Mena News

 

  Qatar Petroleum transfers part stake in Industries Qatar to Pension Fund
Aug , 13 , 2012  
  Qatar Petroleum, has lowered its stake in conglomerate Industries Qatar to 51 percent from 70 percent, transferring the shares to another state-owned entity. Qatar Petroleum will transfer 104.5mn shares to the General Retirement and Social Insurance Authority, according to an Industries Qatar trading statement. The deal would not affect QP's rights as the majority shareholder in the steel-to-metals conglomerate which include appointing its chairman and the board of directors.
 

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  Qatar’s Nakilat signs USD380mn Islamic loan
Aug , 13 , 2012  
  Qatar Gas Transport Co (Nakilat), signed a USD380mn murabaha-structured Islamic loan, a statement from one of the banks providing the finance said on Sunday. Qatar Islamic Bank provided USD180mn of the facility. Qatar International Islamic Bank provided the remainder of the cash.
 

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  Saudi Arabia's July cost of living index rises 4 percent on year
Aug , 13 , 2012  
  Saudi Arabia's cost of living index in July rose by 4 percent from a year earlier, according to data issued by the Central Department of Statistics and Information. The cost-of-living index stood at 141.2 points in July, up 0.3 percent from 140.8 in June. Last month, the kingdom's annual inflation fell, dropping to its lowest level in 10 months to 4.9 percent, which the country attributed to lower food prices.
 

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  Wall Street Week Ahead: Bulls, bears and wallflowers
Aug , 13 , 2012  
  (Reuters) - It's another one of those moments that always follow a big move in the stock market: Either you're a believer - or you're not. Right now, the market has its fair share of both. The S&P 500 is up 12 percent so far this year. Through July, it had its best first seven months since 2003 and its second- best seven-month run since 1998. That sounds like a bull market. But there is clearly a disconnect between the way markets have performed and the high level of caution among many investors. That is mainly due to the perception that things have the potential to go horribly wrong - incredibly fast. The danger for investors is that they focus too much on the potential risks, such as the break-up of the euro zone, and end up getting left on the sidelines when markets move higher as they have done since the start of June, said Doug Cote, chief market strategist at ING Investment Management, in New York. "We are in a bull market," he said. "The mistake investors have made is too much attention on global risk, and not enough attention on fundamentals that are very resilient." Cote believes that record high aggregate earnings for S&P 500 companies this year and signs of improvement in the labor market mean investors should be taking on more risk rather than fretting about the dangers stemming from Europe's debt crisis. NO EASY CHOICES But for the more equivocal souls, the market is presenting a difficult dilemma, and strong convictions either way are elusive. David Joy, chief market strategist at Ameriprise Financial in Boston, says it's an uncomfortable time for many investors, who are caught between missing a rally and getting blindsided by some nasty event that sends markets into a tailspin. "It's a dilemma that is uncomfortable to watch and to function in," said Joy, who helps oversee $571 billion in assets. "It's one of those markets where you're running a big risk being out." Joy says the rally is being driven by the hope of more "easy money" policies from central banks in the United States, Europe and China. He has had doubts about the strength of the economy for many months. At the same time, he has been worried by the recent spate of cautious outlooks from corporate managers. But he also knows what investors ignore at their peril: "You can't fight the Fed." "I don't like the fundamentals, I don't like what I'm seeing economically, I don't like what I'm seeing in terms of earnings forecasts going forward, but I recognize that central banks can trump all of those things," Joy said. "You may be right on the fundamentals, but wrong on the price action of the market." Both the European Central Bank and the Federal Reserve are due to meet during the first half of September. Investors are hoping the ECB will buy bonds of troubled European nations in a bid to ease the debt crisis. CAUTION CUTS BOTH WAYS But Joy is also cautious about what many are describing as early signs of stabilization in the U.S. economy after a soft patch earlier in the spring and summer. The July nonfarm payrolls report, which showed U.S. employers had done the most hiring in five months, is not enough to convince investors like Joy who want to see more confirmation before unwinding their defensive stance and getting more aggressive. That cautious view that led him to cut his bond-equity allocation and lean more toward defensive areas of the stock market, such as consumer staples, healthcare and utilities, helps explain an oddity of the market's rally since June. Much of the money heading into U.S. equity markets over the last two months has been heading into defensive sectors, some of it in a flight to safety from overseas markets, especially Europe. Of two classically defensive sectors - utilities and telecoms - the utilities sector is trading at a 24 percent premium to the S&P 500, compared with an average 5 percent discount over the last 10 years, while the telecom sector is trading at a 50 percent premium compared with the usual 5 percent, according to data cited by UBS Wealth Management. For Jeremy Zirin, UBS Wealth Management's New York-based head of U.S. equities and chief U.S. equity strategist, that is both a red flag highlighting the market's misgivings and a potential opportunity, should that differential start to narrow. "We have a bit of a pro-cyclical tilt in our sector strategy within U.S. equity markets, largely because the market seems to be positioned so defensively," Zirin said. "We have seen this flood of flows going into defensive safe havens with high yield, and we just think they are very highly priced. "Cyclical sectors seem to be pricing in something of a more dire economic scenario than we envision," he said. "Cyclical sectors are trading at a nearly two-decade valuation low relative to defensive sectors." Of course, the market could also be setting itself up for a fall. Betting on what central bankers will and won't do is a risky game. "Investors who have been hopeful that policymakers will take stronger action through this entire sovereign debt crisis have been consistently disappointed," Zirin said. "The notion that someone with very deep pockets will come along and pay the bills without conditionality is likely to be a foolish one." That is why many are still erring on the side of caution. Harris Private Bank in Chicago has been using the U.S. stock market's rally to cut its remaining exposure to stock markets in developed European economies. They have repatriated the money to the United Stated where they have invested in U.S. equity positions, cautiously hedged with options. They now have higher-than-normal exposure to both U.S. and emerging market equities. "We are certainly well overexposed to dollar assets," said Harris Private Bank's chief investment officer Jack Ablin. "We are sanguine on equities in general, but still very concerned about the outcomes in Europe."
 

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  Finance Minister says Italy to overshoot deficit goal: paper
Aug , 13 , 2012  
  (Reuters) - Finance Minister Vittorio Grilli said Italy's government would overshoot its 2012 deficit goal because of worse-than-expected growth but planned no extra budget cuts because Italy was on target to meet its EU obligations, a newspaper reported. "We know there will be a worsening of the nominal deficit," Grilli told Rome's la Repubblica in an article published on Sunday. "Nonetheless, our compass remains the structural deficit, and on that we are and we will be perfectly in line." Italy plans to post a structural, or growth-adjusted, budget surplus in 2013, which is what European Union authorities have asked the country to do. Its nominal deficit targets are 1.7 percent of gross domestic product this year, 0.5 percent in 2013, and 0.1 percent in 2014. Last week data showed that Italy, which has had the euro zone's most sluggish economy for more than a decade, slipped further into recession in the second quarter. Employers' lobby Confindustria forecast the economy would contract by more than 2.4 percent this year, a much gloomier view than the government's official projection of -1.2 percent. Investors have become increasingly concerned about Italy's ability to reduce its public debt of around 123 percent of output. Its borrowing costs are currently bordering levels that are seen as unsustainable over the long run. In the same interview, Grilli said he welcomed the European Central Bank's plans, announced on August 2, to come up with ways to lower bond yields to accurately depict the bank's monetary policy. Grilli urged the central bank to present the details of its plans soon and repeated Prime Minister Mario Monti's previous denial, also from August 2, that Italy intended to apply for aid in bringing down bond yields. "The re-balancing measures announced by the ECB must be accelerated," Grilli said. "We believe that the tools the ECB will bring to the table, when operative, can substantially relieve tensions", between German Bunds and other euro zone benchmark bonds. If Italy does ask the ECB to intervene on the markets on its behalf, the country already meets all the conditions necessary for assistance by adhering to the EU growth and stability pact and the recently passed fiscal compact, Grilli said. "There are no additional conditionalities," he added. ECB President Mario Draghi said that countries seeking the bank's help would need to sign a memorandum of understanding. Grill said that when the government gets back to work after a brief summer recess, a debt reduction plan will be introduced that is composed mainly of state real estate sales, spending cuts and prudent budget management. "When this recession is over, (the debt reduction plan) would permit a lowering in the debt-to-GDP ratio of 20 percentage points in five years," he said
 

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  Stocks May Climb in These Dog Days of Summer
Aug , 13 , 2012  
  Stocks could continue to stair step higher, as the dog days of summer take hold and markets await central bank action in September. The week ahead should provide insight into the consumer from earnings reports from major retailers, including Home Depot [HD 53.06 -0.09 (-0.17%) ] and Wal-Mart [WMT 73.68 -0.17 (-0.23%) ], as well as the July retail sales report. A few other important economic reports, such as industrial production and consumer and producer inflation data, punctuate a week that promises to be otherwise quiet. Stocks, in the past week, quietly consolidated the gains made since the June 4 low. Up for eight of the last 10 weeks, the S&P 500 broke through 1400 for the first time since May and then tread water around that level for four sessions. It finished the week at 1405, up 1 percent and is now up more than 9.5 percent since early June. The Dow was up 0.9 percent to 13,207, and the Nasdaq gained 1.8 percent for the week to 3020. “This rally caught us by surprise, I have to admit. We thought the fundamentals would be weaker, and they have been, but the market does well anyway,” said Ed Keon, managing director at Prudential Financial’s Quantitative Management Associates. Many analysts and traders have been befuddled by the stealthy summer rally, coming even as earnings reports reveal weaker revenues and slowing earnings growth. “The market’s certainly showing signs of fatigue,” said Art Hogan of Lazard Capital. He noted that the market internals are not great. Transports are not keeping up, volume is weak. “The interesting thing is we haven’t collapsed. We haven’t move back. I think the explanation there is expectation of aggressive monetary policy,” he said. Stocks have also been moving higher in the face of a litany of other worries, most particularly, the European debt crisis. While the sovereign debt drama is far from over, markets were reassured by a plan of action laid out by European Central Bank president Mario Draghi, even though it lacks details and requires buy in. At the same time, the Federal Reserve has promised to take action if necessary, and traders are looking to its September meeting for a possible announcement of a new bond purchase program, or quantitative easing. “The biggest thing I’m worried about are things in Europe spinning out of control, and that might really hurt us,” said Keon. “It still keeps me from being an aggressive buyer of stock.” But even as the central banks hold out the promise of more policy easing, worries about the economy, the U.S. elections and so-called “fiscal cliff” are containing gains, and strategists say there’s not a compelling enough case to be made for stocks either way.
 

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  TASI begins new week positively
Aug , 12 , 2012  
  The Tadawul All-Share Index (TASI) closed higher at 6,987.06 yesterday, up 33.47 points or 0.48 percent for the day. Earlier the index started its ascending travel, crossed the 7,000 mark during mid of the session and then moving downward ended below this level, showing a maximum rise of 51 points. On year-to-date basis, it showed a yield of 8.87 percent. Sectoral performance was tremendous, as 13 out of the 15 sectors closed in the upward territory, accumulating nearly 800 points collectively. Only Multi-Investment and Petrochemical sectors could not manage for gains, trimming an aggregate of 29 points. Hotel & Tourism and Insurance were best performing sectors of the day, surging by 5.06 percent and 2.7 percent respectively. Hotel sector added more than 376 points to close the day at 7,809.76. Most of the trading was concentrated in the Insurance sector, which pumped more liquidity into the market by contributing SR 2.4 billion, which is approximately 40 percent of overall market turnover. Market breadth with advance-decline ratio of 2.1:1 remained extremely strong. Most of heavy weights closed in green, with Etihad Etisalat Co. (Mobily) surging 2.27 percent, SABB 2.12 percent and Samba Financial Group 0.62 percent. Only the Kingdom Holding and Saudi Telecom closed lower, declining by 0.84 percent and 0.51 percent respectively. Insurance stocks led the top gainer chart at Tadawul, with Alinma Tokio Marine, Alalamiya Insurance and Allied Insurance Group, all rising by 9.8 percent for the day. Alinma Insurance also topped the value chart on the Saudi stock market with a turnover of SR 441.3 million.
 

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  Expect profit taking this week in local markets
Aug , 12 , 2012  
  Abu Dhabi: The regional markets are broadly expected to trade in the positive territory this week although investors are also likely to book profits to cash-in on the recent upturn in market confidence, say analysts. However, the volume of trade is expected to remain low because of lack of strong catalysts, although rebounding global oil prices are likely to offer support to the region’s markets. Nevertheless, slowing of China’s exports, Euro zone’s unresolved sovereign debt issues and a decline in the U.S. economic growth rate remain major concerns for global markets and could accentuate downside risks, near-term. Analysts say the talk of more monetary stimulus by central banks is shoring up the markets at the moment. There’s talk of the U.S. Federal Reserve unleashing its third round of quantitative easing (QE) and the European Bank (ECB) unleashing its own bond-buying programme to ease borrowing costs for debt-laden Spain and Italy, which look to be the next candidates to seek a full Euro zone bailout. “There is (again) some speculation creeping in, expecting some policy changes from the Federal Reserve Bank at the Jackson Hole meeting,” Gerhard Schubert, analyst at Emirates NBD wrote in a research note. The uncertainties in the global economy are hampering...with Chinese exports under pressure and the European sovereign debt issues raging on. These uncertainties are proving to be a positive driver for gold prices,” Schubert added. Pradeep Unni, senior relationship manager at Dubai-based Richcomm Global Services said that data showed China’s annual consumer inflation fell to a 30-month low in July, suggesting that country’s central bank can follow up rate cuts in June and July to stimulate the economy. On Thursday, the benchmark Dubai Financial Market index closed 1.08 per cent higher at 1,572.37 while in Abu Dhabi, the Abu Dhabi Securities Exchange’s general index closed 0.81 per cent higher at 2,534.72.
 

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  Greece Plans Large Debt Auction Tuesday
Aug , 12 , 2012  
  Greece, starved of financing options, will step up its treasury bill issuance on Tuesday, offering an unusually large amount so it can meet looming redemptions on Aug. 20 and fund its cash needs until it secures further aid from its international creditors. The auction, which could raise up to €5 billion ($6.15 billion), is likely to meet decent demand despite Greece's precarious government finances, because this short-term debt is accepted as collateral by the European Central Bank. Greek banks, keen to access ECB emergency facilities, are likely to snap up the new paper. The Greek Public Debt Management Agency said it would auction €3.125 billion of 13-week treasury bills next week. Two noncompetitive auction rounds, if exercised to the maximum allowed amount, could bring the total to €5 billion. The country sold 26-week treasury bills this week, through which it raised €1 billion. Greece was left with no options other than to increase its auction sizes after its euro-zone partners declined to provide it with a bridge loan until a disbursement of crucial aid in coming months. Greece is in talks with international creditors—the European Union, the International Monetary Fund and the ECB—on a package of new austerity measures of €11.5 billion, a requirement for Greece to receive its next €31 billion aid installment. A decision by creditors on whether the country is eligible for the funds won't be made until October. Raising €5 billion next week would allow Greece to repay creditors and meet general financing needs. Greece must repay €3.1 billion of debt on Aug. 20, mostly to the ECB. According to RBC Capital Markets analysts, €670 million of coupon payments add to its payment duties.
 

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  Gulf’s GDP to grow by 5.8% to $1.6tn
Aug , 11 , 2012  
  The combined GDP of the six-nation Gulf Cooperation Council (GCC) is projected to grow by 5.8 percent to peak at $1.6 trillion at current rates, a new report by Kuwait-based Gulf Investment Company (GIC) said. Qatar will lead growth in the region with around 8.7 percent, while growth will be about six percent each in Saudi Arabia and Kuwait, 4.5 percent in the UAE, 4.2 percent in Oman and 3.1 percent in Bahrain. It added that the recent decline in oil prices will not affect the economies of Gulf hydrocarbon exporters, given the high public spending and reforms being implemented by most members. The price of oil is lower on fresh concerns about the Chinese economy and a lower forecast for global demand for crude. China said Friday that the country’s exports grew just 1 percent in July from a year earlier while import growth slowed to 4.7 percent. That suggests growth continues to slow in the world’s second-largest economy. Meanwhile, the International Energy Agency lowered its forecast for global crude demand for the year to 89.6 million barrels a day from 89.9 million. Benchmark crude fell 90 cents to $92.47 a barrel in New York. In London, Brent crude dropped 97 cents to $112.25 on the ICE Futures exchange. "Despite the speculation about a further oil price decline, the GCC economies are still expanding as they are based on real growth pillars," the GCI report said. "The first and most important pillar is the high public spending in most member states, as it accounts for nearly 35 percent of GDP. This is coupled with the implementation of massive projects worth nearly $1.1 trillion, almost a quarter of the world’s investment in infrastructure and energy," it explained.
 

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