Middle East

[winston]

From Bloomberg:-

Global status used to be a national airline. Now every country wants a stock market and world-class financial center.

In the race to become the Middle East's New York, Qatar's Doha Securities Market gained a partner in the battle with its two main competitors -- Dubai and Bahrain -- by agreeing late last month to sell a 25 percent stake to NYSE Euronext for $250 million. The proposed investment will also leave Qatar well- positioned to compete with other regional aspirants, such as Saudi Arabia, Kuwait, Oman and Abu Dhabi.

Saudi Arabia's stock-market value equals $476 billion, followed by the U.A.E. at $219 billion, Kuwait at $209 billion, Qatar at $120 billion, Bahrain at $31 billion and Oman at $28 billion, according to data compiled by Bloomberg.

The stock markets' free-floats -- that which is available for purchase and not held by governments, families, foundations and other companies -- are much smaller, though. Saudi's adjusted free-float is $144 billion, Kuwait's $66 billion, the U.A.E.'s $34 billion, Qatar's $15 billion, Bahrain's 5 billion and Oman's $7 billion, according to Morgan Stanley Capital International.

Preparing for the day the oil and gas runs out is important. Even so, regardless of its wealth, the Middle East needs only one major financial hub.

[LenaHuat]

Qatar (Doha)?
UAE (Dubai or Abu Dhabi?)?
Saudi Arabia (Riyadh? or Jeddah?)
Oman?
Bahrain?

What is forumer's pick? I would pick either Saudi Arabia or UAE as having the best potential.

[winston]

Gulf states look to harvest food from foreign investment

DUBAI : Faced with a scarcity of fertile land, water shortages and surging world food prices, wealthy Arab states in the Gulf are seeking to secure their food supplies by investing in agriculture abroad.

Saudi Arabia and the United Arab Emirates, the top food importers among Arab countries in the Gulf, are now looking to Asia and Africa as opportunities for agricultural investments.

UAE President Sheikh Khalifa bin Zayed al-Nahayan said in Kazakhstan on Monday that his country, which imports around 85 per cent of its food, is interested in the central Asian nation "to diversify its sources of food supplies."

Investing in agriculture abroad "is part of our strategic investment in general," UAE Economy Minister Sultan bin Said al-Mansuri said earlier this month.

Rapid growth, fuelled by record oil revenues, has triggered a huge influx of expatriates in the Gulf, steadily boosting populations and stretching the ability to meet demand for mostly imported foodstuffs.

The total population of the six members of the Gulf Cooperation Council -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE -- rose from around 30 million in 2000 to more than 35 million in 2006, according to GCC statistics.

This figure is expected to reach nearly 39 million by 2010 and 58 million by 2030, according to a Dubai-based Gulf Reseach Centre (GRC) report.

Although these nations have huge oil reserves, they are among the world's poorest in natural water resources and arable land -- just two per cent of the vast Saudi desert kingdom and one per cent of the UAE.

GCC food imports cost 10 billion US dollars in 2007, said the GRC study, although some press reports put the figure much higher. Saudi Arabia, with a population of about 24 million, remains the largest food importer.

Amid surging food prices and a fear of shortages caused by export bans from major crop-producing countries, GCC states now want food lifelines.

For Saudi Arabia, investing in agriculture abroad marks a shift from its own costly crop self-sufficiency scheme.

"In the 1970s and 1980s, Saudi Arabia developed its own agricultural sector for food security," said Monica Malik, economist at the Dubai-based EFG-Hermes investment bank.

"However the sector had to be highly subsidised by the government for it to be economically viable given the climatic conditions," she told AFP.

In a kingdom with scarce water reserves, a tonne of barley requires roughly 1,212 cubic metres of practically exhausted ground-water reserves, the GRC said.

Malik said the issue of food security has worsened globally, given the sharp rise in food prices and demand.

"A number of GCC countries are looking at establishing agricultural ventures in nearby countries such as Sudan for this food security and as a cheaper alternative to domestic production," she said.

"Proximity is important, as is a good relationship with the other country to secure food supplies," Malik added. Close ties with partner countries could protect the GCC against export bans in times of crop shortages in exporting countries, she said.

One reported UAE project to develop more than 28,328 hectares of arable land in Sudan is in line with this strategy. Riyadh has also held talks with Khartoum on agricultural projects, the Financial Times reported last month.

Africa's largest country has abundant water resources including the Nile River, the world's longest.

But Sudanese agriculture remains massively underdeveloped, although it employs 80 per cent of the workforce, with much of the population reliant on subsistence agriculture.

Egypt and Pakistan have also been targeted by Saudi Arabia and the UAE for food projects. Both Muslim countries have large expatriate communities in the Gulf that send home huge amounts of money annually.

"There are some projects we are negotiating with the UAE related to food security for the UAE," Egypt's foreign trade and industry minister, Rashid Mohammed Rashid, was quoted by the Emirati daily The National as saying this month.

In Pakistan, the UAE is considering buying more than 40,470 hectares of farmland worth 500 million US dollars, press reports said. Private UAE firms such as the Dubai-based Abraaj Capital have also reportedly been buying agricultural land in Pakistan.

According to the reports, when Pakistani Prime Minister Yousuf Raza Gilani visited Saudi Arabia in June, he offered hundreds of thousands of acres of agricultural land to the Saudis in return for oil.

But agricultural exporters including Egypt and Pakistan recently imposed export bans on certain crops after riots triggered by food shortages at home.

Host countries for agricultural investment may therefore be unable to allow exports because they have to feed their own people.

One issue reportedly delaying UAE investment in Pakistan is the Gulf state appearing to want "blanket exemption" from Islamabad's agricultural export policies, according to a Pakistani official cited by The National.

- AFP/ir

[millionairemind]

Come buy
Aug 27th 2008
From the Economist Intelligence Unit ViewsWire

Saudi Arabia opens its stockmarket, at last, to foreign investors. They are likely to take full advantage

The gradual process of opening the Saudi stockmarket to foreign investors has taken a significant step forward with the announcement that non-residents will be entitled to trade in local stocks through Saudi intermediaries. The news prompted an immediate rally in the market—which has lost ground so far this year—in apparent anticipation of a surge in foreign interest. That optimism is well-founded, as there is plenty of value to be found on the Saudi bourse, which is by far the largest in the Middle East by market capitalisation, and most of the big names in global equity investment have a presence in Riyadh.

Share-swap
The announcement from the Capital Market Authority (CMA) on August 20th stated that "authorised persons" (in other words local entities licensed by the CMA) may enter into swap agreements with non-resident foreign investors, both individual and corporate, to transfer the economic benefits of shares listed in the Saudi Stock Exchange (Tadawul). Legal ownership of the shares will reside with the Saudi intermediary.

According to a note issued by EFG-Hermes, a Cairo-based investment bank with a long-standing presence in Saudi Arabia, the regulations covering the swaps are in place, but the CMA is reviewing the structures and procedures offered by the Saudi intermediaries before giving the go-ahead for the first actual deals. EFG-Hermes indicated that swap agreements must be fully financed and covered at the time of purchase, and are valid for a maximum four years. Voting rights are retained by the Saudi parties, but they are not permitted to exercise these rights. No limits have yet been set on the proportion of free-float shares that a foreign investor may own in a company or sector.

The swap arrangement is part of a process of opening up the Saudi market that started with the approval of a number of offshore mutual funds in the late 1990s. In 2006, after the market crashed in the second quarter, the CMA allowed foreign residents to invest, and last year the market was opened up to citizens of the Gulf Co-operation Council, and the CMA started issuing licences to investment banks to set up brokerage, asset management and advisory affiliates. The latest opening came at a relatively subdued moment. The Tadawul all-share index (TASI) had fallen by more than 20% since the start of the year, largely because of sell-offs to enable investors to participate in a succession of initial public offerings (IPOs)—the most recent was a US$2.5bn offering in shares in Maaden, a mining company—and trading activity usually slows down in Ramadan, the Muslim fasting month, which starts on September 1st. These appear to be favourable conditions for introducing a new system that is likely, eventually, to lead to a big increase in trading volumes.

Varied palette
A succession of IPOs over the past five years has resulted in the number of stocks listed on the Tadawul almost doubling. There are now 126 listed firms, with a total market capitalisation of SR1.74bn (US$463bn) as of August 25th. Just over one-third of the total issued shares are free-floating. Heavy industrial firms, such as Saud Basic Industries (Sabic), account for almost 40% of total market capitalisation, followed by banking, telecoms and real estate. Tadawul classifies the listed firms in 15 sectors. The price/earnings (P/E) of the market as a whole is currently 19.14, according to Tadawul, based on 2007 income. EFG-Hermes reckons that the forward P/E ratios are a rather more enticing 14.1 based on projected 2008 earnings and 13.0 based on forecast 2009 earnings.

[LenaHuat]

What a wondrous state of well-being by Sulaiman al Fahim, the board member who led Abu Dhabi United Group's bid for Thaksin's Manchester City :

We really have a deep pocket, we really have. It's very deep.

[millionairemind]

And the House of Cards come tumbling down...

Slowdown in the Gulf reverberates in the Middle East
By Michael Slackman Published: October 29, 2008

CAIRO: For many of the financially strapped nations of the Middle East, the oil-rich countries of the Gulf have served for years as an economic lifeline, providing jobs for their citizens, who in turn sent millions of dollars back home; tourists, who filled their hotels when Westerners were reluctant to visit; direct investment; and the kind of checkbook diplomacy that has helped stabilize an often volatile region.

Suddenly, that lifeline appears frayed, dangerously so for countries like Egypt and Jordan, as the energy-rich nations find themselves pulled into the global financial crisis and undermined by dropping oil prices. Across the Gulf, stock markets are down, causing panic among investors. Even in the boomtown of Dubai, United Arab Emirates, the once-mighty real estate market has cooled as access to credit has tightened.

Governments across the region have intervened.

The United Arab Emirates injected $32 billion into its banking system and guaranteed bank deposits. Saudi Arabia has offered billions of dollars to make loans available to its citizens. And Kuwait, which had already cut its benchmark rate, this week moved to prop up its second largest bank.

But the era of sky-high oil prices, while now a memory, left most of the region's capitals with enough cash reserves to cushion the blow, economists and financial experts in the region said. And as long as oil sells for more than $55 a barrel, most of the governments will take in more than they have allocated in their budgets, regional analysts said.

Slowdown in the Gulf reverberates in the Middle EastRebel advance in Congo threatens UN operations"We are not calling for a recession in the Gulf," said Marios Maratheftis, regional head of research for Standard Chartered Bank in Dubai. "We are looking at a slowdown."

But a slowdown in the Gulf might feel like a crash landing in places like Egypt, Jordan and Syria, where Gulf money has helped prop up strained economies.

"When there is growth in the Gulf, there will be growth in the whole Arab world," said Rashad Abdou, a professor of economics and international finance at Cairo University. "There would be more tourism, more money in the stock market, more investments. And the opposite is true. With a shrinking or recession, they will not come for tourism, they will not put their money in the stock market, they will not invest and they will not be able to hire Egyptian workers."

Egypt receives about half of its $6 billion in annual remittances from more than two million citizens living and working in the Gulf area, while about 60 percent of its tourists come from that region, Egyptian economists estimated. Syria has benefited from Gulf investments in large real estate projects, helping offset some of the isolation imposed by United States sanctions. Jordan receives about $2 billion annually in remittances from workers in the Gulf and takes in about $500 million in financial aid from Saudi Arabia alone.

"I expect investments from the Gulf to slow down or stop because they have to deal with their own problems before they invest in other countries," said Nabil Samman, an economist who runs the Damascus-based Center for Research and Documentation. "Syria will be affected in terms of the Syrian people who send money from the Gulf. There are close to a million Syrians in the Gulf area."

Extravagant oil wealth has helped transform not only the Gulf nations on which it was bestowed but also the greater Arab world. Egypt, once the cultural and political capital of a region that stretched from Morocco to Iraq, has taken a back seat to the petro-fueled economies and politics of places like Qatar and Saudi Arabia.

The Gulf states took on an aura of invincibility, especially as oil prices crested this summer near $150 a barrel. And even as the financial crisis spread from the United States to Europe and into Asia, there was a feeling in the Middle East that oil-rich nations would be spared. But then the price of oil began to drop, precipitously, revealing a financial anatomy in many nations that was far from invincible.

Sparkling Dubai was powered by the greatest construction boom in Middle Eastern history. But it was a dream built on a promissory note. Debt increased 49 percent from 2007 to 2008, so when the credit crisis came it hit Dubai hard, financial experts there said.

Dubai had to turn to the government of the United Arab Emirates for an injection of capital to keep its banks afloat. Optimists are hoping that the cooling of Dubai's overheated real estate market will ultimately have a positive effect on the emirate, though they recognized it would not be without pain.

"The subprime crisis, which started in the U.S. in 2007, has developed into a full-blown international crisis with potentially severe consequences for the GCC countries and their growth models," Eckart Woertz, an economist at the Gulf Research Center, wrote in a report issued this month. The GCC, or Gulf Cooperation Council, is a regional association that includes Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait and Bahrain.

On Sunday, Kuwait suspended trading in shares of its second largest bank, Gulf Bank, after a customer defaulted on a derivatives contract costing the bank hundreds of millions of dollars. That further spooked the equities market in Kuwait, where the main index has dropped 19 percent for the year.

"Every single person who has $100,000, which is to say, 20,000 dinars, is really involved in this," Suleiman al-Mutawa, a former planning minister in Kuwait, said of those invested in stocks. "It adds up to family budgets, to family expenditures, to vacations, hence people are upset."

But Kuwait has done well compared with Saudi Arabia, where the main stock index has lost half its value since the start of the year.

While the GCC wrestles with its growing problems, its neighbors anxiously await the potential fallout from next door. There are signs that the pain is spreading.

In Cairo, Karim Hussein, 27, has worked for the last three years in offices that arrange work visas for Egyptians looking for employment in the Emirates. He said in the past they would get requests for up to 70 visas a month. Now they get 10, he said, "if we get anything at all."

In Amman, Jordan, Manal Saleh, 35, works for a company that sends skilled workers to the Gulf. She said opportunities there have dropped by about half since the start of the year. "In light of the financial situation, demand has shrunk," she said.

[iam802]

Gulf Citizens Beg for Bailout as Stock Rout Signals End of Boom

http://www.bloomberg.com/apps/news?pid= ... refer=home

Oct. 31 (Bloomberg) -- Abdullah Hajeri led a march on the Emir's palace in Kuwait this week, demanding the oil-rich nation's ruler stop stocks from plunging. Adnan Mohammed Saleh, down the Persian Gulf coast in Dubai, said he wants more government protection from the global financial crisis.

``Every day the market is crashing,'' said Saleh, a 42-year- old trader, staring dumbfounded last Tuesday as company names scrolled across the Dubai Stock Exchange's outdoor ticker in red.

The region's rulers are under pressure from citizens to shore up investors, not just banks, as they try to fend off what may be the worst economic crisis since December 1998, when oil at $10.35 a barrel forced them to slash spending. Crude prices have fallen 50 percent from a record $147.27 in July, and stock indexes in Dubai and Saudi Arabia are down by as much this year.

Gulf economies are more susceptible to financial turmoil than in the past because of their greater dependency on international expertise, investment and tourists to diversify away from oil. While Dubai, home to the world's tallest building and the man-made Palm Island, is considered most at risk, no part of the Persian Gulf will go untouched.

``There is no way you can say that any trouble in Dubai is going to be isolated,'' Georges Makhoul, Morgan Stanley's president for the Middle East and North Africa, said in an interview in London. ``The biggest threat is going to be local confidence in the local economy, whether it's in Dubai or Abu Dhabi or anywhere else.''

No Investors Left

There aren't many international investors left in the region, he added.

Regional competition to attract investors and tourists from around the world led to a surge in record-breaking projects.

Dubai is racing against Saudi billionaire Prince Alwaleed bin Talal's investment company to build the world's first kilometer-tall tower. Saudi Arabia has turned a spot on its Red Sea coast into the biggest property development in the Middle East. Now little more than sand and construction cranes, the $120 billion King Abdullah Economic City is meant to create 1 million jobs and be home to 2 million residents.

Projects risk going unfinished or becoming white elephants if economies around the world go into recession, keeping international investors and tourists closer to home.

Dubai's plans, including the Disneyland-style ``Dubailand'' that will be three times the size of Manhattan, are predicated on doubling the number of tourists annually to reach 15 million visitors by 2015.

``Many of the projects being marketed in the Gulf today will get shelved,'' Kamel Lazaar, chairman of Riyadh-based financial advisory firm Swicorp, said Oct. 7. ``The price of land has been inflated. It will have to correct.''

`Better Suited'

Kuwait on Wednesday became the third Gulf state to prop up its banking system. It did so after losses on currency derivatives at Gulf Bank KSC, the country's second-largest lender by assets, sparked a surge in customer withdrawals from the bank.

The United Arab Emirates said Oct. 12 it would guarantee deposits of all local lenders and large foreign banks. It also set up a $19 billion facility to help banks make loans. Saudi Arabia, the world's largest oil exporter, put $2.7 billion into a government-run bank in Riyadh to provide no-fee loans to low- income citizens.

``We are going to be impacted, but we are better suited than anyone else to deal with the problems,'' Hareb Al-Darmaki, executive director of the Abu Dhabi Investment Authority, said Oct. 28 at a London conference for companies from the United Arab Emirates' richest member. ``We have the ammunition.''

Societal Setback

The emirate has almost 8 percent of the world's oil reserves and a sovereign wealth fund with assets between $250 billion and $875 billion, according to a range of estimates compiled by the International Monetary Fund. Even with its decline, oil still averages $110 a barrel for the year.

Residents of the region are used to government intervention. All Gulf countries are run by unelected rulers who maintain political power through tribal allegiances and marriages. Generous state welfare programs have traditionally damped demands for more political participation.

How the region's rulers cope with the turmoil may define relations with their people in the future, as they try to wean their subjects off state handouts and encourage them to find jobs and embrace market capitalism.

``There's no question that it sets back the move from socialist, paternalistic societies toward more modern capitalist states,'' said Gabriel Stein, a director at London's Lombard Street Research, which provides economic analysis to investors and companies. ``It is a trend that we have seen all over the world. The immediate reaction is that you told us to do this, so now things are going wrong it's up to you to help us out.''

Market `Destruction'

On Oct. 27, Hajeri, an independent equity trader, and 20 peers marched from the Kuwait Stock Exchange's trading floor to the emir's office to demand that the government close the exchange. Rebuffed, Hajeri said it meant ``destruction to the market and the Kuwait people.''

All capital markets in the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, have declined and interest rates have increased since Lehman Brothers Holdings Inc. sought bankruptcy protection on Sept. 15.

Foreign investors were net sellers of more than 5 billion dirhams ($1.4 billion) of shares on the Dubai Stock Exchange since the beginning of August, more than 1 percent of its current market value, according to bourse data.

`More Integrated'

``The U.S. financial crisis has ramifications for all countries, including the Gulf,'' U.S. Deputy Secretary of Treasury Robert Kimmitt said this week during a speech in Dubai, where he met representatives of sovereign wealth funds. ``Our capital markets are more integrated than ever before, allowing opportunities, but also financial difficulties, to spread rapidly across borders.''

Of the Gulf states, Dubai may be hardest hit by a global economic slowdown because it has borrowed more to finance its transformation from a Persian Gulf trading post to a financial and tourist hub, and has only 4 billion barrels of oil reserves.

Government-controlled companies owe at least $47 billion, more than Dubai's gross domestic product, and they will continue to accumulate debt faster than the economy grows, Moody's Investors Service estimated in an Oct. 13 report. It concluded that Dubai may need financing help from Abu Dhabi.

Dubai-based Emaar Properties PJSC has shed more than 26 percent since Sept. 15 as investors lost confidence in the ability of the Middle East's biggest publicly traded real-estate developer to finance projects by borrowing through local and international banks.

Real Estate Bust?

Dubai property prices will likely remain unchanged through 2010 after quadrupling in the past five years, Colliers CRE Plc said Oct. 5.

``There is a liquidity and credit crunch and now oil prices have fallen from $140 to $70,'' said Nouriel Roubini, a professor at New York University. ``I see the risk of a real-estate bust throughout the Gulf, but specifically in Dubai, and there's a huge amount of excess capacity being built.''

That's not keeping investors from betting on pain across the region. The cost of protecting debt from default has jumped more than fivefold since July for Abu Dhabi and Dubai, according to trading in credit default swaps. The cost of insuring Saudi Arabian government debt has risen 51 percent since Sept. 18.

The price of oil may determine whether governments can maintain government spending and support economic growth.

``If prices drop by $15 a barrel from the $60 to $70 mark, then they will probably not break even in terms of their budgets,'' said John Sfakianakis, chief economist at Saudi British Bank in Riyadh.

[winston]

Need to pay back or not ?

US seeks 300 billion dlrs from Gulf states: report

AFP - Thursday, November 20KUWAIT CITY (AFP) - - The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait's daily Al-Seyassah reported Thursday.

Quoting "highly informed" sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait.

Al-Seyassah said Washington sought the amount as "financial aid" to face the fallout of the financial crisis and help prevent its economy from sliding into a painful recession.

The daily said the United States plans to use the funds to help the ailing automobile industry , banks and other companies suffering from the global financial turmoil.

The four nations, all members of OPEC, produce together 14 million barrels of oil per day, around half of the cartel's production and about 17 percent of world supplies.

The four states are estimated to have amassed close to 1.5 trillion dollars in surplus in the past six years due to high oil prices that rocketed above 147 dollars in July before sliding to just above 50 dollars.

The daily also said that the United States has asked Kuwait to forgive its Iraqi debt estimated at around 16 billion dollars.

[blid2def]

Don't need. It's like protection fees last time. Oi, I sell your weapons, protect you from Iran / Syria / Israel, now I am here to claim the fees.

[LenaHuat]

Especially patriot missiles.