Gold prices may reach new high in 2013

Updated 07 December 2012
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Gold prices may reach new high in 2013

LONDON: BNP Paribas cut its gold price forecast for 2013, citing cautious market sentiment, and sees prices dropping in 2014, which would be the first annual decline in 14 years.
“Our downward revision (for 2013) is largely due to mark-to-market considerations rather than a change in our fundamental view,” analyst Anne-Laure Tremblay said in a note to clients.
The analyst said gold’s performance was disappointing in the last two months as the metal failed to benefit from the absence of extreme episodes of risk aversion, US Federal Reserve easing, or seasonal demand in India and the West.
Tremblay still expects gold to achieve a new record high in 2013 due to further monetary easing, less tail risk related to a breakup of the euro zone, and ongoing support from physical demand.
BNP lowered its 2013 gold price forecast to $ 1,865 per ounce from $ 1,900. The bank expects gold prices to average $ 1,780 an ounce in 2014.
“Fundamentals of the precious metal will turn progressively more negative (in 2014) as the market starts to anticipate a withdrawal of monetary easing measures in line with improving economic growth,” the analyst said.
“The extent of the decline will, however, be limited as gold will continue to attract investor flows thanks to its diversification and safe haven properties.”
Gold prices steadied above $1,690 an ounce yesterday, as buyers remained on the sidelines after the European Central Bank left rates unchanged as expected, and on uncertainty over negotiations to avert a US fiscal crisis.
Confidence in gold has ebbed this month after it failed to push above $ 1,730 in November. A weak technical picture helped push prices to a one-month low on Wednesday, taking them below their 100-day moving average for the first time since August.
Spot gold was at $ 1,692.91 an ounce at 1303 GMT, little changed from $1,693.41 an ounce late on Wednesday, while US gold futures for December delivery were up 60 cents an ounce at $1,694.40.
The euro was little changed against the dollar after the European Central Bank kept interest rates on hold at 0.75 percent as expected by most market players.
Buyers are awaiting direction from non-farm payrolls data today, and next week’s US Federal Reserve policy meeting, as well as clearer signals on how the US will deal with negotiations over its upcoming “fiscal cliff.”
That refers to the possibility that a $600 billion package of tax hikes and spending cuts due to kick in in the New Year could push the world’s biggest economy back into recession.
“We have the ECB decision today, with some (talk) of Spain applying now for financial help, and furthermore we have the Fed decision,” LGT Capital analyst Bayram Dincer said. “Also, some people are positioning for year-end, profit taking. All of this is adding to negative sentiment in the gold market.”
The ECB is wary of taking any action that could see the euro zone’s governments soft-pedal budget-consolidation efforts. That puts the onus on Spain to ask for a full bailout before the ECB can intervene and buy Spanish sovereign debt.
Gold priced in euros slipped into oversold territory after falling nearly 2 percent this week, posting its biggest one-day decline in six months on Wednesday and touching its lowest since mid-July at 1,288.85 euros an ounce.
Its 14-day relative strength index stood at 28.9 yesterday, with any reading less than 30 considered to signal oversold conditions.
Investors’ appetite for physical gold and physically backed investment products remained sharp, with holdings of the largest gold exchange-traded fund, New York’s SPDR Gold Trust, at a record high.
Demand in India, historically the world’s biggest buyer of gold, was also firm as prices fell to their lowest in a month, weighed by a stronger rupee and a decline in spot prices.
“Buying is on, as people feel prices are good,” Haresh Acharya, head of the bullion desk at Gujarat-based Parker Bullion, said. “Wedding demand is expected to continue for another couple of months.”
From a chart perspective, further losses in gold could take prices down to support at its November low at $ 1,672.50 an ounce, and its 200-day moving average at $ 1,660.
Among other precious metals, silver was down 0.15 percent at $ 32.79 an ounce.
Silver has lost some ground to gold so far this month, with the gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, edging further from last week’s near eight-month low at 50.42 to 51.6 yesterday.
Spot platinum was up 0.33 percent at $ 1,581.15 an ounce, while spot palladium was up 0.07 percent at $ 682.97 an ounce.


Pace of Saudi Arabia’s private sector sell-off accelerates

Updated 25 April 2018
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Pace of Saudi Arabia’s private sector sell-off accelerates

  • Aim is to increase the private sector contribution to gross domestic product from 40 percent to 65 percent by 2030
  • The NCP said that the privatization program would save the government around SR35 billion.

DUBAI: Saudi Arabia’s ports, hospitals, desalination plants, schools, and even its sports clubs, are among the candidates for early transfer to the private sector in a program that the government hopes will generate up to SR40 billion ($10.6 billion) in revenue over the next two years.
The National Center for Privatization (NCP), the body responsible for implementing the big state sell-off program, released details of its privatization plan after the Council of Economic and Development Affairs, chaired by Crown Prince Mohammed bin Salman, approved the proposals to increase private sector involvement in the economy — a vital part of the Vision 2030 strategy to reduce oil dependency.
The aim is to increase the private sector contribution to gross domestic product from 40 percent to 65 percent by 2030.
The NCP said that the privatization program would save the government around SR35 billion, add SR14 billion to gross domestic product, and generate up to 12,000 new private sector jobs in the Kingdom by 2020 — the initial phase of the sell-off.
“The scale is very realistic given that privatization is a complex and time-consuming process from a host of perspectives, including regulatory, governance and legal,” said John Sfakianakis, director of economic research at the Saudi Arabia-based Gulf Research Center.
“The estimated amount is equally pragmatic at this stage. These numbers change both due to valuations and appetite as well as economic conditioning with time.”
Other parts of the national economy are also earmarked for some form of privatization under the Delivery Plan 2020. Transport, the renewable energy industry and flour mills are all scheduled in an NCP report that lays out the structure and conditions of the state sell-off program.
“The most important characteristic is the commitment to push ahead with privatization as well as do it in a phased way over the next few years that involves a number of different sectors. There is an evolutionary phase to any privatization process that involves multiple phases over time,” said Sfakianakis.
The King Faisal Specialist Hospital and Research Center, the Riyadh facility regarded as the jewel in the crown of Saudi medical facilities, is named as a subject for incorporation as a prelude to becoming a non-profit organization “to become financially independent and a role model in the health sector and help in achieving its leadership position through focusing on innovation.”

HIGHLIGHTS
- The National Center for Privatization hopes the 2020 privatization program will contribute SR13-14 billion to Saudi Arabia’s GDP.
- Total government proceeds from asset asset sales will total between SR 35 billion.
- Net savings (capex and open) from privatization and PPP projects are forecast to be SR25-33 billion.
- Between 10-12,000 new private sector jobs will be created.
- The privatization program aims to enhance competitiveness, and improve the Kingdom’s business environment through privatizing government services.


Other hospitals will be privatized by the handing over of medical facilities to private operators and the creation of new medical cities, as well as primary care facilities, the provision of rehabilitation services, radiology and laboratory
upgrades.
In a statement, Turki Al-Hokail, chief executive of the NCP, identified other sectors that would be the focus of the privatization plan, including agriculture, housing, energy and Hajj and Umrah services.
“The privatization program aims to enhance competitiveness, elevate the quality of service and economic development, and improve the business environment through privatizing government services,” he said.
The privatization program has been an element of the Vision 2030 strategy since it was launched two years ago, but the latest document sets out a firmer timetable for the sell-off. It identifies “game changers” — businesses that will “receive special attention from the leadership to ensure their successful completion.”
The first three “game changers” are Saudi Arabian ports, the Saline Water Conversion Company at Das Al-Khair and what the NCP calls “opportunity explorers” — structures aimed at facilitating partnership opportunities between the public and private sectors.
The NCP makes clear it is keeping its options open in choosing what kind of privatization is appropriate for a sector: “Full or partial asset sale, initial public offering, management buy-out, concessions or outsourcing” are all under consideration.
Some 100-plus privatization initiatives have been identified across 10 ministries, of which some (including sports clubs, grain silos and desalination) are expected to be completed by 2020.
Jason Tuvey, Middle East economist at Capital Economics, said that the estimate of selloffs were lower than what was possible given the “vast number” of companies that the Saudi state wholly owns or has a controlling stake in.
“Excluding the Aramco IPO, we’ve previously estimated that the government could raise around $25-50 billion from privatizations,” he told Arab News.
The document also makes clear that foreign participation will be allowed in some parts of the program.
The NCP program does not include any assets owned by the Public Investment Fund, the body which is intended to become the world’s largest sovereign wealth fund with assets of $2 trillion by 2030 and which will retain the right to sell the assets it owns in partnership with the government.
The NCP program also does not include residential real estate assets which are unlocked for private sector usage by contractors and real estate developers, and which are covered by the national housing program.
Ministers have said that the overall privatization program could raise as much as $200 billion in sell-of proceeds in the years running up to 2030, but there is no certainty as to how that figure will be reached. In Riyadh last week government officials gave a more conservative estimate of between $50 and $60 billion.
The plan also makes it clear that there is still work to do on the legislative and regulatory framework within which privatization will be pursued. The first of the three “strategic pillars” of the Delivery Plan is the creation of such structures “to enable privatization processes and governance by setting clear and specific procedures that increase the level of preparation and execution of privatization.” Key initiatives remain to be fulfilled in this respect, the document says.
Al-Hokail added: “The privatization program is in the interests of Saudi citizens, will bring many benefits, and improve the investment climate. The program’s strong governance foundation will be a strong pull factor for global investors and large corporations because it sets the guidelines that will make the program attractive.”