Finance

New Bahrain bourse to offer derivatives on FTSE indices

The Bahrain Financial Exchange (BFX), due to start operations in October, said it would offer a number of derivative products based on FTSE indices on its trading platform. BFX, owned by Indian exchange operator Financial Technologies said the derivatives would be based on the FTSE Emerging, FTSE Europe, FTSE BRIC 50 and FTSE Coast Kuwait 40 indices. BFX, which will also offer trading in both conventional and Islamic products in commodities, currency and equities has delayed its start by about six month until October due to the current sluggish market sentiment in the Gulf Arab region. It will compete with Bahrain Stock Exchange and other bourses in the region such as Nasdaq Dubai.

Bahrain: A changing model

Bahrain’s finance industry, both Islamic and conventional, has long been a lynchpin of the economy. Perhaps unsurprisingly, though, in the post-economic crisis environment and given the increasingly competitive regional market, changes are under way. Combined, the Islamic and conventional finance segments represent around 26 per cent of Bahrain’s GDP. In its annual economic review for 2010, the Bahrain Economic Development Board (EDB) said that while country’s economy had managed to expand in the preceding year, the financial sector had contracted slightly in 2009, with output shrinking by 1 per cent – a result that would have been warmly welcomed in many Western markets. The EDB report, released on July 19, said that despite the slight contraction in 2009, the finance industry had survived the global slowdown relatively well, although it also noted that there would be changes on the horizon for the Shari'a-compliant and conventional segments. “Going forward, however, it is evident that the development model for the Bahrain finance sector, which has depended heavily on the rapid growth of offshore wholesale banking, will change,” the report said. According to the EDB report, some 90 per cent of wholesale banks’ assets and liabilities originate offshore. Though not setting out what specifically they will be, the report did note that, “there will be big changes in the pattern of expansion”. (Source: OBG)

Iraq approves two Iranian banks in Baghdad

Central Bank of Iraq approved applications by two Iranian private banks for opening branches in the Iraq's capital city of Baghdad. Iraq's Central Bank approved applications by Parsian and Karafarin to start activity in the country and open branches in Baghdad. The two banks have been given a month to transmit their investments and find suitable locations in the Iraqi capital for branch offices, Asia Pulse website quoted an economic consultant of Iran's embassy in Baghdad, Ali Heidari, as saying. He also confirmed that the legal procedures for the applications to operate in Iraq have been completed. Since relative security has been established in Iraq, foreign banks have been making great efforts to invest in financial as well as other sectors of Iraq's economy.

Dubai: Taking stock

Dubai’s capital markets appear to be in for significant change with plans unveiled to establish a second-tier stock exchange coming hot on the heels of Dubai Financial Market (DFM) – the government-administered domestic bourse – and the DIFC-based NASDAQ Dubai’s move to formally link their trading platforms. All of this is happening as speculation of a merger between the bourses of Dubai and Abu Dhabi mounts. The new second-tier market would cater to the needs of the emirate’s smaller enterprises, while a merger between the Dubai and Abu Dhabi exchanges would create a massive new trading base that would be even more appealing for foreign investors. On July 20, Nasser Saidi, the chief economist at the Dubai International Financial Centre (DIFC), announced that plans were afoot to launch an alternate market catering to small and medium-sized enterprises (SMEs), a move away from the high-profile and high-value listings that dominate Dubai’s existing capital markets. Speaking at the Gulf Venture Capital Association conference in Dubai, staged to release the fourth annual “Private Equity and Venture Capital in the Middle East” report, Saidi said the regional private equity industry needed a second-tier market with less stringent requirements where smaller companies with revenue of US$20 million to US$80 million could be listed. “There is a huge opportunity for setting up a tier-two market to accommodate SMEs run by families and hundreds of well-run free zone entities operating within the UAE and across the region,” said Saidi, who is also the head of external relations at the DIFC Authority (DIFCA) and the executive director of the Hawkamah Institute for Corporate Governance. More than just opening doors for local firms, Saidi held out the prospect that a second-tier market would serve SMEs throughout the Gulf and beyond. (Source: OBG)

Egyptian stock exchange reshuffles indexes

The Egyptian stock exchange said it would change the composition of the benchmark index EGX 30, in the first major decision made by its new chairman, Khaled Serry Siam. Effective from August, the index will drop eight companies, including Nasr City Housing and add another eight, including private equity firm Citadel Capital. In a statement, the exchange also said it will replace 18 firms from the .EGX70 with the same number. Following are the firms to be added to the EGX 30: Sidi Kerir Petrochemicals, Citadel Capital, Remco for Touristic Villages Construction, Egyptian Development for Building Materials, Ajwa Food Industries, National Company for Maize Production, Egyptian Media Production City Company, National Real Estate Bank for Development, Following are the firms to be dropped from the EGX 30: Nasr City Housing, International Agricultural Products, Alexandria Spinning and Weaving (Spinalex), El Nasr Clothing and Textile Co (Kabo), Nile Cotton Ginning, Ahly Development and Investment, Egyptian Housing and Development, Egyptian Financial and Industrial Corporation (EFIC).

QNB gets nod to open branch in Lebanon

The overseas license in Lebanon supports Qatar National Bank's (QNB) international expansion plan. QNB's Lebanon branch will provide a full range of banking services and products to individuals, corporate entities and government. These include retail banking services such as fixed deposits and current accounts, as well as a broad range of corporate banking and advisory services including corporate, project and trade finance. QNB Group Chief Executive Ali Shareef Al-Emadi said, "We are very pleased to receive this license which supports the group's strategic growth plans and more importantly gives QNB the opportunity to be a key partner that supports the cross-border economic growth of individuals, corporates and government entities in both Lebanon and Qatar."

Egypt's Heliopolis seeks US$19.5m capital increase

Egypt's Heliopolis Housing has asked shareholders to approve a 50 per cent capital increase financed from retained earnings, its management said. The company would issue one bonus share for every two held, raising capital to EP111.3 million (US$19.5m) from EP74.2 million, it said in a statement distributed by the stock exchange. Heliopolis Housing said that net profit for the year to end-June rose 52 per cent to EP151.5 million.

Oman banking sector looking "stable"

Oman's banking sector is expected to remain stable throughout the year, Moody's Investor Service said. The Gulf state's banking industry has remained resilient throughout the global economic downturn largely due to it being an introverted market with little exposure to western markets, Moody's said. "For 2010, Moody's expects systemic credit expansion to gradually increase to between 10 and 15 percent although it will likely remain below the pre-crisis level of 40 percent," said Elena Panayiotou, author of the report. "The resumption in loan growth will be driven by increased government spending, which was largely concentrated on the hydrocarbon sector in 2009, but also focused on the non-oil sector of the economy as part of the government's measures to diversify the economy." The credit rating agency said it expected the country's domestic liquidity to remain "adequate" while access to foreign-currency funding at lower costs to remain "in line with the improved conditions in the international capital markets".