Thread: Archive Latest News - Dinar Think Tank - 27/08/08 - 15/01/09

Default Saudi revaluation -expected effects on its stock market
http://www.business24-7.ae/articles/...udibourse.aspx

This should settle the issue if stockholders feel affects of revaluation but also how revaluation affects other financial indicators. I saved my remarks for the end



“If there were a change in the currency, the impact on the stock market would be as follows: after an initial bounce, we think a revaluation would have a negative impact, as it makes investment in foreign markets relatively cheaper,” it said.

“Listed companies that import would benefit from a revaluation; those that have foreign earnings may lose out… as rising inflation is eroding consumers’ disposable incomes and generating uncertainty for local companies, it is likely that the Tadawul All-Share Index (TASI) would jump in the event of a revaluation.

“After this immediate euphoria has evaporated, there is likely to be an outflow of funds. This is because reducing the number of riyals necessary to buy a unit of foreign currency makes investment in foreign currency denominated assets more attractive,” it said.

The study about Saudi Arabia’s economy and possible currency revaluation said a 15 per cent appreciation of the riyal against the dollar would make the riyal price of shares listed on US markets 15 per cent cheaper.

Some foreign investors may also choose to exit the Saudi market after making a one-off exchange rate gain from the revaluation, the study added.

Jadwa ruled out an imminent revaluation of the riyal but said any appreciation in its value against the dollar in the future would benefit the firms and sectors that import from foreign markets as the revaluation would lower the cost of their imports.
It expected those importers to increase their profit margins although they will come under pressure to pass on the impact of a revaluation to final consumers.

“Retail and transport are the most import-dependant sectors on the Tadawul. Companies undergoing major expansion programmes where the necessary technology comes from abroad, but final product is sold domestically, should also benefit. These include telecoms and real estate.

“Performance of all companies with foreign earnings will worsen in the event of a revaluation, as these earnings will be worth less when converted into riyals and recorded in their financial statements,” the study said.

It said sectors focused on exporting, such as petrochemicals and some manufacturers from the investment, construction and agricultural sectors, would be most affected. In addition, travel agents and other companies reliant on foreign spending would be hit.

“A revaluation would lower the value of commercial bank foreign assets and raise the value of foreign liabilities in addition to lowering the value of returns on foreign investment when reported in riyals. Insurance firms would see a similar impact on their balance sheets, as would investment companies with large foreign holdings,” it said.

“The energy and utilities, cement and agricultural sectors would be little affected by any revaluation of the riyal as the bulk of their inputs (power, limestone, water and labour) are sourced from within the Kingdom and their output is consumed domestically.”

According to the report, foreign banks have largely increased their riyal-denominated deposits with Saudi banks in anticipation of a revaluation decision.

“But speculation of a revaluation, which heightened during 2007 and early 2008, has not prompted any measures by Saudi Arabia’s commercial banks to cut their foreign assets.”



The above tells us alot
1) Most importantly, Investors benefit from the revaluation exchange
2) Further appreciation greatly benefits importers
3) Companies with foreign earnings financials are negatively affected
- With the dinar not international, I expect this to be a very small number, if any, of listed companies.
Definately a benefit to RV before going intl.
4) runup then bounce back market growth. This would be expected.
*The bourse is still small enough that the gains from economic growth would still follow and the fall back.

5) Outflow of capital- expected but it will be interesting to see if the rumor of additional bump to investors to keep funds in market bears fruit

6)Signs Saudi moving foreign funds may indicate rv around corner to protect these foreign assets.
__________________
"currencies rarely trade on economics alone" Daniel Hanna -REGIONAL ECONOMIST FOR THE MIDDLE EAST
Reply With Quote



Not being a doctor of any sorts, but is it not true that a deathly ill, or a just sick person, and of course a recoverying person react differently to the same medicine,even adversely to it in many cases?

Maceman

Which patient is iraq?

Security Agreement allows Iraq to enter agreements with any other party

Skinner said the spokesman, the Iraqi government that the proposed convention with the United States of America convention will not be long term but temporary and limited Convention for a term of three years ago to regulate the temporary presence and the mechanism for withdrawal of U.S. forces from Iraq requesting to be completed by the end in 2011.

He added Skinner of the Independent News Agency, Wednesday, that "the Convention allows Iraq to enter with any party other than the United States of America of security agreements to maintain security and stability in the country.

The Skinner said Tuesday that the vision of a new Iraqi security crystallized on the Convention to be signed with the United States of America is to be long this Convention three years ago, leaving a renewal or not to officials of the two countries at the time.

The Convention governing the security of long-term presence of U.S. forces in Iraq after in 2008, it currently relies on the presence of UN authorization renewed at the end of each year the request of the Iraqi government.

Translated version of http://radionawa.com/(X(1)A(x2qRCv0-yQEkAAAAZmRiMmMwYmEtOTkzMi00OWM4LTkxODctZWNiZGUwZD QyMjc1Ah-yEb5ZAgnwlZm7ffqZDejmDjQ1))/Ar/NewsDetailN.aspx?id=16374&LinkID=109&AspxAutoDetec tCookieSupport=1

Kuwait denies it promised not to claim debts owed by Iraq and surprised by the statements Skinner
Denied official source at the Kuwaiti Foreign Ministry, as stated by the Chairman of the Foreign Relations Committee in the Iraqi parliament, Hammam Hamoudi, from Kuwait and promised not to claim debts owed by Iraq

He noted that the Kuwaiti government to possess a decision in this file, without recourse to the National Council, which was confirmed by the Kuwaiti Foreign Ministry in more than one occasion to the Iraqi side, with the exception of the compensation owed to Kuwait Airways on Iraq.

He said that both countries agreed to discuss the possibility of this issue outside the framework of the overall compensation supervised by the United Nations, to take place in the settlement of this issue of compensation between the airlines of both countries, after the Iraqi side proposed to settle the form of services provided by the Iraqi lines of its Kuwaiti until meet religion Receivable, which was approved by the Kuwaiti side, and spare the parties much progress in negotiations on the details.

In a related, the deputy Khaled Issa, told the «time», the absence of what is necessary to raise the Iraqi side to the issue of border demarcation between the two countries, especially that they have already painted a decision of the United Nations.

Kuwaiti and debt owed by Iraq, Issa said that Iraq is a country rich and varied resources, and debt owed it to Kuwait is not kind, all «cash taken from the living flesh», in a country not only has oil as a major source of income, but has no other resources, strengthens the need He adhered to Kuwait this money owed by Iraq.

For his part, MP Hassan Jawhar called on the Iraqi government to use the most appropriate way to open a direct dialogue with Kuwait, away from delivering messages through the media, pointing out that the heart of Kuwait is open for any dialogue, and reach out to the brothers in Iraq, although the United Nations resolved among many files Border town, and compensation

Expressed amazement official source at the Kuwaiti Foreign Ministry, as mentioned by the official spokesman of the Iraqi Government to Skinner, about the existence of files pending a stumbling block between the two countries, including the file of demarcation.

He favored the source told «premature» that the reference to the issue of demarcation of land borders and maritime understood error, by the carrier to the news of San Skinner, killing some of the media in error handling this issue ended already under Security Council resolution, which is non-negotiable.

He explained that «the meaning of these statements, the question of maintenance of boundary markers between the two countries, and discussed the issue of violation of some Iraqi facilities and farms adjacent to our borders, and demanded that Kuwait earlier eliminated, and deposited their owners in compensations United Nations».

However Source: «What is needed now is action and movement of practical and operational, by the Iraqi side, to remove such installations, farms and dimensions of a few kilometers from the border strip to ensure the safety of the border between the two countries

Translated version of http://www.baghdadtimes.net/Arabic/index.php?sid=31896

Lower demand for the dollar on Thurs

Demand for the dollar was down in the Central Bank of Iraq's (CBI) auction on Thursday, registering at $78.460 million compared to $110.240 million on Wednesday.

"The demand hit $17.460 million in cash and $61.0 million in foreign transfers outside the country, all covered by the bank at a stable exchange rate of 1,184 Iraqi dinars per dollar, same as yesterday," an official source from the bank told Aswat al-Iraq - Voices of Iraq - (VOI).

The 12 banks that participated in the auction offered to sell $4 million, which the bank bought at an exchange rate of 1,182 Iraqi dinars per dollar.

The Iraqi Central Bank runs a daily auction from Sunday to Thursday

Aswat Aliraq

Update......

Kuwait to Ask MPs to Forgive Iraq Debt

Kuwait's government will present a request to parliament in its next session in October to forgive Iraq's multi-billion debt, a local newspaper reported on Thursday, citing a senior source.

The Gulf Arab state has said that it would not allow the repayment of the estimated $15 billion to $16 billion debt to become a burden on Iraq, but only parliament can cancel it.

The Kuwaiti government move came after the United Arab Emirates waived Iraq's debts and Saudi Arabia pledged to do so, daily newspaper Seyassah reported the senior source as saying. The debt represents loans Kuwait made to Baghdad in the Saddam Hussein era, mostly during the 1980-1988 Iraq-Iran war.

Local media on Thursday also carried statements from an Iraqi politician stating that Kuwait could cancel the debt.

"Our brothers in Kuwait told us that they are not demanding any debt and that there is no need to discuss this issue," the head of the Iraqi parliamentary foreign relations committee Humam Hamoudi was quoted as saying by Al-Qabas newspaper.

"But the officials in the Iraqi government want to settle all the debt."

Several Kuwaiti deputies oppose debt forgiveness as many in Kuwait are still bitter about Saddam's 1990 invasion of their country.

The United States has, since invading Iraq in 2003 and toppling Saddam, been pressing its Arab allies to forgive Iraq's debts and restore top-level diplomatic ties.

The United Arab Emirates waived all of Iraq's almost $7 billion debt to the UAE last month.

Saudi Arabia pledged last year to cancel 80 percent of more than $15 billion in Iraqi debt but has yet to do so. A senior Saudi official said in May the kingdom may rescind the entire debt.

PUKmedia :: English - Kuwait to Ask MPs to Forgive Iraq Debt

Iraq's Sadr Suspends Militia Activity Indefinitely

Iraqi Shiite radical leader Moqtada al-Sadr said on Thursday that he has suspended indefinitely the activity of the Mahdi Army, his feared 60,000 strong militia.

"The Mahdi Army suspension will be valid indefinitely and anyone who does not follow this order will not be considered a member of this group," a statement issued by Sadr said.

PUKmedia :: English - Iraq's Sadr Suspends Militia Activity Indefinitely

Iraq to put Saddam’s train back in service

Iraqi railway officials announced that the personal luxury train of former President Saddam Hussein will return to service soon. Abu Samir from the facilities’ security protection unit said the train was used by former regime senior officials while the government will put it back in service to the public soon. Starting next month, the 23-carriage train will carry passengers from Baghdad to the southern city of Basra.

The former president used the French-built train only once, in the late 1970s. Since then it has been kept in a secret place in Baghdad and was protected from looting following the US invasion to Iraq in 2003.
Railway spokesman Karim Al Tamimi said the train was recently moved to Baghdad's main train station.

Iraq to put Saddam?s train back in service | Iraq News | Alsumaria Iraqi Satellite TV Network

Iraqi Parliament to open office in Provinces

Today a delegation from the Iraqi Council of Representatives (Iraqi parliament) met with the Sulaimani governor Dana Ahmad Majid in his office.

The delegates announced the decision for opening office of the Iraqi council of representatives in all the provinces.

“The offices are tasked with addressing the pending problems between the Iraqi ministries and the provincial authorities,” Nawzad Saleh Rafhat, a lawmaker in the Iraqi council of representatives from Kurdistan Alliance Bloc, said.

The Sulaimani governor demanded that issues of shortage of medical supplies and sending expired food and medicine by the Iraqi related ministries to Sulaimani be discussed.

PUKmedia :: English - Iraqi parliament to open office in provinces

Maliki are technical changes to the success of negotiations "Sufa"

Opens next week in the intensive talks between the two Iraqi and American Convention on the security negotiations between Baghdad and Washington after Prime Minister Nouri al-Maliki set of changes and actions to find quick solutions to outstanding points between the two sides.

Al-Maliki announced yesterday following the meeting of the ****utive Board (3 +1) that the American negotiator on the "Sufa" promised to submit a new version of the Convention within a week. Explains observers that the prime minister aims through their moves to find a formula acceptable to the Convention to meet the aspirations of Iraqis and the reservation of sovereignty and national interests. The prime minister acknowledged the existence of positive steps have been achieved in the negotiations the parties, but said at the same time: that some of the vocabulary and the details have not yet been resolved circulation with Vice President Dr. Adel Abdel Mahdi and Tariq Hashimi, expressing the hope that there will be "flexible and responsive Of the parties to reach an agreement that we can adopt and approved by the parliament.

"The issues of" immunity granted to "foreign forces and the withdrawal of a comprehensive rescheduling of the U.S. Army from the country, in addition to the issue of Iraqi detainees at the forefront of axes about which there is debate. A government spokesman Dr. Ali Skinner that "Security Agreement will not be long term but temporary and limited to a period of three years." Skinner said that the objective of the convention organizing the temporary presence and the mechanism for withdrawal of U.S. forces from Iraq complete its withdrawal by the end of the year 2011 ", noting that the vision of Iraq" Iraq's commitment to ensure that things might not Wish to continue in the long run.

"Maliki and President yesterday, the Iraqi delegation negotiator, since the new team consisted of national security adviser Muwaffaq Al-Rubaie Dr. government political adviser, Sadiq passengers and Director of the Office of the Prime Minister Tarek Najm. His deputy, Mahmoud Othman, the Kurdish Alliance in a press statement : The delegation previously frozen al-Maliki and other officials of the Chamber is close to the government.

Translated version of http://www.alsabaah.com/

Iraqi PM changes team negotiating U.S. troops Pact

Iraq's Prime Minister Nuri al-Maliki has reshuffled a negotiating team seeking to finalize an agreement on the future presence of U.S. troops here, a senior Iraqi politician said on Thursday.

U.S. and Iraqi officials have been locked in discussions over the security pact, which will provide a legal basis for U.S. troops to remain in Iraq after a United Nations mandate expires at the end of this year.

Maliki has replaced officials on the negotiating team, which had been headed by deputy Foreign Minister Mohammad al-Haj Hamoud, said Mahmoud Othman, a senior member of the Kurdish bloc in parliament.

The new team is headed by national security advisor Mowaffaq al-Rubaie, Othman said. He described the move as a "normal" step that would allow more senior officials to make decisions.

"There was a technical delegation which has done its part in the negotiations and achieved results," Othman said.

U.S. and Iraq technical negotiators have completed a draft agreement, which must be approved by Iraqi leaders and by parliament. Negotiations with U.S. officials also continue.

Washington has long refused to be held to an arbitrary timeline for leaving Iraq, but it appears to have softened its objections as violence drops dramatically in Iraq and the Maliki government becomes increasingly assertive in security talks.

Maliki said earlier in the week that both sides had agreed that the approximately 144,000 U.S. troops stationed in Iraq would be required to leave the country by the end of 2011.

Iraq has also said it would like a future deal to end routine U.S. patrols of Iraqi cities and towns by mid-2009.

PUKmedia :: English - Iraqi PM changes team negotiating U.S. troops pact