GCC ‘single currency to further strengthen economic stability’

Updated 03 April 2013
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GCC ‘single currency to further strengthen economic stability’

A senior foreign exchange analyst attending the 4th Saudi Money Expo and Conference 2013 has predicted a rise in global gold prices in 2014.
Peter Rosenstreich, chief FX Analyst and associate director of Swissquote Bank SA, speaking to Arab News on the sidelines of the conference yesterday, said: “Currently the relationship between inflation and gold prices is no longer there. Therefore, without that connection people really don't have a reason to trade gold. If we start seeing global inflation rising at the end of 2013, we will tell investors to start buying gold again to offset inflation, which would make gold prices to rise.”
Saudi businessmen should take extra precautions while investing funds to avoid financial losses, Prince Saif Al-Islam bin Saud bin Abdulaziz, said while inaugurating the 4th Saudi Money Expo and Conference 2013 at the Faisaliah Hotel in Riyadh yesterday.
The expo is organized by Stayconnected in collaboration with Alawsat for Economic Consultancy for Prince Dr. Saif Al-Islam bin Saud bin Abdulaziz in partnership with Alpari UK.
“The main objective of the two-day expo is to strengthen the country’s market analysis and trading (national and international) policies as Saudi Arabia has already been ranked as a top player in the investment sector, with almost 28 percent investment in currency markets, oil and gold,” the prince said.
He pointed out that the event is in line with the new industry report released by Fitch Rating Agency, one of the largest international rating agencies, which claimed that the foolproof fiscal and economic policies followed by the Kingdom, under Custodian of the Two Holy Mosques King Abdullah’s directions, have led to an elevation of Kingdom's rating to AA.
The prince pointed out that the program of the forum is designed to inform the participants about the risks involved in investments. He stressed that inaccurate information provided by some organizations could mislead the investors to incur heavy financial losses in their ventures.
Referring to the economic crisis in Cyprus, he said that although some banks suffered severely, Arab banks stood the test of time due to proper planning.
He added that the proposed GCC single currency will further strengthen the economic stability of the region since such a uniform currency will ensure stability of prices in all commodities within the region.
With the strong backing of consistent success of the last three editions of the expo, the event began with the participation of a number of major Gulf companies, financial and economic institutions from 10 European countries, including the United States, and almost 3,000 investors from the Kingdom, who also attended the free training courses offered by the field experts.
The exhibition brought together some of the leading minds in banking and FX trading, shedding light on the present state of FX trading in the world and some of the most widely used trading strategies by experts. Additionally, it featured the most recent technologies, products, security and safety services that are becoming available in the online trading industry.
Walid Ead, director of Stayconnected, said the expo rendered a great platform and opportunity to the participants to meet the top officials of leading foreign companies and get an enriching experience through discussions about the latest trading technologies.
"The expo brings to light crucial and sensitive issues such as latest trends in the global market, especially in the Kingdom, which promises a bright future of investment and trading sector. Consequently, the expo has bestowed a golden chance to the participants to interact directly with the world’s leading analysts and experts," Ead added.
Alpari UK, a leading British company, gave an insight into the techniques used to interpret financial market indicators. The event also featured a panel discussion wherein top officials discussed the future of Online Currency Trade business. It also provided free educational sessions designed specifically to educate the young investors about day-to-day market fluctuations.
The Kingdom with a population as of July 2010 estimated to be 25,731,776 is the richest country in the Middle East. According to Bloomberg Business Week, it has around 170,000 millionaires and is ranked 19 among countries with the most millionaires in 2010.
Over 35 percent of Middle East FX retail traders are living in the Kingdom and invest an average of $ 35,000 in FX trading over the course of their trading experience.
The expo is co-sponsored by Amana Capital (strategic sponsor), FX Solutions (official sponsor), FXDD (main sponsor), Swissquote Bank (banking partner), Arab Financial Brokers (diamond sponsor) and ADSS (platinum sponsor).


Gulf companies challenged by debt and rising interest rates

Updated 22 April 2018
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Gulf companies challenged by debt and rising interest rates

  • Debt restructurings on the rise, but below crisis levels
  • Central Bank of the UAE has raised interest rates four times since last March

There has been an uptick in recent months in heavily-borrowed companies in the Gulf seeking to restructure their debts with lenders. Although the pressure on companies is not comparable to levels witnessed in the region following the 2008 global financial crisis, rising interest rates will eventually begin to have a greater impact, say experts.
Speaking exclusively to Arab news, Matthew Wilde, a partner at consultancy PwC in Dubai, said: “We do expect that interest rate increases will gradually start to impact companies over the next 12 months, but to date the impact of hedging and the runoff of older fixed rate deals has meant the impact is fairly muted so far.”
The Central Bank of the UAE has raised interest rates four times since the start of last year, in line with action taken by the US Federal Reserve. The Fed has signalled that it will raise interest rates at least twice more before the end of the year.
Wilde added that there had been a little more pressure on company balance sheets of late, although “this shouldn’t be overplayed”.
Nevertheless, just last week, Stanford Marine Group — majority owned by a fund managed by private equity firm Abraaj Group — was reported by the New York Times to be in talks with banks to restructure a $325 million Islamic loan. The newspaper cited a Reuters report that relied on “banking sources”.
The Dubai-based oil and gas services firm, which has struggled as a result of the downturn in the hydrocarbons market since 2014, has reportedly asked banks to consider extending the maturity of its debt and restructuring repayments, after it breached certain loan covenants.
A fund managed by Abraaj owns 51 percent of Stanford Marine, with the remaining stake held by Abu Dhabi-based investment firm Waha Capital. Abraaj declined to comment.

 

Dubai-based theme parks operator DXB Entertainments struck a deal last month with creditors to restructure 4.2 billion dirhams ($1.1 billion) of borrowings, with visitor numbers to attractions such as Legoland Dubai and Bollywood Parks Dubai struggling to meet visitor targets.
Earlier this month, Reuters reported that Sharjah-based Gulf General Investment Company was in talks with banks to restructure loan and credit facilities after defaulting on a payment linked to 2.1 billion dirhams of debt at the end of last year.
Dubai International Capital, according to a Bloomberg report from December, has restructured its debt for the second time, reaching an agreement with banks to roll over a loan of about $1 billion. At the height of the emirate’s boom years, DIC amassed assets worth about $13 billion, including the owner of London’s Madame Tussauds waxworks museum, as well as stakes in Sony and Daimler. The firm was later forced to sell most of these assets and reschedule $2.5 billion of debt after the global financial crisis.
Wilde told Arab News: “We have seen an increasing number of listed companies restructuring or planning to restructure their capital recently — including using tools such as capital reductions and raising capital by using quasi equity instruments such as perpetual bonds.”
This has happened across the region and PwC expected this to accelerate a little as companies “respond to legislative pressures and become more familiar with the options available to fix their problems,” said Wilde.
He added that the trend was being driven by oil prices remaining below historical highs, soft economic conditions, and continued caution in the UAE’s banking sector.
On the debt restructuring side, Wilde said there had been a “reasonably steady flow of cases of debts being restructured”.
However, the volume of firms seeking to renegotiate debt remains small compared to the level of restructurings witnessed in the aftermath of Dubai’s debt crisis.
Several big name firms in the emirate were caught out by the onset of the global financial crisis, which saw the emirate’s booming economy and real estate market go into reverse.
State-owned conglomerate Dubai World, whose companies included real-estate firm Nakheel and ports operator DP World, stunned global markets in November 2009 when it asked creditors for a six-month standstill on its obligations. Dubai World restructured around $25 billion of debt in 2011, followed by a $15 billion restructuring deal in 2015.
“We would not expect it to become (comparable to 2008-9) so barring some form of sharp external impetus such as global political instability or a protectionist trade war,” said Wilde.
Nor did he see the introduction of VAT as particularly driving this trend, but rather as just one more factor impacting some already strained sectors (e.g. some sub sectors of retail) “which were already pressured by other macro factors.”

FACTOID

Four

The number of interest rate rises in the UAE since March 2017.