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The Buzz

Morning briefing: 31 Jan 2013

by Executive Staff January 31, 2013
written by Executive Staff

Economics

Egypt’s bourse recovered on Wednesday from a four-week low as bargain hunters shrugged off political unrest.

More from Reuters

 

The International Monetary Fund called on Lebanon to implement deeper reforms as Finance Minister Mohammad Safadi met US officials in Washington on Wednesday.

More from The Daily Star

 

A 3-D survey has shown that gas reserves off Lebanon’s southern coast may be larger than previously thought.

More from The Daily Star

 

Israel has announced it will pay US$100 million owed to the Palestinian Authority, billing it as a "one-time" response to a Palestinian economy struck by falling foreign aid and Israeli obstacles.

More from The National

 

The United Arab Emirates (UAE) pledged on Wednesday to provide $300m to help Syrian refugees made homeless by nearly two years of conflict, the official WAM news agency reported.

More from Arabian Business

 

Companies

Research In Motion Ltd unveiled the long-delayed line of smartphones it hopes will put it on the comeback trail on Wednesday but it disappointed investors by saying U.S. sales of its all-new BlackBerry 10 will start only in March.

More from Gulf Business

 

Iran's Bank Mellat plans to sue European Union governments for damages after a European court ruled to annul sanctions against the company, lawyers said on Wednesday.

More from Reuters

 

More than 652,000 sick notes were issued in Abu Dhabi emirate last year, almost 12 times more than the number recorded the year before, after a stringent electronic system was introduced for approval of leave.

More from The National

 

Dubai-based Tamweel has announced  that it has repaid in full a $300 million five-year Sukuk, which matured earlier this month.

More from Gulf Business

January 31, 2013 0 comments
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Finance

Investment ideas: February 2013

by Maya Sioufi January 31, 2013
written by Maya Sioufi

On January 1, news anchors were switching between covering the New Year’s celebrations from cities around the world and analyzing the United States politicians’ tackling of the fiscal cliff — the combination of tax cuts and government spending which were due to expire the day before. Many were hoping 2013 would bring an end to the market turbulence of the previous 12 months. For this month’s investment recommendations, Executive sat with Raed Khoury, general manager at Cedrus Invest Bank, and Mark Daher, general manager of Forex Capital Markets MENA.

Raed Khoury

> Favorite asset classes in 2013? Khoury expects 2013 to be more challenging than 2012 from the markets’ perspective. After a solid performance for fixed income in 2012, he no longer recommends exposure to this asset class as “their yields are so low and we are starting to reach a bubble in fixed income.” He sees opportunities in high-yield corporate fixed income and is looking to launch a fund specialized in this asset. He also recommends selectively investing in US equities that he expects to increase by another 10 to 15 percent this year, and favors cyclical sectors. Alternatively, he recommends selling ‘put options’ — right to sell at a specified price at a specified time — on “whatever we believe are good equities.”

> Key concerns? His chief concern is political risk in the Middle East and the psychology of investors, as they are still very reluctant to buy equities. Khoury, however, believes that a large amount of liquidity will find its way into equities. With retail investors no longer interested in this asset class — having been burnt in 2008 — it is an opportunity for other investors to come in, given that “you have to follow institutional investors and when retail comes in you should sell,” he adds.

> MENA thoughts? Khoury is not yet ready to start heavily investing in the region but is looking into opportunities, mainly in Iraq and Saudi Arabia.

> Opportunities in Lebanese securities? Khoury believes Lebanese banks would be good investments as they are trading very cheaply. He also likes Solidere and believes that the potential upside outweighs the downside risk.

> Top investment ideas? Caterpillar, the world’s largest maker of construction and mining equipment; Nestle, the world’s largest food company; and Microsoft, the world’s biggest software maker.

 

Mark Daher

> Time to buy the markets? Daher does not believe turmoil in America is behind us yet. “In the beginning of March, the US will hit the debt ceiling again and you will have the fiscal cliff all over again.” Having said that, Daher would be buying US equities that he expects to end on a higher note over the next quarter as the debt ceiling is dealt with. “As you saw with the fiscal cliff, at the last minute, they kick the can down the road,” he adds.

> Favorite regions? Daher favors the US markets and specifically the US housing market. “When the housing market picks up everything picks up; it’s one of the main indicators of the US economy,” he says. As for emerging markets, he would invest in India for its limited inflation, and gas-abundant Russia for the prospects of a higher gas price.

> Europe? Daher would shy away from European government debt despite the attractiveness of the yields — with Spanish debt offering around 5 percent (as Executive went to print) — as he expects reform implementation to remain a key risk for investments in Europe. If he had to deploy capital in Europe, he would favor the acquisition of some cyclical sectors such as energy.

> Favorites assets? Daher favors US equities over fixed income and within equities, he is bullish on financials, especially mortgage origination and servicing companies, as well as development companies. As for metals, he is very bullish on gold and would invest in gold equities this year given their underperformance relative to gold price, as well as silver. Given his bullishness on gas, he also recommends acquiring Russian company Gazprom, but warns that it comes with Russia’s political risk. “If [Russian President Vladimir] Putin wakes up tomorrow feeling like he wants to own Gazprom, he will”. As for foreign exchange, he would short the Japanese yen following the appointment of a new Japanese government elected on a campaign to weaken the yen, adding “it might end up being one of the trades of the year.” (Daher’s comments were made prior to the Japanese government approving a $116 billion economic stimulus package on January 10, which weakened the country’s currency.)

> Top investment tips for 2013? Buy gold and silver, short the yen and gain exposure to the US housing market.
 

January 31, 2013 0 comments
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The Buzz

Morning briefing: 30 Jan 2013

by Executive Staff January 30, 2013
written by Executive Staff

Economics

Israel's central bank governor, Stanley Fischer, has announced that he will step down effective June 30.

More from the Wall Street Journal

 

Gasoline prices in Lebanon have risen for the ninth week in a row.

More from The Daily Star

 

Egypt’s pound weakened further against the dollar at the central bank’s foreign exchange auction Tuesday on worries that turmoil on the streets could further delay a long-awaited IMF loan.

More from Reuters

 

Most Gulf Arab oil exporting countries’ budget surpluses will shrink this year when heavy government spending and lower crude oil prices trim their economic growth rates, a Reuters poll has suggested.

More from Reuters

 

Companies

The wealthy Gulf state of Qatar pledged on Tuesday to invest up to 1 billion euros ($1.34 billion) in Greek companies, money which could help Greece recover from its debt crisis.

More from Gulf Business

 

The Lebanese Cabinet has agreed to extend the operation licenses of touch and Alfa mobile companies for a maximum of one month to pave the way for a new tender.

More from The Daily Star

 

High net wealth investors should be looking to again increase the risk of their portfolios, satisfied the worst of the global financial crisis is over, JP Morgan private banking EMEA CEO Pablo Garnica has said.

More from Arabian Business

January 30, 2013 0 comments
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New hope for Palestinian unity

by Ahmed Moor January 30, 2013
written by Ahmed Moor

Factional divisions have existed among the Palestinians for as long as they’ve been politically active. Movements have developed, splintered and adapted, producing a diverse set of representational choices in the struggle against Zionism. Yet the contest between Hamas and Fatah lies well beyond the usual range of ideological differences. It is a long animosity, rooted in the early nineties, that has resulted in armed conflict between the factions.

Since 2007, a prolonged division has undermined any successful strategy that might have been mounted in opposition to Israeli apartheid. But now the Palestinians appear ready for rapprochement. A fundamentally altered regional landscape has combined with dwindling American influence and a moribund negotiations track to yield the best environment for reconciliation in five years.

See also: Israel vs. Gaza: Goliath vs. David

No end to injustice

For a long time Fatah leader and Palestinian Authority President Mahmoud Abbas could rely on the support of former Egyptian President Hosni Mubarak in his effort to repress Hamas — a required condition of the negotiations process with Israel. But the Egyptian revolution deprived Abbas of critical support at an important time. The negotiations track he had committed to with Israel seemed stale and counterproductive even to stalwarts of the two-state solution, especially after Israeli Prime Minister Benjamin Netanyahu rebuffed American President Barack Obama’s best efforts at restarting talks.

Aggressive settlement growth and the total isolation of Jerusalem by Jewish colonies illustrated the contempt with which the Israelis regarded the negotiations. And while Abbas could attempt to ignore or downplay the message, critics from within his party and Palestinian society more broadly could not.

Abbas’ frustration with his position became evident when the normally deferential leader bucked his American patrons last year at the United Nations. The successful petition by the Palestinian mission to the General Assembly for upgraded observer status was as much an expression of the Fatah leader’s limited options as it was an attempt to prod the Israelis and Americans into re-engaging with the Oslo process his party had invested so much in.

The bid — which was popular among Palestinians — coincided roughly with an Israeli war that killed 400 Palestinians in the occupied Gaza Strip. Hamas withstood the onslaught and exacted a greater psychological cost than ever before from the Israelis through the use of longer-range missiles that targeted Tel Aviv. The result was that it found its public profile enhanced alongside that of Fatah.

When the Israelis responded to Fatah’s diplomatic maneuver at the United Nations by declaring new plans for building 3,000 settler homes in East Jerusalem, Fatah’s rationale for not implementing a deal with Hamas evaporated. At the same time, persistent Egyptian and Qatari pressure for a genuine reconciliation finally began to generate breakthroughs as the Americans faded from the scene.

The clearest sign of a meaningful development in the push for Palestinian unity came in December, when Fatah permitted Hamas to stage a rally in the West Bank.

The celebrations marked both the 25th anniversary of the organization and the perception of a positive outcome after the most recent Israeli attacks on the Gaza Strip. They also marked the first time in years that Hamas supporters could publicly meet in the West Bank with no fear of harassment or worse.

Hamas reciprocated several weeks later when its leaders agreed to permit a Fatah rally in the Gaza Strip. Hundreds of thousands of Fatah supporters showed up, putting to rest the notion that Fatah no longer had a meaningful presence in the Gaza strip.

The two rallies were followed by face-to-face meetings between Abbas and Khaled Meshaal, Hamas’ political leader, in Cairo on January 9. The men reaffirmed their commitment to the implementation of reconciliation agreements that the two organizations signed in Doha and Cairo last year.

They also released a timetable outlining the measures that would be undertaken to move reconciliation along. For instance, the Central Elections, Social Reconciliation and Public Freedoms committees are due to reconvene today. Significantly, the two parties’ adherence to the timetable is to be overseen by a newly-formed committee chaired by Egypt, meaning Hamas and Fatah have agreed to an Egyptian referee.

The split between Fatah and Hamas has been a five-year-long source of individual, factional and national frustration for the Palestinians. New regional developments and within Israel and the Occupied Territories have produced an environment that is more amenable to a genuine reconciliation than ever before. Whether Abbas and Meshaal are moved by that fact — and whether they’re willing to make the most of their opportunity — is anyone’s guess.


Ahmed Moor is a master of public policy candidate at the Harvard University Kennedy School of Government

January 30, 2013 0 comments
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The Buzz

Lebanon’s gender gap

by Benjamin Redd January 30, 2013
written by Benjamin Redd

For at least a quarter of a century, development economists have been documenting the close relationship between gender equality and development: poorer regions tend to have less equality, while richer areas are more egalitarian. Measures of gender equality are thus considered major indicators of economic development by bodies like the United Nations Development Program (UNDP).

In Lebanon’s case, the data reveals an uneven picture of equality. In education, women outpace men at all levels from primary through university. However, this doesn’t appear to translate to the labor force or political representation, where their numbers remain disproportionately low. According to the UNDP, three out of every four workers is male.

Click here or on the picture below to reveal our interactive guide to Lebanon’s gender statistics.

http://www.executive-magazine.com/gender-gap-lebanon-development/

January 30, 2013 0 comments
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The Buzz

Morning briefing: 29 Jan 2013

by Executive Staff January 29, 2013
written by Executive Staff

Economics

The world oil market should remain well supplied in 2013 and OPEC does not need to trim back its oil output, OPEC secretary-general Abdullah al-Badri said Monday.

More from Reuters

 

Islamist militants are suspected of attacking an oil pipeline on Monday in the Algerian region of Djebahia, some 70km east of the capital Algiers, killing two Algerian guards.

More from Reuters

 

Kuwait's parliament has moved closer to approving a law that would write off citizens' debts on interest accrued on loans taken between 2002 and 2008.

More from The National

 

A business delegation from Iraqi Kurdistan mulled strengthening economic ties on Monday with Lebanon’s second-biggest city Tripoli.

More from The Daily Star

 

Jordan will tap the bond market for the first time in more than two years as the nation struggles with a cut in foreign aid, a rising energy bill and an influx of Syrian refugees.

More from Bloomberg

 

Lebanon’s Agriculture Ministry, the European Union and Kafalat signed a grant contract of 3.5 million euros ($4.7 million) Monday for small loans intended for agricultural and rural development

More from The Daily Star                                    
 

 

Companies

Construction permits issued by the Orders of Engineers in Beirut and Tripoli declined 11.7 percent in 2012 compared to 2011, when they also declined 6.8 percent.

More from The Daily Star

 

Abu Dhabi welcomed over 2.38 million hotel guests in 2012, up 13 per cent compared to 2011, and above its target of 2.3 million guests, according to figures released by the Abu Dhabi Tourism and Culture Authority.

More from Gulf Business

 

A delegation from Abu Dhabi's Etihad Airways will meet Indian Commerce Minister Anand Sharma in the next "couple of days," an Indian government statement quoting the minister said, amid speculation that the Gulf carrier is close to buying a minority stake in Jet Airways.

More from Reuters

 

Oman plans to build a 570 million rial ($1.48 billion) medical complex and will invite bids this year to manage construction, a ministry of health official has said.

More from Reuters

 

Emirates Investment Bank has sold its stake in First National Bank for $42 million, leading to notable changes in the shareholder structure of the Lebanese bank.

More from The Daily Star

 

January 29, 2013 0 comments
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Business

The problem with Lebanon’s new job site

by Zak Brophy January 29, 2013
written by Zak Brophy

Are you unemployed? Have you found yourself eyeing up employment opportunities in the Gulf, the US, Europe…anywhere but Lebanon? Well fear not, the Lebanese government’s very own National Employment Office (NEO) has launched a new online job finding service. NEO to the rescue, or possibly not.

Intrigued as to what kinds of opportunities are awaiting Lebanon’s scores of unemployed and underemployed – youth unemployment currently stands at around one in five – I spent an afternoon perusing the English version of the site. I concluded I would have been better off procrastinating on Facebook.

 

See also: Unemployment in the Middle East – an interactive guide

Unemployment in Lebanon – an analysis

Despite dozens of searches into all kinds of bizarre and wonderful employment subcategories – in the Machine Operators and Assemblers category, for example, among the nearly 200 subcategories are jobs including photogravure operator, milk pasteurizer and vinegar maker – I found absolutely no jobs listed. Not one.

So whether your skills incline you towards computer programming or fish farming it would seem you are fresh out of luck. The style of the website was clunky and there was no option to see all jobs in a particular category – meaning the process of finding no jobs was particularly time-consuming.


As this screenshot from www.neo.gov.lb/ shows there are hundreds of sub-sections in which to search for work

 


Now it could be that the website isn’t fully functional yet – in which case you have to question the value of telling the media that it was. It could also be that the site is operational and Executive’s staff are not tech-savvy enough to work it out – if that’s the case then it’s hardly user-friendly. But it could also be that the whole website is set up to be a metaphor for the country’s economy – lots of promise but ultimately no jobs.

This online adventure, four years in the making by the International Labor Organization and NEO (with funding from the Canadian International Development Agency), is in principle a good idea. Increased communication between employers and the workforce – and an ease of access to labor market information – undoubtedly greases the cogs of the employment machine. Lebanon, however, is in need of more than just a smudge of axle grease.
 

But nomatter what you enter, the results are always the same

 


We are all versed in Lebanon’s great promise: a highly skilled and educated work force, a robust and well laden banking sector, a geographical and cultural juxtaposition between the Middle East and “the West” and, of course, sun, sea, mountains, and great food. But a damaging combination of structural imbalances, corrosive politics and decrepit infrastructure ensures that the departure lounge at Rafik Hariri airport remains the most promising destination for so many of Lebanon’s graduates.


The economy is highly dependent on massive inflows of capital especially in the form of petro-dollars from the Gulf and remittances from the Lebanese diaspora. Among the many affects of this is an upward push on the prices of non-tradable goods and services, which only serves to make life more unaffordable and domestic industries less competitive.

What is more, as money flows into the final stages of production and distribution, which are predominantly low value-added, this is where jobs are also created. The preponderance of low paid and low skilled jobs does little to nurture Lebanon’s domestic workforce as they are often over qualified and will in most cases be undercut by imported workers.

A mixture of political obstructionism, myopic policy-making and chronic mismanagement ensure that Lebanon has a critically dysfunctional infrastructure. Whether it is transport, telecoms, Internet or electricity Lebanon consistently fares terribly when compared to other countries of a similar income bracket.

Without serious and comprehensive administrative reform this malaise will only continue. Creating a nice new website may grab a couple of headlines and create the illusion that something is actually being done to tackle youth unemployment. However, right now the only people this site is creating jobs for are its developers and managers, and perhaps a consultant or two.

 

Update 18.29:  A few jobs are now on the site, though they are still incredibly difficult to find.

January 29, 2013 0 comments
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The Buzz

Morning briefing: 28 Jan 2013

by Executive Staff January 28, 2013
written by Executive Staff

Economics

Lebanon’s trade deficit widened 6 percent in 2012 to a five-year high of $16.8 billion as Lebanese fuel imports, which are partially being re-exported to Syria, soared.

More from The Daily Star

 

Egypt's president declared a state of emergency and curfew in three Suez Canal provinces hit hardest by a weekend wave of unrest that left more than 50 dead, using tactics of the ousted regime to get a grip on discontent over his Islamist policies and the slow pace of change.

More from The National

 

Iraqi energy officials have signed an oil exploration agreement with a Kuwait-led group, finalising a deal that was altered to expel a Turkish firm amid worsening ties with Ankara.

More from Sky News

 

Companies

Dubai’s government-run oil company says it has started importing supplies from Qatar and is seeking other sources in apparent moves to replace Iranian crude lost because of international sanctions.

More from AFP

 

Nawras, Oman’s number two telecoms operator, posted a 13.4 per cent drop in fourth-quarter profit, a fourth consecutive quarterly decline, as falling revenue from texts and on-network calls weighed on the bottom line.

More from Gulf Business

 

Lebanon’s Byblos Bank posted a 5.9 percent year-on-year drop in profits in 2012 after allocating $66.7 million in provisions for credit losses.

More from The Daily Star

 

Twitter has started commercial operations in the UAE with the Egyptian advertising agency Connect Ads after tripling the number of users in the region over the past year.

More from The National

 

Commercial Bank of Qatar (CBQ), which is eyeing a majority stake in Turkey’s Alternatifbank, posted a 19 per cent jump in fourth-quarter net profit on Sunday on increased lending, but still trailed analysts’ forecasts.

More from Gulf Business

 

UAE investors in stalled schemes being developed by Hydra Properties were again left frustrated yesterday when the auction of a prime package of land owned by the developer was suspended at the last minute.

More from The National

 

January 28, 2013 0 comments
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Jordan’s apolitical new parliament

by Riad Al-Khouri January 28, 2013
written by Riad Al-Khouri

As violence continued in Syria, Iraq, Egypt, and elsewhere in the region last week, Jordan managed to hold boringly quiet elections for the kingdom’s 17th Lower House of Parliament. These came out as expected, with most of the winning candidates being non-ideological and representing clans. While the king was allegedly seeking a new approach to involve parliament in the naming of the next prime minister and in the formation of the cabinet, the new legislature looks worryingly like its predecessors – largely made up of individuals with few ties to political groups.

The result is a more or less apolitical legislature that will not get in the way of the serious business of ruling the country and preserving its role as a strategic Western ally and asset. A senior regional election-observer summed things up when he told me privately after the results were announced that the regime “got what it wanted.”

The reaction in the country was mute. The few minor post-election riots that did take place were contained via tribal mediation, and the capital Amman was miraculously cleared of campaign posters within three days of the vote – with allegedly 4,100 tons of rubbish thrown away.

Cynics of course might say that it was all garbage from the beginning. For a start, there was blatant gerrymandering of the mostly multi-member constituencies. In these, voters got to elect one person only, resulting in the success of candidates with the larger clan following. The inevitable result was thus a heavy bias in favor of tribal non-ideologues who could be counted on to continue playing the political game as the regime expects.

To help overcome this systemic bias of all previous parliaments since 1993, the outgoing parliament – with the King’s backing – introduced a new National List for the first time. Under this system, 27 individuals were elected based upon national political lines, rather than local constituencies. Despite this, many of these lists were simply the clients of the tribal leaders who head the groupings. These seats ended up being filled by candidates from a score of lists, thus contributing to the fragmentation that will leave the new House of Representatives as putty in the executive branch’s hands (the Senate, the other branch of Jordan’s parliament, is appointed directly by the king, so there are no problems there).

However, the whole exercise was not necessarily bad. The poll was more or less free and transparent, with most people exercising their right to vote without coercion. This was attested to by most of the more than 7,400 local and international election observers who monitored the poll, in addition to several hundred guests from outside the country who included foreign diplomats and other officials.

And even the more cynical among Jordanians couldn’t fail to note the election of a record 18 women – up from 13  – about an eighth of the 150-seat Lower House’s members. Fifteen of these won through the women’s quota already built into the election law in previous polls, two won by direct competition in the 108 constituency seats, and one other won via National Lists, eight of the winners having had previous parliamentary experience. In Jordan’s current situation, this small step forward by and for women is good.

Despite an electoral system that amplifies family, tribal and national divisions, limits the development of a true legislative body, and challenges the stated aim of encouraging full parliamentary government, the overall exercise was positive compared with the 2007 and 2010 elections.  

So, as foreseen in the government’s plans, Jordan’s “reformist” tale is boring the local audience with promises of stability, rather than titillating them with hints of major change. Yet, the current Jordanian crisis – like that of the other countries of the region – is an existential one, so this tinkering with the current system may eventually not work. As the current regional situation deteriorates, Jordan could come under more serious strain; in that case a business-as-usual attitude as exemplified in these elections won’t be enough to save the country’s political system.

 

Riad al Khouri is a Jordanian economist and a principal of DEA Inc, in Washington DC

January 28, 2013 0 comments
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Finance

Understanding Lebanon’s stimulus package

by Joe Dyke January 28, 2013
written by Joe Dyke

Lebanon's economy and particularly its real estate sector are in need of a boost, and so the Banque du Liban (BDL) – the country's central bank – have proposed a stimulus package.

On January 14, 2013, BDL issued Intermediate Circular 313, with the aim of pumping an extra LL2,200 billion ($1.46 billion) into the economy, yet the plan has received little meaningful analysis. 

Click here or on the picture below to see Executive's interactive guide to the package.

January 28, 2013 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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