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TresVista Monthly Newsletter Septemeber 09
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TresVista Monthly Newsletter Septemeber 09

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  • 1. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 MENA MARKETS For additional 120.0 Country Index Close % Change information or requests 115.0 Saudi Arabia SASEIDX Index 6,322.0 12.2% or to be added to the Kuwait KWSEIDX Index 7,817.3 (0.7%) distribution list, please 110.0 UAE DFMGI Index 2,191.0 15.6% contact Egypt HERMES Index 632.2 3.3% 105.0 Oman MSM30 Index 6,572.3 3.0% newsletter@tresvista.com 100.0 Jordan JOSMGNFF Index 2,688.2 4.7% Morocco MOSENEW Index 10,765.4 (2.5%) 95.0 Bahrain BHSEASI Index 1,554.5 1.8% 1. MENA Overview 90.0 Qatar DSM Index 7,414.3 3.7% 2. Saudi Arabia Tunisia TUSISE Index 4,063.8 7.7% 3. Kuwait 85.0 Lebanon BLOM Index 1,470.2 5.2% Abu Dhabi ADSMI Index 3,124.2 7.3% 4. UAE Sep-01 Sep-08 Sep-15 Sep-22 Sep-29 5. Egypt Saudi Arabia Kuwait U.A.E Egypt 6. Other Countries GLOBAL MARKETS 7. M&A 115.0 Country Index Close % Change 110.0 USA Dow Jones 9,712.3 4.3% USA S&P 500 1,057.1 5.9% 105.0 USA NASDAQ 2,122.4 7.8% 100.0 EURO DJ Euro Stoxx 2,872.6 5.8% London FTSE 100 5,133.9 6.5% 95.0 Japan NIKKEI 225 10,133.2 (3.8%) Market Buzz… China HANG SENG 20,955.3 5.4% 90.0 85.0 Sep-01 Sep-08 Sep-15 Sep-22 Sep-29 Dow Jones Industrial S&P 500 NASDAQ Composite DJ Euro Stoxx FT SE 100 Nikkei 225 Hang Seng COMMODITIES / CURRENCIES Commodity Open Close % Change Currency (USD/) Open Close % Change NYMEX Crude 68.05 70.61 3.8% GBP 0.619 0.626 1.1% Gold 956.35 1,007.70 5.4% EUR 0.703 0.683 (2.8%) Silver 15.02 16.65 10.8% SAR 3.750 3.750 0.0% LME Steel 402.50 435.00 8.1% KWD 0.287 0.287 (0.3%) MENA Overview - Markaz, recommended in its latest released research note that the current structure of real estate financing should be amended, commenting on the pitfalls and suggesting alternatives. The report said that real estate constitutes a noteworthy percentage of the balance sheets of GCC corporate with 6.5%, and also as an investment asset class with 4.0% of total invested wealth, and is too important to be left to fend its financing needs on its own. - The GCC power generation capacity is expected to grow by 44.0% to surpass 1,609.0 MW hours by 2013. - Airlines in the Middle East are likely to witness a cumulative 8.0% growth in passenger volume in 2009, but they are set to incur an estimated USD 500.0 million loss this year due to the impact of the global financial crunch, Giovanni Bisignani, International …Global Sukuk Air Transport Association (IATA) director-general. issuance has fallen from - The estimates of combined losses to be incurred by airlines this year have been increased by IATA to USD 11.0 billion from USD USD 11.1 billion during 9.0 billion previously, due to declining yields, increasing fuel costs and slump in business travel. the first seven months of 2008 to USD 9.3 billion - Gulf countries are expected to invest as much as USD 51.4 billion in power projects to meet the additional demand of 55,000.0 in the same period of MW in the region until 2015. 2009… TresVista Financial Services, Pvt. Ltd. © Page 1
  • 2. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 Saudi Arabia Company % Change …The outlook for the 1 Month Index Performance CAGR 12.2% Sectors % ▼▲ Top 5 Gainers: Middle East has 6,400.0 Telecom 7.1% Banking 16.2% Arabian Shield Cooperative Insurance Company 57.2% improved as oil prices 6,200.0 Samba Financial Group 39.7% Cement 6.5% have rebounded from 6,000.0 Al Mouwasat Medical Services 37.5% Insurance 10.1% SASEIDX Index previous lows and 5,800.0 Trade Union Cooperative Insurance Company 31.0% prospects for the global 5,600.0 Riyad Bank 28.9% economy improve. The 5,400.0 Top 5 Losers: region is looking at 5,200.0 SABB Takaful (9.6%) Allied Cooperative Insurance Group (5.7%) annual growth of more 5,000.0 Tihama Holding (4.6%) than 4.0% next year… Sep-01 Sep-08 Sep-15 Sep-22 Sep-29 Saudi Chemical Company (4.6%) Aldrees Petroleum and Transport Services Company (4.4%) Macro Economic News ▲ Expatriate workers and professional in Saudi Arabia have increased amount of remittance to their countries by 33.0% in 2008. ▲ Saudi Arabia’s state-run pension fund spent SAR 1.3 billion to raise its stake in seven companies as it seeks to expand investments and benefit from a market rally. ▲ Saudi Arabia's annual inflation rate inched down to 4.1% in August from 4.2% in July, mainly due to a slowdown in the rise of home rents. The cost of living index stood at 122.7 points in August, up from 122.2 points in July. ▲ The Chairman of the Royal Commission for Jubail and Yanbu said that the commission has awarded utility contracts totaling USD 373.0 million. ▼ Saudi Arabia's non-oil exports in June fell 22.0% to SAR 8.1 billion from a year earlier. The kingdom's imports in June also fell, dropping 25.0% to SAR 26.8 billion, compared with SAR 35.6 billion from a year earlier. ▼ The global data provider MSCI will pull Saudi stocks from its indexes after refusing to comply with a deadline set by the Saudi bourse to resolve a month-long spat, which might concern some foreign investors. - Saudi Arabia cut the official selling prices for all grades of crude oil exported to the U.S. in October, according to state-run oil company Saudi Aramco. - Custodian of the Two Holy Mosques King Abdullah ordered the payment of SAR 1.2 billion in emergency aid in order for poor families to cover their Ramadan and Eid Al-Fitr expenses. Sector News ▲ Saudi Arabia's real estate sector would sustain a growth rate of 5.0-7.0% until 2012, backed by a rising housing demand, expanding business development projects and a growing hospitality sector. ▲ Saudi Arabia, imported more than USD 10.5 billion worth of cars and spare parts in 2008; while auto sales are expected to further increase by 5.0% in 2009 to surpass the 545,000 units sold last year. ▲ The Saudi government has formally awarded the USD 720.0 million fourth construction package on the North-South minerals railway to a consortium led by a local company. ▲ Doosan Heavy Industries & Construction Co., South Korea’s leading power equipment maker, said that it has won a USD 1.0 billion deal to build a power plant in Saudi Arabia. ▲ The petrochemical and refining industry in Saudi Arabia accounted for most of the USD 38.0 billion growth inflows, which amounted to USD 12.0 billion - a 57.0% increase over the previous year - and there was a fourfold rise in the real estate sector, where inflows totaled USD 7.9 billion. ▲ Saudi Arabia's Central Department of Statistics showed that the value of Saudi petrochemicals exports fell 27.8% in July compared with the same month last year. For the Q2 2009, the value of petrochemical exports was USD 1.9 billion, down from USD 2.4 billion during the same period of 2008. Company News ▲ China's Epure International has signed a letter of intent to build a USD 82.4 million wastewater treatment plant for Saudi Arabia's Power & Water Utility Company for Jubail & Yanbu (Marafiq). ▲ Egypt plans to sell its Development and Agricultural Credit Bank to Saudi's Rajhi Investment Group, said a senior government official. ▲ Zamil Industrial Investment Company’s subsidiary, Zamil Air Conditioners, has won a SAR 51.0 million contract from the Saudi Arabian Ministry of Education to manufacture and supply more than 25,500 room air conditioning units for the government schools. ▲ Saudi Arabia's market regulator said it has approved Almarai Co.'s request for a capital hike to SAR 1.2 billion from SAR 1.1 billion as well as its offer to acquire Saudi Hail Agricultural Development Co., or Hadco. ▲ Saudi Arabia's Al Jazeera Cement Co. has signed contracts with international companies for the importation, installation, and operation of clinker mills and three gravel crushers at a total investment of SAR 350.0 million. ▲ The Saudi Railway Company has awarded the Riyadh-Qassim portion of the north-south railway project to a Saudi-Chinese consortium worth SAR 2.7 billion. ▲ Saudi Electricity Company has awarded two contracts for transmission projects worth SAR 220.0 million in early September. TresVista Financial Services, Pvt. Ltd. © Page 2
  • 3. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 ▲ A group of private Saudi Arabian investors will set up a SAR 2.0 billion firm, the new International Agriculture and Food …The four members of Investment Co. which will invest in agriculture projects. the Gulf Cooperation ▲ Saudi Electricity Co. said its board agreed a day earlier to award SAR 7.6 billion worth of new power generation and Council comprising transmission projects. Saudi Arabia, Kuwait, ▲ Saudi Arabia's government has decided to renew a ten-year reprieve on receiving dividends from Saudi Electricity Co. Bahrain, and Qatar are expected to ratify the ▲ A Saudi government panel has brokered a deal between Saad Group and local creditors that excludes international banks. monetary union Saad and another Saudi family conglomerate are at the center of an estimated USD 22.0 billion debt implosion. agreement by the end of ▲ Saudi Public Transport Company announced that it has signed a five year, SAR 124.0 million contract with King Saud this year, according to a University to provide its students with transportation services. top official… ▲ ArcelorMittal will complete a mill in Saudi Arabia to make pipes for the oil industry in 2011. The plant, initially slated to start production in 2009, will have a capacity to produce 600,000 metric tons a year. ▲ Saudi Cables has received orders for medium voltage power cables worth SAR 74.0 million from Saudi Electricity. ▲ Saudi Arabia’s Public Pension’s Agency has increased its stake in Samba to 12.4%. PPA has purchased an additional 2.2% stake in the firm in a deal worth a total of SAR 841.5 million. ▲ Mohammad Al Mojil Group announced that it has received the approval of Saudi Aramco to finalize the construction work for 355 residential units at the King Abdullah University of Science and Technology. The contract is worth SAR 183.0 million and the company expects to deliver by the end of November 2009. ▲ Maan Al Sanea, the chairman of Saad Group, has cut his stake in Samba Financial Group by 2.8%. Al Sanea held a 7.8% stake in Samba. ▲ Premco, a subsidiary of Construction Products Holding Company, signed an agreement for supplying precast concrete to Princess Noura University in Riyadh. The deal is valued at SAR 100.0 million and will be implemented in 24 months. ▲ The Saudi Aramco has awarded a front-end engineering (Feed) and project management services for the Wasit gas development program to SNC-Lavalin. The development program will provide for the production and processing of up to 2.5 billion standard cubic feet per day (SCFD) of gas from the Aribiyah and Hasbah offshore non-associated sour gas fields to meet the future demands of Saudi Arabia. ▲ Air Products will work with Samsung Engineering on USD 300.0 million Jubail air separation units. ▲ The National Water Company plans for SAR 10.0 billion new projects in Riyadh and Jeddah to be implemented after two years from now, an NWC official said in a statement. ▲ Saudi Arabia’s PetroSaudi International and 1Malaysia Development Berhad (1MDB), wholly owned by the Malaysian Government, are set to announce a joint venture company to invest USD 2.5 billion in Malaysia. ▼ Saudi Arabia’s Central Bank governor announced that the bank would not buy debts from the Algosaibi and Saad groups that defaulted after borrowing more than USD 15.0 billion. ▼ Capital Intelligence has lowered the financial strength rating of Saudi Hollandi from ‘A’ to ‘A-’ with a stable outlook. ▼ Emaar Economic City, the firm tasked with developing the USD 27.0 billion King Abdullah Economic City on Saudi Arabia's Red Sea coast, said it canceled a SAR 1.4 billion contract with the contractor Saudi Binladin Group. - Ergil Group and Al-Joaib Holding have agreed to sign a Joint Venture agreement between Ergil Group and Engineering Services and Development Center, a subsidiary of Al-Joaib Holding in Saudi Arabia. - Barclays Plc plans to set up a private banking operation in Saudi Arabia to tap the market for wealthy individuals. - A new joint venture company, Warehousing & Distribution Holding Company, or WARED LLC, with a capital of SAR 120.0 million, has been formed. The joint venture is owned by Zahid Holding Group and Construction Products Holding Company on a 50:50 basis. - State-run Saudi Aramco said that a planned joint venture with Dow Chemical would have an annual production capacity of 8.0 million tonnes of petrochemical products. - Saudi Aramco may award two contracts this month to help implement gas projects to meet soaring demand for gas in the Kingdom. The projects, the Manifa gas development program and the Shaybah natural gas liquids program, are estimated to cost around USD 6.9 billion. Liquidity ▲ Islamic Development Bank launched its latest capital markets offering, a USD 850.0 million fixed-rate sukuk under its USD 1.5 billion MTN issuance program. The issuance was 2.4 times oversubscribed. TresVista Financial Services, Pvt. Ltd. © Page 3
  • 4. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 Kuwait …Oil prices are Sectors % ▼▲ Company % Change 1 Month Index Performance CAGR (0.7% ) relatively strong enough 7,950.0 Insurance 1.6% Top 5 Gainers: to support the GCC 7,900.0 Banks 2.9% National Industries Company 33.3% Food (4.6%) economies without 7,850.0 Service (1.2%) Al Ahlia Holding Company 29.6% AREF Investment Group 26.7% registering massive 7,800.0 KWSEIDX Index Real Estate 0.7% Kuwait Commercial Markets Complex Company 24.3% 7,750.0 deficits, even as local 7,700.0 Industries (1.2%) Kuwait Bahrain International Exchange Company 22.8% and global banks are 7,650.0 Investment (1.8%) Top 5 Losers: reluctant to lend to long 7,600.0 Mushrif Trading and Contracting Company (27.0%) term projects, according 7,550.0 Jeeran Holding Company (26.3%) United Foodstuff Industries Group Company (20.9%) to a top official of Qatar 7,500.0 Sep-01 Sep-08 Sep-15 Sep-22 Sep-29 Kuwait Foundry Company (17.5%) Petroleum… Abyaar Real Estate Development Company (15.9%) Macro Economic News ▲ Kuwait Investment Authority (KIA) dismissed as untrue recent information by the UN Conference on Trade and Development (UNCTAD) that it had incurred losses to the tune of USD 94.0 billion. ▲ Governor of Central Bank of Kuwait (CBK) Sheikh Salem Abdulaziz Al- Sabah said that inflation rate for the last months of 2009 will keep on slumping to reach less than 5.0%. ▲ Kuwait is likely to post a healthy budget surplus of up to KWD 6.2 billion this fiscal year on the strength of higher oil prices although the government has projected a huge deficit. The budget surplus is expected to range between KWD 1.1 billion and KWD 6.2 billion depending on the oil price. ▼ Kuwait's crude oil exports to Japan fell 26.6% in August 2009 from a year earlier to 8.9 million barrels, or 285,000 barrels per day (bpd), for the second straight monthly decline. Japan is Kuwait's largest oil buyer accounting for 20.0% of its total crude exports. - The latest official figures from the NBK report show Kuwait's inflation at 5.9%. Sector News ▲ Kuwaiti property sales fell 37.9% in the year to July. Sales fell to KWD 99.8 million from KWD 160.7 million in July 2008. ▲ The Civil Aviation Authority said that the number of flights increased by 6.0%, commercial flights by 33.0%, cargo by 41.0% from and to Kuwait International Airport during August. Non-commercial flights dropped by 33.0%, the total number of passengers during the past month reached 840,000 passengers. ▲ Kuwait signed a USD 1.5 billion contract with General Electric and Hyundai Heavy Industries to build and operate a power station in Al-Subbiya Area which will produce 2,000 megawatts, or 20.0% of the current electricity output. The contract includes importing and assembly of six gas turbines that will produce 1,320 megawatts in addition to six steam turbines generating 700 megawatts. Company News ▲ The Central Bank of Kuwait approved the 25.0% rights issue of Al Ahli Bank of Kuwait. ▲ The President of state-run Kuwait Petroleum International said that Kuwait has restarted talks with BP as a potential partner in a USD 9.0 billion joint venture refinery it plans to build with China's Sinopec. ▲ Logistics provider Agility said it won a multi-million-dollar contract to provide logistics services to RasGas Company, one of Qatar’s liquefied natural gas producers. ▲ A consortium of Indian telecom companies and a Malaysian investor will buy a 46.0% stake in Kuwaiti telecom, Zain. ▲ NBK has raised its stake in Islamic lender Boubyan Bank to 40.0% by buying Securities Group Co’s 7.2 % stake in the Islamic lender as it seeks to boost its Sharia compliant business. ▲ National Investments Company has announced the mechanism for the participation of small shareholders and the arrangements for the gathering led by Al‫ـ‬Khair National for Stocks and Real Estate regarding the necessary preparations to sell 46.0% of shares of Zain. ▼ Moody's Investors Service has downgraded the bank financial strength rating (BFSR) of Commercial Bank of Kuwait to C‫ـ‬ from C and also downgraded Al‫ـ‬Ahli Bank of Kuwait to D+ from C-. Liquidity ▲ Kuwaiti money supply growth was steady in August from the month earlier at 18.7%. Money supply, measured as M2, rose to KWD 24.5 billion (USD 85.5 billion) on August 31, from KWD 20.6 billion a year earlier, the central bank said. ▲ The Central Bank of Kuwait (CBK) reported a hike in credit facilities by local banks to different sectors to KWD 24.4 billion by end of July 2009, a hike of 0.5%. ▲ In August, quasi money ‫ ـ‬which includes savings and time deposits in dinars, as well as foreign currency deposits rose 23.3% to KWD 19.7 billion. ▼ The Central Bank of Kuwait said that money supply growth dropped to 18.9% in July from 21.6% a month earlier. - Kuwaiti Islamic lender Boubyan Bank said it plans to raise its capital to USD 609.0 million as it seeks to expand in Kuwait, after it received the central bank’s approval for the move. TresVista Financial Services, Pvt. Ltd. © Page 4
  • 5. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 Es UAE …The number of 1 Month Index Performance CAGR 15.6% Sectors % ▼▲ Company % Change Insurance Index 1.3% Top 5 Gainers: international banks 2,300.0 Health Care Index 8.2% Dubai Financial Market 32.2% willing to lend to Telecom Index 11.5% 2,200.0 Dubai Islamic Bank 21.2% projects in GCC Construction Index 0.2% Emaar Properties 19.8% countries has shrunk Energy Index (1.9%) DFMGI Index 2,100.0 Real Estate Index 21.9% Emirates NBD 18.9% sharply; only 12 banks Bank&Finance Index 5.1% Drake and Scull International 18.2% 2,000.0 were actively seeking Industrial Index 5.6% Top 5 Losers: project finance deals 1,900.0 Consumer Index 7.5% Gulf Finance House (45.8%) there at the end of 2008, Arab Insurance Group (14.0%) 1,800.0 Grand Real Estate Projects Company (6.9%) down from 45 in 2006. Sep-01 Sep-08 Sep-15 Sep-22 Sep-29 National Cement Company (4.1%) As a result major oil and Ekttitab Holding Company 0.0% gas, industrial, and Macro Economic News infrastructure projects that have a substantial ▲ UAE has improved business competitiveness significantly, moving up from 47th position to 33rd according to the latest Doing amount of FDI have Business 2010 report by the World Bank. been delayed… ▲ Dubai’s total exports grew 6.5% to AED 46.5 billion in the Q2 2009 compared to Q1 2009. ▲ UAE's inflation rate has plunged to between 3.5% and 4.0% this year, according to the Minister of Economy. ▲ From 2.5% at the start of August, Eibor plunged to 1.8% at the end of the month following an announcement by the Central Bank to establish a mechanism for inter-bank rates. ▲ UAE will invest AED 25.0 billion to AED 30.0 billion to build a countrywide network of railways spread over 1,100.0 kms. ▼ UAE corporate borrowing defaults will shoot up to 20.0% in 2010 due to a still sluggish real estate sector. But government and state-backed entities are not likely to default. ▼ The Institute of International Finance projected a real economic slowdown of 1.2% in UAE in 2009, followed by a 3.4% growth in 2010. The slowdown in UAE in 2009 would be fully due to contraction in the hydrocarbon real GDP which is set to decline by 7.0% during the year. ▼ FDI inflows fell by 3.0% in the UAE to USD 14.0 billion, as the global financial crisis in the last quarter of 2008 began to hit Dubai’s tourism, real estate, and banking sector. - The spread on the CDS of Abu Dhabi sovereign debt was 90.0 basis points above the LIBOR while the Dubai spread was 294.0 bps, according to the latest data available from credit information tracking firm, CMS Vision. Government Regulations ▲ UAE Central Bank asked lenders operating in the country to achieve a Tier 1 capital adequacy ratio of 7.0% by September 30 and 8.0% by June 30 next year. The banks also need to achieve an overall capital adequacy ratio, including Tier 1 and Tier 2, of 11.0% by September 30 and 12.0% by June 30 next year, according to a Central Bank circular. ▲ UAE Ministry of Finance announced that it will establish a Public Debt Management Unit as the next step towards the implementation of the Public Debt Law. ▲ The Cabinet is finalizing the industry law that will allow 100.0% foreign ownership in industries. It is also considering raising the foreign ownership ceiling from the current 49.0% to boost foreign investment. ▲ A draft law, permitting private firm employees to work for those other than their sponsors, has just been given shape by the Ministry of Labour. The draft law seeks to allow all workers in private firms to serve employers other than their sponsors for daily fixed hours, yet remain on the sponsorship of their primary employers. Sector News ▲ From about AED 150.7 billion at the end of 2007, deposits by the government and other public institutions with the country's 24 national banks and 28 foreign units leaped to nearly AED 272.0 billion at the end of March this year, an increase of AED 121.3 billion, showed the figures released by the Central Bank. ▲ Housing services grew by only about 2.3% in the first seven months of 2009 compared with a record 12.3% in the corresponding period last year following a steep fall in the real estate market in Dubai and other emirates. ▲ International passenger traffic at Dubai airports is projected to grow 13.6% in 2010, according to Dubai Airports Company. ▲ The total value of land transactions in Dubai last week reached AED 1.8 billion, of which sales exceeded AED 956.1 million. The total value of mortgages during the period was AED 798.9 million, according to the Land Department. A total of 39 sale transactions were registered with the department by the end of the week. ▲ The total value of land transactions in Dubai last week reached AED 680.8 million, of which sales exceeded AED 283.0 million. The total value of mortgages during the period was AED 397.8 million. A total of 17 sale transactions were registered with the Land Department. ▼ The exposure of Dubai banks to the troubled real estate sector is 23.0%, the second highest in the GCC after Bahrain, while banks in Abu Dhabi have the least at 9.0%. ▼ The UAE has committed around USD 26.0 billion in investments to new air and seaport infrastructure projects to reinforce its role as a global trade and logistics centre. TresVista Financial Services, Pvt. Ltd. © Page 5
  • 6. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 ▼ Cement and concrete prices in Abu Dhabi fell this week by 3.0% and 6.0% compared to the previous week. …As part of a regional ▼ The UAE Government has pumped more than AED121.0 billion into the banking sector in 15 months and the bulk of the funds initiative to step up war were channeled following the eruption of global financial crisis, official figures showed yesterday. on drugs, the six-nation ▼ The number of vacant offices in Dubai will continue to rise until mid-2010, while the pace of decline of office rents will slow Gulf Cooperation to 15.0% in Q3 2009, according to a realty analyst. The rate of decline has eased off from 45.0% in Q1 2009 to 25.0% in the Q2 Council, announced 2009, according to Jones Lang LaSalle. plans to set up a major ▼ Selling prices for properties in Dubai are not expected to see any strong recovery before second half of 2010, according to center to combat drug EFG Hermes report. With relatively low buyers' confidence in Dubai, together with the view that demand will continue to trafficking… focus on the rental market as supply is absorbed, they do not anticipate any strong recovery in Dubai selling prices. Company News ▲ Dubai Holding announced that it will pay off Sama Dubai’s three-year USD 300.0 million loan facility when it matures on September 27. ▲ Emaar MGF, a joint venture between Dubai-based Emaar Properties and India’s MGF Developments, leads three Indian real estate companies planning to raise up to INR 75.0 billion or about USD 1.5 billion through an initial public offering. ▼ Air Arabia said it has signed a 40:60 joint venture with Egyptian travel and tour operator, Travco Group. ▼ Negotiations between Dubai-based private equity firm, Abraaj Capital, and DP World have collapsed. Abraaj Capital has been engaged in talks to acquire 15.0% stake in DP World. However, both firms failed to agree on the terms of the deal. ▼ Dubai Gascities, a joint venture between Dana Gas and Crescent Petroleum to roll out energy clusters across the Middle East, said it has reached an agreement with the Yemeni Government to possibly develop a 'gas city' in Yemen. ▼ Abu Dhabi Commercial Bank PJSC (ADCB) is owed a combined AED 2.2 billion by Saudi Arabia's Saad and Algosaibi groups. Saad Group owes the bank AED 1.5 billion and Algosaibi Group owes AED 751.0 million, according to the prospectus for the bank's global medium-term notes. ▼ Sorouh Real Estate has confirmed the resignation of CEO Mounir Haidar, effective from next month. No replacement in the new organizational structure is planned, the company said. ▼ Fitch Ratings has downgraded the long-term default ratings of the Dubai Holding Commercial Operations Group LLC, Dubai Electricity, and Water Authority and placed Emirates Telecommunications Corporation (Etisalat) under ‘negative’ watch. ▼ Fitch Ratings downgraded the long-term issuer default ratings of seven UAE banks. The institutions affected are Bank of Sharjah, Commercial Bank of Dubai, Dubai Bank, Emirates Bank International, Mashreqbank, National Bank of Ras Al Khaimah and Tamweel, whose support ratings were also downgraded to ‘2’ from ‘1.’ - The UAE Central Bank said it plans to set guidance on provisions to be allocated by banks against Saad and Algosaibi bad debts and on the limit for minimum provisions, is not yet decided. Liquidity ▲ The UAE Central Bank slashed the interest rate on liquidity support facilities to banks to 1.5% from 2.5%. ▲ National Bank of Abu Dhabi raised more than USD 4.0 billion in orders for the bank's Euro Medium Term Note program, at 190 bps over the five-year dollar mid-swap. ▲ Kuwait central bank to issue USD 262.0 million of one year treasury bonds on September 16th with a coupon rate of 1.5 %. Bids for the bonds amounted to KWD 391.5 million. Kuwait’s central bank has been increasing the number of bond issues this year to absorb excess liquidity. ▲ The UAE's central bank will keep interest rates low to spur growth. The UAE's overnight repurchase rate stands at 1.0%. In contrast, interbank lending rates stand at 2.1% for three months, 2.4% for six months and 2.6% for one year. ▲ UAE Central Bank to launch new mechanism for fixing interbank rate on 1st October, 2009. EIBOR continues to narrow (3 month currently 2.1% from a 4.8% high in October 2008) but many still remain cautious about the practical impact of the change ▼ The UAE money supply decreased by 8.3% in August. The total amount of currency in circulation plus demand deposits - also known as M1 or narrow money - contracted 13.5% in July and 10.7% in June. - Emirates NBD plans to raise USD 2.0 billion in capital by taking advantage of a new federal law that guarantees bonds issued by local banks. The bank plans to issue a 3-5 year bond under a Euro medium-term note (EMTN) program as soon as the government formalizes its bond guarantee scheme. TresVista Financial Services, Pvt. Ltd. © Page 6
  • 7. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 Egypt …FDI inflows rose only 1 Month Index Performance CAGR 3.3% Company % Change Top 5 Gainers: slightly in Bahrain and 670.0 El Gezirah Hotels and Tourism Company 180.0% fell in Kuwait and 650.0 National Navigation Company 125.4% Oman in the GCC 630.0 Giza General Contracting and Real Estate Investment 119.3% region during the period Hermes Index Piraeus Bank Egypt 113.6% 610.0 Union National Bank - Egypt 103.0% compared to the Top 5 Losers: previous year, reported 590.0 Holding Company for Financial Investments (22.0%) United Nations 570.0 Ismailia Misr Poultry (12.5%) Alexandria Mineral Oil Company (10.6%) Conference on Trade & 550.0 Abu Qir Fertilizers and Chemical Industries Company (8.4%) Development’s annual Sep-01 Sep-08 Sep-15 Sep-22 Sep-29 Amreyah Cement (5.7%) study of worldwide Macro Economic News investment trade… ▲ Egyptian government expects to attract about USD 10.0 billion in foreign direct investment in the fiscal year through June 2010. ▲ Egypt's GDP growth should exceed 5.0% in the 2009-2010 fiscal year. Sector News ▼ Egypt's revenues from tourism dropped 1.6% to USD 2.6 billion in the quarter ending June 2009, compared with the corresponding period a year ago. Company News ▲ Dabur, which is currently hunting for acquisitions in the African continent, is setting up its second manufacturing facility in Egypt as part of its expansion plan in the region. ▲ Orascom Development Holding announced that it has entered an alliance with Imerys to establish a 6.8 million square meters Eco - Town in Cornwall, United Kingdom. The company will have a 75.0% stake in the project. ▲ Weather Capital Finance SA, a fully owned subsidiary of telecommunications company Weather Investments SpA, has completed the purchase of EUR 825.0 million worth of outstanding exchangeable bonds as part of a buyback program. - Delta Rasmala Securities announced that Yassin Group for Importing and Exporting has acquired a 26.0% stake (0.520 million shares) in the company at a price of EGP 66.60 per share. - Talaat Moustafa Group Holding will sell 0.500 million of its treasury shares. - Al Arafa for Investments and Consultancies will sell 10.000 million of its treasury shares. - Remco for Touristic Villages Construction announced that its subsidiary, Remco for Real Estate Construction, has received an 8 year EGP 500.0 million loan from Banque Misr with a two year grace period. - Misr Travel Company held an EGM and approved the voluntary delisting of the company's shares from the Egyptian Exchange. - Telecom Egypt signed a wholesale telecommunications services deal with Vodafone Egypt that could bring the company EGP 4.0 billion over the next three years. - Citadel Capital said it launched a microfinance company in Egypt with Egyptian Gulf Bank that will help provide low and middle income groups with access to financing and financial services. Liquidity ▲ Weather Capital Finance SA, a fully owned subsidiary of Weather Investments SpA, a unit owned by Egyptian entrepreneur Nagiub Sawiris, said that holders of EUR 744.6 million worth of bonds have tendered to sell their bonds to Weather as part of a buyback program. ▲ El Saed Contracting Company announced that it will sell 15.0 million of its treasury shares. ▲ General Company for Ceramic and Porcelain Products announces the increase in the authorized capital from EGP 100.0 million to EGP 150.0 million and 75.0% rights issue. TresVista Financial Services, Pvt. Ltd. © Page 7
  • 8. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 Other Countries …GCC-China free trade Oman talks continue as the ▲ Omani GDP reached OMR 23.0 billion in 2008 as compared to OMR 16.0 billion, or a 43.8% growth rate, the Kuwait-based GCC and the Chinese Global Investment House said in a detailed analytical report on the Sultanate. On a CAGR basis, the Omani GDP scored a record governments have growth rate of 22.7% over the period 2003-08. successfully concluded talks in Riyadh, Saudi ▲ Oman's airline industry saw passenger numbers grow 8.5% to 2.5 million in the January-July period. Arabia, the first round ▲ Oman’s M2 money supply growth accelerated to 12.6% in July from 8.2% the previous month. of negotiations to ▲ Oman will see an increase of 11.0% in tourists this year, taking it to the 2.0 million mark, thanks to Gulf residents looking for establish a free trade cheaper holiday in the region. zone between the GCC ▲ Oman wants to attract OMR 3.0 billion worth of foreign investment to its industrial and free trade zones as part of efforts to and China… diversify its oil-based economy. ▲ Central Bank of Oman (CBO) allotted OMR 682.0 million during the Certificates of Deposit tender held during the week ended 11th September. The average interest rates for 28 day certificates were 0.03% while the maximum accepted rate was 0.04%. Repo rate was held stable at 2.00%. ▲ Annual inflation in Oman slowed for the eighth month in a row to 1.8% in July from 2.9% in June, the Ministry of National Economy said, led by a decline in food prices. ▲ Central Bank Governor Hamood al-Zadjali expects the country’s economy to grow 1.0% to 2.0% this year. ▲ CBO allotted OMR 302.0 million during the Certificates of Deposit tender held during the week ended 18th September 2009. The average interest rates for 28 day certificates were 0.03% while the maximum accepted rate was 0.05%. ▲ Oman's Sohar Industrial Port signed a USD 200.0 million loan agreement with banks to finance a port project. ▼ The value of Saudi non-oil exports in July 2009 totaled SAR 8,791.0 million, showing a decline of 24.0% as compared to an amount of SAR 11,551.0 million fetched during the same month in 2008. ▼ Oman’s commodity exports fell 26.3% during the first two month of 2009 compared to the same period in 2008. - Oman Air has signed its first export credit loan financing two A330 - 300s with Citi. - The Oman Investment Fund said that it will invest about USD 125.0 million for a 50.0% stake in an Indian realty firm. - Bahrain's Mashael Group will build a 30,000 barrels per day (bpd) bitumen refinery in Oman that is planned to be completed in 2012. The agreement has been signed by Mashael and the government to build the refinery at a cost of USD 200.0 million in the Sohar Industrial Port Company (SIPC) area. - The total number of real estate deals signed during the first seven months of 2009 stood at 29,270 worth OMR 268.2 million. Jordan ▲ Jordan Tax Authorities said that actual revenues during the first eight months of 2009 reached USD 2.5 billion, up 8.7% from the same period in 2008. ▲ Foreign currencies' reserves reached JOD 6.9 billion at the end of July compared to JOD 5.1 billion during the same period last year, according to the Central Bank of Jordan's figures. ▲ Arab Bank slashed lending interest rate on housing loans by 0.50% to 8.25% effective September 1, 2009. ▲ A report issued by Jordan's Department of Statistics (DoS) showed that the Kingdom's Gross Domestic Product (GDP) grew by 2.8% during the Q2 2009, reaching USD 5.6 billion. According to the report, the growth rate was 3.2% during the Q1 2009 while the GDP's overall growth rate during H1 2009 totaled 3.0% compared with that recorded during the first half of last year. ▲ The Agriculture, Hunting, and Fisheries sector posted the highest growth rate in Jordan, reaching 14.0%, followed by the construction sector at 13.2%. The public services sector ranked third at 6.8%, followed by the transport sector at 4.4%. Moreover, the wholesale and retail sector grew by 3.6%, followed by manufacturing industries at 3.0%. ▲ Jordan’s Minister of Finance Bassem Salem said that the kingdom will receive USD 300.0 million in soft loans from the World Bank in the fourth quarter of this year in a bid to address the increasing deficit in the state budget. ▲ Kuwait topped the list of real estate investments in Jordan in the last eight months through investing in 967 projects. ▲ Arab Potash Company announced that it has recently signed a memorandum of understanding with the Indonesian Fertilizer producer Kaltim. The MoU calls for the supply of up to 150,000 metric tonnes of potash as the Kaltim plants come on stream in 2010 and 2011. ▲ The Kingdom's trade deficit between January and July narrowed by 27.4% to JOD 3.0 billion compared to JOD 4.1 billion during the same period last year. The Kingdom's total exports and re-exports dropped by 15.6% during the first seven months of this year to JOD 2.6 billion compared to JOD 3.1 billion ▲ The Jordan government signed an agreement with a business consortium, Qatraneh electric Power Company, to build an electricity generation plant in Qatraneh, at a cost of around USD 455.0 million. ▼ Jordan's unemployment rate during the first eight months of the current year topped 13.0%. ▼ The total value of real estate deals in Jordan dropped 38.0% to USD 3.9 billion in the first eight months of 2009 compared to the corresponding period in 2008. TresVista Financial Services, Pvt. Ltd. © Page 8
  • 9. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 …At a time when the ▼ Remittances from Jordanians working abroad dropped by 3.7% in the first seven months of this year to JOD 1.5 billion, real estate market in the compared with JOD 1.5 billion registered during the same period last year. According to the Central Bank of Jordan, GCC is not going remittances from expatriate workers in July amounted to JOD 254.0 million, the same figure recorded in July 2008. through a smooth phase, ▼ The unemployment rate rose to 14.0% during Q3 2009 compared to 13.0% during Q2 2009 and 12.1% in Q1 2009, according to A.T. Kearney, global the Department of Statistics. strategic consulting ▼ Jordan’s budget deficit climbed to JOD 763.2 million (USD 1.1 billion) in the first eight months of the year, finance ministry firm, sees definite sources said. opportunities for GCC based and managed real - The Jordanian government is involved in the final stage of negotiations with Estonian firm Eesti Energia for a USD 7.0 billion estate investment trusts project envisaging the production of 35,000 barrels of crude per day from oil shale. (REITs) and similar - The Central Bank of Jordan (CBJ) issued regulations that stated any individual or corporate body that wishes to acquire an types of investment influential interest in any Jordanian bank must obtain the CBJ approval. Accordingly, any individual or group who wishes to funds to attract billions acquire at least 10.0% of the capital of a bank or increase his/her stake by the same ratio or more, must submit an application to in foreign direct the CBJ in this regard, and obtain its approval prior to the purchase. investment into the region's real estate Bahrain markets... ▲ Ahli United Bank has received the Central Bank of Bahrain's approval to enter a joint venture with Legal and General Group (United Kingdom) to establish two equally-owned conventional and Islamic insurance companies that will provide their services through the bank's branches. ▲ Bahrain-based Islamic investment house Tharawat said it plans to raise USD 100.0 million by year-end for a Sukuk fund it recently launched to snatch up bargains on the secondary market. ▲ Bahrain Telecommunications Company announced that it is in the negotiation phase to acquire stakes in Middle East and North Africa region worth USD 1.5 billion. ▲ Foreign direct investment (FDI) to Bahrain increased by 2.0% last year despite the global credit crunch. ▲ The Central Bank of Bahrain moved to pump prime the economy by cutting interest rates. It reduced its lending rate and repo rate by 0.50% from 2.75% to 2.25% in a move seen as an attempt to encourage bank lending and economic growth. ▲ Bahrain-based First Energy Bank (FEB) has acquired a 9.0% stake in the Al Dur Independent Water and Power Production (IWPP) project in Bahrain. ▲ A leading Shura Council member backed plans to privatize the Bahrain Stock Exchange and subscribe part of its shares. ▼ Bahrain based Investcorp Bank has been downgraded by Moody's Investor Services to Ba2 from Ba1 and its bank financial strength rating (BFSR) to D from D+. ▼ The International Monetary Fund said that Bahrain's economy is expected to grow 2.6% in 2009, compared to last year's forecast of 6.1% growth, as banking sector losses and sluggish oil output hit growth. - General Trading and Food Processing Company clarified media reports and announced that Trafco Tourism (Egypt) has entered a joint venture with Air Arabia to establish a private airlines company. - Bahrain is auctioning a three-year BHD 165.0 million sukuk at a fixed rate of 3.75%. - Gulf Finance House announced that it has received the approval of the Central Bank of Bahrain to increase its capital by USD 300.0 million to USD 500.0 million through a rights issue. Qatar ▲ Qatari Diar Real Estate Investment Company said it has appointed Qatar Islamic Bank to lead arrange a five year QAR 3.5 billion Sharia'-compliant syndicated facility. ▲ Qatari national banks have increased their allocations for risk reserves by 76.0% to QAR 3.3 billion in the first half of 2009 from QAR 1.9 billion a year earlier. ▲ Black Cat Engineering & Construction has been awarded a major contract from Qatar Petroleum for the Engineering, Procurement, Installation, & Commissioning (EPIC) of Sweet Fuel Gas Supply with an approximate contract value of QAR 400.0 million to Dukhan consumers. ▲ State-owned Qatar Petroleum has awarded a QAR 109.0 million construction services deal to Halul Offshore Services Co. ▲ Barwa Real Estate Co. said it has completed 85.0% of its Barwa Village project under construction in Al Wakra to the south of Doha at a total cost of QAR 1.5 billion. ▲ Qatar Shipping Co. said its board has approved the sale of its Qatar Engineering & Construction Co. unit to a consortium led by Qatar America Asia Consortium for USD 110.0 million. ▲ Barwa Real Estate Company is planning to launch a QAR 1.5 billion residential and retail development project under the name of "Barwa Village Project" in Al Wakra Municipality. ▲ Qatar registered a 43.0% increase in FDI inflows, mainly in liquefied natural gas (LNG), power and water, and telecommunications. However, Qatar’s FDI outflow declined from USD 45.3 billion to USD 2.4 billion during the period. ▲ Qatar Telecom has increased the size of its USD 1.5 billion loan to USD 2.0 billion as a result of a strong response from banks during general syndication. TresVista Financial Services, Pvt. Ltd. © Page 9
  • 10. Issue No. 2.01 MENA MONTHLY NEWS Month of September 2009 ▲ The investment in Ras Laffan Industrial City, the hub of Qatar’s striving upstream industry, has reached a USD 70.0 billion. ▲ Qatari Diar Real Estate Investment Co said that investments in its projects total more than USD 60.0 billion. ▲ Qatar's hospitality sector is expected to grow by 9.0% in 2009. ▲ First Leasing Co. said it has increased the capital of its automobile leasing unit Autolease Co. to QAR 50.0 million. ▲ Qatar Airways has secured two financing deals worth a total of USD 700.0 million for the purchase of four new Boeing 777 aircraft due for delivery over the next few months. ▼ Qatar saw its risk spread widen to 81.8 basis points. ▼ Rents in Qatar have fallen by about 17.0% since the beginning of this year, according to a report published by a regional business website, quoting Qatar Statistics Authority (QSA). - Doha-based investment bank QInvest and Fortis Bank Nederland said they plan to launch the first USD 200.0 million Shariah- compliant marine fund to invest in the shipping industry. Abu Dhabi ▲ Government spending has risen by 21.0% to AED 42.2 billion this year. ▼ Average prices of apartments in Abu Dhabi fell by up to 15.0% since May. - Aldar Properties' subsidiary Al Raha Gardens Property said it has formed a joint venture facilities management company with National Catering Company. - Abu Dhabi-based Tourism Development and Investment Company may raise USD 1.0 billion in an Islamic bond offer, according to two bankers with knowledge of the deal. Mergers & Acquisitions Announced Transaction Value TV/ LTM TV/ LTM Sr. Target Acquirer Target Industry date (In USD mn) Revenues EBITDA 1 Medi Telecom Multiple Acquirers Telecom 01-Sep-09 1,138.6 NA NA 2 Tune Hospitality Investments Tune Hotels.Com Capital Financial Services 01-Sep-09 4.0 NA NA 3 Pearl Thailand Holdings Ltd UBG Bhd Oil & Gas 02-Sep-09 5.2 NA NA 4 Qatar Engineering And Construction Multiple Acquirers Transportation 16-Sep-09 110.0 NA NA 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 10