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Markaz report: GCC bonds & sukuk market review for H1 2010 - Kuwait first in value
August 2, 2010--
“Markaz” published a market review for the GCC fixed income market in H1 2010 covering both conventional bonds & Shari’ah compliant sukuk.
GCC Aggregate Bonds & Sukuk Market H1 2009
Total value of GCC bonds and sukuk, issued during the first half of 2010 dropped by 32%, compared to the respective period of 2009, to USD24.2 billion. The month of April predominated in terms of issuance frequency and value, with 17 issuances and USD6.1 billion, raising 25.1% of H1 2010 total issuances value.
During H1 2010, sovereign/government issuances dominated the majority of the amount raised, with USD17.2 billion or a 71.0% of the total amount raised; this represents a continuation with the trend observed since 2003 except for the peak years of 2006-2007 and 2008, where corporate issuances dominated the market.
Continuing with the trend witnessed since 2003, conventional issuances raised the largest amount during H1 2010 with USD20.1 billion through 68 issues, which is five times the total value of sukuk issued during the same period.
Excluding sovereign/government issues, four sectors were active during H1 2010: the Financial Services sector which, continuing with the trend that has been witnessed since 2003, issued the greatest number and raised the largest amount, with USD3.3 billion through eight issuances, followed by the Power and Utilities sector with USD2.9 billion through two issuances, the Real Estate sector with USD0.6 million through three issuances, and finally the Oil and Gas sector with USD0.3 million through one issuance.
Kuwait first in value
In H1 2010, Kuwait raised the largest amount with USD10.8 billion, representing 44.7% of the total amount issued through 31 issuances, most of which were by Central Bank of Kuwait. Followed by Saudi Arabia with USD4.2 billion raised through five issuances.
However, in terms of frequency, Bahrain was the most active issuing 37 bonds and sukuk representing 45.1% of the total number of issuances and raising USD2.0 billion.
The Kuwaiti Dinar denominated issuances raised the largest amount in H1 2010 with USD10.8 billion, The US Dollar denominated issuances raised USD4.9 billion through 6 issuances, followed by the Qatari Riyal denominated issuances with USD3.3 billion and the Saudi Riyal denominated issuances raised USD3.1 billion. While the Bahraini Dinar denominated issuances were the most active, representing 42.7% of the total number of issuances.
Source: Kuwait Financial Center
Jordan budget deficit drops by over 30%
August 1, 2010--Jordan's state budget deficit in the first six months of this year dropped by over 30% to JD156m ($219m) from JD560m recorded in the same period of 2009, Jordan Times has reported.
Effective austerity measures taken by the government earlier this year contributed to the decline, finance minister Mohammad Abu Hammour told the daily. The government is to continue with these measures adopted in its action plan in order to address the unprecedented JD1.5bn deficit, he added.
Source: AME Info
Global sukuk bonds gain 2.1% in July
August 1, 2010--Islamic bonds gained at half the pace of emerging-market debt in July, Bloomberg has reported. Global bonds that comply with Shariah law gained 2.1%, double the return in June and the most since a 4.1% advance in March, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index.
JPMorgan Chase & Co.'s EMBI Global Diversified Index, which tracks debt from 46 emerging-market countries, climbed 3.9%.
Source: AME Info
Egypt GDP grows 5.9% in last quarter
August 1, 2010--The Egyptian government has said the country's economic growth had accelerated to an annualised 5.9% in the three months to end-June, Reuters has reported. "This indicates a near full recovery from the global crisis and a return to the path of rapid economic growth similar to the period before the global crisis," economic development minister Osman Mohamed Osman said in a statement.
Gross domestic product for the financial year to end-June grew 5.3%, faster than the 4.7 % growth in 2008/09. Egyptian growth hit a record 7.2% in 2007/08 before the global downturn curbed tourism, foreign direct investment and Suez Canal revenues in the Arab world's most populous country.
Source: AME Info
Dubai Gold And Commodities Exchange Weekly Views-August 1, 2010
August 1, 2010--Commodities Overview
Volatility in the gold, silver, and crude oil markets has eased in recent weeks. This in large part may be attributed to the summer doldrums, typical of markets in the Northern Hemisphere. Investor activity is reduced as many of the market participants in this region go on vacation. Concerns over Europe’s financial troubles have eased over the past week and second quarter corporate earnings results are coming in better than expected.
This may be weighing on gold prices along with the reduced investor activity. Low trading volumes, however, will provide potential for increased volatility should market participants decide to enter or exit positions en masse. Structural problems in developed economies remain and should keep longer term investors interested in gold and silver.
Currencies Overview
The U.S. dollar may begin to trend lower again this week, after having managed to consolidate last week. The dollar moved sideways against most currencies as financial markets digested the results of the European banking sector stress tests. Mixed macroeconomic data also kept the dollar from moving forcefully out of recent support and resistance levels. Investor focus has been shifting toward the possibility that economic activity in the United States will be less robust for the remainder of the year than in the past few quarters. A growing chorus of market observers indicate that conditions will be much gloomier. There are even some market participants who have suggested the likelihood of another recession.
Source: Dubai Gold And Commodities Exchange (DGCX)
Shuaa stress test report: UAE banking system capable of withstanding deterioration in asset quality
August 1, 2010--: SHUAA Capital, the leading financial services institution in the GCC, has today published its “UAE Banks Put To The Test” report, a stress test of the UAE banking sector. This report comes at a time when the worst of the recession appears to be over but local banks remain risk averse and reluctant to extend credit to the private sector due to concerns around future losses and write downs. SHUAA has estimated the extent of those losses and write downs and the ability of UAE banks to absorb them should they materialize. Ultimately, the report concludes that the local banking sector as a whole is sufficiently capitalised to withstand further deterioration in asset quality.
The report stress tests eight local banks: Emirates NBD, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Mashreqbank, First Gulf Bank, Dubai Islamic Bank, Union National Bank and Commercial Bank of Dubai. The report focuses on what SHUAA considers to be the banks’ riskiest assets on their balance sheets; these include real estate and personal loans extended in 2008, potential losses associated with banks’ exposure to Saad, Al Gosaibi and Dubai World, and “renegotiated loans” which appeared on most banks' FY09 financials. Moreover, the report takes into account the fact that Dubai-based banks incur a higher risk associated with their real estate exposure than Abu-Dhabi based lenders.
Local banks continue to be nervous about extending credit to the private sector due to fears around potential future losses and write-downs they may face. However, the report’s results suggest that the UAE banking sector overall has the ability to withstand potential losses associated with further deterioration in asset quality, largely due to the authorities’ efforts to strengthen banks’ balance sheets since the onset of the financial crisis.
Source: SHUAA Capital
Dubai Investments Q2 profit drops 32%
July 28, 2010--Dubai Investments, the largest investment company listed on the Dubai Financial Market, reported a 32% decline in second-quarter profit as investment income dropped. Net income fell to Dhs196.3m ($53m) from Dhs287m a year earlier, the company said in a statement. Income from sale of goods and services fell 1.8% to Dhs309.4m, while contract revenue rose 30% to Dhs213.8m.
Dubai Investments wrote down the value of its investments by 49.7 million dirhams in the quarter, while it had a profit of 53 million dirhams a year ago, the results showed. has said it has started with the process of launching an initial public offering for its subsidiary, M'Sharie, by next year. "The company has already initiated processes for the M'Sharie IPO planned for 2011 and is in active discussions with local stock exchanges. The IPO of M'Sharie will result in raising liquidity and will provide a platform for future growth," Khalid Bin Kalban, DI managing director and CEO said. The conglomerate has reported net profit of Dhs474m for the first half of this year with total income at Dhs1.67bn.
Source: AME Info
OPEC Monthly Oil Report-July 2010
July 28, 2010--Oil Market Highlights
The OPEC Reference Basket declined by $1.53 to average $72.95/b in June. The market remained volatile throughout the month as mixed economic data painted an uncertain picture about
the strength of the economic recovery. Sovereign debt concerns in Europe and fiscal and monetary tightening in China offset the slightly improving gasoline demand in the US and at times falling
jobless claims. Equities and exchange rate fluctuations also impacted prices. In early July, the Basket fell below $70/b as market sentiment turned temporarily bearish on economic concerns. However, by the second week, prices recovered to stand at $73.93/b on 14 July.
The world economy has gained momentum in 2010 and is expected to grow by 3.8%. The recovery has so far been supported by unprecedented fiscal and monetary stimulus. Both are expected to gradually diminish over the coming months, and private consumption and investment will have to compensate. This, combined with announced fiscal austerity measures in most of the developed countries and monetary and fiscal tightening in China, should lead to a slight moderation in growth next year. As a result, the world economy is expected to grow by 3.7% in 2011. The OECD is seen growing by 2.0%, led by the US at 2.5%, while Japan is at 1.4% and the Euro-zone at 0.9%. The main contribution to global growth is again projected to come from the non-OECD countries, mainly China at 8.8% and India at 7.7%.
World oil demand growth in 2010 is unchanged at 0.9 mb/d. The OECD region is not expected to see any growth this year, mainly due to declining European demand. In 2011, world oil demand is projected to grow by 1.0 mb/d, reflecting continued caution about the pace of the global economic recovery. Growth will take place in the non-OECD, mainly China, India, the Middle East and Latin America. The demand for industrial fuel will be strong as a result of the continuing economic recovery, with healthy growth also expected in demand for transportation fuels. US gasoline demand is expected to return to normal growth, although with considerable uncertainty about the pace of growth.
Source: OPEC
Yemen currency hits record low
July 28, 2010--Mohammed Awad bin Hamam, governor of Yemen's central bank, has said that injecting more cash in the exchange market is possible after an $80m injection failed to raise the country's rial currency, Reuters has reported.
The rial has fallen about 12% from a level of 208 versus the dollar in mid-January. He said that demand is expected to decrease as supply of foreign currencies like the dollar, increase in coming days when remittances would be sent to Yemen by expatriates.
Source: AME Info
Kuwait inflation holds steady
July 28, 2010--According to figures by Kuwait's central bank, the Gulf state posted annual inflation of 2.8% in April, in line with levels since the start of the year as food and transport costs remained steady, Reuters has reported.
Food prices, which account for 18 percent of the basket, fell by 0.1% from the previous month, following a 0.8% rise in March, while transport prices, the third biggest component, rose 0.1% after remaining unchanged in March.
Source: AME Info
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