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Banks weigh on Bahrain market
July 1, 2010--The Manama-based Bahrain All Share Index was pulled down 1.17% to 1,379.98 points by weak performing banks. The country's largest financial instutute Arab Banking Corporation (ABC) posted the largest loss, plummeting 9.82% at $0.505.
Inovest bucked the baisse by advancing 4.35% at $0.480.
DGCX Volume Hits All-Time Monthly High in June
July 1, 2010--Volume scales a new monthly high in June at 192,138 contracts
June also sees the highest ever monthly volume for Indian Rupee/Dollar futures at 12,159 contracts
Total volume on Dubai Gold & Commodities Exchange (DGCX) rose to an all-time high in June at 192,138 contracts, surpassing the previous peak achieved in November 2009.
The strong activity was led by significant increases in volume across all product suites - precious metals, currencies and crude oil. Month-on-month volume rose by 24% for gold, 95% for Euro/Dollar, 40% for INR and 187% for WTI futures.
Setting yet another record, the volume of Indian Rupee/Dollar futures also scaled a new monthly high in June, at 12,159 contracts, demonstrating robust demand for the product.
Trading and participation on the Exchange has continued to expand since the start of 2010, borne out by a year-to-date June 2010 volumes of 934,403 contracts compared to 631,850 contracts over the same period in 2009, a growth of 48%.
The underlying value of total commodity and currency futures transactions in June was US$ 10.846 billion.
Commenting on the activity in June, Eric Hasham, Chief Executive Officer, DGCX, said, "June marked several milestones for DGCX. In addition to achieving the highest traded overall and Indian Rupee volumes, June also saw the launch of three new currency contracts."
"The DGCX INR/Dollar futures contract is the only exchange-traded Rupee futures outside of India, and is witnessing new interest from businesses, arbitrageurs and investors," said Hasham. "This is spurred by the contract’s higher liquidity, competitive trading costs, guaranteed settlement and reduced counterparty risk."
Funds tap into GCC's carbon market
June 30, 2010--As news of some clean development mechanism projects initiated by the GCC governments begins to spread, funds managed by banks and financial institutions are descending on the region to tap CERs, or Certified Emission Reduction units, that can be traded on European climate exchanges.
The GCC as a source of CERs is still at a fledgling stage and cannot be compared to Europe or even to China and India.
"You have funds trying to tap into the CERs from the GCC. These funds are managed by professional bodies and they may have banks and financial institutions behind them," said Anthony M Dols, CEO, Avantis 4E, a member company of the Dubai Multi Commodities. The Dubai-based firm provides sustainable energy solutions and advisory services in the UAE.
Funds that collect CERs sell them on European exchanges that record the highest volumes of carbon trade in the world. The London-based European Climate Exchange sees 2.2 billion such units being traded as futures and options annually.
The carbon trade market in Europe is estimated to be worth €100bn (Dh448.54bn) and is expected to grow to €800bn by 2020.
Saudi market falls on oil price decline
June 29, 2010--The Riyadh-located Tadawul market plummeted 2.65%, closing at 6,135.86 points as oil prices were hit by worrying data from East Asia and by comments made by the Bank of International Settlements (BIS) about an alleged weak status quo of the global financial sector. Consequently market leader and petrochemical giant Saudi Basic Industries Corporation (Sabic, off 3.87% at SR87) and a number of banks posted heavy losses.
But there were also gainers in Riyadh: Amana Cooperative Insurance Co. and Gulf General Cooperative Insurance Company which both added two percent and closed at SR15.00 and SR30.90, respectively, were the top gainers.
S&P Report Outlines Possible Corrective Steps For Gulf Investment Companies As They Seek To Revamp For Recovery
June 28, 2010--Some investment companies in the Gulf will likely find it difficult to pursue their operations without dramatic changes in the wake of the global financial downturn, said Standard & Poor's Ratings Services in a new report published today, titled "Gulf Investment Companies Face The Need To Rethink Their Business Models And Financial Policies."
"The main reasons behind this deterioration, in our opinion, are Gulf investment companies' generally high maturity mismatches they carry in their funding profiles and the ensuing weakened liquidity, weak business profiles, high leverage, and high exposure to real estate for some of them," said Standard & Poor's credit analyst Mohamed Damak.
Investment companies in the Gulf Cooperation Council (GCC) countries, including those with banking licenses and private equity firms, navigated through testing times in 2009, some more successfully and some less. A few defaulted on their financial obligations. And their moves to raise capital met with far higher obstacles than in the past. This has consequently called into question the sustainability of their business models.
We believe that the GCC countries will continue to be net exporters of capital in the medium term, thanks to high oil prices that prevailed over the past five years and that we expect will likely remain high in the future. A substantial portion of this oil money will likely continue to find its way to local, government-sponsored projects and to global investment banks offering solutions for wealth management; we think the remainder will likely still flow to smaller investment companies in the Gulf.
"But in the short term, we see some major hurdles for Gulf investment companies to overcome on the potential road to recovery. These consist essentially in corrective measures that are, in our view, necessary to enable these companies to enhance the maturity profiles of their funding bases and reduce their leverage, as a means to prepare for better days, " said Mr. Damak.
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com
Saudi GDP to rise 4% in 2010
June 28, 2010--Saudi Arabia's Samba Financial Group has said that real GDP and the non-oil sector in the kingdom will grow by 4% this year as oil production increases, while inflation will stabilise at an annual average of 5%, Reuters has reported.
"The recovery in economic activity is gathering pace, with renewed strength in corporate finance flows," economists at Samba Financial Group said in a report.
UAE to maintain dirham's dollar peg, says Dubai's ruler
June 28, 2010--The UAE will keep the dirham's peg to the dollar and has no plans to rejoin the planned Gulf monetary union "for the time being," Dubai's ruler, Sheikh Mohammed Bin Rashid Al Maktoum, told CNN.
The emirates "still believe" in the peg, Sheikh Mohammed said in the CNN interview. "The euro is in trouble and we thought of the Gulf currency and we said, well the UAE said 'not yet' and I think they are right, until we are sure."
Jordan to tap Islamic or Eurobonds debt market
June 28, 2010--Jordan officials and bankers have said the kingdom wants to speed up issuance of Islamic bonds or Eurobonds to tap more competitive sources of funding to contain its budget deficit, Reuters has reported.
"Domestic borrowing costs have gone up sharply and this only piles pressure on the treasury ... that is why the government is moving ahead with more innovative means to tap lower-cost funding abroad," one senior banker who requested anonymity told the news service. Last year the authorities considered the international debt market to finance a chronic deficit worsened by the global downturn. However, it put the plans on hold as risk-averse local banks, awash with liquidity, were happy to lend to the government even at low interest rates.
Dubai Gold And Commodities Exchange Weekly Views-June 27, 2010
June 27, 2010--Commodities Overview
Most commodities prices traded in broad ranges last week. Ongoing euro zone sovereign debt and deficit problems, an easing in equity values, and resurfacing investor pessimism about overall economic conditions capped commodity price gains that had emerged the previous week. Gold managed to set record highs again, although the gains were made on the back of these very issues.
Silver and oil prices meanwhile tested resistance levels. While economic data continue to point toward a global economic recovery, recent data releases and comments by monetary officials suggest a moderation in the pace of economic expansion. Current tight bank lending conditions and low levels of resource utilization are tempering commodity price gains, but as these conditions improve demand for commodities is likely to improve.
Currencies Overview
The People’s Bank of China announced on 20 June that it would allow the yuan to appreciate against the dollar once more. This should not have surprised anyone in the market, since the PBOC has been saying for months it would do this. It should be viewed as part of a broader move by the PBOC and the Chinese government to take a more prominent position in international monetary affairs. CPM Group expects a high level official from the Bank of China to be named Deputy Managing Director at the International Monetary Fund later this year, for example. While the yuan appreciation plan is a positive long-term development, it will do virtually nothing to resolve the more problematic long-term trade, deficit, and debt problems in the industrialized nations. Given the stickiness in import demand for Chinese goods in industrialized nations it will exacerbate some of these trends initially, worsening trade deficits in the United States, Japan, and Europe.
Abu Dhabi bourse rises insignificantly
June 24, 2010--The ADX General Index ended the day after a mild trading session at 2,553.44 points (up 0.08%). Shares of First Gulf Bank (FGB), the number four in the UAE, gained 0.66%, closing at Dhs15.15. FGB has sued Saudi conglomerate Ahmad Hamad Al Gosaibi and Brothers (AHAB) over an alleged default on Dh58.7 million (US$15.98m) of loans, The National reports.
As oil prices halted near the level of $77 per barrel, market bellwether Abu Dhabi National Energy Company (Taqa) weakened 0.98%, closing at Dhs1.10. Credit Suisse research appreciates the short term oil price development at the current stage as "neutral".
