Interpreting Middle East Economic News and Analyzing Market Trends

Archive for February, 2013

What happened to the Arab Spring?

More than two years since the Arab Spring began in Tunisia and spread across the Middle East and North Africa, one has to ask, what has it accomplished?

   

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Here’s one of the downsides to owning physical gold…

Goldbugs love gold.  They love looking at gold, they love touching gold, but most of all they love taking physical possession of gold.  Holding a gold certificate or any other piece of paper showing their gold ownership means nothing.  As the saying goes, if you can’t touch it, you don’t own it. Well, here’s an interesting story out of Dubai…

 

A man who arrived in Dubai from Mali carrying six suitcases packed with 210kg of gold plates was robbed while checking into a Deira hotel, a court has heard.

Five Nigerian men on Thursday confessed to the crime of stealing the 45kg suitcase of gold worth Dh8 million ($2.2 million).

The Malian man told prosecutors he arrived in Dubai at 3am on December 21, 2012 with two other friends.

He claims he was followed from the airport by the Nigerians. As he was standing at the reception of his hotel to check in, he said he was shoved from behind and a man grabbed the suitcase and ran from the hotel.

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The hottest market nobody is watching – the Dubai Financial Market

Headlines were made around the world when the Dow Jones Industrial Average (DJIA) broke above 14,000 recently reaching a five-year high.  The Japanese market has been making headlines recently as well after the new government pledged to fight the country’s 20 plus years of low growth and deflation.  Headlines aside, what has been the performance of these markets?  So far this year (up to Feb 20), the DJIA is up 6.3% and the Dow Jones Japan Index is up 4.6% in dollar terms.  In yen, the market did better since the yen has been depreciating with the stock market’s appreciation.  This leaves little upside for non-yen investors.

 

One market that has been out of the spotlight is the Dubai Financial Market (DFM).  Since the beginning of the year, the DFM index has gained 22%… in dollar terms (note: the UAE dirham is pegged to the dollar).  See the chart below for a visual comparison of the DFM versus other indexes.

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Dubai government sees no reason to privatize DEWA and give up dividends

Dubai has no plans to privatize the Dubai Electricity and Water Authority (DEWA), the public utility.

 

The Dubai government has no intention to privatise the electricity and water sector, Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance and President of Dubai Electricity and Water Authority (Dewa), told the media on Tuesday.

“If we allow privatisation for this sector the prices of electricity and water would be more expensive,” Shaikh Hamdan said.

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Cash rich Qatar looks for distressed assets as cash poor countries line up

Today, Qatar announced the launch of a $12 billion fund to invest in distressed assets around the world.  The country has been investing in top luxury brands over the past couple of years.  It is currently the largest shareholder in Tiffany & Co. according to Reuters, owns Harrod’s department store and has a stakes in LVMH.  Going after distressed assets seems like a departure from the previous strategy.  Here’s more from Bloomberg:

Qatar said yesterday that the new fund, to be called Doha Global Investment, will receive about $3 billion in assets from Qatar Holding LLC, a unit of the country’s wealth fund, and seek to raise the same amount in a share sale to nationals. The Persian Gulf emirate is using wealth from the world’s third- largest gas reserves to acquire assets across the globe.

“Given current low global rates, tight spreads and low volatility, only terrible or European companies now fit in the distressed bracket with significant capital already chasing distressed assets,” said Emad Mostaque, a strategist at Noah Capital Markets in London. “It doesn’t look like an ideal area for investment in the near future.”

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