Middle East Business Review

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Dnata, the airline services arm of Emirates Group, has acquired a majority stake in Travel Republic, one of the leading British online travel agency firms for an undisclosed sum. The deal marks Dnata’s biggest transaction to date and was the second acquisition made in December last year. ?Dnata will use the strength of its global travel network to expand on this further by offering a broader range of destinations whilst maintaining the same price competitive and high-quality customer experience,? a company statement said. Travel Republic offers 650 destinations worldwide to hotels and airlines.

According to Ernst & Young’s year-end MENA IPO update, regional capital markets raised US$843.9million in 2011 as compared to US$2.8billion in 2010, a decline of 69.3 per cent. The year closed with IPO funds worth US$226.1million being raised in the fourth quarter, a decline of 83.5 per cent from US$1.4billion raised in Q4’10.

Political uprisings that started in January last year, combined with the eurozone debt crisis, wreaked havoc on almost all the bourses in the Middle East and North Africa region. According to Majdi Gharzeddeene, head of investment research at Kuwait’s Kipco Asset Management Company (Kamco), MENA stock exchanges lost about $100bn in market capitalisation since December 2010. “This is mainly due to a lack of investor confidence, flight of capital and bearish market sentiment that pushed trading activities to its lowest level,” he added. The worst hit were Egypt, Saudi Arabia and Dubai. The Egypt Exchange fell by 4.1%, Saudi Arabia’s Tadawul dropped 4.9% and the Dubai Financial Market slid 2.2%.

Dubai government’s bond yields suffered a blow in the last four weeks after it pledged to halve its 2012 budget deficit in order to confront $15.5 billion in debt maturing this year. The emirate announced last month it intends to cut down public spending this year by 4.2 per cent and narrow the shortfall to 1.83 billion dirhams ($498million) or 0.6 per cent of gross domestic product from a 2011 target of 3.78 billion dirhams ($1.03 billion). The yield on the government?s 7.75 percent bond due October 2020 fell 36 basis points, or 0.36 percentage points, to 6.92 percent last week.

According to data compiled by Bloomberg news service, Dubai crude price, the benchmark grade for Middle East oil, peaked $106.58 a barrel after registering a $1.74 increase on Tuesday.

Saudi Arabia’s petrochemical companies fear their profitability will be hit if the government increases its gas prices. According to NCB Capital, a Jamaican wealth and asset management company, natural gas is currently offered to producers in the Kingdom at 1998 prices when crude was at US$13 a barrel, compared to today’s price which is hovering around $100-110. “The ministry of petroleum and mineral resources and Saudi Aramco are jointly working towards revising the price at which natural gas is supplied to producers,” said Tariq Al Alaiwat, an analyst at NCB Capital, based in Riyadh. Countries such as China, India, Pakistan and Turkey have accused Saudi petrochemicals firms of anti-dumping.

According to money changers and media, Iran’s troubled currency, the rial, made a dramatic comeback on Tuesday, after an unprecedented 12 per cent drop the day before. The rial reached 17,000 against the greenback on Monday — a record low for the Iranian currency – but was trading at 15,900 to the US dollar on Tuesday afternoon.

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