GOLD neared three-week highs today as a Chinese interest rate hike highlighted simmering global inflation pressures.
The most actively traded contract, for April delivery, rose $US15.90, or 1.2 per cent, to settle at $US1364.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded front-month gold gained $US15.80, to $US1363.40, its strongest close since January 19.
China, the world's No. 2 gold market after India, raised benchmark lending and deposit rates last night in the latest of a series of tightening measures, further stoking global inflation fears amid surging worldwide commodity prices.
Gold, which doesn't earn interest, is traditionally a hedge against inflation and often falls as interest rates rise and investors are drawn into higher-yielding assets.
But instead of having a calming effect, China's hike of its one-year lending and deposit rates to combat inflation reinforced fears that other governments have been "complacent" in letting easy monetary policy run too long, said Michael Gross, broker and futures analyst with OptionSellers.com.
"A general fear of inflation outweighed the action by China to tighten," he said.
Atlanta Federal Reserve president Dennis Lockhart said "inflation anxiety is rising" within the US, and sought to calm nerves, saying, broadly speaking, price pressures remain low.
He added that emerging-market economies, such as China and Brazil, can deal with any inflation pressures building in their own economies.
Some Fed critics have pointed to the US central bank's ultra-loose monetary policy as stoking inflation -- particularly in food prices -- in smaller economies.
Although core inflation remains subdued in the US, worries about longer-term price rises in the world's largest economy have also supported gold.
The combination of ultra-low interest rates -- which also boost the allure of non-interest bearing gold -- and Federal Reserve purchases of Treasuries to stimulate the economy is causing some to believe the Fed won't be able to sponge up extra liquidity in time to avoid problematic consumer and producer price increases over the longer term.
Those inflation concerns have been heightened as Treasury bond yields have recently jumped to their highest levels since May.
"You're continuing the inflation story no matter where you look," said George Gero, vice-president with RBC Capital Markets Global Futures.
Other precious metals traded in New York also rose. Comex March silver rallied 3.2 per cent. Nymex April platinum gained 1 per cent, while March palladium on the exchange added 2.4 per cent.
Wednesday, February 9, 2011
Tuesday, February 8, 2011
India-focused European funds see record inflows - Economic TImes
Europe-domiciled offshore India equity funds , which constitute over 90% of the overall India-focused offshore fund pie, continue to record bumper inflows, with the segment recording investments worth 24.32 billion in 2010.
Firm equities markets in the first nine months of 2010, coupled with robust long-term growth and diverse sector play, prompted foreign investors to park their money in India-focused equity funds, analysts at Morningstar said.
"Europe-domiciled India funds logged a 42% rise in investments in 2010. They're investing in Indian shares seeing good future prospects," Dhruva Raj Chatterji, senior research analyst, Morningstar India, told ET.
While European investors loaded their portfolios with emerging market funds, several Japanese investors redeemed their money from the region. Indian funds were the worst impacted as Japanese investors redeemed investment worth $2 billion from offshore pools investing in Indian companies.
Total net assets of India offshore funds in Japan shrank by about 13% in 2010, to close the year at ¥737 billion. The total assets of these India offshore funds in Japan have almost halved from their peak of ¥1,400 billion at the end of December 2007.
"Japanese investors have been redeeming equity investments across markets. Portfolio investors in Japan are shifting their investments from equities to emerging market bond funds and high-yield bonds," Mr Chatterji said.
One of the main reasons for Japanese investors exiting Indian funds was the appreciation of the yen vis-a-vis the rupee. The yen has appreciated 10% against the rupee over the past few months, which resulted in the underperformance of several India-focused funds. Nomura India Equity from Japan recorded the biggest net outflow of ¥ 22.97 billion in 2010. In all, only three of the 27 offshore India funds in Japan registered a positive inflow during the year.
Among other funds, HSBC GIF Indian Equity, the largest offshore India fund from Eurozone, registered an estimated net outflow of euro 285 million in 2010. The fund was a bottom quartile performer within its peer group during the year. Franklin India recorded the largest inflow of euro 338 million in 2010, and its assets base grew 90% during the considered period.
Despite the 30-share Sensex gaining about 17% in 2010, Indian markets underperformed emerging market peers such as Indonesia, Thailand, Malaysia and the Philippines. The top performing offshore India fund in 2010 was Aberdeen Global Indian Equity D2, which is the second-largest offshore India fund (with assets of $4.66 billion as of December 2010). The worst performing fund was Japan-domiciled HSBC India Infra Equity Open, which fell 12% during the year.
Firm equities markets in the first nine months of 2010, coupled with robust long-term growth and diverse sector play, prompted foreign investors to park their money in India-focused equity funds, analysts at Morningstar said.
"Europe-domiciled India funds logged a 42% rise in investments in 2010. They're investing in Indian shares seeing good future prospects," Dhruva Raj Chatterji, senior research analyst, Morningstar India, told ET.
While European investors loaded their portfolios with emerging market funds, several Japanese investors redeemed their money from the region. Indian funds were the worst impacted as Japanese investors redeemed investment worth $2 billion from offshore pools investing in Indian companies.
Total net assets of India offshore funds in Japan shrank by about 13% in 2010, to close the year at ¥737 billion. The total assets of these India offshore funds in Japan have almost halved from their peak of ¥1,400 billion at the end of December 2007.
"Japanese investors have been redeeming equity investments across markets. Portfolio investors in Japan are shifting their investments from equities to emerging market bond funds and high-yield bonds," Mr Chatterji said.
One of the main reasons for Japanese investors exiting Indian funds was the appreciation of the yen vis-a-vis the rupee. The yen has appreciated 10% against the rupee over the past few months, which resulted in the underperformance of several India-focused funds. Nomura India Equity from Japan recorded the biggest net outflow of ¥ 22.97 billion in 2010. In all, only three of the 27 offshore India funds in Japan registered a positive inflow during the year.
Among other funds, HSBC GIF Indian Equity, the largest offshore India fund from Eurozone, registered an estimated net outflow of euro 285 million in 2010. The fund was a bottom quartile performer within its peer group during the year. Franklin India recorded the largest inflow of euro 338 million in 2010, and its assets base grew 90% during the considered period.
Despite the 30-share Sensex gaining about 17% in 2010, Indian markets underperformed emerging market peers such as Indonesia, Thailand, Malaysia and the Philippines. The top performing offshore India fund in 2010 was Aberdeen Global Indian Equity D2, which is the second-largest offshore India fund (with assets of $4.66 billion as of December 2010). The worst performing fund was Japan-domiciled HSBC India Infra Equity Open, which fell 12% during the year.
When will the Indian stock market recover? - Reuters
January was a big disappointment to the stock market. The Sensex which had crossed the earlier peak was already down to 20,000 at the beginning of 2011. It gradually slumped further during the first three weeks and dropped with a thud towards the end of the month. There were reasons not all very apparent.
The Sensex was undoubtedly hammered by the global trends. The Egyptian crisis meant not only a setback to some of the Indian companies operating in Middle East but also a sharp increase in commodity prices. Oil shot up to more than $100 a barrel. International prices of food products also jumped. That meant higher costs and lower profits. There were also fears that the Suez Canal could be closed.
The domestic reasons were even more convincing. Inflation had relapsed. Food inflation crossed 17 percent and the headline inflation for December touched 8.5 percent. Besides, the many tales of widespread corruption had created doubts about effective governance.
The RBI reacted to inflation the usual way. It put up the repo rate by 25 bps threatening at the same time that further action may follow. That was more than a cue to the banking sector which pushed up the interest rate on lending as also borrowing. Added to all this was the rather tame performance of the corporate sector in the last quarter of 2010. That was enough to knock down the Sensex.
There is however more to it than that. For, the Sensex had started climbing down right from the beginning of the year and had lost 1,000 points by the middle of the month. That was because the FIIs had begun to repatriate part of their investment possibly because there were better opportunities at home.
In January, even before the Egypt crisis, the FIIs disinvested more than $1 billion. That was because the US economy was on a rebound. A reflection of that was seen in the recovery of Dow Jones which crossed 12,000 on 27th January, a jump of 3 percent in three weeks.
The US economy grew 3.2 percent in the last quarter of 2010. That was mainly because of the improvement in consumption which had stagnated and will become the mainstay of recovery in future. Interest rates have also been hardening and prices rising giving an indication that the US is on way to recovery though the Federal Reserve is still cautions mainly because unemployment is still above 9 percent. It therefore appears that about a half of the 2,000 points loss in Sensex in 2011 is due to US recovery which prompted return of FII funds. The month end events like the Egyptian crisis, crude oil prices, even domestic inflation, will be back to normal possibly in another 4-6 weeks. But the loss from return of FII funds may continue and put a lid on Sensex which will remain subdued for some time unless the budget provides a trigger.
The Sensex was undoubtedly hammered by the global trends. The Egyptian crisis meant not only a setback to some of the Indian companies operating in Middle East but also a sharp increase in commodity prices. Oil shot up to more than $100 a barrel. International prices of food products also jumped. That meant higher costs and lower profits. There were also fears that the Suez Canal could be closed.
The domestic reasons were even more convincing. Inflation had relapsed. Food inflation crossed 17 percent and the headline inflation for December touched 8.5 percent. Besides, the many tales of widespread corruption had created doubts about effective governance.
The RBI reacted to inflation the usual way. It put up the repo rate by 25 bps threatening at the same time that further action may follow. That was more than a cue to the banking sector which pushed up the interest rate on lending as also borrowing. Added to all this was the rather tame performance of the corporate sector in the last quarter of 2010. That was enough to knock down the Sensex.
There is however more to it than that. For, the Sensex had started climbing down right from the beginning of the year and had lost 1,000 points by the middle of the month. That was because the FIIs had begun to repatriate part of their investment possibly because there were better opportunities at home.
In January, even before the Egypt crisis, the FIIs disinvested more than $1 billion. That was because the US economy was on a rebound. A reflection of that was seen in the recovery of Dow Jones which crossed 12,000 on 27th January, a jump of 3 percent in three weeks.
The US economy grew 3.2 percent in the last quarter of 2010. That was mainly because of the improvement in consumption which had stagnated and will become the mainstay of recovery in future. Interest rates have also been hardening and prices rising giving an indication that the US is on way to recovery though the Federal Reserve is still cautions mainly because unemployment is still above 9 percent. It therefore appears that about a half of the 2,000 points loss in Sensex in 2011 is due to US recovery which prompted return of FII funds. The month end events like the Egyptian crisis, crude oil prices, even domestic inflation, will be back to normal possibly in another 4-6 weeks. But the loss from return of FII funds may continue and put a lid on Sensex which will remain subdued for some time unless the budget provides a trigger.
Monday, February 7, 2011
Investment Dar, creditors agree on $4.9bn debt plan - ArabianBusiness
Investment Dar Co, the Kuwait-based owner of half of Aston Martin Lagonda Ltd, and the coordinating committee of its creditors agreed to a revised plan to restructure the company’s debt. “The Enhanced Supplementary Plan contains revised facilities under which full repayment with profit will take place over a six to eight-year period," Investment Dar and the committee said in an e-mailed statement on Tuesday.
Investment Dar will pay KD405m of debt in three to four years with an 11 percent profit rate a year, according to the statement. Of that 11 percent, five percent will be paid in cash and the rest ‘‘payment in kind.’’ The remaining KD600m will be paid between years four to eight, the statement said.
Investment Dar, which missed a payment on a $100m Islamic bond in May 2009, said in March last year it was applying for legal protection under the Financial Stability Law to implement a restructuring plan. The law was passed by the government in 2009 to help financial institutions hurt by the credit crisis. The next Kuwaiti court hearing on the company’s application for protection under the law will be on February 10.
Investment Dar, which had KD1.03bn of debt outstanding at the end of September 2008, presented a plan to investors in December 2009. The company’s creditors number more than 100 banks and investors worldwide.
The coordinating committee includes Jordan International Bank, ABC Islamic Bank, Lloyds TSB, Al Rajhi Bank, Islamic Development Bank and Bank of Bahrain & Kuwait. The former committee resigned in November and the current one was formed last month.
The plan converts part of the creditors’ debt claims on the company into equity in Investment Dar, the statement said. Investment Dar ‘‘shareholders can reclaim part of this equity if debt repayments are honored in full,” it said. Under the plan, 10 percent of the company’s shares “will be passed to the banks and investors as part of the restructuring package. In addition, up to KD20m in fresh equity will be injected by Investment Dar’s shareholders in the first 12 months of the plan,” according to the statement.
Investment Dar will pay KD405m of debt in three to four years with an 11 percent profit rate a year, according to the statement. Of that 11 percent, five percent will be paid in cash and the rest ‘‘payment in kind.’’ The remaining KD600m will be paid between years four to eight, the statement said.
Investment Dar, which missed a payment on a $100m Islamic bond in May 2009, said in March last year it was applying for legal protection under the Financial Stability Law to implement a restructuring plan. The law was passed by the government in 2009 to help financial institutions hurt by the credit crisis. The next Kuwaiti court hearing on the company’s application for protection under the law will be on February 10.
Investment Dar, which had KD1.03bn of debt outstanding at the end of September 2008, presented a plan to investors in December 2009. The company’s creditors number more than 100 banks and investors worldwide.
The coordinating committee includes Jordan International Bank, ABC Islamic Bank, Lloyds TSB, Al Rajhi Bank, Islamic Development Bank and Bank of Bahrain & Kuwait. The former committee resigned in November and the current one was formed last month.
The plan converts part of the creditors’ debt claims on the company into equity in Investment Dar, the statement said. Investment Dar ‘‘shareholders can reclaim part of this equity if debt repayments are honored in full,” it said. Under the plan, 10 percent of the company’s shares “will be passed to the banks and investors as part of the restructuring package. In addition, up to KD20m in fresh equity will be injected by Investment Dar’s shareholders in the first 12 months of the plan,” according to the statement.
25 Indian Stocks to Consider (on a low P/B basis) - as of 7th Feb, 2010
The list provided above has been shortlisted from the more than 1000 stocks that are currently trading at a P/B ratio below 1. Furthermore, the list has been limited to stocks with a market capitalization greater than 500cr (approx. $100m). An additional filter considered to come up with this shortlist is the number of analysts covering the stock.
This list is probably a good place to begin to look for potential multibaggers. By no means are all the stocks listed above a good investment, keeping in mind that some of them might be trading at a low P/B as a result of the inherent charateristics; earnings quality, industry, corporate governance etc.
Invest at your own risk. Happy Investing !!
Egypt turmoil may worsen India's c/a deficit: Citi - EconomicTimes
A prolonged political turmoil in Middle Eastern countries, led by Egypt, may further deteriorate India's current account deficit and dent investment flows to emerging markets, Citi said in a research note on Monday.
The crisis in Egypt could result in oil prices trending higher, which will impact India's already deteriorating current account deficit, leading to higher subsidies and inflation, analysts Rohini Malkani and Anushka Shah wrote.
India's current account deficit in the September quarter widened to a record high of $15.8 billion as booming domestic consumer demand sucked in imports and service sector exports suffered from weak global demand.
Events in Egypt will have an impact on Indian monetary policy, the country's central bank deputy governor told reporters on Sunday, underscoring the worries about headline inflation above 8.4 percent.
India's economy, Asia's third-largest and a driver of the world recovery, is expected to grow 8.6 percent in the year ending in March, but at the risk of high commodity prices widening the trade gap and exacerbating inflation.
The Reserve Bank of India (RBI) has increased its end March inflation forecast to 7 percent from the earlier 5.5 percent.
India's central bank has raised rates seven times since March, although monetary policy is expected to have only a limited impact on reining in supply-side driven food inflation.
The turmoil in Egypt has raised concerns of a disruption to supply of Middle East oil shipped through Egypt, and of unrest spreading across the Middle East and North Africa, which combined produce more than a third of the world's oil.
North Sea Brent crude oil futures jumped back above $100 on Monday.
The Middle East accounts for more than half of India's remittances of $52 billion and is also India's largest export market, the Citi report said.
The crisis in Egypt could result in oil prices trending higher, which will impact India's already deteriorating current account deficit, leading to higher subsidies and inflation, analysts Rohini Malkani and Anushka Shah wrote.
India's current account deficit in the September quarter widened to a record high of $15.8 billion as booming domestic consumer demand sucked in imports and service sector exports suffered from weak global demand.
Events in Egypt will have an impact on Indian monetary policy, the country's central bank deputy governor told reporters on Sunday, underscoring the worries about headline inflation above 8.4 percent.
India's economy, Asia's third-largest and a driver of the world recovery, is expected to grow 8.6 percent in the year ending in March, but at the risk of high commodity prices widening the trade gap and exacerbating inflation.
The Reserve Bank of India (RBI) has increased its end March inflation forecast to 7 percent from the earlier 5.5 percent.
India's central bank has raised rates seven times since March, although monetary policy is expected to have only a limited impact on reining in supply-side driven food inflation.
The turmoil in Egypt has raised concerns of a disruption to supply of Middle East oil shipped through Egypt, and of unrest spreading across the Middle East and North Africa, which combined produce more than a third of the world's oil.
North Sea Brent crude oil futures jumped back above $100 on Monday.
The Middle East accounts for more than half of India's remittances of $52 billion and is also India's largest export market, the Citi report said.
Foreign funds outflow in equities markets tops $1 bn in 2011 - EconomicTimes
Foreign funds, which were a major factor in the rally of Indian equities markets in 2010, have contributed almost equally in the current weakness at the bourses, having sold scrips over $1 billion in 2011 till Friday.
Foreign institutional investors sold stocks worth $283.47 million in the last trading week alone, according to data available with the Securities and Exchange Board of India ( SEBI )).
A combination of factors have led to this withdrawal, with analysts mainly pointing to the increasing hawkish attitude adopted by the Reserve Bank of India for FIIs looking for greener pastures in other global markets.
In a bid to tame prices, which has kept annual food inflation hovering around double digits, India's central bank last month hiked its short-term lending and borrowing rates by 25 basis points and hinted at more tightening in the coming months if inflation did not come down.
In the past few days, unrest in Egypt, which led to global crude oil prices spiking to around $100 a barrel, has also raised the uneasiness of investors in economies like India which are mostly dependant on imported oil.
Though, prices of petrol were recently hiked by state-run oil marketing companies in India, a further hike in the fuel cannot be ruled out. Also, the government may not be able to hold off an increase in prices of diesel -- it still controls pricing of the fuel, unlike petrol.
Given this scenario, FIIs are looking to book profits in Indian equities markets, which last year had seen benchmark indices rally more than 17 per cent, fuelled to a large extent by the $28.83 billion inflow of overseas money.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange, which ended Dec 31, 2010 at 20,250.26 points, has fallen over 11 per cent in five weeks of trading. The Sensex closed Friday at 18,008.15 points.
Foreign institutional investors sold stocks worth $283.47 million in the last trading week alone, according to data available with the Securities and Exchange Board of India ( SEBI )).
A combination of factors have led to this withdrawal, with analysts mainly pointing to the increasing hawkish attitude adopted by the Reserve Bank of India for FIIs looking for greener pastures in other global markets.
In a bid to tame prices, which has kept annual food inflation hovering around double digits, India's central bank last month hiked its short-term lending and borrowing rates by 25 basis points and hinted at more tightening in the coming months if inflation did not come down.
In the past few days, unrest in Egypt, which led to global crude oil prices spiking to around $100 a barrel, has also raised the uneasiness of investors in economies like India which are mostly dependant on imported oil.
Though, prices of petrol were recently hiked by state-run oil marketing companies in India, a further hike in the fuel cannot be ruled out. Also, the government may not be able to hold off an increase in prices of diesel -- it still controls pricing of the fuel, unlike petrol.
Given this scenario, FIIs are looking to book profits in Indian equities markets, which last year had seen benchmark indices rally more than 17 per cent, fuelled to a large extent by the $28.83 billion inflow of overseas money.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange, which ended Dec 31, 2010 at 20,250.26 points, has fallen over 11 per cent in five weeks of trading. The Sensex closed Friday at 18,008.15 points.
BSE Sensex edges up 0.2 pct; sentiment shaky - Reuters
The BSE Sensex ended up 0.2 percent in choppy trade on Monday as firm world equities helped them recover slightly from last week's 2.1 percent decline, but investors were not convinced the strength in the market was here to stay. The 30-share BSE index closed 0.16 percent, or 29.04 points, higher in choppy trade to 18,037.19, with 21 of its components advancing. The index had declined 10.6 percent in January and is down more than 12 percent year-to-date.
"There is lack of confidence in the market. People are using any rise to sell," said Neeraj Dewan, director of Quantum Securities. Foreign funds have pulled out $1.35 billion this year until Feb. 3, on concerns over high inflation and as optimism over prospects of a U.S. economic recovery diverted attention. "Unless there is any significant improvement on the macro front, any gains will be sold," Dewan said.
Prime Minister Manmohan Singh said on Friday high headline inflation was beginning to pose a serious threat to India's high growth plans. Economic growth in Asia's third-largest economy for the 2010/11 fiscal year is estimated to grow at 8.6 percent, a government statement said on Monday.
Cipla shed nearly 3 percent after the drugmaker reported a larger-than-expected 19.4 percent drop in third-quarter net profit late on Friday. "While management remains upbeat about the growth prospects for the company, its time-frame for delivery of returns to shareholders may be longer than current market expectations," Emkay Global said in a note. The brokerage downgraded the stock to "reduce" from "accumulate."Cigarette-to-hotel business ITC recovered from Friday's 4.2 percent decline and led the gains with a 2.6 percent rise. Energy giant Reliance Industries, which has the highest weight on the main index, climbed 1.1 percent. It had declined 2.5 percent on Friday. Explorer Cairn India rose 1 percent after the Indian oil secretary said on Sunday he was hopeful of finding a "positive solution" to Vedanta Resources' deal to buy a controlling stake in the unit of Cairn Energy. Non-ferrous metals producer Sterlite Industries firmed 0.4 percent as London copper prices hit record high. Tata Steel, world's seventh-largest maker of the alloy, gained 0.6 percent, while aluminium producer Hindalco dropped nearly 2 percent.
In the broader market, losers were 1.5 times the number of gainers in a low volume of 268 million shares.The 50-share NSE Nifty closed barely changed at 5,396 points. World stocks were hovering near a 29-month high on further signs of global economic recovery. The MSCI world equity index rose 0.3 percent by 1045 GMT, while the emerging markets index edged 0.1 percent lower.
STOCKS THAT MOVED
* State-run oil marketing companies Bharat Petroleum Corp, Hindustan Petroleum Corp and Indian Oil Corp rose between 1 percent and 1.7 percent, as international crude oil prices declined. Separately, Bharat Petroleum said it discovered gas in offshore Mozambique.
* Lanco Infratech and Punj Lloyd shed nearly 4 percent and nearly 2 percent, respectively, ahead of their quarterly earnings announcement.
* Bhushan Steel climbed 1 percent to 401.80 rupees after the steel maker said its October-December net profit rose 23.3 percent.
MAIN TOP THREE BY VOLUME
* SpiceJet on 16.4 million shares
* Suzlon Energy on 10.3 million shares
* Unitech on 4.7 million shares
Link
"There is lack of confidence in the market. People are using any rise to sell," said Neeraj Dewan, director of Quantum Securities. Foreign funds have pulled out $1.35 billion this year until Feb. 3, on concerns over high inflation and as optimism over prospects of a U.S. economic recovery diverted attention. "Unless there is any significant improvement on the macro front, any gains will be sold," Dewan said.
Prime Minister Manmohan Singh said on Friday high headline inflation was beginning to pose a serious threat to India's high growth plans. Economic growth in Asia's third-largest economy for the 2010/11 fiscal year is estimated to grow at 8.6 percent, a government statement said on Monday.
Cipla shed nearly 3 percent after the drugmaker reported a larger-than-expected 19.4 percent drop in third-quarter net profit late on Friday. "While management remains upbeat about the growth prospects for the company, its time-frame for delivery of returns to shareholders may be longer than current market expectations," Emkay Global said in a note. The brokerage downgraded the stock to "reduce" from "accumulate."Cigarette-to-hotel business ITC recovered from Friday's 4.2 percent decline and led the gains with a 2.6 percent rise. Energy giant Reliance Industries, which has the highest weight on the main index, climbed 1.1 percent. It had declined 2.5 percent on Friday. Explorer Cairn India rose 1 percent after the Indian oil secretary said on Sunday he was hopeful of finding a "positive solution" to Vedanta Resources' deal to buy a controlling stake in the unit of Cairn Energy. Non-ferrous metals producer Sterlite Industries firmed 0.4 percent as London copper prices hit record high. Tata Steel, world's seventh-largest maker of the alloy, gained 0.6 percent, while aluminium producer Hindalco dropped nearly 2 percent.
In the broader market, losers were 1.5 times the number of gainers in a low volume of 268 million shares.The 50-share NSE Nifty closed barely changed at 5,396 points. World stocks were hovering near a 29-month high on further signs of global economic recovery. The MSCI world equity index rose 0.3 percent by 1045 GMT, while the emerging markets index edged 0.1 percent lower.
STOCKS THAT MOVED
* State-run oil marketing companies Bharat Petroleum Corp, Hindustan Petroleum Corp and Indian Oil Corp rose between 1 percent and 1.7 percent, as international crude oil prices declined. Separately, Bharat Petroleum said it discovered gas in offshore Mozambique.
* Lanco Infratech and Punj Lloyd shed nearly 4 percent and nearly 2 percent, respectively, ahead of their quarterly earnings announcement.
* Bhushan Steel climbed 1 percent to 401.80 rupees after the steel maker said its October-December net profit rose 23.3 percent.
MAIN TOP THREE BY VOLUME
* SpiceJet on 16.4 million shares
* Suzlon Energy on 10.3 million shares
* Unitech on 4.7 million shares
Link
Gulf states set for boom in public-private partnerships - ArabianBusiness
The Gulf is forecast to see a surge in public-private partnerships (PPPs) as governments rush to spread the cost and risk of giant infrastructure projects, a PricewaterhouseCoopers has said.
Local states are spending billions of dollars in overhauling infrastructure, with Qatar alone set to spend $100bn – or 87 percent of GDP – on modernising the emirate. “To see a rise in PPPs you have to start with infrastructure spending, and the Middle East is massive for that,” said Clement Walsh, director of infrastructure finance at PWC. “There are huge projects out here, in the UAE, Kuwait, Saudi Arabia and Qatar.” If just some of the infrastructure projects planned for the Gulf take place, he added, “it will be a big market” for PPPs.
As governments work to further develop and rejuvenate their economies in the wake of the global economic crisis, they are increasingly turning to private funding. Dubai’s state transport agency said in January it would offer about a third of its infrastructure projects over the next five years as PPPs in a bid to scale back its exposure to risk and costs. In Abu Dhabi and Saudi Arabia, big projects such as inter-country rail lines and causeways have also opened to private sector involvement. In Qatar, the Ministry of Business and Trade has also assigned a unit to examine PPPs as a possible source of funding for its infrastructure spree.
PwC is one of the PPP facilitators that will be making a significant investment in the Middle East in the next twelve to 36 months, said Neil Broadhead, partner in charge of advisory services. “Capital projects and infrastructure practice in the Middle East is a very significant investment,” he said. “It’s included on everyone’s agenda.” PwC currently has 30 engineers, accountants and other PPP facilitators on the ground in MENA, in offices from Dubai and Abu Dhabi to the newly opened arm in Ramallah.
Broadhead said the biggest demand was for professional service advice – ensuring that capital is managed effectively during the building of projects. Those projects include everything from transportation to waste treatment facilities. “Most governments looking at [making] big expenditures look at PPPs to reduce the burden on the public purse and as the best value for money,” Walsh said. “Because that’s the measure for success. Over a project’s life cycle they offer a better value – but they’re not cheap. They emerged from very mature economies… they are a way of managing risk to the public.”
Both said the Middle East and GCC – with a recovered economy, emphasis on building and projects tied into the Qatar World Cup and other initiatives – would be a PPP hotspot in the next year.“One year ago there was no capital projects team in the Mid East – now there’s Abu Dhabi, Doha, Saudi, Ramallah, capital projects in Dubai,” Broadhead said. “To work with these clients we need to be in their markets.”
Link
Local states are spending billions of dollars in overhauling infrastructure, with Qatar alone set to spend $100bn – or 87 percent of GDP – on modernising the emirate. “To see a rise in PPPs you have to start with infrastructure spending, and the Middle East is massive for that,” said Clement Walsh, director of infrastructure finance at PWC. “There are huge projects out here, in the UAE, Kuwait, Saudi Arabia and Qatar.” If just some of the infrastructure projects planned for the Gulf take place, he added, “it will be a big market” for PPPs.
As governments work to further develop and rejuvenate their economies in the wake of the global economic crisis, they are increasingly turning to private funding. Dubai’s state transport agency said in January it would offer about a third of its infrastructure projects over the next five years as PPPs in a bid to scale back its exposure to risk and costs. In Abu Dhabi and Saudi Arabia, big projects such as inter-country rail lines and causeways have also opened to private sector involvement. In Qatar, the Ministry of Business and Trade has also assigned a unit to examine PPPs as a possible source of funding for its infrastructure spree.
PwC is one of the PPP facilitators that will be making a significant investment in the Middle East in the next twelve to 36 months, said Neil Broadhead, partner in charge of advisory services. “Capital projects and infrastructure practice in the Middle East is a very significant investment,” he said. “It’s included on everyone’s agenda.” PwC currently has 30 engineers, accountants and other PPP facilitators on the ground in MENA, in offices from Dubai and Abu Dhabi to the newly opened arm in Ramallah.
Broadhead said the biggest demand was for professional service advice – ensuring that capital is managed effectively during the building of projects. Those projects include everything from transportation to waste treatment facilities. “Most governments looking at [making] big expenditures look at PPPs to reduce the burden on the public purse and as the best value for money,” Walsh said. “Because that’s the measure for success. Over a project’s life cycle they offer a better value – but they’re not cheap. They emerged from very mature economies… they are a way of managing risk to the public.”
Both said the Middle East and GCC – with a recovered economy, emphasis on building and projects tied into the Qatar World Cup and other initiatives – would be a PPP hotspot in the next year.“One year ago there was no capital projects team in the Mid East – now there’s Abu Dhabi, Doha, Saudi, Ramallah, capital projects in Dubai,” Broadhead said. “To work with these clients we need to be in their markets.”
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India on track to grow 8.6 pct in this fiscal year - Reuters
India's economy, Asia's third-largest and a driver of the world recovery, is expected to grow 8.6 percent in the year ending in March, but at the risk of high commodity prices widening the trade gap and exacerbating inflation.
The government estimate comes after a Reuters poll last month forecast the economy would grow 8.7 percent in the current fiscal year and 8.5 percent in the year that ends March 2012.
Prime Minister Manmohan Singh said last week rising prices were a serious threat to growth momentum, underscoring the worries of policymakers about headline inflation above 8.4 percent, driven by stubbornly high food prices. India is the second fastest-growing major economy in the world, after China, and both countries are battling inflation.
India's trade gap and fiscal deficit also cloud the outlook for an economy that, along with China's, has been a key driver of recovery from the global downturn. The trade gap hit a 23-month high of $13 billion in August as imports backed by rising domestic demand far outstripped exports, which were crimped by sluggish recovery in advanced markets, but it shrunk to $2.6 billion in December.
Trade Secretary Rahul Khullar has said that if global crude and commodity prices rise, the trade deficit in the January-March quarter could widen again. "I am happy with the 8.6 percent growth. But there are other concerns apart from GDP. My main concerns are inflation and the trade gap," Finance Minister Pranab Mukherjee told reporters. In the fiscal year that ended last March, India's GDP rose 8 percent, up from 6.7 percent in the fiscal year that ended in March 2009.
India's chief statistician, T.C.A. Anant, said rising global crude oil prices had put pressure on India's fiscal deficit, although he expects the government to meet its target of keeping the fiscal deficit to 5.5 percent of GDP this fiscal year. Rising crude prices threaten to add to the government's fuel-subsidy burden.
India's expected GDP growth this fiscal year will be helped by a rebound in agriculture, which is expected to grow 5.4 percent on good monsoon rains after expanding by just 0.2 percent a year earlier following a severe drought.
The full-year outlook implies a slowdown in fiscal fourth-quarter growth to about 8 percent year-on-year, a four-quarter low, according to Dariusz Kowalczyk, an analyst at Credit Agricole-CIB in Hong Kong. The expected January-March quarter moderation "would provide hope for slowdown in demand-pulled price pressures", Kowalczyk said in a note.
Bond yields, swap rates and the rupee were little changed after the release of the data on Monday.
The strong growth in agriculture is expected despite recent shortages in vegetables, such as onions and potatoes, which have led to high food inflation spilling into the broader economy.
RATE RISES
The Reserve Bank of India, has raised interest rates seven times since March, although monetary policy is expected to have only a limited impact on reining in supply-side driven food inflation. Rising interest rates, meanwhile, have taken a toll on manufacturing, which is expected to grow by 8.8 percent this fiscal year, down from nearly 11 percent growth a year earlier. "You have to look at manufacturing, which at 8.8 percent is beginning to show capacity constraints and price pressures, which could be a drag on growth going forward," said N. Bhanumurthy, senior economist with the National Institute of Public Finance and Policy. The manufacturing sector grew at 13 percent in the June quarter and nearly 10 percent in the September quarter, thanks to robust domestic demand, as India came out of the global financial crisis much faster than many other economies around the world. Core sectors in industry like mining and construction, which tend to reflect the health of the overall economy, are expected to grow at 6.2 percent in the current fiscal year. India's industrial growth slumped to an 18-month low in November to 2.7 percent but PMI data showed manufacturing grew at a slightly faster pace in January.
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The government estimate comes after a Reuters poll last month forecast the economy would grow 8.7 percent in the current fiscal year and 8.5 percent in the year that ends March 2012.
Prime Minister Manmohan Singh said last week rising prices were a serious threat to growth momentum, underscoring the worries of policymakers about headline inflation above 8.4 percent, driven by stubbornly high food prices. India is the second fastest-growing major economy in the world, after China, and both countries are battling inflation.
India's trade gap and fiscal deficit also cloud the outlook for an economy that, along with China's, has been a key driver of recovery from the global downturn. The trade gap hit a 23-month high of $13 billion in August as imports backed by rising domestic demand far outstripped exports, which were crimped by sluggish recovery in advanced markets, but it shrunk to $2.6 billion in December.
Trade Secretary Rahul Khullar has said that if global crude and commodity prices rise, the trade deficit in the January-March quarter could widen again. "I am happy with the 8.6 percent growth. But there are other concerns apart from GDP. My main concerns are inflation and the trade gap," Finance Minister Pranab Mukherjee told reporters. In the fiscal year that ended last March, India's GDP rose 8 percent, up from 6.7 percent in the fiscal year that ended in March 2009.
India's chief statistician, T.C.A. Anant, said rising global crude oil prices had put pressure on India's fiscal deficit, although he expects the government to meet its target of keeping the fiscal deficit to 5.5 percent of GDP this fiscal year. Rising crude prices threaten to add to the government's fuel-subsidy burden.
India's expected GDP growth this fiscal year will be helped by a rebound in agriculture, which is expected to grow 5.4 percent on good monsoon rains after expanding by just 0.2 percent a year earlier following a severe drought.
The full-year outlook implies a slowdown in fiscal fourth-quarter growth to about 8 percent year-on-year, a four-quarter low, according to Dariusz Kowalczyk, an analyst at Credit Agricole-CIB in Hong Kong. The expected January-March quarter moderation "would provide hope for slowdown in demand-pulled price pressures", Kowalczyk said in a note.
Bond yields, swap rates and the rupee were little changed after the release of the data on Monday.
The strong growth in agriculture is expected despite recent shortages in vegetables, such as onions and potatoes, which have led to high food inflation spilling into the broader economy.
RATE RISES
The Reserve Bank of India, has raised interest rates seven times since March, although monetary policy is expected to have only a limited impact on reining in supply-side driven food inflation. Rising interest rates, meanwhile, have taken a toll on manufacturing, which is expected to grow by 8.8 percent this fiscal year, down from nearly 11 percent growth a year earlier. "You have to look at manufacturing, which at 8.8 percent is beginning to show capacity constraints and price pressures, which could be a drag on growth going forward," said N. Bhanumurthy, senior economist with the National Institute of Public Finance and Policy. The manufacturing sector grew at 13 percent in the June quarter and nearly 10 percent in the September quarter, thanks to robust domestic demand, as India came out of the global financial crisis much faster than many other economies around the world. Core sectors in industry like mining and construction, which tend to reflect the health of the overall economy, are expected to grow at 6.2 percent in the current fiscal year. India's industrial growth slumped to an 18-month low in November to 2.7 percent but PMI data showed manufacturing grew at a slightly faster pace in January.
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UAE set to be Iraq’s top Gulf trade partner - ArabianBusiness
The UAE will be Iraq’s primary GCC investment partner once the war-torn country has established economic and political stability, a leading economist has said. John Sfankaniakis, chief economist at Saudi Banque Fransi, told Arabian Business that due to the UAE’s sizable Iraqi community and an interest in trade rather than investment, the country would top its closest competitor, Saudi Arabia.
“The interest in Saudi and other GCC states is in the investment flows rather than the trade flows,” he said. “Going forward I see more trade opportunities. I don’t expect sizable investments will be made. “Investments will require political longevity and stability to take hold and convince investors that it’s a good move forward. But trade will continue to do well, and if the political situation improves and stabilizes, that will steer greater interest for investors to put their money into Iraq directly.”
Iraq’s cabinet has proposed an $82.6bn budget for 2011, the latest and likely permanent revision after a lengthy haggle with lawmakers amid continuous rises in oil prices.The budget – currently awaiting parliamentary approval – is higher than Sfakianakis expected, largely off the back of those spikes in oil.
“Oil revenues are increasing – so it’s a larger than expected budget,” he said. For the time being, Iraq’s economic development is homegrown. “Investments are coming in from Iraqis, from the disapora – though there’s some coming from Turkey over the northern part of Iraq,” he said. “GCC money is of less use” and its involvement in helping Iraq grow “is not expected to be immediate.” The Opec producer’s deals with global oil companies could raise output capacity to 12 million bpd from the current 2.5 million, which could pit it against leader Saudi six years from now.
The Gulf’s involvement will depend on the political situation. “If the government continues to be stable and levels of ethnic unrest and violence dissipate, that will determine it.” The budget will “most likely get passed since it’s an expansionary budget. Everyone knows money has to get spent in Iraq.” The latest budget draft is based on a $76.50 per barrel average for crude, with 2.2 million barrels in daily exports.
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“The interest in Saudi and other GCC states is in the investment flows rather than the trade flows,” he said. “Going forward I see more trade opportunities. I don’t expect sizable investments will be made. “Investments will require political longevity and stability to take hold and convince investors that it’s a good move forward. But trade will continue to do well, and if the political situation improves and stabilizes, that will steer greater interest for investors to put their money into Iraq directly.”
Iraq’s cabinet has proposed an $82.6bn budget for 2011, the latest and likely permanent revision after a lengthy haggle with lawmakers amid continuous rises in oil prices.The budget – currently awaiting parliamentary approval – is higher than Sfakianakis expected, largely off the back of those spikes in oil.
“Oil revenues are increasing – so it’s a larger than expected budget,” he said. For the time being, Iraq’s economic development is homegrown. “Investments are coming in from Iraqis, from the disapora – though there’s some coming from Turkey over the northern part of Iraq,” he said. “GCC money is of less use” and its involvement in helping Iraq grow “is not expected to be immediate.” The Opec producer’s deals with global oil companies could raise output capacity to 12 million bpd from the current 2.5 million, which could pit it against leader Saudi six years from now.
The Gulf’s involvement will depend on the political situation. “If the government continues to be stable and levels of ethnic unrest and violence dissipate, that will determine it.” The budget will “most likely get passed since it’s an expansionary budget. Everyone knows money has to get spent in Iraq.” The latest budget draft is based on a $76.50 per barrel average for crude, with 2.2 million barrels in daily exports.
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Deposit insurance costs climbing for big banks - Reuters
Mega-banks will have to pay more for U.S. deposit insurance under a new regulation set for final approval on Monday as the government advances a boatload of financial oversight changes. Other measures to be considered this week include curbing bonus plans at banks that encourage too much risk-taking, and limiting the role of much-maligned credit ratings. A congressional committee will also weigh the funding needs of the Commodity Futures Trading Commission. The White House was also expected to release next week proposals for fixing the housing finance system and the government-sponsored companies at its heart, Fannie Mae and Freddie Mac.
On Monday, the Federal Deposit Insurance Corp was expected to approve a rule mandated by the Dodd-Frank reforms, enacted in July after the 2007-2009 financial crisis that led to huge taxpayer bailouts of the nation's largest financial firms. Bank of America, JPMorgan Chase and Citigroup combined would have to pay about $1 billion more per year under the new, liabilities-based FDIC insurance fund assessment formula, according to industry estimates.
Approval of the rule would shift some of the burden for maintaining the FDIC's deposit insurance fund off of smaller banks, which mostly rode out the crisis unscathed, and onto large institutions that received massive government aid. Community banks lobbied for the change, arguing large banks pose more risk to the financial system and so should contribute more to the fund. The Independent Community Bankers Association estimated the change would save banks with less than $10 billion in assets about $4.5 billion over three years.
If approved, the rule would take effect on April 1, hitting the big banks' second-quarter results. Citigroup Chief Financial Officer John Gerspach told analysts last month that the FDIC assessment change was shaping up as the single largest impact from Dodd-Frank on the bank. Dodd-Frank also called for banning incentive-based pay plans at banks that promote excessive risk-taking by executives. The FDIC will consider a proposal on the rule, which could force some firms to defer some executives' pay.
The proposed rule will require executives at the largest financial institutions to have half of their bonuses deferred for at least three years, according to two people familiar with proposal.
The proposal applies to top executives at financial companies with $50 billion or more in assets such as Bank of America Corp, JPMorgan Chase & Co, Goldman Sachs Group Inc and Morgan Stanley. On Wednesday, the Securities and Exchange Commission is slated to take up a Dodd-Frank provision with major impact for the Big Three credit rating agencies -- Moody's Corp, Standard & Poor's and Fitch Ratings.
The legislation called for federal agencies to sharply reduce their reliance on credit ratings, widely seen as flawed in the run-up to the financial crisis. The SEC will discuss whether to propose a rule along these lines. The U.S. House of Representatives Agriculture Committee will hold a hearing on Thursday on funding for the CFTC, which must implement dozens of new Dodd-Frank regulations and needs more staff and resources to handle the job. Some House Republicans want to restrain spending at the SEC and the CFTC, partly to combat the federal budget deficit and partly to undermine the Dodd-Frank reforms that were opposed last year by most Republicans.
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On Monday, the Federal Deposit Insurance Corp was expected to approve a rule mandated by the Dodd-Frank reforms, enacted in July after the 2007-2009 financial crisis that led to huge taxpayer bailouts of the nation's largest financial firms. Bank of America, JPMorgan Chase and Citigroup combined would have to pay about $1 billion more per year under the new, liabilities-based FDIC insurance fund assessment formula, according to industry estimates.
Approval of the rule would shift some of the burden for maintaining the FDIC's deposit insurance fund off of smaller banks, which mostly rode out the crisis unscathed, and onto large institutions that received massive government aid. Community banks lobbied for the change, arguing large banks pose more risk to the financial system and so should contribute more to the fund. The Independent Community Bankers Association estimated the change would save banks with less than $10 billion in assets about $4.5 billion over three years.
If approved, the rule would take effect on April 1, hitting the big banks' second-quarter results. Citigroup Chief Financial Officer John Gerspach told analysts last month that the FDIC assessment change was shaping up as the single largest impact from Dodd-Frank on the bank. Dodd-Frank also called for banning incentive-based pay plans at banks that promote excessive risk-taking by executives. The FDIC will consider a proposal on the rule, which could force some firms to defer some executives' pay.
The proposed rule will require executives at the largest financial institutions to have half of their bonuses deferred for at least three years, according to two people familiar with proposal.
The proposal applies to top executives at financial companies with $50 billion or more in assets such as Bank of America Corp, JPMorgan Chase & Co, Goldman Sachs Group Inc and Morgan Stanley. On Wednesday, the Securities and Exchange Commission is slated to take up a Dodd-Frank provision with major impact for the Big Three credit rating agencies -- Moody's Corp, Standard & Poor's and Fitch Ratings.
The legislation called for federal agencies to sharply reduce their reliance on credit ratings, widely seen as flawed in the run-up to the financial crisis. The SEC will discuss whether to propose a rule along these lines. The U.S. House of Representatives Agriculture Committee will hold a hearing on Thursday on funding for the CFTC, which must implement dozens of new Dodd-Frank regulations and needs more staff and resources to handle the job. Some House Republicans want to restrain spending at the SEC and the CFTC, partly to combat the federal budget deficit and partly to undermine the Dodd-Frank reforms that were opposed last year by most Republicans.
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Who Will Profit From AOL’s Deal for Huffington Post? - NYTimes
AOL’s deal to buy The Huffington Post, the sprawling Web news hub, is certainly a coup for the site’s co-founders, Arianna Huffington and Ken Lerer. But the two had some financial help in building up The Huffington Post from a liberal-oriented blog in 2005.
As The New York Times reported on Monday, AOL will pay $315 million for the site, with $300 million of that in cash.
That amounts to roughly five times the site’s estimated revenue for 2010 of about $60 million, according to The Times. (The Huffington Post’s revenue for last year nearly doubled from 2009, and the company’s executives insisted that the site turned a profit for the first time.)
That will mean a healthy payday for investors and holders of the company’s stock and options. Those equity holders will benefit earlier than if The Huffington Post had waited for an initial public offering. So who is invested in The Huffington Post? Ms. Huffington and Mr. Lerer founded the site in 2005 with about $2 million in seed capital, according to Advertising Age.
The site subsequently raised money from several investors, including:
Alan Patricof’s Greycroft Partners
Softbank Capital
Oak Investment Partners (which kicked in $25 million in late 2008) and, fittingly, Robert W. Pittman, the former AOL executive
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As The New York Times reported on Monday, AOL will pay $315 million for the site, with $300 million of that in cash.
That amounts to roughly five times the site’s estimated revenue for 2010 of about $60 million, according to The Times. (The Huffington Post’s revenue for last year nearly doubled from 2009, and the company’s executives insisted that the site turned a profit for the first time.)
That will mean a healthy payday for investors and holders of the company’s stock and options. Those equity holders will benefit earlier than if The Huffington Post had waited for an initial public offering. So who is invested in The Huffington Post? Ms. Huffington and Mr. Lerer founded the site in 2005 with about $2 million in seed capital, according to Advertising Age.
The site subsequently raised money from several investors, including:
Alan Patricof’s Greycroft Partners
Softbank Capital
Oak Investment Partners (which kicked in $25 million in late 2008) and, fittingly, Robert W. Pittman, the former AOL executive
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Green energy consumption up 5.3% in MENA in 2010 - ArabianBusiness
Total consumption of alternative energy grew by 5.3 percent in the Middle East North Africa region in 2010, the second-highest rate globally after traditional green energy powerhouse Asia-Pacific.
“New energies including wind, solar, nuclear power plants and biomass and environmentally clean technologies are a necessity for the region to keep pace with its new energy demand. This is the only way it can conserve its main lifeline, oil, for the long term," said Shailesh Dash, CEO of Al Masah Capital, which issued a report on worldwide alternative energy consumption.
He credited the rise to huge investments in energy intensive industries, rapid infrastructural and real estate developments, growing population and water consumption had significantly augmented energy needs. A large-scale shift away from oil and gas exports is underway in MENA, particularly in Gulf emirates such as Abu Dhabi – yet data shows the Gulf lags the rest of the region. "There was no production of renewable energy in these countries until 2008,” Al Masah said.
In 2008, Egypt had the largest share - 56.8 percent - in total renewable energy generated in the MENA region, followed by Iran with 18 percent. The Gulf needs to move away from “complete oil dependency to a balanced diet which prominently features alternative fuels,” Al Masah’s report said.
MENA recorded an average annual growth rate of 4 percent in oil consumption from 1999-2009 – higher than the 3.2 percent the previous decade. Natural gas consumption also increased by 6.6 percent in 1999–2009, up from 6 percent for the previous ten years. Oil contributes to about 50 percent of the GCC’s total GDP. MENA countries own around 61 percent of the world’s proven oil reserves and approximately 45 percent of its proven natural gas reserves.
Current usage of alternative energy in the MENA region was minimal, significant alternative energy projects were underway. "Many of them are in the planning stages but these efforts will eventually bear fruit. The important thing is that this need is being recognized now rather than later when it might be too late,” Dash said.
According to the International Energy Agency, concentrated solar power plants in the region could cater to 100 times the combined electricity consumption of MENA and Europe. "The biggest resource in the MENA region is solar irradiance with a potential to meet the total demand for electricity worldwide,” it said in a statement. Based on climatic conditions and geographic location, Al Masah said Egypt had the best physical resources to implement solar technologies in the MENA region followed by Oman, Saudi Arabia, Jordan and the UAE. In terms of current utilization, Morocco had the largest installed PV capacity in the region.
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“New energies including wind, solar, nuclear power plants and biomass and environmentally clean technologies are a necessity for the region to keep pace with its new energy demand. This is the only way it can conserve its main lifeline, oil, for the long term," said Shailesh Dash, CEO of Al Masah Capital, which issued a report on worldwide alternative energy consumption.
He credited the rise to huge investments in energy intensive industries, rapid infrastructural and real estate developments, growing population and water consumption had significantly augmented energy needs. A large-scale shift away from oil and gas exports is underway in MENA, particularly in Gulf emirates such as Abu Dhabi – yet data shows the Gulf lags the rest of the region. "There was no production of renewable energy in these countries until 2008,” Al Masah said.
In 2008, Egypt had the largest share - 56.8 percent - in total renewable energy generated in the MENA region, followed by Iran with 18 percent. The Gulf needs to move away from “complete oil dependency to a balanced diet which prominently features alternative fuels,” Al Masah’s report said.
MENA recorded an average annual growth rate of 4 percent in oil consumption from 1999-2009 – higher than the 3.2 percent the previous decade. Natural gas consumption also increased by 6.6 percent in 1999–2009, up from 6 percent for the previous ten years. Oil contributes to about 50 percent of the GCC’s total GDP. MENA countries own around 61 percent of the world’s proven oil reserves and approximately 45 percent of its proven natural gas reserves.
Current usage of alternative energy in the MENA region was minimal, significant alternative energy projects were underway. "Many of them are in the planning stages but these efforts will eventually bear fruit. The important thing is that this need is being recognized now rather than later when it might be too late,” Dash said.
According to the International Energy Agency, concentrated solar power plants in the region could cater to 100 times the combined electricity consumption of MENA and Europe. "The biggest resource in the MENA region is solar irradiance with a potential to meet the total demand for electricity worldwide,” it said in a statement. Based on climatic conditions and geographic location, Al Masah said Egypt had the best physical resources to implement solar technologies in the MENA region followed by Oman, Saudi Arabia, Jordan and the UAE. In terms of current utilization, Morocco had the largest installed PV capacity in the region.
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Sunday, February 6, 2011
Iraq cabinet ramps up spending as oil prices rise - Zawya
Iraq's government submitted a revised draft budget to MPs for approval on Sunday, raising projected public spending as oil prices have increased, government spokesman Ali al-Dabbagh said.
Dabbagh said the $13.3 billion deficit would be covered by "money accumulated from past surpluses and from internal and external loans."
He added that the cabinet also gave the green light for the finance ministry to request a $4.5 billion loan from the International Monetary Fund, and a further $2 billion from the World Bank.
While Iraq's projected oil price currently looks to be a conservative estimate -- prices currently stand at around $89 in New York -- its projected exports are more ambitious.
Iraq has not exported 2.2 million barrels per day of oil since the 2003 US-led invasion ousted dictator Saddam Hussein.
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The new spending programme estimates overall expenditure at $81.86 billion, or 96.6 trillion Iraqi dinars, while income will be $68.56 billion, leaving a shortfall of $13.3 billion-- about a 16 percent budget deficit.
Sunday's submission is based on average oil prices of $76.5 per barrel and projected exports of 2.2 million barrels of oil per day (bpd), a figure which includes 100,000 bpd of exports from the autonomous Kurdish region.
A previous draft budget, sent to parliament on December 1, estimated spending of $78.8 billion based on oil prices of $73 per barrel.
Of the overall spending in the new budget, $56.44 billion will be operating expenses -- primarily salaries and pensions for civil servants - and the remaining $25.42 billion will be dedicated to investment, Dabbagh said.
Energy sales are expected to account for 90 percent of revenues. Dabbagh said the $13.3 billion deficit would be covered by "money accumulated from past surpluses and from internal and external loans."
He added that the cabinet also gave the green light for the finance ministry to request a $4.5 billion loan from the International Monetary Fund, and a further $2 billion from the World Bank.
While Iraq's projected oil price currently looks to be a conservative estimate -- prices currently stand at around $89 in New York -- its projected exports are more ambitious.
Iraq has not exported 2.2 million barrels per day of oil since the 2003 US-led invasion ousted dictator Saddam Hussein.
The country currently produces around 2.5 million bpd, with exports averaging around two million bpd, though the former figure is expected to rise to three million bpd by the end of the year, according to the oil ministry.
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Saturday, February 5, 2011
Egypt moves $854m to financial system as banks open - ArabianBusiness
Egypt’s central bank moved EGP5bn ($854m) of cash into the financial system as depositors gain access to their savings for the first time in more than a week and the government seeks to resume debt sales.
The central bank used military cargo planes to bring in the cash, governor Farouk El-Okdah told state-run television. The bank, which has $36bn in reserves and guarantees deposits, said last week that customers can withdraw up to EGP50,000 and $10,000 a day and lenders had enough liquidity to meet all demands.
“The central bank took a good step in saying something publicly to try to reassure depositors,” Ann Wyman, London- based head of emerging markets research at Nomura Holding Inc, said in an e-mail February 3.
Yields on Egypt’s treasury bills may surge about 30 percent as the government seeks to raise EGP11bn tomorrow after cancelling last week’s auction as protests against president Hosni Mubarak intensified, according to Shahinaz Foda, the head of treasury at BNP Paribas Egypt. Credit Agricole CIB expects the pound to slump 20 percent in the “short term.” The currency’s three-month non-deliverable forwards rose to a record last week, suggesting the currency may fall more than seven percent against the dollar.
The finance ministry plans to hold a meeting with the central bank and primary dealers and will issue a statement later today, Hani Khallaf, the finance minister’s public debt adviser said in a telephone interview last week. Egypt’s stock exchange will “likely” open this week with new rules to limit the expected drop in the market, communications manager Hisham Turk said yesterday. The bourse has been shut during the past five working days.
Treasury bills with maturities ranging from 91 days to one year are scheduled for sale this week, according to the website of the finance ministry. It postponed the sale of EGP4bn planned for January 30 after raising EGP2.5bn on January 27. The average yields on the sale of 182-day bills jumped 40 basis points to a one-year high of 10.6 percent, according to data compiled by Bloomberg.
Yields on three-month treasury bills should be “not less than” 12.5 percent in upcoming auctions, up from 9.5 percent last month, Cairo-based Foda said by phone yesterday. The yield on the one-year bills may climb to 14 percent from 10.6 percent, she said.
Egypt’s central bank will hold an auction for treasury bills tomorrow and announce the results the next day, deputy governor Hisham Ramez said yesterday. More than 200 bank branches will open today, the central bank said on its website.
In an attempt to placate the protesters, newly appointed finance minister Samir Radwan reiterated yesterday that the government won’t reduce subsidies even if global prices of food and commodities rise. Public spending will be used as a tool to “achieve social justice,” he told a news conference in Cairo.
An increase in public spending may push the budget gap to “double digits” in 2011, compared with 8.1 percent in the fiscal year that ended in June, rating company Standard & Poor’s said last week after lowering the country’s credit ratings a notch to two levels below investment grades. Fitch Ratings and Moody’s Investor Service also cut Egypt’s ratings.
The unrest sent the yield on the country’s 5.75 percent bond due in April 2020 to a record 7.2 percent on January 31. The yield has dropped 62 basis points since and ended the week at 6.59 percent. The cost of insuring Egypt’s debt for five years with credit-default swaps soared to 430 basis points on January 28, the highest since April 2009. They closed at 380 on February 4, CMA prices in London show.
Radwan said Egypt will honor its debt obligations and urged foreign investors to have confidence in the country. “All the bond obligations, everything will be honored on time,” Radwan said in a February 4 telephone interview from Cairo. “We are not defaulting on any obligations.”
Banks held EGP937bn in deposits in November, according to preliminary data published on the central bank’s website. Of that, households held EGP505bn pounds, while private companies held EGP124bn, the data show. The country’s banks have an average loan-to-deposit ratio of about 53 percent, Mohamed Barakat, head of the banking association, said in an interview on January 30.
Some Egyptians, such as 32-year-old pharmacist Moustafa Awwad, said they won’t rush to take their money out.
“I have enough cash and the central bank guarantees all deposits,” he said in a telephone interview from Cairo. “Having money at the bank is safer than holding cash.”
Egypt’s three-month non-deliverable pound forwards strengthened 0.2 percent to 6.325 per dollar on February 4 from 6.34 the previous day, according to data compiled by Bloomberg. The contracts reflect bets the currency will weaken 7.4 percent in three months from the spot rate of 5.8570. A drop in the Egyptian pound may prompt the central bank to intervene, John Sfakianakis, chief economist at Banque Saudi Fransi Credit Agricole Group, said in a note February 3.
“Over the short term we expect the Egyptian pound to fall by 20 percent, which would require the central bank to intervene on several occasions,” he wrote. “The drawdown in reserves would be a crucial factor in supporting the Egyptian pound, but increased political tensions, a run on local banks as well as expected dollarisation of some of the deposits will impact the short-term currency outlook.”
Protests demanding the ouster of the president erupted January 25 and have left at least 300 people dead according to United Nations estimates. A total of about 1,200 people were wounded, health minister Ahmed Farid said yesterday in an interview with State TV. Egyptian authorities and opposition leaders yesterday began talks on ending president Hosni Mubarak’s 30 years in power before September elections.
Egypt’s financial system faces a moment of truth - Reuters
Egypt’s financial system faces a moment of truth. The country didn’t have an economic crisis before the past ten days of protests began. But its banks and stock exchange have been closed for a week. When they reopen, starting on Sunday, the fear is that the political turmoil could prompt a financial meltdown.
The central bank is due to reopen on Sunday, while stock market trading will resume the next day – though that could be delayed if violent clashes continue. So far, markets across the Mid-East region have largely ignored the unrest. Yet before the Egyptian market closed, there were signs that investors were fleeing.An exodus of foreign investors would probably be manageable. The central bank says its official reserves are $36 billion. Additional assets held with commercial banks – regarded as unofficial reserves – are estimated at around $20 billion. Before the crisis, foreigners held just 7 percent of Egypt’s total public debt, equivalent to a little over $11 billion.
The bigger worry is if Egyptians also take fright. The rich could decide to shift their money into gold, dollars or overseas markets. The poor, many of whom are relatively new to banking, may choose to stash their life savings under mattresses instead.
Egypt’s banks could probably cope with a short-term run. Lenders are well funded with loan-to-deposit ratios of around 50 percent. More than half the country’s 38 banks are owned by foreign groups, which are likely to back their subsidiaries. Public sector banks, which account for about half the market, benefit from full government support.
However, banks are the main buyers of government bonds. So sustained bank trouble would make it harder for the Egyptian government, already running a deficit, to borrow or refinance debt as it comes due. A declining currency, one possible consequence of turmoil, could fuel inflation.
Any prolonged unrest will, therefore, force Egypt to make more tough choices. Propping up its banks and currency could quickly drain the central bank’s reserves. But keeping banks and the stock exchange closed could further erode confidence. Capital controls and withdrawal limits at banks may be the least bad of several unattractive options.
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Aegis inks $2bn call centre deal with Saudi Telecom - ArabianBusiness
Aegis, Essar Group’s outsourcing services arm, will partner with Saudi Telecom – the largest telecom operator in the Kingdom – in a call centre venture. Under the deal, Aegis will get $2bn in business in eight years, reportedly one of the largest deals in the process outsourcing sector. Called Call Centre Company, the venture will have a near-equal stake from both partners. STC will hold 50 percent and one share in CCC; Aegis the rest.
Aegis will shoulder operational control and responsibilities, STC will have an exclusivity contract with CCC. CCC will provide over-the-phone customer care service to STC’s 28 million customers in Saudi Arabia. “This is certainly one of the largest organic deals for the company, as well as the industry. It will have an IT component as well; this also validates our strategy of growth,” said Aparup Sengupta, managing director and CEO of Aegis. “So far, we have focused on an inorganic route but now we have the ability to pull off a large organic deal” that makes us “one of the biggest players in the region.”
STC can release its fixed cost and free up management to focus on emerging opportunities. “This would provide a huge leg up to Aegis’ West Asia presence, since the joint venture would actively seek new businesses. We have aspirations of making this the largest BPO operation in the region,” Sengupta said. STC, a pioneer in the Saudi telecom market, is now focusing on expansion into the GCC, Africa, and India. It will rely on Aegis’s expertise “in managing customer experience across multiple geographies,” said STC’s group CEO, Saud Al Daweesh.
As one of the biggest deals in the West Asia telecom segment, it could have the effect of inspiring foreign providers to expand further into the GCC. “This deal will encourage a lot of service provider to pursue business in the region, said Alok Shende, principal analyst at Ascentius Consulting. Aegis currently serves 150 clients through a network of 47 delivery centres across 11 countries. It has more than 50,000 employees.Link
Aegis will shoulder operational control and responsibilities, STC will have an exclusivity contract with CCC. CCC will provide over-the-phone customer care service to STC’s 28 million customers in Saudi Arabia. “This is certainly one of the largest organic deals for the company, as well as the industry. It will have an IT component as well; this also validates our strategy of growth,” said Aparup Sengupta, managing director and CEO of Aegis. “So far, we have focused on an inorganic route but now we have the ability to pull off a large organic deal” that makes us “one of the biggest players in the region.”
STC can release its fixed cost and free up management to focus on emerging opportunities. “This would provide a huge leg up to Aegis’ West Asia presence, since the joint venture would actively seek new businesses. We have aspirations of making this the largest BPO operation in the region,” Sengupta said. STC, a pioneer in the Saudi telecom market, is now focusing on expansion into the GCC, Africa, and India. It will rely on Aegis’s expertise “in managing customer experience across multiple geographies,” said STC’s group CEO, Saud Al Daweesh.
As one of the biggest deals in the West Asia telecom segment, it could have the effect of inspiring foreign providers to expand further into the GCC. “This deal will encourage a lot of service provider to pursue business in the region, said Alok Shende, principal analyst at Ascentius Consulting. Aegis currently serves 150 clients through a network of 47 delivery centres across 11 countries. It has more than 50,000 employees.Link
Tanker rates have biggest weekly gain of 2011 on western demand - ArabianBusiness
The cost of shipping Middle East crude oil to Asia, the world’s busiest route for supertankers, had this year’s biggest weekly advance on hire demand from Western countries. Charter rates for very large crude carriers, or VLCCs, on the industry’s benchmark Saudi Arabia-to-Japan voyage rose 11 percent this week to 49.8 Worldscale points, according to the Baltic Exchange in London. That was the largest gain since the week ended Dec 24. Rates climbed 0.8 percent today. “While China is on holiday, activity by Western charterers has been good, perhaps taking advantage of a less-crowded environment,” Dag Kilen, an analyst with RS Platou Markets AS in Oslo, said in an e-mailed note today. There’s “limited downside” to the market in the short-term, he said, citing brokers. Daily returns from the benchmark route climbed 8.2 percent to $9,280 today, rounding out a 37 percent weekly jump.
China’s weeklong break for the Lunar New Year started on Feb 2. The Organization of Petroleum Exporting Countries will raise crude shipments 1.7 percent through next month amid strong demand from Asia, according to tanker tracker Oil Movements. OPEC, whose members include Venezuela and Iran, accounts for about 40 percent of global oil supply. Loadings will rise to 24.1 million barrels a day in the four weeks to Feb 19 from 23.7 million barrels in the period to Jan 22, Oil Movements said yesterday in a report. Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a metric ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch. Daily returns from suezmax tankers that haul 1 million barrel cargoes, half as much as VLCCs, jumped 42 percent to $11,534, according to the exchange. Returns from aframaxes that carry 650,000 barrels gained 36 percent to $1,819 a day.
Link
Gulf airlines to fuel demand for MRO service - Zawya
The demand for aircraft maintenance, repair and overhaul (MRO) service is set to grow significantly in the Middle East region in the coming years, led mainly by the ambitious fleet expansion by major airlines of the Gulf region, a senior official of Lufthansa Technik, one of the world's largest MRO service providers has said.
"There is certainly a need for MRO market in the region given the fleet expansion by major airlines of the region like Emirates, Etihad, Qatar AirwaysQatar Airways, Saudi Arabian airlines, etc. There is a need for MRO service even for smaller players, which will not be covered only by sending aircraft material, etc out of the region, but quite a considerable volume will be done in the region itself. That requires facilities, trained personnel and expertise. On a long term, Middle East will increase its MRO capabilities and capacities, which offers us an opportunity for partnerships," Walter Heerdt, Senior Vice President - worldwide (Marketing & Sales) of Lufthansa Technik, part of the Deutsche Lufthansa group, told Emirates 24l7.
He said as per estimates the size of the Middle East MRO market, the second fastest growing MRO market in the world after Asia-Pacific, is approximately $1.8 billion in terms of the value of the contract, out of which Lufthansa Technik's share is around 13 per cent.
"We're expecting around 8 per cent growth of the MRO market annually in the region and this is expected to continue until 2020," Heerdt said.
On February 2, at the MRO Middle East in Dubai, Lufthansa Technik signed a base maintenance contract with Oman AirOman Air, the national airline of the Sultanate of Oman, for Oman AirOman Air's fifteen Boeing 737 NG aircraft.
Prior to that on February 1, Emirates AirlineEmirates Airline contracted Lufthansa Technik to overhaul the centre landing gears of its Airbus A340-300 fleet. The agreement has been signed for two years and includes services for eight aircraft.
He said in terms of the size, Emirates airlineEmirates airline remains the fastest growing customer for the firm in the region.
"If you look at the number of aircraft that Emirates has in its fleet and the number of aircraft on their order books, Emirates is the fastest growing customer for us," Heerdt added.
Last year, Middle East-based carriers reported the strongest full year growth in passenger demand globally at 17.8 per cent on the back of a 13.2 per cent capacity increase fueled largely by aircraft deliveries to Gulf-based airlines, according to the full-year 2010 demand statistics for international scheduled air traffic released by International Air Transport Association (Iata) released on February 2.
Load factors for the region also showed a 3 percentage point increase to 76 per cent. December demand was 14.1 per cent above previous year levels and 35 per cent higher than in December 2008, illustrating the structural shift that is taking place in the industry as a result of the region's expansion, Iata said in a statement.
In the international freight demand as well, Middle East-based carriers (accounting for 11 per cent of the international freight market) recorded the second highest full-year growth rate of 26.7 per cent, behind Latin American carriers, the Iata said.
Link
Several mid-cap stocks fall below their book value - Economic Times
MUMBAI: The recent correction in shares may have set the stage for value-hunters to pick and choose ‘multi-baggers’ — a market terminology for describing stocks that could grow many-folds in value. Several mid-cap and select front-line stocks have fallen below their book value, a conventional valuation metric, after the 13-15% fall in the BSE’s mid-cap and small-cap indices from their highs in the past two months.
An ET analysis shows around 20 ‘A’ group and over 850 ‘B’ group companies — nearly 43% of overall mid-cap universe — are currently trading below the net asset value or book value. Book value means the value of company’s total assets (with goodwill) less liabilities.
“This is an opportunity for investors to buy some good stocks,” said Ambareesh Baliga, vice-president, Karvy Stock Broking. “Fundamentals usually take the back seat in an indecisive market like this. Speculators dump good stocks at any price in such conditions. Several stocks in the mid-cap segment could be buys at current price levels,” he said.
Some shares of companies could have fallen below book value because of bleak business outlook rather than a selloff led by poor investor sentiment, Baliga warns. Analysts said investors may buy shares of banks, consumer goods, agri-based companies and logistic companies that are trading below their book value, analysts said.
They are also sceptical about the prospects of large-cap index stocks that are currently trading below book value, as these stocks are weighed down mostly when business outlook is negative.
Analysts are cautious about the prospects of some big companies whose shares are trading below their book value — Aditya Birla Nuvo is currently trading Rs 1,275 per share lower than book value, HDIL (Rs 63), Sterlite Industries (Rs 272), Indiabulls Real Estate (Rs 116), LIC Housing Finance (Rs 190), MTNL (Rs 103), Reliance Infra (Rs 107).
Analysts said most companies trading below book value may have issues relating to business scale and uncertainty over profit growth in the future. Some companies value their assets at prices higher than market value, resulting in higher price to book value and lower stock price.
Price to book value is a metric to value stocks of companies which have large amount of tangible assets in their balance sheet. As per textbooks, if a company is trading at a price to book value of less than 1, the company’s assets are either overvalued or it is earning poor return on its assets.
“PBV less than 1 is definitely a good buy, but then it should be taken on a case to case basis. It should not be the lone criteria to buy a stock,” said Saurabh Agarwal, director, Kennis Group, a Mumbai-based investment consultancy, adding, “Stocks with low market float also tend to trade below book value.”
In other instances, companies with lower corporate governance may have lot of cash — the benefit of which will only be going to promoters. This cash component will not reflect in stock price. Book value is an ideal metric in case of companies that are in investment phase as it can estimate potential earnings of a company for several quarters ahead, analysts said.
An ET analysis shows around 20 ‘A’ group and over 850 ‘B’ group companies — nearly 43% of overall mid-cap universe — are currently trading below the net asset value or book value. Book value means the value of company’s total assets (with goodwill) less liabilities.
“This is an opportunity for investors to buy some good stocks,” said Ambareesh Baliga, vice-president, Karvy Stock Broking. “Fundamentals usually take the back seat in an indecisive market like this. Speculators dump good stocks at any price in such conditions. Several stocks in the mid-cap segment could be buys at current price levels,” he said.
Some shares of companies could have fallen below book value because of bleak business outlook rather than a selloff led by poor investor sentiment, Baliga warns. Analysts said investors may buy shares of banks, consumer goods, agri-based companies and logistic companies that are trading below their book value, analysts said.
They are also sceptical about the prospects of large-cap index stocks that are currently trading below book value, as these stocks are weighed down mostly when business outlook is negative.
Analysts are cautious about the prospects of some big companies whose shares are trading below their book value — Aditya Birla Nuvo is currently trading Rs 1,275 per share lower than book value, HDIL (Rs 63), Sterlite Industries (Rs 272), Indiabulls Real Estate (Rs 116), LIC Housing Finance (Rs 190), MTNL (Rs 103), Reliance Infra (Rs 107).
Analysts said most companies trading below book value may have issues relating to business scale and uncertainty over profit growth in the future. Some companies value their assets at prices higher than market value, resulting in higher price to book value and lower stock price.
Price to book value is a metric to value stocks of companies which have large amount of tangible assets in their balance sheet. As per textbooks, if a company is trading at a price to book value of less than 1, the company’s assets are either overvalued or it is earning poor return on its assets.
“PBV less than 1 is definitely a good buy, but then it should be taken on a case to case basis. It should not be the lone criteria to buy a stock,” said Saurabh Agarwal, director, Kennis Group, a Mumbai-based investment consultancy, adding, “Stocks with low market float also tend to trade below book value.”
In other instances, companies with lower corporate governance may have lot of cash — the benefit of which will only be going to promoters. This cash component will not reflect in stock price. Book value is an ideal metric in case of companies that are in investment phase as it can estimate potential earnings of a company for several quarters ahead, analysts said.
Friday, February 4, 2011
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