Middle East ETF News Older than One Year
S&P Report Outlines Possible Corrective Steps For Gulf Investment Companies As They Seek To Revamp For Recovery
June 28, 2010--Some investment companies in the Gulf will likely find it difficult to pursue their operations without dramatic changes in the wake of the global financial downturn, said Standard & Poor's Ratings Services in a new report published today, titled "Gulf Investment Companies Face The Need To Rethink Their Business Models And Financial Policies."
"The main reasons behind this deterioration, in our opinion, are Gulf investment companies' generally high maturity mismatches they carry in their funding profiles and the ensuing weakened liquidity, weak business profiles, high leverage, and high exposure to real estate for some of them," said Standard & Poor's credit analyst Mohamed Damak.
Investment companies in the Gulf Cooperation Council (GCC) countries, including those with banking licenses and private equity firms, navigated through testing times in 2009, some more successfully and some less. A few defaulted on their financial obligations. And their moves to raise capital met with far higher obstacles than in the past. This has consequently called into question the sustainability of their business models.
We believe that the GCC countries will continue to be net exporters of capital in the medium term, thanks to high oil prices that prevailed over the past five years and that we expect will likely remain high in the future. A substantial portion of this oil money will likely continue to find its way to local, government-sponsored projects and to global investment banks offering solutions for wealth management; we think the remainder will likely still flow to smaller investment companies in the Gulf.
"But in the short term, we see some major hurdles for Gulf investment companies to overcome on the potential road to recovery. These consist essentially in corrective measures that are, in our view, necessary to enable these companies to enhance the maturity profiles of their funding bases and reduce their leverage, as a means to prepare for better days, " said Mr. Damak.
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com
Source: Standard & Poors
Saudi GDP to rise 4% in 2010
June 28, 2010--Saudi Arabia's Samba Financial Group has said that real GDP and the non-oil sector in the kingdom will grow by 4% this year as oil production increases, while inflation will stabilise at an annual average of 5%, Reuters has reported.
"The recovery in economic activity is gathering pace, with renewed strength in corporate finance flows," economists at Samba Financial Group said in a report.
Source: AME Info
UAE to maintain dirham's dollar peg, says Dubai's ruler
June 28, 2010--The UAE will keep the dirham's peg to the dollar and has no plans to rejoin the planned Gulf monetary union "for the time being," Dubai's ruler, Sheikh Mohammed Bin Rashid Al Maktoum, told CNN.
The emirates "still believe" in the peg, Sheikh Mohammed said in the CNN interview. "The euro is in trouble and we thought of the Gulf currency and we said, well the UAE said 'not yet' and I think they are right, until we are sure."
Source: AME Info
Jordan to tap Islamic or Eurobonds debt market
June 28, 2010--Jordan officials and bankers have said the kingdom wants to speed up issuance of Islamic bonds or Eurobonds to tap more competitive sources of funding to contain its budget deficit, Reuters has reported.
"Domestic borrowing costs have gone up sharply and this only piles pressure on the treasury ... that is why the government is moving ahead with more innovative means to tap lower-cost funding abroad," one senior banker who requested anonymity told the news service. Last year the authorities considered the international debt market to finance a chronic deficit worsened by the global downturn. However, it put the plans on hold as risk-averse local banks, awash with liquidity, were happy to lend to the government even at low interest rates.
Source: AME Info
Dubai Gold And Commodities Exchange Weekly Views-June 27, 2010
June 27, 2010--Commodities Overview
Most commodities prices traded in broad ranges last week. Ongoing euro zone sovereign debt and deficit problems, an easing in equity values, and resurfacing investor pessimism about overall economic conditions capped commodity price gains that had emerged the previous week. Gold managed to set record highs again, although the gains were made on the back of these very issues.
Silver and oil prices meanwhile tested resistance levels. While economic data continue to point toward a global economic recovery, recent data releases and comments by monetary officials suggest a moderation in the pace of economic expansion. Current tight bank lending conditions and low levels of resource utilization are tempering commodity price gains, but as these conditions improve demand for commodities is likely to improve.
Currencies Overview
The People’s Bank of China announced on 20 June that it would allow the yuan to appreciate against the dollar once more. This should not have surprised anyone in the market, since the PBOC has been saying for months it would do this. It should be viewed as part of a broader move by the PBOC and the Chinese government to take a more prominent position in international monetary affairs. CPM Group expects a high level official from the Bank of China to be named Deputy Managing Director at the International Monetary Fund later this year, for example. While the yuan appreciation plan is a positive long-term development, it will do virtually nothing to resolve the more problematic long-term trade, deficit, and debt problems in the industrialized nations. Given the stickiness in import demand for Chinese goods in industrialized nations it will exacerbate some of these trends initially, worsening trade deficits in the United States, Japan, and Europe.
Source: Dubai Gold And Commodities Exchange (DGCX)
Abu Dhabi bourse rises insignificantly
June 24, 2010--The ADX General Index ended the day after a mild trading session at 2,553.44 points (up 0.08%). Shares of First Gulf Bank (FGB), the number four in the UAE, gained 0.66%, closing at Dhs15.15. FGB has sued Saudi conglomerate Ahmad Hamad Al Gosaibi and Brothers (AHAB) over an alleged default on Dh58.7 million (US$15.98m) of loans, The National reports.
As oil prices halted near the level of $77 per barrel, market bellwether Abu Dhabi National Energy Company (Taqa) weakened 0.98%, closing at Dhs1.10. Credit Suisse research appreciates the short term oil price development at the current stage as "neutral".
Source: AME Info
Dubai market finishes the week 0.79% lower
June 23, 2010--The DFM Index opened in the green but lost momentum and stabilized only during the last two hours of trading, ending 0.79% lower at 1,538.98 points. Shares of the DFM itself declined by 1.27% (closing at Dhs1.55. Due to low trading volumes and the absent of IPOs, the DFM stock lost 17 percent during the last six months.
A Credit Suisse Global Research report from today however notices that stock market corrections tend to be shorter and subsequent rebounds stronger as the world economy is in a recovery phase. Trading value increased by 10% to Dhs197.18m at the DFM and trading volumes surged 22% as almost 195m stocks changed hands. Emaar (off 2.10% at Dhs3.26) was the most liquid share.
Source: AME Info
UAE lenders lose over Dhs82bn in foreign funds
June 24, 2010--According to data by the UAE central bank, lenders in the country had lost more than Dhs82bn in foreign deposits through 2009 after some investors gave up hope of an appreciation of the dirham against the US dollar and others withdrew their funds to shore up liquidity shortage at home, Emirates Business has reported.
From around Dhs175.6bn at the end of 2008, foreign deposits with the UAE's 23 national banks and 28 foreign units slumped to nearly Dhs93.1bn at the end of 2009, a decline of Dhs82.5bn in just one year, the data showed.
Source: AME Info
Islamic banking looks to tap new markets
June 23, 2010--Even during the slowdown that resulted from the financial crisis many new branches of Islamic retail banks were opened worldwide. However, as a new e-friendly generation enters the scene, the industry will need to upgrade its services and distribution channels and expand into untapped markets to continue to grow.
On the search for a low-risk, non-interest and ethical way of investing, investors might regard Islamic finance, which is expected to reach $1 trillion globally in 2010, as a trustworthy alternative way of sheltering their savings from the rumbles of any financial crisis.
Islamic retail banks promise their clients all sorts of financing with Allah's blessing. However, in the Gulf, where two thirds of the roughly 40 million inhabitants are younger than 25, a new generation is entering the scene seeking not only adherence to religious principles but also to the modern tools needed for e-banking.
Source: AME Info
New DGCX FX products record healthy first week volumes
June 23, 2010--DGCX listed Australian Dollar/US Dollar (DAUD), Canadian Dollar/US Dollar (DCAD) and Swiss Franc/US Dollar (DCHF) futures contracts on June 15, 2010
Total of 881 AUD, CAD and CHF contracts were transacted in the first week of trading, valued at US $ 40 million
Dubai Gold & Commodities Exchange (DGCX) listed its new currency contracts on June 15 – Australian Dollar/US Dollar (DAUD), Canadian Dollar/US Dollar (DCAD) and Swiss Franc/US Dollar (DCHF) – amid healthy demand from participants.
The region’s strong appetite for currency products was evidenced in the first week of trading for the new contracts - a total of 881 of contracts, valued at US$ 40 million, were transacted during the opening week.
"Our wider currency offering provides participants with further financial tools to manage exchange rate volatility. The new contracts meet the hedging and investment requirements of participants, while also enabling them to gain exposure to the strong economic fundamentals of these currencies," Eric Hasham, Chief Executive Officer, DGCX, said.
Other currency contracts trading on the Exchange include Euro/US Dollar, Sterling/US Dollar, Yen/US Dollar and Indian Rupee/US Dollar futures contracts. Currencies have remained the fastest growing segment on DGCX with year-to-date volume rising 138%.
DGCX is the only futures Exchange outside of the US and Europe to offer the world’s six most liquid currency futures pairs. It is also the only Exchange in the region to offer currency futures with the added benefit of local clearing facilities which help safeguard participants against counterparty risk and guarantees settlement. The new currency contracts can be traded from 8:30am to 11:30pm Dubai Time (4:30am to 7:30pm GMT and 12:30am to 3:30pm Eastern Time). The contracts are sized at CHF 50,000, AUD 50,000 and CAD 50,000, with the contract price quoted in US dollars. The minimum price fluctuation is US $0.0001 per contract, equivalent to a tick value of US $5 per contract. The first delivery month available for trading for all three contracts is September 2010.
Source: Dubai Gold & Commodities Exchange (DGCX)
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