange)

3938.02

-2.25%

ASE (Amman Stock Exchange)

1920.88

-1.10%

TUNINDEX (Tunisia Stock Exchange)

4692.46

-0.06%

CB (Casablanca Stock Exchange)

11373.5

0.00%

PSE (Palestine Securities Exchange)

476.3

-0.56%

Saudi index up as insurance stocks rally; Dubai drops - GCC - ArabianBusiness.com

Saudi Arabia's insurance stocks rallied and the index rose for a fourth consecutive session as upbeat sentiment in world stocks lended support.

The benchmark closed 0.6 percent higher at 6,137 points, trimming 2011 losses to 7.3 percent.

"There is volatility and an uncertainty trend for the market ahead of the Q3 results," said Tarek Al Madi, an independent Riyadh-based financial analyst.

Egypt Stocks Fall to Lowest Since 2009 After Deadly Clashes - Businessweek

Egyptian shares dropped to the lowest level in more than two years and the country’s default risk rose after clashes between Christian demonstrators and security forces in Cairo left dozens dead.

The benchmark EGX 30 Index declined 2.3 percent to 3,938.02 at the 2:30 p.m. close in Cairo, the lowest level since March 2009. The measure tumbled as much as 5.2 percent earlier today. Orascom Construction Industries, the country’s biggest publicly traded builder, lost 3 percent. Citadel Capital SAE closed at the lowest since listing in December 2009.

At least 36 people died as violence broke out last night between protesters from the Arab country’s Christian minority, and police and army forces, Al Arabiya reported today, citing the Health Ministry. The protesters were demonstrating against a recent attack on a church in Egypt’s southern city of Aswan.

Oman May Introduce Islamic Instruments Next Year, CMA Head Says - Bloomberg

Oman may introduce Islamic instruments in early 2012 as it’s working on developing a framework for Shariah-compliant products, the Persian Gulf country’s market regulator said today.

The instruction to start Islamic banks in the sultanate has facilitated the introduction of the services, which “will create new challenges in rethinking our legislations and amending them to accommodate Islamic products,” Oman Capital Markets Authority President Yahya Said Al Jabri said in a speech in Muscat today. “This task requires education and training of human resources able to assimilate this promising industry.”

The introduction of Islamic instruments will be helpful for the expansion of the securities market, Al Jabri said.

Qatari royals swoop on Belgian, Luxembourg private banks | Reuters

Qatar's royal family is stepping up its investment in the euro zone's troubled banking sector with plans to buy private banking businesses from Franco-Belgium financial group Dexia and its Belgian rival KBC .

A Qatari investment group looking to take over Dexia's Banque Internationale Luxembourg (BIL) belongs to members of the al-Thani royal family, who are also buying KBC's private bank, Luxembourg's finance minister Luc Frieden said on Monday.

KBC had earlier said Precision Capital, a Qatari-backed firm based in Luxembourg, had agreed to buy KBL, KBC's private banking unit, for 1.05 billion euros ($1.42 billion). It said the Qatari investor had requested anonymity.

Dubai Group debt deal to take longer than expected - Noor CEO | Reuters

Dubai Group, part of a conglomerate owned by the emirate's ruler, may take longer than expected to reach an agreement with its lenders on a debt deal, a senior banker involved in the talks said on Monday.

"It is taking a bit more time," Hussain al Qemzi, the chief executive of Noor Islamic Bank told Reuters in an interview on the sidelines of a conference.

The company is restructuring about $10 billion in debt with its creditors that comprised of about $6 billion in bank debt already disclosed, a source close to the discussions told Reuters in April.

Dubai's MAF eyes sukuk; expansion into Iraq, Lebanon - exec | Reuters

Dubai's Majid Al Futtaim Holding, sole franchisee of hypermarket chain Carrefour in the Gulf, is to set up a sukuk programme as market volatility continues to thwart its plans for a conventional issue, an executive told reporters today.

MAF completed roadshows for an offering from its $2 billion medium term notes programme in June but chose not to issue a bond because of unfavourable market conditions.

"The next building block is to add a sukuk programme, the sukuk market is more stable," Daniele Vecchi, senior vice president, group treasury, at MAF, said on the sidelines of an Islamic finance conference.

Bahrain's Elaf Bank has sukuk mandates worth $1.5 bln | Reuters

Bahrain-based Islamic investment bank Elaf Bank has secured sharia-compliant bond mandates worth at least $1.5 billion from three Malaysian firms, its chief executive said on Monday.

The Islamic bonds, or sukuk, are being planned for the first quarter of 2012, Jamil Jaroudi told reporters on the sidelines of a conference.

"We have mandates from three Malaysian corporates to issue sukuks in the Malaysian market," said Jaroudi.

GCC facing fresh global crisis - Zawya

Persian Gulf hydrocarbon exporters are in a position to deal with the global economic weakness and any fresh fall in oil prices, given their massive overseas assets and financial surpluses, according to a key Saudi bank.

The Saudi American Bank Group (Samba) estimated the combined assets of regional sovereign wealth funds (SWFs) at nearly $1.1 trillion, more than half of which are controlled by the Abu Dhabi Investment Authority (Adia), Emirates 24/7 wrote.

In a study on the impact of global fiscal turbulence on the six-nation Persian Gulf Cooperation Council (PGCC), SAMBA said the figures do not include the assets controlled by the Saudi Arabian Monetary Agency (Sama), estimated at around SR1,926 billion ($513 billion) at the end of August.

UAE Mashreq Bank working on three local currency sukuks | Reuters

Mashreq Bank , Dubai's second-largest lender by market value, is working with three entities for potential dirham-denominated benchmark sukuks, the head of its Islamic unit said on Monday.

The issues could hit the market next year, Moinuddin Malim, the chief executive of Mashreq Al Islami, told Reuters on the sidelines of a conference in Abu Dhabi.

"We are working with three entities, both corporates and government-related entities (GREs) to help them tap the domestic market," he said. "We have huge liquidity and there is demand for the right price."

UAE's Etisalat says no plans for foreign acquisitions | Reuters

Etisalat has no immediate plans for foreign acquisitions, although it recently scrapped a bid to buy a rival in Kuwait, the United Arab Emirates telecoms operator's chairman said on Monday.

The former monopoly is active in 18 countries, yet about three-quarters of its revenues in the first half of 2011 came from domestic operations.

"At this stage we are not looking at any acquisitions," said Etisalat Chairman Mohammad Omran, speaking on the sidelines of a conference, adding Etisalat had yet to decide on whether to bid for Iraq's fourth mobile license, which is expected to be auctioned by year-end.

Dubai Shares Fall Most in Week on Europe Debt Crisis Concerns - Bloomberg

Dubai’s shares fell the most in almost a week as the heads of Europe’s two biggest economies didn’t provide details on how they will support banks amid a debt crisis that threatens global growth.

Dubai Islamic Bank PJSC (DIB), the biggest Shariah-compliant lender in the emirate, slumped 1.5 percent. Deyaar Development (DEYAAR) PJSC dropped to the lowest intraday level since March. The DFM General Index (DFMGI) slipped 0.3 percent, the most since Oct. 4, to 1,393.99 at 10:52 a.m. in Dubai. About 29 million shares traded in Dubai today, compared with this year’s daily average of 110 million shares. The Bloomberg GCC 200 Index (BGCC200) fell 0.1 percent.

“The delay in responding to Euro debts issues by policy makers is causing investors to stay on the sidelines,” said Tariq Qaqish, deputy head of asset management at Dubai-based Al Mal Capital.

Business : Qatar to acquire Luxembourg’s KBL bank for 1b euros

Belgian bank KBC announced on Monday it agreed to sell its Luxembourg unit KBL to Qatar’s state-owned investment group Precision Capital for 1.05 billion euros ($1.41 billion).

“The KBC group has reached an agreement with Precision Capital for the sale of its dedicated private banking subsidiary KBL European Private Bankers for a total consideration of EUR 1.05 billion, EUR 50 million of which depend on the results of KBL,” the bank said in a statement.

Dragon Oil expands into Tunisia | Reuters

Oil and gas firm Dragon Oil has signed a deal to explore in Tunisia, expanding beyond its Turkmenistan asset base for the first time as part of a long-stated plan to add new projects to its portfolio.

The Dubai-headquartered company said on Monday that it agreed to acquire a 55 percent interest in the Bargou Exploration Permit off the coast of Tunisia in exchange for paying a proportion of well costs up to $26.6 million.

"This farm-in is part of our plan to build a portfolio of development and exploration opportunities in order to grow the group into a multi-asset company," said Chief Executive Abdul Jaleel Al Khalifa in a statement.

gulfnews : Lombard Odier to expand in region

Lombard Odier, one of the oldest and largest Swiss banks is set to expand in the region with the opening of its new strategic hub in Dubai.

The hub will cover the Middle East, Africa, Eastern Europe and Central Asia and will be led by Arnaud Leclercq, head of new markets at Lombard Odier, who is relocating to the UAE from the bank's headquarters in Geneva.

"Historically the UAE has been a key market for Lombard Odier. Located at the centre of a region that is generating huge private wealth, we expect to attract more business from the region," said Leclercq.

gulfnews : Gulf 'is vulnerable to new global downturn'

The economies of the six Gulf states are vulnerable to a further downturn in the global economy, though their copious fin-ancial reserves should help them mitigate the impact of a deeper economic crisis, the International Monetary Fund said yesterday.

The six nations of the Gulf Cooperation Council (GCC) would be particularly exposed to a deepening of the banking and sovereign debt problems in the advanced economies or to a slowdown in emerging markets, according to Masoud Ahmad, the IMF's director for the Middle East and Central Asia.

The subsequent decline in trade and tightening of global liquidity could have the same impact on the GCC countries as seen in 2008-2009, when the global economic crisis led to a sharp contraction in the region.

gulfnews : Retail asset management industry in nascent state

Despite growing capital pools and rising wealth of expatriates, the region's retail asset management industry remains very nascent.

Experts at the recent Middle East and North Africa (Mena) Investment Management Forum in Doha said there is indeed a "wall of money" in the region, however, individuals with investible cash are either looking for opportunities elsewhere or reluctant to place their wealth with investment managers.

"It's an emerging industry here. The retail market is very underdeveloped," said George Pickering, managing director for policy, enforcement and risk division of the Qatar Financial Centre Regulatory Authority.

Full: Tunisia's economic reforms offer a blueprint for stability - The National

Before Tunisia's revolution, the country was neither an economic miracle nor a complete bust, but it was doing better than other countries in the region. Tunisia achieved an average economic growth rate of nearly 5 per cent during the last decade, outpacing other countries in the Middle East and North Africa.

Tunisia, however, was a complex case with a delicate authoritarian bargain between the regime and society. For a long time, the regime was able to provide economic and social gains and secure its legitimacy and political stability in return.

But the authoritarian bargain failed with the growing inability of the economy to create jobs for educated labour, the proliferation of unprotected and poorly paid jobs in the informal sector, and rising income inequality and regional disparities. Gradually, the losers from the status quo began to outnumber the winners - and this eroded the regime's legitimacy.

The world comes to Abu Dhabi, and the UAE takes its place on stage - The National

A month before this year's Abu Dhabi Grand Prix another major global event will be taking place at the Yas Marina Circuit.

For the fourth year running, the UAE is hosting the World Economic Forum's Summit on the Global Agenda. In different ways, both gatherings represent a race against the clock.

The World Economic Forum describes the Summit on the Global Agenda as "an annual global brainstorming" that brings together experts from more than 80 countries to discuss emerging trends, risks and unmet opportunities across more than 75 different subjects.

World Bank's International Finance Corporation offers extra funds in wake of Arab revolutions - The National

The International Finance Corporation (IFC) is lifting its investment in the Middle East and North Africa (Mena) region by half to US$6 billion (Dh22bn) over the next three to four years to help to ease post-revolution transitions.

Much of the investment by the private sector arm of the World Bank will be channelled into job creation, improving civil infrastructure and other drivers of economic growth.

"We want to support the region as much as we can and the processes that are going on and that is why we're willing to step up," said Lars Thunell, the chief executive and executive vice president of IFC.

Egyptian Shares Gain Most in Seven Weeks After 4.5% Drop, Global Advance - Bloomberg

Egypt’s shares soared the most since August on bets last week’s drop was overdone given the outlook for earnings and after global markets rallied amid optimism European leaders will tame the debt crisis.

Commercial International Bank Egypt SAE (COMI), the country’s biggest publicly traded lender, advanced 2.5 percent and Egyptian Financial Group-Hermes Holding (HRHO) advanced the most in almost two weeks after they were raised at AlembicHC. The EGX 30 Index rallied 1.9 percent, the most since Aug. 17, to 4,028.71 at the 2:30 p.m. close in Cairo. The measure slumped 4.5 percent last week. Egypt’s stock market was closed Oct. 6 for a holiday. The Bloomberg GCC 200 Index (BGCC200) gained 0.5 percent.

“The selling was definitely overdone,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities. “But this is classic in times of uncertainty; the global backdrop was not helping.”

SATORP's debut sukuk oversubscribed 3.5 times - Arab News

Saudi Aramco Total Refining and Petrochemical Company (SATORP), a joint venture between Saudi Aramco and Total S.A. of France, issued its debut sukuk Sunday and there are signs that several other potential Saudi issuers are lining up to go to the market preferring to raise funds in this way despite the continuing turmoil in the global financial market and economy.

According to the latest information available Sunday, the SATORP bond issue was 3.5 times oversubscribed.

According to a statement from Saudi Fransi Capital, one of the three joint lead managers and joint bookrunners for the transaction together with Deutsche Securities Saudi Arabia and Samba Capital & Investment Management Company "the aggregate face amount of SATORP's public offering of SR-denominated certificates (the sukuk) will be SR3,749,900,000 and the net proceeds of the offering will be the aggregate face amount after deducting the fees of the joint lead managers and joint bookrunners for the offering."

THE DAILY STAR :: Egypt: Qatar gave $500 mln to help with budget

Egypt’s finance minister, who has been negotiating with Gulf Arab states for financial assistance, said Sunday that Qatar had given a grant of $500 million to support the budget which has ballooned as a result of political turmoil.

Hazem al-Beblawi said last week he was negotiating with Saudi Arabia and the United Arab Emirates for funds worth close to $7 billion. He also said he was considering International Monetary Fund financing that Egypt previously turned down.

Egypt’s economy, which had been growing robustly before the popular uprising earlier this year, was hit hard by the protests, which prompted foreign investors to withdraw funds and saw major revenue sources like tourism suffer.

Mideast investment banks income at seven-year low | A1SaudiArabia.com

Investment banking revenues in the Middle East tumbled to the lowest level since 2004 as the twin burden of the global economic downturn and the region s political upheaval has crippled deal activity and prompted lenders to downsize or focus on smaller, less profitable transactions.

Investment banks in the Middle East in the third quarter saw revenues from equity, debt and mergers advisory fall to a combined $36 million, compared to $73 million in the same quarter in 2010, Dealogic data showed. The result in the lowest since the second quarter of 2004 and is a mere fraction of what banks earned in 2007 when Dubai was rising rapidly as a financial center and attracting bankers from across the globe. With $36 million in third-quarter net revenues, banks in the entire Middle East made as much as Finland and South Africa, but only about half of the fees earned in Belgium.

Goldman Sachs topped the chart with $15 million in revenues for the quarter, followed by RBC Capital Markets. Citi and Saudi Arabias Falcon Financial Services who each made $3 million to $2 million.

Buying inexpensive Gulf bonds may be worth the risk - The National

Investors have been dumping Middle Eastern bonds in recent weeks, thrusting the local fixed-income market into the headlines. A scan of the most-read stories on UAE Bloomberg terminals revealed just two Middle East business stories in past week's top 10. Both were about bonds.

The articles were referring to the sell-off in sukuk issued by Dar Al-Arkan, a Saudi property company. And the selling of bonds issued by organisations in Dubai, particularly government-related entities such as Dubai Holding Commercial Operations and Dubai International Financial Centre Investments (DIFCI).

Sellers of course fear the European debt crisis could cause a second credit crunch. A global financial crisis would make it tough to roll over bonds that mature in the next year or two. All valid concerns.

Egypt May Be Forced to Seek IMF Loan It Rejected: Arab Credit - Bloomberg

Egypt, grappling with the highest borrowing costs since 2008, may be forced to ask the International Monetary Fund for the $3 billion loan it spurned in June unless Persian Gulf states make good on aid pledges.

The yield on the government’s one-year treasury bills soared 328 basis points, or 3.28 percentage points, to 13.86 percent since the Jan. 25 revolt that ousted President Hosni nsn lssvk56ttds1Mubarak, the highest since November 2008. The extra yield investors demand to hold Egyptian debt instead of U.S. Treasuries rose 160 basis points for the period to 421, according to JPMorgan Chase & Co.’s data. Middle East spreads climbed 128 basis points on average to 437, the data show.

“They must go to the IMF and the World Bank,” Mona Mansour, co-director of research at Cairo-based investment bank CI Capital, said in a telephone interview. “The government will resort to foreign borrowing because this can’t continue.”

Greece seeks Abu Dhabi funds - The National

Greece is courting Abu Dhabi as the European country struggles to reduce its debt burden and avoid defaulting on loans.

Athens wants the emirate to invest in its tourism industry.

The disclosure from the Greek tourism minister came as Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, met in Berlin to tackle the Greek debt crisis and turmoil in the euro-zone banking sector.

The economics of the Arab spring - FT.com

On the face of it, it was a statement of the obvious. When Hazem el-Beblawi, Egypt’s new finance minister, warned at the end of last month that lawsuits against foreign businesses were shaking market confidence in the country, he was expressing the sentiment of many investors. Additional remarks that the Arab spring had not been a boon for the economies of the region were also seemingly unsurprising.

Not, however, in Cairo. In the Egyptian capital his comments provoked a furore, with outrage pouring in online and in calls to television chat shows. How dare the minister criticise what popular opinion considers necessary justice against the corruption of the Hosni Mubarak era, or cast doubt on the achievements of the revolution that this year deposed the long-time president, the people charged.

Essam Sharaf, the prime minister, posted on his Facebook page on Monday in an attempt to calm the outcry, saying Mr Beblawi had no intention of undermining the revolution, which he insisted “We are all proud of.”