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IMF upbeat on GCC’s prospects

admin — Fri, 23 Jul 2010 16:37:29 +0000

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.

The complexity of Afghanistan’s $1T untapped mineral deposits discovery

admin — Mon, 14 Jun 2010 12:12:28 +0000

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.

Look at Libya! From isolation, to the future

admin — Wed, 09 Jun 2010 12:32:29 +0000

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.

GE-Saudi renewed partnership overshadowed by Wall Street folly

admin — Mon, 10 May 2010 03:38:49 +0000

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.

Four reasons why Dubai will survive

LN — Wed, 09 Dec 2009 23:37:26 +0000

1) Actual (Strategic) Value of “Distressed” Real Estate: Dubai World, the government-affiliated parent company under scrutiny, is strapped with an estimated $24B in debt,including $7.3B in deteriorating real estate assets held by their Nakheel subsidiary. On paper, these assets are distressed. In brick-and-mortar reality, they include new-to-market commercial and residential units that help define the Dubai skyline. Vacancy rates are transitory, but quality real estate will return value if strategically positioned as part of a larger initiative or economic plan. A shift, for example, in the commercial focus from financial services and tourism to energy, such as the creation of a solar-powered city, could restart investment and development.

2) Primacy of DP World: Dubai World’s marine and port subsidiary, DP World, maintains deep-water terminals in over 30 countries from the Americas to Asia. It is simply too valuable a commodity (commercially and politically) for the government to abandon to creditors in courts. DP World’s port presence across the globe is central to the UAE’s identity and prestige.

3) Capitalism 2.0: The Dubai crisis was an inevitable and necessary step in the maturation process of an emerging free-market economy. Sheik Mohammed bin Rashid Al Maktoum’s undisciplined approach to development, coupled with investors who naively assumed their bets were covered by state revenues derived from oil, created conditions that plunged the Emirate $80B in debt. Despite the poor timing of Dubai World’s announcement of a standstill just prior to the Muslim holiday of Eid al-Adha, Dubai and its flagship company should emerge from the crisis with a new sense of purpose and propriety. Abu Dhabi will likely take the lead in helping Dubai restructure its financial institutions and reshape its strategic thinking as part of a wider effort to regain a measure of market integrity and public trust.

4) Human Capital: Dubai’s “oil reserves” are its people. They are educated (77.9% literacy rate), able, and multi-lingual with commands of Arabic, Persian, English, Hindi, and Urdu. The serious, sophisticated investor recognizes this as a key attribute in any successful venture. Human capital is the critical “X factor” on a balance sheet.

UAE shoots for stars by acquiring stake in Branson’s space venture

LN — Tue, 04 Aug 2009 12:58:19 +0000

Last week, the Financial Times reported that a UAE state-linked investment firm planned to acquire a 32 percent stake in Sir Richard Branson’s civilian space venture, Virgin Galactic. Aabar investments will initially shell out $280 million, plus another $100 million for development of a satellite launch-capable spacecraft. Aabar will also build a science center and spaceport facilities in Abu Dhabi. The implications of this venture cannot be overstated. They are as vast as space itself. The Virgin-Aabar alliance is perhaps a harbinger of the future for a region where cash-rich nations, backed by solvent banks and sovereign funds, aggressively pursue the next generation of disruptive technologies derived from aeronautical research and exploration. The potential commercial as well as military (i.e. security) advantages of a successful space program could dramatically alter the geo-political landscape of the greater Middle East, creating dynamic economies where stakeholders also share in maintaining regional security.

GE, Bahrain: Shine the light on growth

admin — Thu, 11 Jun 2009 16:50:10 +0000

clipped from finance.yahoo.com

GE inks $500M in power generation deals in Bahrain

The deal reflects the Fairfield, Connecticut-based conglomerate’s increased focus on the Middle East, where demand for electrical power is expanding rapidly as its population and infrastructure boom.

Under the terms of the deal, GE will provide equipment and long-term service to the Al Dur Independent Water and Power Project, which is slated to eventually produce 1,250 megawatts of power. That equals 30 percent of the country’s existing power output.

“The project is an example of the growing trend toward the integration of water and power production at a single site, especially in the Middle East where population and industrial growth rates exceed many other regions of the world,” Joseph Anis, GE Energy’s regional head, said in a statement.

TF21 embraces President Obama’s unequivocal message in Cairo

LN — Thu, 04 Jun 2009 19:37:16 +0000

In a commentary posted on the TradeFlow21 website in advance of President Obama’s speech, we wrote that necessity:

1) demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question

2) requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region

3) dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all

In his long-awaited speech on American-Muslim relations today in Cairo, President Obama responded, arguing that

1) “America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity and a state of their own”

2) “as long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace…conflict rather than cooperation…this cycle of suspicion and discord must end”

3) “on economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries…I will host a summit on entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world”

Thank you, Mr. President. The partners of TradeFlow21 will join you in the cause to build a prosperous, secure Middle East through commerce and trade. Let us now begin our work.

TradeFlow21 Commentary: Will President Obama finally turn the page in U.S. – Middle East relations?

LN — Wed, 03 Jun 2009 16:29:15 +0000

When President Barack Obama delivers his address tomorrow in Cairo to the wider Muslim world, he will do so at great political risk to himself and his administration. But it is a risk that demonstrates the political courage of a first-term president who acts out of necessity, and not expediency.

Necessity demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question.

Necessity now requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region.

Necessity dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all.

For over 60 years, the Middle East, which is comprised of over 20 nations spanning Northern Africa in the west to Southern Asia in the east, has been defined by conflict and oil. This is a new era. Real GDP non-oil growth in the region, which is projected to expand by more than 3.5 percent this year, suggests that Middle Eastern nations are actively pursuing commercial diversification as they seek to become full partners and competitors in the global economy. It also presents tremendous export opportunities for companies who want access to an emerging market of 500 million consumers.

The world is waiting for President Obama to signal a new turn in U.S. – Middle East relations where strategic alliances are built principally on commerce and trade. The partners of TradeFlow21 welcome such a change as both vital and necessary.

Abu Dhabi-Daimler: cash is king, green is good

admin — Tue, 24 Mar 2009 02:15:41 +0000

If not for U.S. Treasury Secretary Geithner’s latest toxic asset rescue p lan — which actually finally tickled the stock market — Abu Dhabi’s Aabar Investments’ $2.66B (9.1% stake) investment in Daimler AG would have been the headline of the day. Instead of “cash for trash,” Aabar and Daimler are investing in R&D in fuel-saving technology. Aabar is now Daimler’s leading shareholder ahead of the Kuwait Investment Authority (6.9%).

Bloomberg reports that Aabar has already transferred the money. Although dilutive, Daimler shores up its balance sheet. Meanwhile, along with return on its capital investment, Abu Dhabi is striving to learn from Daimler’s expertise as it aims to develop its own cleaner energy technologies. Gulf region sovereign wealth has perhaps wisely sat on the sidelines in recent months as it concerns casting more capital at Western banks, but let’s not forget there was also a sizable investment in chipmaker AMD by Abu Dhabi last October.