Aranca Blog

News & Views General

§  Saudi Electricity plans to invest $28 Bn in the next three years to meet the rising demand in the domestic market.

§  Almarai Co. offered to acquire Hail Agricultural Development Co. for $253.2 Mn to foray into the Saudi poultry business.

§  International Petroleum Investment Co. announced to borrow $5 Bn to acquire Canada’s Nova Chemicals Corp. and hike stake in Spain’s Cia Espanola de Petroleos SA.

§  Aramex announced that foreign investors could own up to 49% stake in the company with effect from July 1, 2009.

§  Flydubai has agreed to finance four Boeing 737-800 aircraft worth $320 Mn with GE Capital Aviation Services (GECAS).

§  Qatar Aluminium Extrusion Co. signed a deal with UBE Machineries of Japan and Granco Clark of USA, for the supply of equipment & machinery for its Aluminium Extrusion project.

§  Dubai based ANC Holdings LLC, announced the strategic acquisition of a majority stake in Amusement Whitewater LLC.

§  European space and defense company EADS bagged $2.8 Bn worth contract from Saudi Arabia to install radars and checkpoints along 8,000 kilometers of Saudi borders.

§  Saudi Arabia state-run pension fund – The General Organization for Social Insurance invested $10.7 Bn in Saudi companies.

§  Gozour acquired the Nile Company for Food Industries from Haykala, the Egyptian private equity firm founded by Commercial International Bank.

§  Fitch Ratings affirmed ‘A+’ rating with a ’stable’ outlook to Qatar’s RasGas 2 Series A bond and RasGas 3 Series B, C and D bonds.

Real Estate and Private Equity        

§  Sorouh Real Estate is providing 20% discount on property units in its Gate Towers project for avoiding payments’ default.

§  Emaar International Jordan finished the second phase design of The Apartments, a residential community in Samarah Dead Sea Resort.

July 2nd, 2009 | Tags: Almarai Co, Aramex, International Petroleum Investment Co, Qatar Aluminium Extrusion Co, Saudi Electricity | Category: GCC News | Leave a comment

§ The Saudi economy is forecast to shrink 1.2 per cent this year, despite a stronger market for oil and expanded government investment – Riyadh-based Samba Bank.

§ Egypt expects to spend 323.9 billion Egyptian pounds ($57.6 billion) and receive 225 billion pounds in revenue in the fiscal year starting July 1 – Finance Ministry.

§ BankMuscat announced that it has received approval from the Capital Market Authority for the setting up of a subsidiary in Saudi, Muscat Securities House Company. The firm would provide principal, underwriting services, fund management, advisory as well as act as a custodian.

§ MENA Infrastructure Fund, the infrastructure equity fund sponsored by HSBC, Waha Capital and Dubai International Capital has acquired 32.8% of United Power Company SAOG (UPC) for $26.5 Mn.

§ Ericsson and Etisalat entered into a MoU for the setting up of a joint committee to cooperate on common business objectives to gain from synergies in their operations.

§ Al Mazaya Holding Co. announced that it would not purchase a further 33% stake in First Dubai Real Estate Development Co.

§ Emirates NBD is close to securing a AED3.5 Bn ($953 Mn) government cash injection that will allow the UAE’s largest lender to meet new capital adequacy targets set by the Central Bank late last year.

§ Saudi Arabia-based Sabb Takaful has received Saudi Capital Market Authority’s approval for a SAR300 Mn rights issue.

§ Saudi Aramco and Dow Chemical announced the seeking of bids for the construction of a petrochemical complex in Saudi, scheduled to commence operations in 2015.

 Real Estate and Private Equity

§ The Ras Al-Khaimah Investment Authority (Rakia), the body overseeing the emirate’s growth, has created a property regulator to safeguard investors and ensure construction funds are not misused. Rakia Real Estate Regulatory Authority (Rera) will oversee the implementation of the escrow account and also monitor the progress of construction by sending inspectors to project sites to make sure contracts are adhered to.

§ Private equity fund, Delta Partners Mena Telecom Fund, announced plans to invest in Dubai-based Vox Spectrum Limited to further consolidate Vox Spectrum’s existing operations as well as expand its presence in Middle East and India.

June 30th, 2009 | Tags: Al Mazaya Holding Co., auction, BankMuscat, Egypt, Ericsson, Etisalat, Iraq, MENA Infrastructure Fund, Saudi Economy | Category: GCC News | Leave a comment

News & Views General 

*   The United Arab Emirates plans to guarantee bank bond sales to intensify efforts to shore up the financial system after pledging AED120 Bn to boost liquidity in the economy.

*   Switzerland-based BSI bank’s Bahrain branch is considering joint ventures with Gulf partners as well as acquisitions, as part of its strategy to expand in the region over the next three years.

*   EMKE Group, one of the largest retail chains in the Gulf region, has finalized its plans to expand its customer reach across Abu Dhabi by investing AED1.5 Bn in the next 18-months.

*   Emirates Islamic Bank approved a rights issue of 1.1 Bn shares at a total value of AED1.1 Bn.

*   Abu Dhabi Basic Industries Corporation and Bahrain based Midal Cables entered into a joint venture agreement to establish a $100 Mn worth aluminum rod and conductor plant in Abu Dhabi.

*   The Capital Market Authority approved rights issues worth $360 Mn for Sahara Petrochemicals Co and SABB Takaful in the midst of tight credit markets.

*   Aramex signed cargo services agreement with Air Arabia for securing access of Air Arabia’s cargo facility in express shipments.

*   Saudi Electricity signed a contract with power supplier Aggreko to offer 100 Mw of short-term power. The deal is expected to last for a minimum duration of 3 months.

*   Russell Investments in partnership with Saudi based investment services group, Jadwa announced the launch of 10 Islamic compliant indexes representing Sharia compliant companies from across the world.

*   Dubai Banking Group (DBG) and Shuaa Capital resolved the bond dispute

issue between them with DBG acquiring a 48.4% stake in Shuaa Capital for a price of AED2.91 per share.

*   National Air Services availed a 7-year $650 Mn loan from the Arab Banking Corporation backed by a guarantee from the Export-Import Bank of the United States for financing its purchase of aircrafts from US-based Hawker Beechcraft Corp.

*   Abu Dhabi based Tourism Development & Investment Co. issued a 5-year $1 Bn bond maturing in July 2014 and received subscription to the tune of $6 Bn.

*   India based jewellery retailer, Malabar Gold, announced an investment of AED300 Mn for its expansion plans in the UAE.

Real Estate and Private Equity

*   Emaar-IGO, a venture between Emaar Syria and IGO, has completed 50% construction of the Damascus Stock Exchange building.

*   Manara Development finalised the masterplan for its $1 Bn worth Bahrain water front project. The project covering 2 Mn sq mts. of waterfront land comprises of coastal villas, waterview apartments, retail, entertainment, tourism and office amenity.

*   Kuwait based Abyaar Real Estate Development Company secured a 5 year KD18 Mn loan backed by real estate collaterals from the Bank of Kuwait and the Middle East for funding its projects.

*   Emaar Properties is considering a merger with Dubai Holding-owned Dubai Properties, Sama Dubai and Tatweer.

*   Al Habtoor Leighton Group announced that it would be postponing its IPO by a year due to the ongoing financial crisis.

*   BBK subsidiary, Capinnova investment, announced an investment of $50 Mn in a commercial mall project in Bahrain scheduled for completion in 2010.

June 29th, 2009 | Tags: BSI bank, Emirates Islamic Bank, EMKE Group, gulf region, liquidity, UAE | Category: GCC News | Leave a comment

Nervous US investors sold heavily for the second consecutive week after World Bank downgraded its global GDP growth forecast. The Bank now expects the global GDP to shrink 2.9 percent in 2009—it had forecasted a 1.7 percent decline in March. Meanwhile, US authorities revised the US GDP growth forecast for the first quarter of 2009 to -5.5 percent from -5.7 percent in March 2009. However, despite the improvement in GDP growth, investors remained skeptical. On a positive note, US consumer spending (70 percent of US GDP) increased 0.3 percent in May, the first increase since February 2009. Personal income also rose 1.4 percent in May 2009. This could improve sentiment in the coming quarters and boost economic growth. Negative bias among investors pushed the Dow Jones Industrial Average (DJIA) and FTSE 100 down by 1.19 percent and 2.41 percent, respectively, during the week ended June 26, 2009.

Asian economies remained shielded from US woes. All seven major Asian indices closed in positive territory, reflecting optimism about an economic recovery despite the weakness in US markets. Hong Kong’s benchmark index, Hang Seng (up 3.79 percent) was the top gainer. India’s benchmark index, BSE Sensex, rose 1.67 percent ahead of the budget due on July 6, 2009.

The rupee depreciated 0.06 percent during the week due to higher demand from foreign institutional investors (FII) as they turned net sellers in equity markets. Crude oil prices fell 0.6 percent to US$69.16 per barrel after decreasing 3.5 percent the previous week. Downgrade of the global economic outlook by the World Bank depressed crude prices too.

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To read complete commentary, please download the file.

June 26th, 2009 | Tags: Asian economies, rupee depreciated 0.06 percent, World Bank downgraded | Category: India Weekly | Leave a comment

Global investors remained skeptical about a recovery even after the International Monetary Fund (IMF) upgraded its US GDP growth forecast. IMF now expects the US GDP to contract 2.5 percent in 2009—this is lower than the 2.8 percent decline it had estimated in April 2009. The IMF revised the growth estimate for 2010 to 0.75 percent, up from zero growth earlier. This implies that economic recovery is already underway despite concerns about the rising debt and fiscal deficit. According to IMF estimates, public debt is expected to increase twofold to 75 percent of the GDP, while the fiscal deficit is likely to average 9.0 percent of the GDP during 2009-2011. This increased risks associated with US Treasury bonds as the Dow Jones Industrial Average (DJIA) and FTSE 100 declined 2.95 percent and 2.16 percent, respectively, during the week ended June 19, 2009.

The weaknesses in global economies cast a pall of gloom across Asia, where six out of seven indices ended in the red. China’s Shanghai SE Composite Index (up 4.98 percent) was the lone gainer after World Bank upgraded its economic growth forecast for the country. India’s benchmark index, BSE Sensex, declined 4.7 percent due to profit booking and fear that reforms anticipated in the forthcoming budget would not come through as expected.

The rupee depreciated 1.0 percent during the week as demand for the dollar by oil marketing companies increased in tandem with demand from foreign institutional investors (FII). Crude oil prices slipped 3.5 percent to US$69.55 per barrel after increasing 5.3 percent the previous week. Rising debt levels and soaring fiscal deficit, which could impede for economic recovery triggered a huge sell-off in crude oil.

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To read complete commentary, please download the file.

June 19th, 2009 | Tags: China’s Shanghai, Crude oil prices slipped, World bank | Category: India Weekly | Leave a comment

Global economies exhibited signs of recovery in recent weeks, as evidenced in the rally in stock markets across the globe since March 2009. The positive sentiment palpable in recent months manifested during the week ended June 12, 2009, with all leading macroeconomic indicators rising. U.S. retail sales rose 0.5 percent in May, the first such rise in three months. Meanwhile, new jobless claims declined steadily reflecting the gradual improvement in economic growth. The Dow Jones Industrial Average (DJIA) and FTSE100 gained 0.41 percent and 0.08 percent, respectively, during the week ended June 12, 2009.   

Asian economies displayed mixed trends during the week, with four of the seven indices ending in the green. Japan’s benchmark Nikkei 225 index (up 3.77 percent) led the pack of gainers on better-than-expected GDP growth. India’s benchmark index, BSE Sensex, gained 0.89 percent on improved industrial production and the government’s optimism with regard to strong economic growth.

The rupee depreciated 1.07 percent during the week as demand for the dollar increased in tandem with expected economic recovery. Crude oil prices rose 5.3 percent to close at US$72.04 per barrel after increasing 3.2 percent the previous week. The anticipated economic recovery triggered a flare-up in crude oil prices.

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June 12th, 2009 | Tags: DJIA, FTSE100, GDP, global economy, macroeconomic | Category: India Weekly | Leave a comment

General Motors Corporation filed for bankruptcy on June 1, 2009. Despite its global repercussion, equity markets remained buoyant during the week ended June 5, 2009, in anticipation of an economic revival. In the UK, housing prices rose 2.6 percent month-on-month in May 2009, the first since 2002. This led to the expectation of an economic recovery. Furthermore, signs of economic revival were highlighted by the 0.2 percent month-on-month increase in retail sales in the 16–nation Euro area in April 2009. The Dow Jones Industrial Average (DJIA) and FTSE100 rose 3.09 percent and 0.47 percent, respectively, during the week ended June 5, 2009. The indices have risen 33.8 percent and 26.4 percent, respectively, from their lows in March 2009.   

Improvement in macroeconomic indicators across Asian economies enhanced investor sentiments as five of the seven indices ended in green. China’s Shanghai SE Composite Index was the top gainer among Asian indices (up 4.59 percent) during the week under review led by improved Purchasing Managers’ Index (PMI). India’s benchmark index, BSE Sensex, gained 3.27 percent, led by anticipation of reforms benefiting companies and lower interest rates, which pushed the index higher.

The rupee depreciated 0.03 percent during the week led by the heavy buying of dollars by the Reserve Bank of India (RBI). Crude oil prices rose 3.2 percent to close at US$68.44 per barrel after increasing 7.5 percent the previous week. Since February 18, 2009, crude oil prices moved up 61.3 percent due to the optimism of an economic recovery.

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June 5th, 2009 | Tags: China’s Shanghai, Dow Jones Industrial Average (DJIA), FTSE100, UK housing prices rose 2.6 % | Category: India Weekly | Leave a comment

Optimism of an economic recovery coupled with better-than-expected macroeconomic data from leading economies pushed global equity markets to a new high during the week ended May 29, 2009. The US GDP growth contraction improved to 5.7 percent in the first quarter of 2009 as against the provisional data, which indicated a decline of 6.1 percent. Furthermore, consumer sentiments rose to the highest level (since September 2008) to 68.7 in May 2009 from 65.1 in April 2009. This boosted investor confidence. Improved GDP growth in India and positive industrial growth in Japan indicated recovery in these economies. The Dow Jones Industrial Average (DJIA) and FTSE100, with a gain of 2.69 percent and 1.2 percent, respectively, rallied during the week. 

The rupee appreciated 0.08 percent during the week as a decisive mandate of the UPA government in the general election increased foreign institutional investors (FIIs) inflow, which totaled US$1.34 billion during the week. Crude oil prices jumped 7.5 percent to close at US$66.31 per barrel after rising 8.2 percent the previous week. The weakening dollar against major currencies and the abating recessionary threat raised investments in crude oil that led to an increase in prices.   

Improved investor sentiment across the US and better economic data released in Asian economies positively benefitted the Asian equity markets, as six of the seven indices ended the week in green. Hong Kong’s benchmark index, Hang Seng, was the top gainer among Asian indices (up 6.5 percent) during the week under review. India’s benchmark index, BSE Sensex, gained 5.31 percent, led by increased buoyancy after the statistical data illustrated that GDP grew 5.8 percent in the fourth quarter of 2008–09. 

May 29th, 2009 | Tags: Dow Jones Industrial Average, FTSE100, Improved GDP growth in India | Category: India Weekly | Leave a comment

News & Views General 

·          The withdrawal of United Arab Emirates from the proposed Gulf monetary union has thrown into question the viability and influence of any union that does emerge eventually. The UAE — the second of six members of the Gulf Cooperation Council (GCC) to pull out of Gulf monetary union after smaller Oman — linked its decision to a choice to base a joint central bank in Saudi Arabia, by far the region’s largest economy.

·          National Bank of Abu Dhabi received approval from Hong Kong Monetary Authority to set up a full fledged branch in Hong Kong.

·          Dubai based Aramex approved a proposal permitting foreigners outside the Gulf region to own 49% of the company’s shares.

·          Abu Dhabi Commercial Bank announced to lend $79.5 Mn to Finance House through medium term loans, overdraft and guarantee facilities. Finance House will utilize these funds to finance its operations in the retail as well as small and medium enterprise sector.

·          Orascom Telecom initiated a lawsuit against France Telecom as the latter has offered to acquire minority rights in Mobinil.

·          Dubai Islamic Bank announced to buy back $50.6 Mn worth of sukuk, which is maturing in 2012. The buy-back price is set at 88% of the bond’s face value and the settlement date is May 21, 2009.

·          Commercial Bank of Kuwait received approval from Central Bank of Kuwait to buy about 10% of its issued shares.

·          Dubai is likely to borrow additional $10 Bn from the Central Bank of UAE, by the end of 2009, to help state owned companies in raising cash.

·          Gulf region’s borrowers are likely to restructure their Islamic bonds as global recession cuts funding to repay the debt – Law firm, Clifford Chance LLP. Investment Dar Co. had missed a payment on $100 million of debt last month, becoming the first Persian Gulf company to default on Islamic bonds, also known a sukuk. The market for such bonds has grown to $90 billion as surging energy prices spurred borrowing in the Persian Gulf and Asia.

·          Saudi Arabia hasn’t canceled rail, port and roadwork projects because of the global financial crisis as the government spends cash reserves to diversify its economy and create jobs – Transport Minister Jubara al-Suraisry.

Real Estate and Private Equity

§  Aldar Properties announced to issue a dollar-denominated bond through a special purpose vehicle named Atlantic Finance Ltd.

§  Danube Building Materials FZCO established two retail complexes worth AED11 Mn in Dubai and Abu Dhabi.

May 21st, 2009 | Tags: Abu Dhabi, GCC, Hong Kong Monetary Authority, National Bank, United Arab Emirates | Category: GCC News | Leave a comment