Archive | June, 2014

Dubai Stock Exchange collapsed with over 6%

Dubai Stock Exchange collapsed with over 6%

Dubai Stock ExchangeThe shares of Dubai construction and building company Arabtec still dropped sharply on Tuesday as their price dropped by over 10% for the third consecutive session. After that the Dubai Stock Exchange collapsed with over 6%. This resulted in many aggressive sales of the stock market the emirate. The benchmark DFM deletes 6.68% to 4,009.01 points in afternoon trading in the Middle East. Furthermore Arabtec and many other components took down, including Union Properties, Drake and Scull and even exchange operator Dubai Financial Market.

Arabtec hit saga about the credibility of the entire market, says Arabian Business. Investors are likely to get their profits before the summer lull. Leading Dubai index is still nearly 19% up from the beginning of the year.

“Overall, the sentiment is still negative and auctions continue”, said Julian Bruce, an expert at EFG-Hermes. Dramatic decline in the capitalization of Arabtec came after a series of bad news about the company. It all started from the major shareholder Aabar Investments, which shrunk its stake in the company from 21.57% to 18.85% in the period June 8 to 11 Subsequently, last week the CEO of the company Ismaik Hassan resigned, which led to a significant number of further departures and dismissals of employees.

By Arabtec indicated Tuesday that they fired a “small number” of employees to improve productivity and reduce costs. The company added that all its actions were aimed at protecting the rights of shareholders.

Most of the leavers were employed by Ismaik or perceived as close aides. But the move raises questions about whether the cuts will hamper the ambitious expansion plans of Arabtec, which include multibillion USD deals in the UAE, Egypt and other countries.

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CEZ Group received 100 million EUR compensation by Albania

The Czech energy company CEZ Group signed an agreement with the Albanian government and will receive compensation in the amount of 100 million EUR for the abstracted license to operate a grid of the country. The license was revoked in early 2013 and in the autumn the company filed a claim in the Arbitration Court in Vienna asking for compensation for investments made in the country. Czech company claimed damages worth 200 million EUR.

“I define agreement as a success because we will receive the funds much earlier and there is no need to wait several years for the arbitration proceedings”, said Executives and Chairman of the company Daniel Benes.

So far CEZ Group has received compensation of 4.5 million EUR. This amount will be added another 95.5 million EUR, Albania will have to pay in installments until 2018. The agreement must be approved by the government and parliament in Albania, as well as the governing bodies of CEZ Group. The Czech company entered the Albanian market in 2009, buying local electricity distribution company for 102 million EUR. The license of the concern was withdrawn in early 2013 after a dispute with the Albanian government because of interrupted power supply. Of CEZ claimed in turn that the reason for the suspension of supplies are unpaid bills.

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France seeks support from European partners for BNP Paribas

France seeks support from its European partners to try to limit the fine to BNP Paribas for violating US sanctions against Iran and other countries. The French Government punishment for the bank was disproportionate to the probability financial institution to cause systemic risk to the sector. The President of France Francois Hollande had discussed the issue with German Chancellor Angela Merkel. The French ministers met with representatives of other governments, including the UK, speaking on condition of anonymity.

The diplomatic maneuvering occurred against a backdrop of the envisaged agreement between BNP Paribas and the US government. Banks are expected to pay a fine in the amount of 8-9 billion USD, and agreed to be divided by number of employees. Some of them alone has already left the bank.

Washington insists, moreover, be temporarily “frozen” the French bank transactions in USD. The negotiations between the two parties on exactly how can this happen without affecting the vast trading network of the bank in the United States. One of the reasons that the U.S. Prosecutor calls for more severe measures against BNP compared to fines for other banks (eg HSBC), is the large amount of transactions carried out by BNP, which violate the sanctions imposed by Washington. According to the US authorities, the French bank was founded regional banks in Africa and the Middle East to cover such transactions. The Bank currently denies these accusations.

Paris warned recently that the case of BNP Paribas could harm negotiations between USA and the European Union (EU) on the transatlantic trade agreement. According to the source of the issue of the fine French bank is widely discussed by European regulators and central banks. Some financial institutions are concerned that the ECB may reflect a possible risk of such sanctions and the results of these stress tests.

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Asian indexes ended the session on green

Asian indexes ended the session on green

Asian indexesAsian indexes ended the session on green territory despite the tentative first hours. However, the gains were modest as investors continue to vigilantly monitor what is happening in Ukraine and Iraq. The activity was stimulated by positive news about the U.S. economy yesterday. The Japanese Nikkei 225 index closed with a slight increase of 0.05% of 15,376.24 points. The Chinese Shanghai Composite finished with a growth of 0.47% reaching a value of 2,033.93 points. The Hong Kong’s Hang Seng added 0.33% to 22,880.64 points and regained the drop from yesterday. The Australian S&P/ASX 200 is down with 0.38% today to 5,432.78 points. The South Korean benchmark KOSPI rose with 0.98% to 1,994.35 points, which is the best performance for the index in two weeks.

In Japan, it is expected the press conference of Prime Minister Shinzo Abe, during which he will talk about structural reform of its “third economic boom”. An unprecedented quantitative easing program, Bank of Japan, launched to revive the economy of the country of the rising sun, the risk of failure. Suntory Beverage shares rose nearly 3% after parent company Suntory Holdings Takeshi Niynami appoint a new president - the first leader outside the ruling family. Companies in the real estate sector is not performed satisfactorily. The shares of Mitsui Fudosan fell with 2% to trade in the new issue of securities. The movement in the share price of the company carry on the rest of the sector. The capitalisation of Sumitomo Realty and Development, for example, declined by 0.6%.

In China, the manufacturers of liquor Kweichow Moutai and Sichuan Swellfun added 4% and 10%, respectively, to its market capitalization, after the news that local governments have provided additional support for the sector. The official newspaper of the Communist Party of China - The People’s Daily, criticized those who talked about “weakening outlook” to the real estate market in the country. The newspaper sees “ulterior motives” behind the actions of speakers. The article charges have to Morgan Stanley, Societe Generale, Nomura, UBS and others.

Market in Australia shares trader Country Road clothing rose by 17% after the South African company Woolworths has offered to buy 12% stake billionaire Solomon Lew.

New Zealand company Kathmandu wiped 11% of the value of their shares after the trader has reported a 15% drop in annual profit.

In South Korea, Samsung Electronics shares rose 1.7%, those of LG Display - 3.5% and Hyundai Motor - 2.3%.

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European production decreased in June

European production decreased in June, as the manufacturing activity dropped significantly. The PMI index for the manufacturing sector in the currency bloc fell to 51.9 points, compared to 52.2 points a month earlier, while the market expectations were for a slight decline to a level of 52.1 points.

The data for June closed the strongest quarter in the last three years. The problem, however, is the second consecutive monthly decline, which signals that the recovery lost momentum in the Eurozone. The measure remains above 50 points separating expansion from contraction for the 12th consecutive month.

Meanwhile, the services sector reported a slight deterioration in June, as the meter retreated to 52.8 points compared to 53.2 points in May. The market was staked at the level of 53.3 points in six months.

Earlier in the day did the production and service sectors in France remained red territory for the second consecutive month, prolapse below the market consensus. The activity in the French manufacturing sector dropped to six-month low of 47.8 points in June, compared to 49.6 points in May. When did PMI Services index retreated to 48.2 points from 49.1 points in the previous month. Analysts had expected an increase to 49.5 points.

Meanwhile, the in Germany the production get off the 7-month low, while services declined with the progress in the previous month, 35-month high. The PMI index for manufacturing sector in the Eurozone leading economy rose to 52.4 points from 52.3 points in May, while the service retreated to 54.8 points from 56 points.

However, both measures and remained above the threshold of 50 points respectively 12th and 13th consecutive month, signaling a continuing recovery in the largest economy of the European Union.

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Asian indexes started the week without clear direction

Asian indexes started the week without clear direction, as most of them closed the first trading session of the week with mixed results, despite the optimistic data from China and the Friday record on Wall Street.

Earlier on Monday does manufacturing activity in China saw its first expansion in the last half year in June, sending a signal of a possible stabilization of the second largest economy in the world after months of stagnation. The index of purchasing managers rose to 50.8 points compared to 49.4 points in May. The 50 points separates expansion from contraction.

The Japanese benchmark Nikkei 225 added 0.13% to 15,369.28 points, reaching its highest level since January 29th. The investors’ sentiment was upbeat on the eve of the announcement of additional measures that the government of Shinzo Abe will implement as part of his “third boom” of economic recovery. The consumer electronics manufacturers reported significant, as the capitalisation of Olympus expand by 5%, while Mitsumi Electric added 4%.

The Australian benchmark S&P/ASX 200 rose with 0.62% to 5,453.30 points. The support came from data from China and rising commodity prices. Trading contracts on the Shanghai copper rose to a four-month high, which raised the capitalization of Rio Tinto and Fortescue Metals of 2.5% and more than 4%.

In China, the Shanghai Composite closed in negative territory, losing 0.11% to 2,024.36 points. |The infrastructure companies were among the biggest losers, as Daqin Railway and China State Construction erased more than 1%.

The Hong Kong’s Hang Seng Index reported the strongest decline among the leading markets in the region, prolapse of 1.49% to 22,848.83 points. The price of shares of automaker Great Wall Motor slid nearly 4 percent after weekend news presented for changes in the management.

The South Korean KOSPI ce recover after reached the lowest level since last week, adding 0.35% to 1,974.92 points. The technology giant Samsung Electronics headed the growth, as its shares rose with 1.6%.

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France acquired 20% of Alstom

France acquired 20% of Alstom and is the next obstacle in front of General Electric (GE) for acquisition of the French manufacturer of equipment for railway transport and energy. the Government of France announced that it bought 20% of the company from its main shareholder - the construction giant Bouygues SA. The move will certainly provide the French government last word on decisions in the company, including personnel, regardless of its new owner.

So far, the price, which the government of the President Francois Hollande will pay for 20% of Alstom, is not known. On Saturday, the board of directors of Alstom bid approved GE’s acquisition of the company.

The agreement provides the American group to sell the French railway business for 825 million USD, and to form joint ventures with 50:50 to business electric network operations wind energy business and nuclear turbines.

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Gold futures rose over 3% for week

Gold futures rose over 3% for week

Gold futuresThe gold futures rose over 3% in the previous week, reaching its highest level in the last more than two months amid signs that the US Federal Reserve will maintain historically low interest rates for a significant period of time. The yellow metal for delivery in August rose to a session high of 1,322.50 USD per ounce - the highest level since April 15th, before it retreated slightly to 1,316.60 USD per ounce in late trading on Friday.

Measured against a week earlier, the price of the asset is increased to 3.22%, which was the biggest weekly gain in three months. Today, the precious metal cheaper by 0.2% to 1,314.40 USD per ounce. Earlier in the week the Fed reduced its purchases of government and mortgage bonds with new 10 billion USD per month to a total of 35 billion USD. The main reason was a series of signs that the US economy continues to improve.

However, the central bank also lowered its forecast for economic growth this year to 2.1-2.3% of the previously estimated 2.8-3.0% due to “unforeseen contractions” in the first quarter as a result of an unusually harsh winter. Fed finds and recent increases in inflation and reducing unemployment. President Janet Yellen noted, however, that will not be following specific formula according to which interest rates start to rise at some point.

Meanwhile, the investors were watching the events in Iraq after the conflict between Sunni Islamist insurgents and Iraqi army forces continue in full force. US President Barack Obama said Thursday it would send 300 soldiers specialized and stressed that he was ready to take “targeted” military action if the circumstances warrant it.

After the gold futures growth the silver for July delivery gained also 1.46% to 20.94 USD per ounce, which is the highest level since March 18th, Friday. The contracts rose by 6.16% during the week, reaching its biggest weekly gain in almost four months. The copper for July delivery even added 1.4% to 3,121 USD per pound. For the week, the red metal rose 2.94%.

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Central banks reduced their exposures in long-term debt

The Central banks plan to reduce their exposure in the long-term debt in an attempt to protect themselves from losses after the US Federal Reserve ended its program of buying assets. The move increases the risk of volatility in global markets. The majority of respondents in the survey managers who control assets worth 6.7 trillion USD, or more than half of the total reserves of central banks indicated that they are considering to adjust their portfolios. The move comes amid expectations that the UK and USA will become the first most developed countries to resort to rising interest rates.

The May research among the 69 heads of the world central banks, has shown that many of them have already begun to diversify their funds in riskier assets such as equities. The trend looks set to continue after just under half of the respondents indicated that they would have taken to invest in stocks or exchange-traded funds (ETFs). Others indicated that they would shorten their bond portfolios. Once the global economy showed some signs of recovery, the Fed and other central banks of the developed world began to consider tightening monetary policy. Prospects for higher interest rates again raised fears that the 30-year boom in the bond market is coming to an end and that prices will fall in the coming years.

As part of its program of quantitative easing over the past six years, the Federal Reserve bought US private and public debt totaling 2 trillion USD. However, incentives are expected to be phased out this fall, after the institution has taken several monthly contraction of its large-scale asset purchases. Although the Fed is the largest holder of the US debt, the situation is being monitored closely by other central banks that invest a significant share of their reserves in bonds of the largest economy in the world.

According to the International Monetary Fund (IMF) at the end of last year, more than 62% of the investments of the central banks were in USD assets. Just under a quarter you have set the single European currency - the euro. However, high-yielding currencies such as the CAD, AUD and CNY, have become more attractive in view of the lower return on US government securities.

Signal change in sentiment can look and performance of the capital markets in the world. Since the beginning of 2009 the drafting of MSCI index developed world grew by 150%. The broad US benchmark S&P 500 does extend to an impressive 190%.

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What are the business perspectives in Africa?

The global companies are more and more interested in targeted investment in the sub-Saharan Africa. However, it is not yet certain that the high hopes for the region will materialize. The Frontier Markets Index found that Nigeria tops the list among the most attractive frontier markets, where the major European and US multinationals are interested in pursuing investments in the region. This is the largest economy in sub-Saharan Africa and it is growing very quickly.

Despite the overall optimism, the private sector is not yet aware of when investing in Africa will pay off. The Singapore-based trader of agricultural commodities and food Olam International is present in 25 African countries, having invested more than 1 billion USD in the region. Although the company started business in Nigeria during the late 1989, the analysts are less than enthusiastic about its ability to generate returns on the continent. The Olam’s fertilizer business in Gabon will likely be long-term headache, according to the analyzers. The project, which was released in 2010, was initially expected to be operational by the first half of this year. However, still has not started due to problems related to cost overruns due to difficulties gas.

As in many emerging markets, the business of the continent is hampered by corruption, poor infrastructure, political instability and dysfunctional governments. However, the foreign investment in the continent show no signs of fading. Foreign investment is expected to exceed 80 billion USD this year, according to a joint report by the Organisation for Economic Cooperation and Development and the African Development Bank from May

Overall, Africa has become the second most attractive investment destination in the world last year, staying just behind North America. The continent boasts a growth share of global foreign direct investment to the highest level in 10 years - 5.7%, according to a report EY.

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