Mid-Year Emerging Markets Update | Mark Mobius:
"As I’ve often said, investing in emerging markets requires patience, long-term perspective, and selective stock-picking. I think many investors focus too much on the short-term. As long-term investors, we view short-term bouts of volatility as an opportune time to find potential bargains for our portfolios, and we certainly experienced that in the first half of the year. Sentiment in emerging markets seemed to be at a particularly low point at the very start of the year, coming off a weak 2013. As the US Federal Reserve (Fed) started tapering its quantitative easing program, fears seem to have surfaced that liquidity would dry up, and concerns about potentially slower growth in China this year gave some investors pause. Headlines of conflict and violence in countries including Ukraine, Turkey, Thailand and Nigeria also affected overall investor sentiment in the first half of the year, along with doubts about the readiness of Russia to host the Winter Olympics and Brazil to host the FIFA World Cup. On the brighter side, India’s market saw a post-election resurgence of hope, China’s economy did not experience a hard landing and the upgrade of Qatar and United Arab Emirates to emerging markets status from frontier appeared to fuel investor interest. We believe emerging markets overall are now in what could be classified as a “recovery phase” after 2013’s underperformance, barring no further unexpected shocks.
We believe it’s important to look at the big picture as an investor in emerging markets. During the last 10 years, there have been only three years when emerging markets underperformed developed markets, 2013 being one of them.1 In the first half of 2014, emerging markets have generally outperformed developed markets,2 and I would say that we’re in a sweet spot in terms of emerging markets’ recovery. And, we think a number of frontier markets, the even lesser-developed subset of emerging markets, look particularly attractive right now."
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Monday, 30 June 2014
Another Dismal Day for the UAE ETF | ETF Trends
Another Dismal Day for the UAE ETF | ETF Trends:
"On news the militant group Islamic State in Iraq and Syria (ISIS) has declared itself an official Islamic state and amid increased speculation of a bursting property bubble, shares of the iShares MSCI UAE Capped ETF (NasdaqGM: UAE) are down 4.4% Monday on volume that is already close to the daily average.
UAE's glum Monday showing not only makes the newly minted ETF the day’s worst-performing non-leveraged fund, but extends a decline of nearly 26% since June 6, putting the $55.9 million ETF firmly in bear market territory. [Iraq Violence Plagues UAE ETF]
In Dubai, the benchmark DFM General Index tumbled 4.4%, sending stock there to the worst monthly performance since November 2008. “The index is now poised for its first loss in a quarter since June 2012, with none of the regularly traded stocks in the 30-member gauge trading above their 50-day moving average,” reports Laurence Dodds for The Telegraph.
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"On news the militant group Islamic State in Iraq and Syria (ISIS) has declared itself an official Islamic state and amid increased speculation of a bursting property bubble, shares of the iShares MSCI UAE Capped ETF (NasdaqGM: UAE) are down 4.4% Monday on volume that is already close to the daily average.
UAE's glum Monday showing not only makes the newly minted ETF the day’s worst-performing non-leveraged fund, but extends a decline of nearly 26% since June 6, putting the $55.9 million ETF firmly in bear market territory. [Iraq Violence Plagues UAE ETF]
In Dubai, the benchmark DFM General Index tumbled 4.4%, sending stock there to the worst monthly performance since November 2008. “The index is now poised for its first loss in a quarter since June 2012, with none of the regularly traded stocks in the 30-member gauge trading above their 50-day moving average,” reports Laurence Dodds for The Telegraph.
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| iShares MSCI UAE Capped ETF |
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Ukraine poised to sign gas supply agreement with Russia | CIS Tran Finance
Ukraine poised to sign gas supply agreement with Russia | CIS Tran Finance:
"Ukraine is poised to sign a gas agreement with Russia based on proposals made by the European Commission during negotiations in Kiev.
The commission proposed a repayment scheme in which Ukraine would pay Russian gas giant Gazprom $1 billion, settling the rest in six payments over the rest of the year, News.az reports.
The commission also recommended that the price be adjusted according to seasonal demand, meaning $300 per 1,000 cubic meters of gas during the summer and $385 during the winter."
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"Ukraine is poised to sign a gas agreement with Russia based on proposals made by the European Commission during negotiations in Kiev.
The commission proposed a repayment scheme in which Ukraine would pay Russian gas giant Gazprom $1 billion, settling the rest in six payments over the rest of the year, News.az reports.
The commission also recommended that the price be adjusted according to seasonal demand, meaning $300 per 1,000 cubic meters of gas during the summer and $385 during the winter."
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Daily chart: Bigger big banks | The Economist
Daily chart: Bigger big banks | The Economist:
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The world's top banks are changing their strips
A DECADE ago, Europe counted five banks among the world's top ten. Today there is only one, HSBC. During that time Chinese banks not only made the list, but vaulted into the top two places, according to annual rankings by The Banker released on June 30th. Last year China Construction Bank shoved aside America's JPMorgan Chase to become second largest in terms of tier-one capital. ICBC (formerly known as Industrial and Commercial Bank of China) kept the top spot; with more than $200 billion, it is also the world's most profitable bank. Though Japan's Mitsubishi UFJ Financial Group is close to leaving the list altogether, until 2007 its $117 billion heft would have made it the world's biggest bank. Despite regulations designed to keep banks' ambitions modest so that none are too big to fail, today's groups are larger than ever. Global banking profits are at a record high of $920 billion—a third from Chinese banks alone.
Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble - Bloomberg
Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble - Bloomberg:
"Dubai shares declined, posting the biggest monthly retreat in almost six years, as investors fled property stocks.
The DFM General Index (DFMGI) lost 4.4 percent to 3,942.82 at the close, bringing its monthly loss to 22 percent, the most since November 2008. It entered a bear market last week after the shares plunged 20 percent from their peak in May. Emaar Properties PJSC (EMAAR), the developer with the biggest weighting on the measure, decreased 3.7 percent. Arabtec Holding Co. (ARTC), the United Arab Emirates’ largest listed contractor, fell 10 percent, the most allowed in a day.
The U.A.E.’s central bank on June 8 warned that the country’s real estate market may be overheating, spurring the stocks’ first quarterly retreat since the three months ended June 2012. A restructuring at Arabtec stoked concern the market’s property-led gains in the past two years were overdone."
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"Dubai shares declined, posting the biggest monthly retreat in almost six years, as investors fled property stocks.
The DFM General Index (DFMGI) lost 4.4 percent to 3,942.82 at the close, bringing its monthly loss to 22 percent, the most since November 2008. It entered a bear market last week after the shares plunged 20 percent from their peak in May. Emaar Properties PJSC (EMAAR), the developer with the biggest weighting on the measure, decreased 3.7 percent. Arabtec Holding Co. (ARTC), the United Arab Emirates’ largest listed contractor, fell 10 percent, the most allowed in a day.
The U.A.E.’s central bank on June 8 warned that the country’s real estate market may be overheating, spurring the stocks’ first quarterly retreat since the three months ended June 2012. A restructuring at Arabtec stoked concern the market’s property-led gains in the past two years were overdone."
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Dubai stocks drop another 4.4 per cent to lose 22 per cent in June « ArabianMoney
Dubai stocks drop another 4.4 per cent to lose 22 per cent in June « ArabianMoney:
"The Dubai Financial Market rout continued into Ramadan with another 4.4 per cent decline today in the general index, and closing the biggest monthly retreat in almost six years, down 22 per cent to 3,942.
Emaar Properties, the developer with the highest weighting in the index fell by 3.7 per cent. Arabtec, the largest listed contractor, fell 10 per cent, hitting the daily limit."
'via Blog this'
"The Dubai Financial Market rout continued into Ramadan with another 4.4 per cent decline today in the general index, and closing the biggest monthly retreat in almost six years, down 22 per cent to 3,942.
Emaar Properties, the developer with the highest weighting in the index fell by 3.7 per cent. Arabtec, the largest listed contractor, fell 10 per cent, hitting the daily limit."
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EconoMonitor : EconoMonitor » Understanding Turkey: Volatile Politics, but No Crisis Ahead
EconoMonitor : EconoMonitor » Understanding Turkey: Volatile Politics, but No Crisis Ahead:
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Key takeaway – Over the next five years, AKP is likely to stay in power, and Prime Minister (PM) Erdoğan is likely to rule the country either as President or PM. Frictions with the opposition will persist: the weakening of democratic institutions is likely to unsettle the civil society and create political headwinds in the Parliament, constraining and delaying policy-making. Yet, a major political crisis is unlikely.
A. AKP to keep ruling amid political frictions and weakening institutions.
Erdoğan and AKP to rule over the next five years … In the March 2014 local elections, AKP won 43.5 percent of the votes, a decline from the 49 percent of the 2011 general elections – but an improvement if compared to the 38 percent secured in 2009, in the previous local elections. Well organized and structured, AKP is able to unite right-leaning, conservative, and Islamic voters across the country (Figure 1) and crystallize the aspirations of the underprivileged. Led by PM Erdoğan and in power over the past 12 years, AKP has steadily reached out to the silent low-income majority, offered an identity and political inclusion to the religious rural, and – by successfully managing the economy – contributed to the making of an increasingly sizable middle-class. The two main opposition parties are unable to provide viable alternatives. The center left, Western-leaning social-democratic CHP has reduced its platform to an “anti-Erdoğan” agenda, while the nationalist, conservative MHP is unable to attract AKP voters. The latest polls suggest that little has changed since the March elections: support for AKP is at around 44 percent, with CHP at 28 percent, MHP at 15 percent and the Kurdish party at around 6 percent.
Figure 1 – Over the past 12 years, AKP has consolidated right-leaning, Islamic voters (Turkey – Past eight elections, distribution of votes (%))
Source: Election Board, Authors’ calculations, 2014.
Note: Center-right parties – DP, DYP, ANAP, and GP. Left-leaning parties – CHP, DSP, and İP. Nationalist parties – MHP, BBP, and BTP. Islamic parties – SP. Kurdish Parties – BDP (formerly DTP) and HDP, arguably a leftist party as well.
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GCC Countries Still Too Reliant On Oil and Gas Revenues, S&P Says - Middle East Real Time - WSJ
GCC Countries Still Too Reliant On Oil and Gas Revenues, S&P Says - Middle East Real Time - WSJ:
"High oil prices have always been a double-edged sword for the Persian Gulf countries.
The region’s vast hydrocarbon reserves allowed for the rapid development of these countries’ economies and still provide an indispensable source of income. But over the years, the overreliance on energy-related revenues means governments have largely failed in designing more dynamic economic systems that ensure the creation of sufficient jobs and promote non-oil activities that would still be viable in the long run when reserves dry up.
The solution, economists and policymakers have always maintained, lies in economic diversification away from oil."
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"High oil prices have always been a double-edged sword for the Persian Gulf countries.
The region’s vast hydrocarbon reserves allowed for the rapid development of these countries’ economies and still provide an indispensable source of income. But over the years, the overreliance on energy-related revenues means governments have largely failed in designing more dynamic economic systems that ensure the creation of sufficient jobs and promote non-oil activities that would still be viable in the long run when reserves dry up.
The solution, economists and policymakers have always maintained, lies in economic diversification away from oil."
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Russia and Saudi Arabia – the new Gulf partnership? | @Russia_Direct
#Russia and #Saudi Arabia – the new Gulf partnership? | Russia Direct:
"Recent weeks have seen an escalation of violence in the Middle East, with ISIS advancing into Iraq and effortlessly taking over large swathes of territory there. The growing instability in the region has highlighted the enormous shifts taking place within established political alliances.
At a time when the White House is considering sending military aid to Baghdad, Russian Foreign Minister Sergey Lavrov is visiting Saudi Arabia – a longtime U.S. ally in the region and key stakeholder in the Iraqi crisis.
Russia has been looking to play a bigger role in the Middle East, but Moscow’s inability to win over the Gulf – the key to influencing the Middle East – has continuously prevented it from replacing the United States as a reliable partner to the regional powers. Against this backdrop, Lavrov’s visit to Saudi Arabia has presented Moscow with an opportunity to prove to the Gulf countries that it is in fact the Kremlin, and not the White House, that nowadays holds sway over a troubled Syria and disobedient Iran."
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"Recent weeks have seen an escalation of violence in the Middle East, with ISIS advancing into Iraq and effortlessly taking over large swathes of territory there. The growing instability in the region has highlighted the enormous shifts taking place within established political alliances.
At a time when the White House is considering sending military aid to Baghdad, Russian Foreign Minister Sergey Lavrov is visiting Saudi Arabia – a longtime U.S. ally in the region and key stakeholder in the Iraqi crisis.
Russia has been looking to play a bigger role in the Middle East, but Moscow’s inability to win over the Gulf – the key to influencing the Middle East – has continuously prevented it from replacing the United States as a reliable partner to the regional powers. Against this backdrop, Lavrov’s visit to Saudi Arabia has presented Moscow with an opportunity to prove to the Gulf countries that it is in fact the Kremlin, and not the White House, that nowadays holds sway over a troubled Syria and disobedient Iran."
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Global capital expenditure by companies still stalling
-- Global capital expenditure by companies still stalling - http://www.ft.com/cms/s/0/113201e4-0028-11e4-a3f2-00144feab7de.html posted via mobile
AAII: Pessimism is at 6 Month Lows | PRAGMATIC CAPITALISM
AAII: Pessimism is at 6 Month Lows | PRAGMATIC CAPITALISM:
"These sentiment surveys are notoriously difficult to utilize in any investment strategy, but there are times when they reach extremes when I think their data is more telling than at most other times. In the case of the recent AAII readings, pessimism is at a 6 month low. Here’s more from Charles Rotblut:
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"These sentiment surveys are notoriously difficult to utilize in any investment strategy, but there are times when they reach extremes when I think their data is more telling than at most other times. In the case of the recent AAII readings, pessimism is at a 6 month low. Here’s more from Charles Rotblut:
Pessimism among individual investors is now at a six-month low, according to the latest AAII Sentiment Survey. Neutral sentiment remains at an unusually high level, while optimism is slightly below its historical average.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.0 percentage points to 37.2%. The rebound is not big enough to keep optimism from being below its historical average of 39.0% for the 13th time in the past 15 weeks, however."
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Robin Mills: Opec’s spare oil capacity a cushion – for now | The National
Robin Mills: Opec’s spare oil capacity a cushion – for now | The National:
"The most recent Opec meeting, on June 11, was as casual as a post-World Cup brunch. Opec ministers breezed into Vienna, declared that markets were well supplied, affirmed their 30 million barrels per day (bpd) production ceiling, and were off again. Just two days earlier, Iraqi insurgent forces had swarmed into Mosul.
Would Opec have decided differently had it had more time to react to the dramatic events in Iraq? Probably not. The organisation’s 3.3 million bpd of official spare capacity is concentrated anyway in Saudi Arabia, with some in its allies the UAE and Kuwait – the task of meeting any supply crisis will fall to the Gulf triumvirate. They have already been filling the gap left by Libya, then Iran, for the past three years.
This leads to two competing narratives. One points to the need for record output from Saudi Arabia, to more robust demand than expected, from the US in particular, to disappointing supply from non-Opec countries outside North America, and to risks to Iraqi output. The International Energy Agency (IEA), mostly representing rich-country oil consumers, said that markets were “considerably tighter than they were a year ago”."
'via Blog this'
"The most recent Opec meeting, on June 11, was as casual as a post-World Cup brunch. Opec ministers breezed into Vienna, declared that markets were well supplied, affirmed their 30 million barrels per day (bpd) production ceiling, and were off again. Just two days earlier, Iraqi insurgent forces had swarmed into Mosul.
Would Opec have decided differently had it had more time to react to the dramatic events in Iraq? Probably not. The organisation’s 3.3 million bpd of official spare capacity is concentrated anyway in Saudi Arabia, with some in its allies the UAE and Kuwait – the task of meeting any supply crisis will fall to the Gulf triumvirate. They have already been filling the gap left by Libya, then Iran, for the past three years.
This leads to two competing narratives. One points to the need for record output from Saudi Arabia, to more robust demand than expected, from the US in particular, to disappointing supply from non-Opec countries outside North America, and to risks to Iraqi output. The International Energy Agency (IEA), mostly representing rich-country oil consumers, said that markets were “considerably tighter than they were a year ago”."
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Sawiris say no change to EFG Hermes offer | GulfNews.com
Sawiris say no change to EFG Hermes offer | GulfNews.com:
"Egypt’s Beltone Financial and billionaire Naguib Sawiris said on Sunday they would not change their offer to buy 20 per cent of EFG Hermes investment bank at 16 Egyptian pounds ($2.24) per share.
Beltone and Sawiris’s New Egypt Investment Fund are offering around $257 million for the EFG stake in a bid that could help revive dealmaking in Egyptian equities after three years of stagnation following the overthrow of Honsi Mubarak in 2011.
EFG Hermes, which appointed Cairo-based HC Securities and Investment this month to evaluate the fair value of its shares, said on Saturday an independent financial adviser had set its fair share price at £22.93, higher than the offer by Beltone and Sawiris’s New Egypt Investment Fund."
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"Egypt’s Beltone Financial and billionaire Naguib Sawiris said on Sunday they would not change their offer to buy 20 per cent of EFG Hermes investment bank at 16 Egyptian pounds ($2.24) per share.
Beltone and Sawiris’s New Egypt Investment Fund are offering around $257 million for the EFG stake in a bid that could help revive dealmaking in Egyptian equities after three years of stagnation following the overthrow of Honsi Mubarak in 2011.
EFG Hermes, which appointed Cairo-based HC Securities and Investment this month to evaluate the fair value of its shares, said on Saturday an independent financial adviser had set its fair share price at £22.93, higher than the offer by Beltone and Sawiris’s New Egypt Investment Fund."
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A broader perspective to Nakheel’s turnaround | GulfNews.com
A broader perspective to Nakheel’s turnaround | GulfNews.com:
"Nakheel had been at the centre of Dubai’s building boom, but when things went wrong, it was squarely blamed for being the principal destroyer of that boom. The post-2008 phase saw the rise of a new star in Arabtec, which symbolised resurgence in the Dubai property market.
Now in what turns out to be the ultimate paradox, the former destroyer is helping salvage the situation for Dubai when the market’s new darling has sunk into an abyss, triggering one of the worst sell-offs in the stock market and raising alarms about an impending crisis.
The international media is raising the pitch on the sell-off, comparing it to the beginning of a property bubble similar to the 2008 crash. Analysts have interpreted the Arabtec debacle as a confirmation of the froth that has been forming in the market for a while. And some of the comments have echoed the anti-Dubai tinge that had characterised the post- 2008 crash analysis, particularly in the western media."
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"Nakheel had been at the centre of Dubai’s building boom, but when things went wrong, it was squarely blamed for being the principal destroyer of that boom. The post-2008 phase saw the rise of a new star in Arabtec, which symbolised resurgence in the Dubai property market.
Now in what turns out to be the ultimate paradox, the former destroyer is helping salvage the situation for Dubai when the market’s new darling has sunk into an abyss, triggering one of the worst sell-offs in the stock market and raising alarms about an impending crisis.
The international media is raising the pitch on the sell-off, comparing it to the beginning of a property bubble similar to the 2008 crash. Analysts have interpreted the Arabtec debacle as a confirmation of the froth that has been forming in the market for a while. And some of the comments have echoed the anti-Dubai tinge that had characterised the post- 2008 crash analysis, particularly in the western media."
'via Blog this'
Moscow-to-New York Rally Fueled by Ukraine Progress - Bloomberg
Moscow-to-New York Rally Fueled by Ukraine Progress - Bloomberg:
"Russian stocks in Moscow, London and New York are headed for the biggest quarterly gain since September amid signs the Ukraine crisis is winding down and as oil prices surged on rising tension in the Middle East.
The Bloomberg index of the most-traded Russian stocks in the U.S. is set for a 9.1 percent gain since March while the Market Vectors Russia (RSX) exchange-traded fund has surged 12 percent. The Russian Depositary Index of companies listed in London rose 12 percent for the three months and the Micex Index is up 7.9 percent.
Ukraine extended a cease-fire with pro-Russian rebels last week, adding to efforts aimed at quelling a conflict that sparked a selloff in Russian equities in March and April. The U.S. and European Union have refrained from imposing deeper sanctions against President Vladimir Putin even as they accuse his government of helping separatists in eastern Ukraine. Crude oil, Russia’s biggest export, has gained 3 percent this month as sectarian violence erupted in Iraq."
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"Russian stocks in Moscow, London and New York are headed for the biggest quarterly gain since September amid signs the Ukraine crisis is winding down and as oil prices surged on rising tension in the Middle East.
The Bloomberg index of the most-traded Russian stocks in the U.S. is set for a 9.1 percent gain since March while the Market Vectors Russia (RSX) exchange-traded fund has surged 12 percent. The Russian Depositary Index of companies listed in London rose 12 percent for the three months and the Micex Index is up 7.9 percent.
Ukraine extended a cease-fire with pro-Russian rebels last week, adding to efforts aimed at quelling a conflict that sparked a selloff in Russian equities in March and April. The U.S. and European Union have refrained from imposing deeper sanctions against President Vladimir Putin even as they accuse his government of helping separatists in eastern Ukraine. Crude oil, Russia’s biggest export, has gained 3 percent this month as sectarian violence erupted in Iraq."
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