IMF upbeat on GCC’s prospects

July 23rd, 2010 Posted in Economy, Industrial investment, Regional News | No Comments »

The International Monetary Fund (IMF) said on Wednesday that the GCC member states should plan to exit their high fiscal spending policies in light of their US dollar pegs and exposure to oil cycle volatility, as they have successfully weathered the financial crisis and are poised to continue to grow their economies despite ongoing economic uncertainty. See clip from RTTNews below.
clipped from www.rttnews.com
(RTTNews) - The six-member Gulf Cooperation Council should prepare an exit strategy from current high spending levels, to ensure long term fiscal sustainability, which would be implemented once conditions allow, the International Monetary Fund said Wednesday.
According to IMF, the impact of spillovers from financial developments in Dubai and Greece should continue to have a limited effect on the GCC nations and substantial foreign assets are available to mitigate the impact of new shocks. GCC states include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.
Banks’ capital adequacy ratios remain strong and there are positive indications on profitability.
Further, the IMF said supported by strong fiscal spending and the global recovery, growth is projected to strengthen in 2010. Non-oil growth is estimated to strengthen to around 4.3%. In line with global recovery, oil output is projected to rebound by approximately 4.8% this year.
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Saudi Gold Reserves More Than Double

June 21st, 2010 Posted in Markets | No Comments »

The Financial Times (see hyperlink and clips below) reports that the Saudi Arabian Monetary Agency (SAMA), the Kingdom’s central bank, has disclosed a more than doubling of its gold reserves to 322.9 tons (an increase of US$7 billion at current prices, over its last disclosed level of 143 tons). While the increase may be solely the result of a change to SAMA’s accounting method, the Kingdom possesses more than twice as much gold as previously thought. In recent trading gold has hit unadjusted (for inflation) all-time highs above $1260/ounce. Should sovereign buying of gold continue (India, for instance, has been a big purchaser), and considering that the breaking news of China’s decision to unpeg its currency and thus have a stronger yuan, analysts see more potential upside to gold.
clipped from www.ft.com

Gold prices hit on Monday a fresh record high of almost $1,265 a troy ounce following the revelation that Saudi Arabia, the world’s largest oil exporter, is sitting on more than twice as much gold as previously thought, according to new estimates.

The weakness of the dollar following China’s decision to make the yuan more flexible, gave bullion further momentum, analysts said. A stronger yuan makes the cost of gold for Chinese buyer cheaper, potentially increasing demand. China is the world’s second largest gold consumer, after India. It is also the largest producer.

Analysts said the rise in official gold holdings probably represented an accounting shift rather than fresh purchases. One possibility is that a large fraction of the country’s gold was not considered until now part of the official reserves.

But without an official explanation, analysts were keeping options open. At current prices, the extra gold in Saudi Arabia’s official reserves amounts to $7bn.
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The complexity of Afghanistan’s $1T untapped mineral deposits discovery

June 14th, 2010 Posted in Economy, Industrial investment, News | No Comments »

The New York Times (see image and clips below) reported Sunday that US geologists have discovered nearly $1 trillion of untapped mineral deposits, including iron, copper, cobalt, gold, and lithium. While this is potentially much needed positive game-changing news for the Afghan economy, the NYT cites the cognizance of American officials fearing a ‘double-edged impact’ of the find, referring, for instance, to (1) the possibility of exacerbated instability as the Taliban may elevate its efforts to try and take control of the country, (2) a possible run-in with resource-hungry China, and (3) a lack of mining and basic overall infrastructure (including human capital in both government and industry) in Afghanistan necessary to exploit the deposits — creating the likelihood that meaningful proceeds from any finds are years, if not a decade or two, out. Nevertheless, should Afghanistan somehow manage to arrive at even a modest level of sustained stability, the wheels of commerce will begin to roll and hopefully bring days of ever more peace and prosperity to an impoverished, war-torn country.
clipped from www.nytimes.com


WASHINGTON — The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.


An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and BlackBerrys.


While it could take many years to develop a mining industry, the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.


“This will become the backbone of the Afghan economy,” said Jalil Jumriany, an adviser to the Afghan minister of mines.

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Look at Libya! From isolation, to the future

June 9th, 2010 Posted in Industrial investment, Regional News | No Comments »

In addition to the wealthy Gulf Cooperation Council member states, there are other compelling growth stories, places like Tripoli (Libya), that are soaking up investment capital, particularly in infrastructure projects — the focus of a Financial Times special, see clips below.
clipped from www.ft.com

At a time of global gloom when most governments are tightening their belts, Libya is a rare source of light. The north African oil exporter is splurging on massive building projects in an attempt to make up for 40 years of underinvestment that have left it with poor services and its infrastructure in tatters.
Tripoli, the once-shabby, low-rise capital, is being spruced up with new roads and elegant, modern towers along the waterfront, and cranes dot the cityscape – all part of a drive to build new office blocks, housing and hotels.
“In the development cycle, Libya is sort of where Abu Dhabi was 15 years ago, with the same goals and same initiatives to develop tourism and industry,” Mr Thompson says.
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Qatar’s SWF eyeing Citi -FT

May 26th, 2010 Posted in Financial Services, SWF | No Comments »

Qatar’s sovereign wealth fund (SWF), the Qatar Investment Authority (QIA), is reported by the Financial Times to be interested in buying some of the U.S. Treasury’s 27% stake in Citigroup. Interestingly, while most other SWFs have shied away from bank investments after previously ill-timed ones in 2008, Qatar has fared well, notably from its investments in Credit Suisse and Barclays, according to the FT. QIA has $65 billion in assets, per a ranking of SWF assets on Wikipedia. There appears to be no mention of asset size on QIA’s website. In any event, the principals of TradeFlow21 view QIA’s potential investment as beneficial for all parties, including the capital markets at large.

GCC poised for strong 2010 fiscal position

May 11th, 2010 Posted in Economy, Oil, Regional News | No Comments »

Emirates Business 24|7 reports that strong crude oil prices, currently at around $75/bbl and exceeding Gulf Cooperation Council (GCC) forecasts, will greatly improve members’ fiscal and current accounts. It is debatable whether surpluses will reach the levels of the boom years of the recent past, but it seems certain the situation will be a solid improvement over 2009. Although Saudi Arabia is expected to run a small deficit, this is in fact due to its heavy capital investments, which TradeFlow21 has long recognized as critical to the Kingdom’s economic sustainability and at the same time offering an unprecedented opportunity for U.S. businesses. See clip from Emirates Business below and for more detailed information see hyperlink.
clipped from www.business24-7.ae

Record budget surplus likely for the bloc. Manageable deficit for some members due to public spending. (AFP)
Strong crude prices will bolster the fiscal position in Gulf oil producers in 2010, but some of them could still record a manageable budget deficit because of counter-crisis high public spending, according to analysts.
While the combined budgets of the six-nation Gulf Co-operation Council (GCC) would likely record a surplus, as was the case in the previous nine years, some of them could suffer a relatively small shortfall despite an upsurge in their hydrocarbon earnings, they said. The experts believe four GCC members – the UAE, Kuwait, Qatar and Oman – would record surpluses while the budgets of Saudi Arabia, the largest Arab economy, and Bahrain would remain in a deficit.
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GE-Saudi renewed partnership overshadowed by Wall Street folly

May 10th, 2010 Posted in Economy, Industrial investment, JVs | No Comments »

Less than two weeks ago, General Electric and Saudi Arabia’s Ministry of Commerce and Industry announced that they signed a memorandum of understanding (MoU), effectively reinvigorating their 70-year relationship. It should come as no surprise that GE’s areas of core competence and drivers of future growth — energy, healthcare, transportation, and water — are the same areas targeted as key growth sectors for Saudi Arabia. TradeFlow21 views GE and Saudi Arabia as economic juggernauts: longstanding excellence in industrial know-how and manufacturing in the case of the former, and an agglomeration of capital and capital-intensive investment projects for economic sustainability for the latter. While news of such an MoU bodes very well both for GE and Saudi Arabia, and the global economy at large, unfortunately it was easily overshadowed by ongoing fears of the Greek debt crisis and most recently, the specter of panic selling on Wall Street last Thursday. Nevertheless, the founders of TradeFlow21 remain convinced that the Middle East, and Saudi Arabia in particular, represents both an opportunity and a model for real economic investment.

ICANN approval means big tech opportunity, more in Middle East

May 10th, 2010 Posted in Regional News, Tech | No Comments »

On Friday, the Associated Press reported that ICANN, the California-based nonprofit body which oversees management and assignment of internet domains, approved Egypt, Saudi Arabia, and the United Arab Emirates as the first non-Latin domain names. While not readily apparent to the Western eye, make no mistake, this is big news for the Middle East and represents serious opportunity particularly in the e-commerce and relevant hardware spaces. Overall, the ICANN approval has profound implications for the region given the comparatively fewer number of people connected to the internet. See clip of AP report below.
clipped from www.google.com

Domain names in Arabic for Egypt, Saudi Arabia and the United Arab Emirates were added to the Internet’s master directories on Wednesday, following final approval last month by the Internet Corporation for Assigned Names and Numbers, or ICANN. It’s the first major change to the Internet domain name system since its creation in the 1980s.
“Introducing Arabic domain names is a milestone in Internet history,” Egyptian Communication and Information Technology Minister Tarek Kamel said in a statement. “This great step will open up new horizons for e-services in Egypt” as well as boosting the number of online users and enabling Internet service providers to enter new markets by “eliminating language barriers.”

ICANN, which cleared the way for non-Latin suffixes in October after years of debate, said the Mideast shows growth potential, with just a fifth of the populations online, on average.
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Understanding trade myths in order to avoid a trade war

April 12th, 2010 Posted in General, Trade | No Comments »

TradeFlow21 managing partner Steven Towns recently reviewed Trade Myths: Globalization has left trade balances behind, a profound book weighing in at all of 75 pages with an additional ten pages of charts that bust the same myths already exposed in prose. The author, Dr. Enzio von Pfeil, is a Hong Kong-based investment adviser and fund manager. A regular in the financial media in Asia, he is a former chief regional economist at leading London-based investment banks in Hong Kong. Enzio has long studied matters related to trade, and fortunately for those looking for perspective not readily found in the mainstream media, particularly in the U.S., he has penned Trade Myths. Of the five trade myths he discusses, in each instance, Enzio explains how misguided and anachronistic beliefs about trade could lead to an impaired U.S. economy with a simultaneous jump in interest rates having widespread repercussions. The book review begins below followed by Q&A. Read the rest of this entry »

Exports a bright, blind spot for the U.S.

February 5th, 2010 Posted in Economy | No Comments »
The MarketWatch clip below details some of Commerce Secretary Gary Locke’s key points from his speech at the National Press Club. The partners of TradeFlow21 couldn’t agree more on the importance of rejuvenating exports. Our stance is that we are less interested in debating about whether exports can be doubled in five years (why waste time over a number) and more interested in getting to work.
clipped from www.marketwatch.com


WASHINGTON (MarketWatch) — Exports have been “an economic blind spot” for the United States government, allowing other countries to chip away at America’s international competitiveness, said Commerce Secretary Gary Locke on Thursday.


In a speech at the National Press Club, Locke said expanding exports is now “front and center” for the Obama administration, echoing the president who called for a doubling of American exports over the next five years in the State of the Union speech last week.

Locke said less than one-percent of America’s 30 million companies export at the moment.


The commerce secretary said the White House would not focus on one sector at the expense of others. Doubling exports is “an aggregate goal,” he said.
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