Tres Vista Weekly Me 27 08 09
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Weekly MENA Newsletter by TresVista Financial Services (www.tresvista.com)

Weekly MENA Newsletter by TresVista Financial Services (www.tresvista.com)

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  • 1. Issue No. 2.4 MENA WEEKLY NEWS Week of August 21, 2009 - August 27, 2009 MENA MARKETS … For additional MENA MARKETS information or requests Saudi Arabia Kuwait UAE Egypt Oman Jordan Commodity (USD) Currency (USD/) or to be added to the 5,762.8 7,964.3 1,887.3 621.5 6,255.7 2,491.8 Gold Spot 948.15 GBP 0.614 2.5% 1.5% 4.1% 5.5% 2.3% 1.2% Silver Spot 14.31 EUR 0.697 distribution list, please LME 3 mth. Cu 6,270.00 SAR 3.750 visit our website … Morocco Bahrain Qatar Tunisia Lebanon Abu Dhabi LME 3 mth. Al 1,884.00 KWD 0.287 11,108.6 1,519.2 6,920.1 3,747.2 1,389.3 2,855.9 ICE Brent Crude 72.51 www.tresvista.com 1.1% 0.8% 3.4% 1.7% (0.4%) 2.1% MACRO ECONOMIC NEWS 1. Macro Economic Saudi Arabia News ▲ Makkah Gov. Prince Khaled Al-Faisal announced a plan to establish three urban centers in Makkah, Jeddah, and Taif. 2. Government ▼ Regional contract awards fell far short of target, with just 7.0% of USD 946.0 billion worth of deals planned for 2009 having Regulations been made in first seven months of the year. 3. Sector News 4. Company News Kuwait 5. Liquidity - The Ministry of Electricity and Water (MEW) has stated that it is currently reviewing a plan to tender North Zour plant for water productivity, which, if approved, would be ready for bidding by 2010 at the cost of KWD 1.2 billion according to market Market Buzz… prices. Its productivity is expected to be about 3,000.0 MW and 200,000.0 imperial gallons of water. UAE ▲ A study by Dubai Chamber of Commerce and Industry Consumers to determine consumer confidence in the UAE economy revealed a 13.0% increase in consumer confidence, as a total of 45.0% of consumers questioned said the country will recover next year. ▼ A sharp fall in rents in Dubai and other emirates depressed the UAE's consumer price index (CPI) by nearly 2.7% in H1 2009, despite a surge in beverages and other goods and services. - According to the global Bailout/Stimulus Tracker published by Grail Research, the UAE announced bailout packages amounting to USD 52.6 billion (AED 193.2 billion) between July 1, 2008 and July 17, 2009. - There is a disconnect between Eibor, currently at 2.4% and the interest paid on deposits, which can be as high as 7.0%, leading mortgage lenders and financers to argue that their cost of funds does not have any correlation to Eibor now, and that benchmarking their lending rates to Eibor is no longer viable. Jordan ▼ Jordan’s earnings from exports to EU countries during H1 2009 dropped by 42.0% to stand at JOD 57.9 million compared to those registered during the same period last year, with exports securing JOD 99.5 million in revenues. ▼ Jordan’s imports from EU countries decreased by 19.0% in H1 2009 when compared to the same period of the last year, reaching JOD 1.1 billion. - Central Bank of Jordan (CBJ) Governor Umayya Toukan expects the Kingdom's economy to grow 3.0% - 4.0% in 2009. - The average CPI in July 2009 rose by 0.3% compared to the previous month of June, due to the increase in transportation, fuel, vegetables, and meat and poultry prices. The CPI, dropped by 0.1% during the first seven months of this year compared to the same period of 2008. - Exports to the 27 EU countries accounted for 3.2% of Jordan’s total exports for the January - June period. Qatar ▲ Qatar's diesel imports are expected to cease from October with more domestic availability, according to a senior official of fuel distributor Woqod (Qatar Fuel Company). Oman ▲ Oman will privatize existing power stations and invest OMR 3.0 billion (USD 7.8 billion) in new projects in a bid to boost the economy and narrow the budget deficit as electricity demand grows. - Formalities for floating the tender of the 420.0 MW, 15.0 million gallon, Mirbat Electricity Production and Water Desalination plant, are in the preliminary stage and the first phase of the plant will be operational by 2011. …The UAE is leading the GCC countries in Egypt terms of construction activity with the ▲ Egypt's Minister of Economic Development stated that the government is considering another USD 2.7 billion stimulus projects underway package, but has yet to decide how to finance it. amounting to USD - The Egyptian Minister of Electricity and Energy said that the government is reviewing bids from six international companies, 930.0 billion or 45.0% to provide service-related and technical consultancy for the nuclear safety department in the Egyptian nuclear program. of the total amount of projects in the region… TresVista Financial Services, Pvt. Ltd. © Page 1
  • 2. Issue No. 2.4 MENA WEEKLY NEWS Week of August 21, 2009 - August 27, 2009 GOVERNMENT REGULATIONS …A trend of real estate UAE industry consolidation is - The UAE Central Bank will set up a new 11 - bank panel for the interbank offered rate with four extra local banks and two building in GCC fewer international lenders and also announced a new mechanism to determine the rates. countries, to the benefit of long-term investors Jordan and respective national ▲ Jordan and Iraq signed an agreement to ease land transport of passengers and goods besides signing a memorandum of economies. Most understanding (MoU). Moreover, the two sides agreed to form a joint committee to facilitate transport and trade. property markets in the Gulf suffer from ▲ On land transport issues, the two sides agreed to reach appropriate mechanisms to guarantee the entry of Jordanian trucks significant oversupply. into Iraq and ensure that the downloading process takes place without any impediments or delays. With developers, ▲ The two countries also agreed to run logistical and administrative transport-related operations, either by setting up a joint lenders and owners company for that purpose or by amending the liquidation decision of the Jordan Iraqi Land Transport Company. under financial pressure, past experience in other SECTOR NEWS parts of the world Saudi Arabia suggests that mergers ▲ Saudi Arabia’s plans to invest of ~SAR 172.5 billion (USD 46.0 billion) to build three of the largest and most ambitious and acquisitions in the petrochemical projects. regional real estate ▲ The combined sales of Saudi cement companies grew 19.0% in the first seven months of 2009, from the comparative period business should become last year, to 22.2 million tons. more common, according to AT ▲ Saudi Arabia will boost the storage capacity of its flourmills by 700,000.0 tons to meet the Kingdom's increasing demand for Kearney… grain after local producers scaled back output faster than expected. ▼ Prices of construction materials declined in Saudi Arabia, with steel and cement prices dropping 55.0% and 7.0% respectively from their prices last year. ▼ Saudi poultry producers have asked the government to halt imports saying their losses rose to SAR 600.0 million (USD 80.0 million) due to the flood of imported poultry, mainly from Brazil ▼ Saudi steel prices fell 44.3% to SAR 2,230.0 in H1 2009. ▼ The combined profit of banks operating in Saudi Arabia dropped 6.4% in the first seven months of 2009 to SAR 18.9 billion. - Saudi rail authorities have confirmed that they are retendering a USD 7.0 billion coast-to-coast rail link. Kuwait ▲ According to the Real Estate Registration Department of the Ministry of Justice, a 55.0% increase was reported last July in the private residence sector, reaching 307 contracts worth KWD 55.1 million. ▲ Kuwait's real property market is seeing signs of a boom and prices have started to rebound; investments in the sector have picked up after prices on plots of land dropped KWD 9,000.0 to KWD 3,000.0. Oman ▲ Oman will allocate USD 7.8 billion over the next few years to boost power supply. ▲ Oman registered a 9.4% increase in mobile phone subscribers to 3.5 million subscribers, till June this year compared to the corresponding period last year. UAE ▲ Abu Dhabi Airports Company announced a 10.3% increase in July passenger traffic to 923,124, which attributed the rise to expatriate workers’ holidays. ▲ The total value of mortgages issued in Dubai rose during the second quarter by 14.3% to AED 8.0 billion, up from AED 7.0 billion in the first quarter, as banks made its easier for real estate buyers to get credit. ▲ The value of mortgages issued in Dubai topped AED 8.0 billion during the 2Q 2009, down AED 27.2 billion from a year earlier and up AED 1.0 billion compared to the first three months of the year. ▼ According to Landmark Advisory, residential rents in Dubai fell by up to 30.0% in August, the maximum rental decline being seen in two-bedroom apartments in Palm Jumeirah, which fell 30.0% in August. ▼ Dubai office rents fell by an average of 25.0% in the second quarter, 20.0% less than the fall in Q1 2009. - Total loans and advances by UAE banks declined by 0.2 % in July to AED 1.0 trillion, while bank deposits rose by 0.2% to AED 964.1 billion, compared with corresponding figures for June. The gap between loans and deposits narrowed by AED 4.4 billion to AED 42.9 billion over the month of June. - UAE banks' loan loss provisions rose 54.0% to USD 4.1 billion in H1 2009 compared to the same period in 2008. - Cement, concrete, and wood prices fell 1.7%, 5.5%, and 0.1% respectively, while steel went up 1.7% in July over June, according to a monthly bulletin by the Statistics Centre-Abu Dhabi (Scad). - According to the Executive Director, Private Equity at Gulf Capital, regional PE companies are sitting on about USD 12.0 billion - USD 13.0 billion (AED 44.0 billion – AED 7.7 billion) in un-deployed capital earmarked for buy-outs but sidelined until market conditions improve. TresVista Financial Services, Pvt. Ltd. © Page 2
  • 3. Issue No. 2.4 MENA WEEKLY NEWS Week of August 21, 2009 - August 27, 2009 Jordan …Qatar and the UAE ▲ General insurance premiums increased by 10.0% to USD 277.9 million and life insurance premiums by 7.0% to USD 31.7 are likely to see million, according to the insurance regulator. Gross claims went up by 19.0% to USD 195.3 million. negative inflation this year due to falling house ▲ Jordanian expatriates coming back home for vacation had a positive impact on the real estate sector during the past three prices, while inflation months, with sales of residential apartments in June and July higher than the previous months despite a drop when compared to rates will slow sharply the same period of last year. in Saudi Arabia and ▼ Zuhair Omari, president of the Housing Investors Society said that sale transactions for apartments greater than 150.0 square Kuwait. Inflationary meters were down by 30.0%. pressures have dropped off rapidly across the Bahrain oil-exporting region as ▲ Bahrain's food consumption is likely to increase by 25.5% in the next four years with total volumes of food trade reaching a crude prices fell from record BHD 172.0 million (USD 456.5 million). peaks of USD 147.00 a barrel in July last year COMPANY NEWS and the dollar Saudi Arabia strengthened, easing ▲ Saudi Arabia's National Contracting Company (NCC) has won three contracts worth SAR 204.0 million (USD 55.0 million) to import costs for states build electricity transmission networks in the Kingdom. that peg their currencies ▲ US firm Mustang Engineering has bought a majority stake in Saudi Arabia's Al-Hejailan Consultants in a bid to target to the US currency… engineering and project management deals in the kingdom's energy industry. ▲ Sahara Petrochemical Company’s shareholders have approved a 56.0% rights issue. ▲ Saudi Telecom Company (STC) is to invest USD 340.0 million in Bahrain, with USD 240.0 million spent to obtain Bahrain’s third mobile license and USD 100.0 million to be spent on infrastructure development. ▲ Industrial services company Harsco Corporation is expanding its presence in Saudi Arabia through a joint venture with Jeddah’s Al-Baroom Group, a major domestic construction company. ▲ Zain Saudi Arabia, will up its mobile coverage in the kingdom's inhabited areas from 70.0% to 85.0% before the end of 2009. ▲ Italian foundry equipment maker Danieli has signed a deal with Al Rajhi Steel to build a 1.0 million tonne per year, steel rebar plant in Saudi Arabia worth SAR 800.0 million (AED 783.5 million). ▼ Holders of a USD 650.0 million Islamic bond issued by a unit of SAAD have been asked to vote on dissolving the Sukuk. - Australia's Citadel Resource Group has appointed Saudi Arabia's Riyad Bank and Germany's WestLB as financial advisers for the development of a copper mine at Jabal Sayid in Jeddah. - Aramco has pre-qualified Iranian Offshore Engineering and Construction Company (IOEC), to develop a Saudi Arabian offshore oil project. Kuwait ▲ Kuwait & Gulf Link Transport (KGL), said that one of its units submitted the lowest bid of KWD 44.0 million (USD 153.6 million) for a contract to provide and install port handling equipment at Kuwait's Shuwaikh port. ▲ General Electric (GE) has been selected by the Central Tendering Committee (CTC) for the 2,000.0 MW Al‫ـ‬Sabiya Station after making a bid of 770.0 million KWD, with operations expected to begin by summer 2011. ▲ Kuwait's International Finance Co., obtained central bank approval to merge with investment firm Kuwait Invest Co. and real estate company Jeezan Holding Co. - Al Mazaya Holding allotted USD 100.0 million to purchase properties on The Palm Jumeirah, Burj Dubai, and Dubai International Financial Center area, and will start buying properties as of September this year. - Kuwait Sock Exchange (KSE) announced that it will suspend the transactions of Bank of Kuwait and Bahrain (BBK) starting October 19. BBK’s shares are to be transferred to the Bahrain Stock Exchange. - KSE announced that Gulf Finance House (GFH) intends to establish a strategic partnership with Macquarie Group Limited (Macquarie), which would invest USD 100.0 million in GFH, to provide Islamic finance services in the Middle East. UAE ▲ Dubai Holding was granted a 30.0% stake in retail company Dubai Festival City (DFC) in 2008, owned by the Al-Futtaim family group, which was recorded as an investment in an associate and valued at AED 5.6 billion (USD 1.5 billion). ▲ Ishraqah, a real estate development firm owned by the Saudi-based Al Zahran and Bin Mahfouz Groups, awarded an AED 687.0 million contract for the construction of the Onyx Towers to Arabtec Construction LLC, a subsidiary of Arabtec Holding PJSC. ▲ Abu Dhabi Commercial Bank has approved a Mudaraba Medium Term Facility worth AED 300.0 million for Dubai Silicon Oasis (DSO), to part finance the development of facilities within the technology park. ▲ Emke Group, which operates the biggest hypermarket chain in the Middle East under the LuLu and Al Falah brands, is to invest AED 4.3 billion to expand its network of 75 supermarkets and hypermarkets to 100 within the next three years. - Dubai Holding announced that it has merged with its three troubled real estate units Dubai Properties, Sama Dubai and Tatweer. TresVista Financial Services, Pvt. Ltd. © Page 3
  • 4. Issue No. 2.4 MENA WEEKLY NEWS Week of August 21, 2009 - August 27, 2009 - India's Emaar MGF, a joint venture between the Dubai-based Emaar Properties and Delhi-based MGF Development, is …The latest GCC Fund seriously considering a second attempt to raise about INR 35.0 billion (AED 2.6 billion) through an initial public offering in Market Insight Report October. from Lipper has revealed that equity Oman funds registered for sale ▲ The Ministry of Information and Oman Mobile signed an agreement whereby Omani TV programs will be transmitted via in GCC markets moved the mobile phone. into positive territory ▲ Al Hassan Engineering Company was awarded a USD 47.0 million letter of intent from Petrofac to start construction works on for the first half of 2009 the Kauther Gas Project for Petroleum Development Oman (PDO). The project is expected to be completed within a 30- (YTD 30th June) month period. recording an increase of 21.1%... - Foreign firms including South Korea's Hanjin Heavy Industries, Greece-based Consolidated Contractors Co, and India's Dodsal have been qualified to bid for three Omani airport contracts. Bahrain ▲ Ahli United Bank (AUB) is set to repay USD 400.0 million of USD 1.2 billion syndicated loans by the end of August, well ahead of its final maturity date. ▲ Ahli United Bank announced that it has received the approval from the Central Bank of Iraq to increase its stake in Commercial Bank of Iraq from 49.0% to 75.0%. ▲ Ahli United Bank announced that it has received the preliminary approval from the Central Bank of Egypt to increase its stake in Ahli United Bank of Egypt from 35.3% to 90.0% ▲ Oasis Capital Bank plans to invest USD 63.3 million to develop three student accommodation facilities in London. ▲ Gulf Finance House (GFH) intends to establish a joint Islamic financial services venture in the Middle East with Macquarie Group. Macquarie will invest USD 100.0 million out of USD 200.0 million in a convertible murabaha investment in GFH as part of the deal. ▲ The US Securities and Exchange Commission (SEC) came to an agreement with UGB and its parent, Kuwait Projects Company (Kipco), to limit the scope of the asset freeze to enable the bank to resume trading activities in the US on behalf of their clients who have no connection with the action. ▲ Eskan Bank and Seef Properties have signed a joint venture agreement for the development of a BHD 25.0 million (USD 66.3 million) shopping complex in the Saar area. ▼ Moody's Investors Service downgraded the bank financial strength rating of HSBC Bank Middle East to C from C+. - Al Baraka Banking Group will sell 35.0% of its Syrian unit via an IPO from October 4. Qatar ▲ Alumco Qatar, the premier aluminum façade contractor, has won a major contract to provide aluminum cladding, curtain walls and glazing works for Building Type 5 within the Barwa Commercial Avenue mega project undertaken by Hochtief Construction Qatar WLL in Doha for Barwa Real Estate Company. Egypt - Egypt-Kuwait Holding Company established a USD 267.0 million firm to produce fertilizers and petrochemicals. - Pioneers Holdings signed a final contract with the shareholders of Bankers Securities Co. to acquire 75.0% of the latter's capital. LIQUIDITY Saudi Arabia ▼ Saudi Arabian M3 money supply growth slowed to 15.3% in July, down 1.1% since June, while M1 supply grew to 14.2%, up 3.3% over the same period. UAE ▼ M1 money supply contracted by 13.5% last month in a sign of reduced consumer spending, according to UAE Central Bank. …Middle Eastern Jordan airlines were the only region witnessing - Liquidity in the domestic money market stood at JOD 3.7 billion including overnight deposits. growth in passenger - The Central Bank of Jordan (CBJ), offered three-year treasury bonds in an offering worth 100.0 million JOD (USD 141.0 demand and air freight million). last month, versus last year, with Middle East Oman air traffic growing by - Central Bank of Oman allotted Certificates of Deposit worth OMR 632.0 million; the interest rates for 28 day certificates 13.0%... were 0.04% while the repo rate was held stable at 2.0%. TresVista Financial Services, Pvt. Ltd. © Page 4
  • 5. Issue No. 2.4 MENA WEEKLY NEWS Week of August 21, 2009 - August 27, 2009 About Us: Headquartered in Mumbai, India, TresVista Financial Services Pvt. Ltd provides research, analytics, advisory, investor relations, and other customized services for asset managers, private equity funds, investment banks, operating companies, and other institutions. This document is provided for assistance only and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. This newsletter is provided for information purposes only. The information is believed to be reliable and is based on publicly available information, but TresVista does not warrant its completeness or accuracy. Opinions, estimates, and assumptions constitute our judgment as of the date hereof and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Additional information is available upon request. 2009 TresVista Financial Services © TresVista Financial Services Premier House, Plot No.38, 2nd Floor, New Wing, Central Road, MIDC, Andheri (East), Mumbai 400 093. TresVista Financial Services, Pvt. Ltd. © Page 5