CAPE TOWN, South Africa -- Foreign investment from China and the Persian Gulf nations is helping Africa weather the global downturn, but some say the funds come at a high cost.
Jiang Jianqing, chairman of the state-run Industrial & Commercial Bank of China Ltd., told African leaders here this month at the World Economic Forum on Africa that Chinese investment in Africa is growing and becoming more diversified, even as the global downturn curbs investment by other countries.
China, which has been an African investor for more than a decade, plans to step up activities and work on its reputation in Sub-Saharan Africa as an employer and business partner.
This month, ICBC and Standard Bank Group Ltd., of South Africa, finalized a deal to expand Botswana's main coal-fired power station. China National Electric Equipment Corporation, a top ICBC client, was awarded the $970 million contract to supply and expand the station to ramp up the diamond-rich nation's energy supply.
ICBC is pursuing 65 multimillion-dollar projects across the continent through its partnership with Standard Bank, in which it bought a 20% stake in 2007, Mr. Jiang said.
Chinese investment, initially focused on shoring up access to raw materials as its economy grew, is moving into sectors beyond infrastructure and mining.
Persian Gulf investors, too, although hammered by the downturn, say they are sticking with African projects. Soud Ba'alawy, executive chairman of Dubai Group, the state-owned investment group, said Dubai is pursuing opportunities in the continent. Falling oil prices and a plummeting real-estate market forced many big Dubai investors to retrench and rethink projects, particularly ones far from home. But as oil prices rebound and local stock markets rise, Persian Gulf investors are combing Africa for opportunities.
Foreign-investment flows could be a critical lifeline for some Sub-Saharan African economies. The region's income has been hit by falling commodity prices and dwindling government revenue. Remittances have declined as Africans abroad have been laid off. This year, foreign inflows to developing countries are expected to drop 82%, the Institute of International Finance says.
The increased interest from China and Gulf countries, as well as India, has helped to embolden some African governments to demand more favorable terms or to create a more competitive business environment. Officials in a number of African governments say the Chinese and Arab governments, compared with their Western counterparts, attach relatively few conditions to aid or investment projects.
In African countries where China has invested, many local people complain that the Chinese companies import everything -- including bottled water and toilet paper -- from home, bypassing the domestic economy. In mineral-rich countries such as Zambia and the Democratic Republic of Congo, some Chinese companies have a reputation for exploiting workers.
China's government has said it believes its investments in Africa benefit both sides, and that its involvement there is welcomed by most Africans.
In 2005, 46 Zambians were killed in an explosion at a copper mine owned by China's state metals conglomerate. A government inquiry showed the company had cut corners on safety and banned union organizing.
The Chinese company paid compensation to the victims' families and allowed a union to be formed. The following year, Chinese security guards at the mine opened fire on Zambian workers who were protesting the company's failure to improve working conditions and to deliver back pay promised in a new union deal.
In 2007, a representative said the company was complying with Zambian law and had given a full report on the matter to the Zambian government. The incidents remain a sensitive subject for local miners and politicians in Zambia's Copperbelt, the country's industrial base.
"Bringing the Chinese into our industry is like importing poverty and exporting wealth," said Chishimba Kambwili, the member of parliament from Luanshya, in the Copperbelt, in an interview this year. "They pay very low salaries, and they deplete our resources without our country getting value."
In Congo, the International Monetary Fund has criticized a multi-million-dollar infrastructure deal China made last year in exchange for metals.
Mr. Jiang acknowledged that there have been problems in the past and said the Chinese government is working to improve relations.
By SARAH CHILDRESS - Printed in The Wall Street Journal, page A8
http://online.wsj.com/article/SB124607031091264351.html
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Showing posts with label fdi. Show all posts
Showing posts with label fdi. Show all posts
Saturday, June 27, 2009
Thursday, December 4, 2008
Mubadala buys into US property company
Mubadala Development Company, the Government-controlled fund, has acquired 24.9 per cent of the US property company John Buck, officials said on Thursday. The amount paid was “below US$50 million” (Dh183.7m) according to a source close to the company.
“This investment provides us with access to the US real estate market in multiple product types and it complements the existing joint venture we have together,” said Waleed al Mokarrab al Muhairi, chief operating officer of Mubadala. “Our investment will allow us to co-invest with them in future opportunities and supports our objective of achieving world-class returns through partnerships with industry-leading companies.”
The acquisition is part of the growth of Mubadala’s property and hospitality division, which was officially announced at Cityscape Abu Dhabi in May. The division is developing strategic property developments in Abu Dhabi, particularly boutique hotels, high-end office space and lifestyle-driven residential communities.
In March it created a joint venture with John Buck, called John Buck International, that is developing a new central business district on Sowwah Island. It also set up a venture with CapitaLand of Singapore, called Capitala, to build 140-hectare residential project called Arzanah at Zayed Sports City. In September, Mubadala announced it had acquired 50 per cent of California-based Kor Hotel Group, which has two boutique hotel brands that will open outposts in Abu Dhabi and the Middle East.
Mubadala also owns a 17 per cent stake in Aldar Properties, the Emirate’s largest developer, and is an investor in a major Malaysian property development.
The investment comes at a difficult time for major property developers in the US, who are confronted with falling prices. A recent report from the property consultancy Jones Lang Lasalle said downtown Chicago office vacancies could increase by 50 per cent over the next two years. Commercial office construction is a major source of John Buck’s revenue.
Wednesday, November 19, 2008
Dubai International Capital
Dubai International Capital, the investment arm of government affiliated Dubai Holding, will focus on the region rather than abroad over the next year, according to the firm’s chairman and chief executive.
“I don’t want to invest now [outside the region]; globally, we are heading into a deep recession… which could last for one to two years and makes me want to be conservative,” said Sameer al Ansari, at a conference in Dubai today.
He added that the only deals completed by DIC this year were in emerging markets, where he believed better opportunities exist.
“Perhaps in the next 12 to 18 months, more lucrative opportunities will arise in the US and Europe; but for now, the focus should be on the region,” he said.
When asked about Dubai’s rising debt as an obstacle to encouraging investments in the region, Mr Ansari countered that the emirate’s debt levels were manageable, particularly in a region with an abundance of oil.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Tuesday, November 18, 2008
World Pension Forum - Dubai
Strong and world class regulatory and corporate governance frameworks will ensure continued prosperity of the resilient UAE economy, according to Her Excellency Sheikha Lubna Al Qasimi, UAE Minister for Foreign Trade.
Welcoming delegates to the inaugural World Pension Forum, titled 'Pearls of the Gulf', Her Excellency Sheikha Lubna elaborated on the fundamental strengths behind Dubai and the UAE's growth story and highlighted the government's proactive measures during the global financial turmoil.
Hosted by Dubai Group, the leading diversified financial services company of Dubai Holding, the World Pension Forum in the Middle East opened in Dubai on 17 November, and will conclude on 20 November with a day's session in Abu Dhabi.
In her welcome address, Her Excellency Sheikha Lubna said: "From the government's perspective, I can tell you that nowhere else will you find a more open and welcoming business environment than in the UAE. We are part of the global economy, and despite the impact of the world financial crisis, the economic diversity of the Middle East, as evidenced in countries such as the UAE, will continue to underpin economic growth."
Sheikha Lubna emphasized that Dubai has now become a well recognized and growing financial hub with a successful and credible track record in attracting foreign investment, and encouraging entrepreneurship. Dubai's strategic position in relation to Europe, Asia and Africa, makes it the destination of choice for foreign direct investment in the region.
Around 18 companies out of top 50 in the Global Fortune 500 list such as GE, Citigroup, Samsung, Honda, Nissan, Siemens, HSBC, Deutsche Bank, Goldman Sachs and IBM have substantial operations in Dubai.
Other prominent speakers at the WPF included Soud Ba'alawy, Executive Chairman, Dubai GroupDubai Group, and Philip Schaefer, President of the World Pension Forum.
The forum in Dubai attracted more than 80 leading pension funds from the US, as well as government officials and senior executives of leading UAE companies. The forum is designed to facilitate the development of long term partnerships between the funds and the Middle East.
Offerings insight into the new patterns of global trade and people flows, the expanded role of sovereign wealth, and the execution of first-class infrastructure, the event also works as a platform giving UAE-based companies an opportunity to share their success stories with international delegates.
Founded in 1992, the World Pension Forum hosts various conferences around the world to help US pension fund managers make informed decisions and allocate funds to potential investment destinations.
Investors that are members of the World Pension Forum include CalPERS, CalSTRS, the Kennedy Family Trust, New York State Teacher's Retirement System, as well as major state pension funds and foundations.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Thursday, November 6, 2008
Dubai World Approval for MGM Investment in Las Vegas
Nevada gambling regulators have given preliminary approval for Dubai World to invest more than $6 billion in casino giant MGM Mirage Inc.
The state Gaming Control Board gave its OK on Wednesday for several subsidiaries of the investment arm of the Gulf state to proceed to Nevada Gaming Commission consideration later this month.
Dubai World controls 9.4 percent of MGM Mirage's stock and owns 50 percent of the under-construction $9.1 billion CityCenter development on the Las Vegas Strip.
Dubai World and MGM Mirage will have to be licensed for CityCenter sometime next year.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Sunday, November 2, 2008
UAE sees good investment opportunity in US
UAE. The United Arab Emirates is eager to boost investment in the United States and sees good opportunities as the global financial crisis has cut the price of many companies, a senior UAE official said on Friday.
"A lot of these are great companies. There's nothing wrong with these companies....They have good returns," UAE Foreign Trade Minister Lubna al-Qassimi said in an interview.
"There would be no better time than now to actually take stock of some great investment opportunities and acquisitions of companies at a fraction of what they were worth months back," Qassimi said.
"Sometimes, people look at these like they are hard times. But for some people it's an opportunity."
She was echoing comments that Sultan Ahmed bin Sulayem, Chairman of the Dubai government-owned investor Dubai World, made on Thursday. Dubai is one of the seven emirates that comprises the UAE.
"Today there are things in the market worth a fraction of what they should be worth," Sulayem said.
Dubai World's assets include Dubai Ports World, which was at the centre of a political firestorm two years ago when U.S. lawmakers discovered the Arab company had acquired US port operations as part of its purchase of British company P&O.
To calm the furore, DPW sold the port assets to American International Group, the insurance giant which went to the brink of collapse this year and is now nearly 80% US-government owned.
The US Federal Reserve stepped in last month to rescue the insurer with a US$85 billion credit facility and subsequently provided an additional US$37.8 billion.
So, who now actually owns the port operations in New York, New Jersey, Philadelphia, Baltimore, New Orleans and Miami? Send me an e-mail when you know," Qassimi said with a smile. The UAE has no hard feelings over the controversy, which at least "made us famous," she said.
"For us, it was a business deal that went wrong because of the political climate at the time," Qassimi said. "We like to think we've learned from that."
Since then, UAE investment in the United States has grown and the government has taken care to try to address potential concerns before they arise, she said.
Last year, the Abu Dhabi Investment Authority purchased a 4.9% stake in Citigroup for US$7.5 billion.
"We may not have a lot of exports here, but we have exported capital. For us, it's the investment that really is the forte for us and that's where the balance comes in" trade relations with the United States, Qassimi said.
The wealthy UAE, which possesses 9% of the world's proven oil reserves and the fifth largest proven natural gas reserves, is the largest export market for the United States in the Middle East.
Last year, the United States enjoyed a US$10.3 billion trade surplus with the UAE, as exports to that country reached US$11.6 billion and imports from the UAE were US$1.3 billion.
Many of the goods UAE buys from the United are re-exported to markets in the Middle East, India and China, Qassimi said.
"The market for us is nearly 2 billion population because of the excellence of logistics that we have," she said.
There are now around 750 US companies with operations in the UAE, including many that have made the Emirates their regional headquarters.
"I think the number one reason is because it's a high-tolerant society," Qassimi said.
Source: http://www.bi-me.com/main.php?c=3&cg=4&t=1&id=26732US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Monday, October 20, 2008
Sovereign Wealth Funds continue to acquire Western assets.
Some of private equity's most powerful tycoons, including Blackstone founder Steve Schwarzman, KKR's Henry Kravis and David Rubenstein of Carlyle Group, flew to Dubai last week to lure investors from the cash-rich Gulf states, it emerged this weekend. New research revealed that despite the credit crunch, sovereign wealth funds are continuing to snap up prime Western assets.
The funds, many of them based in the Middle East, spent more than €21bn (£16bn) acquiring stakes in European and US firms in the first six months of this year, suggesting they will match the €43bn invested in 2007, according to a study by the ZEW research institute in Mannheim.
Its findings point to a number of large recent investments, including €566m of Visa shares acquired by the Kuwait Investment Authority earlier this year, and the 20 per cent stake in the London Stock Exchange taken by the Qatar Investment Authority.
Brendan McMahon, a partner at PricewaterhouseCoopers and head of its private equity practice, said sovereign wealth funds were increasingly eyeing up private equity, too. 'Chinese funds have taken stakes in groups such as Blackstone. There has been speculation over deals with Apax. These funds have $3 trillion to deploy and private equity funds have diversified asset classes and jurisdictions. It is a perfect fit.'
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Friday, October 10, 2008
Foreign Direct Investment in Lebanon up by 4 Percent
BEIRUT: A UN report released Thursday showed that Lebanon witnessed growth in investments and Arab capital inflows by approximately 4 percent to $2.845 billion in 2007.
The World Investment Report 2008 (WIR 2008), which was issued by the Geneva-based UN Conference on Trade and Development, was made public during a news conference at the UN House building in Beirut.
Key speakers at the conference were Ali Berro, director of quality program at the Lebanese Economy and Trade Ministry. Khaled Hussein, first economic affairs officer at the UN Economic and Social Commission for Western Asia.
Berro commented on the impact of the current global economic crisis on Lebanon and the country's position, among other countries in the region, in attracting foreign investment in 2007, according to the facts stated under the WIR 2008.
Berro said it is still very early to determine the impact of the crisis on the Arab region in general and Lebanon in particular. "But it is possible to say the Arab oil-producing countries might be negatively affected more than other countries. As for Lebanon, it will probably be least affected as a result of its small economy and limited stock-exchange activity," he added.
According to the WIR 2008, Berro said "Lebanon maintained its fourth position among the Arab countries in attracting investments in 2007 compared to 2006, after ranking third in 2005, second in 2004 and first in 2003."Hussein, meanwhile, spoke about investment in the Arab region. He said foreign direct investment (FDI) in Arab countries increased 17 percent in 2007 to $72.4 billion.
Saudi Arabia came in first, with FDI reaching $24.3 billion in 2007, up 33 percent from 2006. The United Arab Emirates came in second with $13.3 billion, Egypt third with $11.6 billion and Lebanon fourth with $2.8 billion.
The Daily Star - Lebanon
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, October 8, 2008
Abu Dhabi’s investment in AMD ensures a new plant near Albany, New York
Now's the time to recall why Advance Micro Devices Inc., isn't just an important company, it's a critical one. If it wasn't for AMD, we might still be writing stories about the latest, greatest 32-bit x86 servers.
The news is that AMD is splitting off its manufacturing company in an $8 billion investment deal from Abu Dhabi. The general view by analysts is this: AMD has been struggling and separating its manufacturing helps to strengthen its ability to focus on chip development.
Foreign firms that own manufacturing capacity here employ millions of U.S. workers, and it is government policy to encourage this investment. But foreign investment can also help with the transfer of technology and manufacturing capability outside the U.S.
The investment by Abu Dhabi is very different from something like Belgium-based InBev NV/SA's $52 billion purchase of Anheuser-Busch Cos. You can brew beer at home and dream big. But you need billions to start a chip company and change a market. Abu Dhabi's is taking a key role in a fundamental part of the tech economy, and by extension, U.S. economy.
Competition routinely forces tech vendors to change paths and develop better products, but rarely do the stories get as good as AMD's assault on Intel’s x86 universe.
In April 2003, AMD released Opteron, its first 64-bit x86-compatible server chip. It gave users the ability to run 32-bit and 64-bit x86 applications on the same chip.
Intel didn’t have anything like it. Hewlett-Packard Co. was focusing on Intel's Itanium as its 64-bit platform. It rejected Opteron as an “unnecessary complication” to its strategy.
Until Opteron, the x86-world was at risk of turning into a Soviet-style planned economy.
As Computerworld writer Russell Kay pointed out in a 2004, "the industry-leading vendors had stunningly misread what the market wanted …"
And did they ever.
The high performance computing users –- the fastest upgrading club in the world –- jumped on Opteron. They immediately recognized the chip’s capabilities and its perfect fit for Linux.
The business users were right behind and big server vendors, including HP, responded with Opteron-based servers. Customers wanted them.
In 2004, in New York City in the Rainbow Room, Hector Ruiz, chairman of AMD, met with analysts and press to talk about the chip. This was a great time for AMD.
Ruiz called Opteron a "wrecking ball" aimed at guess what?
But Opteron wasn’t a wrecking ball. It was a life saver. It gave customers new options and forced Intel to react and improve. Intel is better company today because of AMD.
Abu Dhabi’s investments ensure that a new fabrication plant near Albany New York will be built, no small thing in this economy. Oil money is the only money flowing right now. The country has already invested heavily in AMD and the two are now tightly linked. Will that turn out to be the best for competition and the U.S.?
The economic problems will eventually recede and the more fundamental issues will emerge overtime, namely whether the U.S. will retain intellectual and manufacturing capital in this critical sector of its economy. AMD is critical to keeping competition in the chip market, and so now is Abu Dhabi. That's the new reality today.
Patrick Thibodeaux Computer WorldUS EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Tuesday, October 7, 2008
Abu Dhabi investors in (AMD) Advanced Micro Devices
The world's number two microprocessor maker, Advanced Micro Devices Inc., is splitting into two in order to shore up its financial position and to better compete with its main rival, Intel Corp.
The Sunnyvale, Calif.-based company announced on Tuesday that it was spinning off its manufacturing operations into a new company called Foundry Co., a joint venture with Advanced Technology Investment Co., an entity backed by the Persian Gulf state of Abu Dhabi.
Advanced Technology Investment will pay $2.1 billion US for its stake in Foundry and will also assume $1.2 billion of AMD's existing debt. The company also plans to invest another $3.6 billion US and $6 billion US in Foundry over the next five years to expand its chip-making capability, which will include a new plant in New York State.
AMD will control 44.4 per cent of the company while Advanced Technology Investment will control 55.6 per cent. AMD senior vice-president Doug Grose will become chief executive officer of Foundry.
Once the spinoff is complete, AMD will focus on design and development of chips, similar to how "fabless" companies such as Nvidia Corp. work.
Abu Dhabi's investment company, Mubadala Development Co., will also double its current stake in AMD to 19.3 per cent with a new investment of $314 million.
The deal, which will require regulatory approval, is expected to close in the beginning of 2009.
AMD has been hurting since it acquired Markham, Ont.-based graphics chip maker ATI Technologies in 2006 for $5.4 billion US. As part of the deal, AMD acquired ATI's cellphone and television divisions, both of which were underperforming. AMD ended up writing down the value of its acquisition by $876 million US.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
The Sunnyvale, Calif.-based company announced on Tuesday that it was spinning off its manufacturing operations into a new company called Foundry Co., a joint venture with Advanced Technology Investment Co., an entity backed by the Persian Gulf state of Abu Dhabi.
Advanced Technology Investment will pay $2.1 billion US for its stake in Foundry and will also assume $1.2 billion of AMD's existing debt. The company also plans to invest another $3.6 billion US and $6 billion US in Foundry over the next five years to expand its chip-making capability, which will include a new plant in New York State.
AMD will control 44.4 per cent of the company while Advanced Technology Investment will control 55.6 per cent. AMD senior vice-president Doug Grose will become chief executive officer of Foundry.
Once the spinoff is complete, AMD will focus on design and development of chips, similar to how "fabless" companies such as Nvidia Corp. work.
Abu Dhabi's investment company, Mubadala Development Co., will also double its current stake in AMD to 19.3 per cent with a new investment of $314 million.
The deal, which will require regulatory approval, is expected to close in the beginning of 2009.
AMD has been hurting since it acquired Markham, Ont.-based graphics chip maker ATI Technologies in 2006 for $5.4 billion US. As part of the deal, AMD acquired ATI's cellphone and television divisions, both of which were underperforming. AMD ended up writing down the value of its acquisition by $876 million US.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Friday, October 3, 2008
Arab sovereign funds likely to buy US assets
Arab sovereign wealth funds (SWFs) are likely to pounce on distressed US assets after the government bail-out plan eases the extraordinary tensions in financial markets, according to one of the top intermediaries in the Gulf.
Gary Long, president of Investcorp, the private equity group which channels petrodollars from some of the biggest private and institutional investors in the Gulf and invests them in western markets, said private investors and sovereign wealth funds were taking a different attitude to the Wall Street meltdown.
Wealthy private investors, "shell-shocked" by the crisis in the US financial system, were now expected to become more cautious and conservative. But institutions, including sovereign wealth funds, will be looking for opportunities.
"Institutional investors recognise that after a period of turmoil there will be a time when market opportunities will be great, so they are seeing what's happening as such a period," Long told the Financial Times.
"But it's hard to hide if you're a [private] investor. Every market is embattled: even the local stock markets, even real estate markets have been questioned. So private investors are going to be a little more conservative as opposed to chasing high returns," he added.
In recent weeks, the Middle East's SWFs, flush with oil-fuelled liquidity, have been remarkably quiet as some of the US financial stocks they had rushed to rescue over the past year were devastated by the global crisis.
Facing pressure at home, the $200 billion (Dh734 billion) Kuwait Investment Authority last week revealed that it had lost $270 million on its Citibank investment but recorded no losses on its investment in Merrill Lynch, which has been bought by Bank of America. The KIA had ploughed $5 billion into the two banks in January.
American institutions scouring the Gulf for capital have also been rebuffed, according to regional bankers.
Sovereign funds are not in the business of bailing out faltering banks, they were told, particularly at a time when they were under domestic pressure to intervene at home and shore up tumbling equity markets that were suffering from a spillover effect of the global turmoil.
Reasonable valuations
But people close to some of the region's sovereign wealth funds say that while they do not want to be seen as white knights, they are not sitting on the sidelines.
"Now the crisis is being dealt with, once that phase is mapped out, it will take years to bring back balance to the market and assets will be available at more reasonable valuations. So if you have cash it could be an interesting opportunity," says one person close to the $50 billion Qatar Investment Authority.
Long, meanwhile, said he expected sovereign wealth funds also to join hands with private equity firms in investing in distressed US assets. This year one Gulf fund set up a $1 billion partnership with Investcorp to buy mezzanine debt related to US commercial property.
"The bigger sovereign wealth funds have always had most of their investments through intermediaries," he said.
By Roula Khalaf, Financial TimesUS EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Tuesday, September 30, 2008
Investors see South Africa as too risky
JOHANNESBURG, SOUTH AFRICA -- It was a bit like a mouse trying to calm a herd of frightened elephants.
With both the world financial markets and South Africa's political scene in turmoil, the country's new president went on national TV Sunday promising to avoid any sharp changes in economic policy.
With both the world financial markets and South Africa's political scene in turmoil, the country's new president went on national TV Sunday promising to avoid any sharp changes in economic policy.
The morning after Motlanthe's speech, the rand currency slid even further. Investors are shunning emerging markets as just too risky.
A speech by Reserve Bank chief Tito Mboweni on Sept. 18 starkly exposed South Africa's vulnerability to the global economic turmoil. About 18 billion rand ($2.16 billion) has flooded out of the country so far this year as foreigners sold off stocks.
Motlanthe this month replaced President Thabo Mbeki, who was forced out by his African National Congress. Motlanthe is widely seen as a caretaker for ANC leader Jacob Zuma, who is likely to win the post in elections next year.
A speech by Reserve Bank chief Tito Mboweni on Sept. 18 starkly exposed South Africa's vulnerability to the global economic turmoil. About 18 billion rand ($2.16 billion) has flooded out of the country so far this year as foreigners sold off stocks.
Motlanthe this month replaced President Thabo Mbeki, who was forced out by his African National Congress. Motlanthe is widely seen as a caretaker for ANC leader Jacob Zuma, who is likely to win the post in elections next year.
South Africa, an economic powerhouse in sub-Saharan Africa, exports commodities such as platinum, gold and diamonds. When the subprime crisis hit, South Africa initially weathered the storm well because its banks weren't exposed to the bad mortgage-related debt. But now it is suffering the secondary effects.
"We are seeing less capital being available in emerging markets generally and in particular South Africa," said Jac Laubscher, economist at Sanlam, a financial services group. "The fact we have a current-account deficit in excess of 7% means the financing of that current account becomes more of an issue, and there is a possibility of downward pressure on the rand."
Gold traditionally is a refuge for investors in time of turmoil, and the increase in gold prices is good for South Africa. But even more important to its economy is platinum, and its price has slumped about 50% since March.
"Platinum has overtaken gold as our most important export, and the platinum price has halved," Laubscher said, adding that increases in the gold price were unlikely to compensate.
South African gold trader Charles Leishman of Standard Bank said gold was being traded emotionally; platinum's price was falling because of weak industrial demand.
"They're actually very distinct, given the environment we're in the moment. [Platinum] is very demand driven. Gold at the moment is very emotionally driven.
"Nobody knows how long it [the global credit crisis] is going to go on for. You can inject all these billions of dollars but is that going to take the toxic sludge out of the system?"
"We are seeing less capital being available in emerging markets generally and in particular South Africa," said Jac Laubscher, economist at Sanlam, a financial services group. "The fact we have a current-account deficit in excess of 7% means the financing of that current account becomes more of an issue, and there is a possibility of downward pressure on the rand."
Gold traditionally is a refuge for investors in time of turmoil, and the increase in gold prices is good for South Africa. But even more important to its economy is platinum, and its price has slumped about 50% since March.
"Platinum has overtaken gold as our most important export, and the platinum price has halved," Laubscher said, adding that increases in the gold price were unlikely to compensate.
South African gold trader Charles Leishman of Standard Bank said gold was being traded emotionally; platinum's price was falling because of weak industrial demand.
"They're actually very distinct, given the environment we're in the moment. [Platinum] is very demand driven. Gold at the moment is very emotionally driven.
"Nobody knows how long it [the global credit crisis] is going to go on for. You can inject all these billions of dollars but is that going to take the toxic sludge out of the system?"
September 30, 2008
The US-UAE Trade and Investment Relationship
Executive Summary
The United States and the United Arab Emirates (UAE) enjoy a robust trade and investment relationship, much of which now has little direct relationship to UAE oil exports. Moreover, this is one of the fastest growing U.S. economic partnerships, both globally and especially in the Gulf region. The trade surplus in goods with the UAE throughout this decade reflects strong U.S. competitiveness in a number of sectors. In addition, the volume of U.S. exports and foreign direct investment into the UAE in recent years has grown dramatically and is likely to continue to grow in the future. This growth reflects the increasingly diversified UAE economy as well as its leading role as a modernizing influence in the Arab world.
Highlights
U.S. goods exports to the UAE increased by 352 percent from ••$2.6 billion in 2001 to $11.9 billion in 2006. This is far greater than the 42 percent increase for overall U.S. exports around the world.
The UAE’s share in U.S. exports to the Gulf Cooperation ••Council (GCC), which consists of the UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman, doubled from 25
percent in 2001 to 49 percent in 2006.
The UAE is the single largest export market for U.S. goods and services in the Middle East, and U.S. exports to the UAE have expanded nearly five-fold from 2000 to 2006.
In 2006, the UAE imported $2,571 of U.S. goods per capita, which exceeded that of many important U.S. trading partners including Kuwait ($821), Saudi Arabia ($330), Japan ($468), Germany ($501), Mexico ($1,287), and Israel ($1,558).
U.S. exports to the UAE originate from a wide variety of U.S. ••states. In 2006, the five largest sources were: Washington (33 percent), Texas (21 percent), California (8 percent),
New York (6 percent), and Tennessee (3 percent).
U.S. foreign direct investment in the UAE rose 445 percent from ••at least $834 million in 2001 to $4,547 million in 2006. This far exceeds a worldwide increase of 63 percent in the same period and an increase of only 22 percent in Saudi Arabia.
The pace of UAE investments in the United States have also ••quickened. Recent examples include a proposed 20 percent share in NASDAQ, a 7.5 percent share in the Carlyle Group, an 8.1 percent share in Advanced Micro Devices, and a 4.9 percent stake in Citigroup.
Cooperation extends beyond the private sector. U.S. non-••profit organizations are also expanding their activities in the UAE, including a Johns Hopkins University partnership in a new cancer treatment center and a New York University plan to establish a campus in Abu Dhabi by 2010.
This economic relationship will likely deepen further in coming years, given the UAE’s growing status as a regional business powerhouse, the high world price of petroleum and resulting high UAE growth rates, and the UAE’s continued political stability and sound economic policies.
by Michael Moore
Professor of Economics and International Affairs
Director, Institute for International Economic Policy
Elliott School of International Affairs
George Washington University
Download the full report .pdf
http://www.usuaebusiness.org/view/resources/uploaded/usuaewhitepaper.pdf
####
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
The United States and the United Arab Emirates (UAE) enjoy a robust trade and investment relationship, much of which now has little direct relationship to UAE oil exports. Moreover, this is one of the fastest growing U.S. economic partnerships, both globally and especially in the Gulf region. The trade surplus in goods with the UAE throughout this decade reflects strong U.S. competitiveness in a number of sectors. In addition, the volume of U.S. exports and foreign direct investment into the UAE in recent years has grown dramatically and is likely to continue to grow in the future. This growth reflects the increasingly diversified UAE economy as well as its leading role as a modernizing influence in the Arab world.
Highlights
U.S. goods exports to the UAE increased by 352 percent from ••$2.6 billion in 2001 to $11.9 billion in 2006. This is far greater than the 42 percent increase for overall U.S. exports around the world.
The UAE’s share in U.S. exports to the Gulf Cooperation ••Council (GCC), which consists of the UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman, doubled from 25
percent in 2001 to 49 percent in 2006.
The UAE is the single largest export market for U.S. goods and services in the Middle East, and U.S. exports to the UAE have expanded nearly five-fold from 2000 to 2006.
In 2006, the UAE imported $2,571 of U.S. goods per capita, which exceeded that of many important U.S. trading partners including Kuwait ($821), Saudi Arabia ($330), Japan ($468), Germany ($501), Mexico ($1,287), and Israel ($1,558).
U.S. exports to the UAE originate from a wide variety of U.S. ••states. In 2006, the five largest sources were: Washington (33 percent), Texas (21 percent), California (8 percent),
New York (6 percent), and Tennessee (3 percent).
U.S. foreign direct investment in the UAE rose 445 percent from ••at least $834 million in 2001 to $4,547 million in 2006. This far exceeds a worldwide increase of 63 percent in the same period and an increase of only 22 percent in Saudi Arabia.
The pace of UAE investments in the United States have also ••quickened. Recent examples include a proposed 20 percent share in NASDAQ, a 7.5 percent share in the Carlyle Group, an 8.1 percent share in Advanced Micro Devices, and a 4.9 percent stake in Citigroup.
Cooperation extends beyond the private sector. U.S. non-••profit organizations are also expanding their activities in the UAE, including a Johns Hopkins University partnership in a new cancer treatment center and a New York University plan to establish a campus in Abu Dhabi by 2010.
This economic relationship will likely deepen further in coming years, given the UAE’s growing status as a regional business powerhouse, the high world price of petroleum and resulting high UAE growth rates, and the UAE’s continued political stability and sound economic policies.
by Michael Moore
Professor of Economics and International Affairs
Director, Institute for International Economic Policy
Elliott School of International Affairs
George Washington University
Download the full report .pdf
http://www.usuaebusiness.org/view/resources/uploaded/usuaewhitepaper.pdf
####
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Monday, September 29, 2008
Libya to build Aluminium Smelter
The world's top aluminium firm United Company Rusal has signed an agreement with Libya to build an aluminium smelter in Libya with an annual capacity of 600,000 tonnes, reported AP. The parties also have agreed to build a 1,500 megawatt gas power station to supply energy to the smelter. The natural gas for the complex will be supplied by the National Oil Company of Libya under a contract intended to last at least 30 years. UC Rusal was formed in March 2007 by a merger between Russian producers Rusal and Sual, and the assets of Switzerland-based commodities trader Glencore.
Abu Dhabi Investment Company and Union Bank of Switzerland Infrastructure Fund
The ADIC-UBS Infrastructure Investment Fund is currently bidding for four multi-billion dollar infrastructure projects including the Aqaba Port Redevelopment in Jordan, an independent power and water plant in Saudi Arabia, a sewage treatment plant in Bahrain, and a schools project in Egypt, reported Khaleej Times. Abu Dhabi Investment Company and Union Bank of Switzerland launched the infrastructure fund early this year, to invest in the expanding infrastructure in the MENA and Turkey. The fund will take up to a $100m equity stake in a 3,000 megawatt power project in Saudi Arabia worth $3.5-4bn.
Sunday, September 28, 2008
Sovereign funds steer clear of US deals
As the entire US investment banking industry seems to teeter on the brink of disaster, investors are asking: Where are the Middle East mega-funds, flush with oil money?
After all, less than a year ago, these funds happily invested billions of dollars for minority stakes in some of the biggest Wall Street names. And as oil approached $150 a barrel in July, Middle East sovereign wealth funds amassed even more cash for deals. But as venerable banks like Goldman Sachs and Morgan Stanley slide, Middle East funds are keeping their distance.
The explanation is simple, bankers in the Middle East say: There are plenty of other, more attractive assets vying for the attention of these funds. While no one would rule out entirely the possibility that a Middle East fund will rescue Goldman Sachs or Morgan Stanley, it seems unlikely, they say.
Markets around the world have been hit by a downturn, said Youssef Nasr, chief executive of HSBC Bank Middle East, so there are compelling, value-priced deals available all over—sports teams in Britain, publicly traded companies in Russia and opportunities closer to home, like Middle East infrastructure acquisitions.
Middle East funds certainly got out their wallets this month—just not for Wall Street banks. A unit of the Kuwait Investment Authority is taking stakes in the country’s national telecommunications company. An Abu Dhabi investment fund owned by the royal family purchased the Manchester City Football Club, a popular soccer team. A Dubai fund is in talks with the British real estate developer Minerva. Saudi funds are looking at agricultural deals in Pakistan.
Because these funds have already invested billions of dollars in US financial institutions, they are less likely, not more likely, to put more cash into that sector right now, bankers say. Middle East sovereign wealth funds “put more money in a few months ago than they would have ideally done” because shares of financial institutions were relatively inexpensive then, Nasr said. That has “unbalanced” the portfolios of these sovereign wealth investors, he said.
“Now they need to go in the other direction,” he said, buying assets other than financial institutions, to diversify.
Jan Randolph, head of sovereign risk at Global Insight, an economic forecasting firm, said sovereign wealth funds “haven’t disappeared. They’ve remained on the sidelines or gone elsewhere”.
Middle East investors who were eager to seek stakes in financial companies a few quarters ago are staying away because the “magnitude of the crisis is much bigger than anyone thought,” Randolph said.
The sovereign wealth funds are also likely to be turned off by regulatory hurdles, political scrutiny and management issues.
Foreign purchases of US banks have attracted particular attention, ever since a scandal in 1991 involving the Bank of Credit and Commerce International, a bank based in Luxembourg that was seized in a coordinated action by regulators that year. BCCI had purchased stakes in US financial institutions without fully disclosing its involvement to regulators.
And none of the big sovereign wealth funds wants to engage in another bruising battle in the US Congress like the one that erupted when CNOOC of China tried to acquire UNOCAL in 2005. The US oil company went to Chevron.
Finally, the sovereign wealth funds generally have small staffs and have few people whom they could send to protect their interests in the event they took control of a major US investment bank.
Some sovereign wealth funds in Asia are still interested in US financial assets, though. The South Korean state-run fund, Korea Asset Management, for example, is hoping to buy nearly a billion dollars in nonperforming loans in the United States.
“The tables have turned,” the chief executive, Lee Chol Hwi, told Bloomberg News this week. Now Asian fund managers are coming to bail out US banks, the reverse of a decade ago, he said.
After all, less than a year ago, these funds happily invested billions of dollars for minority stakes in some of the biggest Wall Street names. And as oil approached $150 a barrel in July, Middle East sovereign wealth funds amassed even more cash for deals. But as venerable banks like Goldman Sachs and Morgan Stanley slide, Middle East funds are keeping their distance.
The explanation is simple, bankers in the Middle East say: There are plenty of other, more attractive assets vying for the attention of these funds. While no one would rule out entirely the possibility that a Middle East fund will rescue Goldman Sachs or Morgan Stanley, it seems unlikely, they say.
Markets around the world have been hit by a downturn, said Youssef Nasr, chief executive of HSBC Bank Middle East, so there are compelling, value-priced deals available all over—sports teams in Britain, publicly traded companies in Russia and opportunities closer to home, like Middle East infrastructure acquisitions.
Middle East funds certainly got out their wallets this month—just not for Wall Street banks. A unit of the Kuwait Investment Authority is taking stakes in the country’s national telecommunications company. An Abu Dhabi investment fund owned by the royal family purchased the Manchester City Football Club, a popular soccer team. A Dubai fund is in talks with the British real estate developer Minerva. Saudi funds are looking at agricultural deals in Pakistan.
Because these funds have already invested billions of dollars in US financial institutions, they are less likely, not more likely, to put more cash into that sector right now, bankers say. Middle East sovereign wealth funds “put more money in a few months ago than they would have ideally done” because shares of financial institutions were relatively inexpensive then, Nasr said. That has “unbalanced” the portfolios of these sovereign wealth investors, he said.
“Now they need to go in the other direction,” he said, buying assets other than financial institutions, to diversify.
Jan Randolph, head of sovereign risk at Global Insight, an economic forecasting firm, said sovereign wealth funds “haven’t disappeared. They’ve remained on the sidelines or gone elsewhere”.
Middle East investors who were eager to seek stakes in financial companies a few quarters ago are staying away because the “magnitude of the crisis is much bigger than anyone thought,” Randolph said.
The sovereign wealth funds are also likely to be turned off by regulatory hurdles, political scrutiny and management issues.
Foreign purchases of US banks have attracted particular attention, ever since a scandal in 1991 involving the Bank of Credit and Commerce International, a bank based in Luxembourg that was seized in a coordinated action by regulators that year. BCCI had purchased stakes in US financial institutions without fully disclosing its involvement to regulators.
And none of the big sovereign wealth funds wants to engage in another bruising battle in the US Congress like the one that erupted when CNOOC of China tried to acquire UNOCAL in 2005. The US oil company went to Chevron.
Finally, the sovereign wealth funds generally have small staffs and have few people whom they could send to protect their interests in the event they took control of a major US investment bank.
Some sovereign wealth funds in Asia are still interested in US financial assets, though. The South Korean state-run fund, Korea Asset Management, for example, is hoping to buy nearly a billion dollars in nonperforming loans in the United States.
“The tables have turned,” the chief executive, Lee Chol Hwi, told Bloomberg News this week. Now Asian fund managers are coming to bail out US banks, the reverse of a decade ago, he said.
By Heather Timmons and Keith Bradsher
Keith Bradsher reported from Hong Kong.
Global FDI up by 30%
GLOBAL foreign direct investment (FDI) grew 30% last year, reaching a record level of $1,83-trillion.
The flows were largely driven by increased cross-border merger and acquisition activity, the United Nations Conference on Trade and Development (Unctad) said in its annual world investment report, released yesterday.
The global financial crisis had not affected investment flows last year, but as the turmoil reaches boiling point, clobbering investment confidence and drying up liquidity, investment activity is expected to hit the skids with the robust FDI flows of last year expected to crimp 10% this year.
However, sovereign wealth funds — state-owned investment funds — may prove to be a buffer in leaner times.
These funds have emerged as new actors in the global investment scene.
While only 0,2% of the $5-trillion under their management were FDI-related, sovereign fund investment activity has risen sharply in recent years, with $31bn of the $39bn invested by sovereign funds over the past twenty years, having been committed in the past three years.
Developed countries received the bulk of FDI flows — $1,2-trillion — with the European Union attracting almost two thirds of inflows, while the US maintained its position as largest recipient country.
Developing countries however also made strides.
FDI flows into developing countries reached their highest level ever, climbing 21% to $500bn last year.
While investment in sub Saharan Africa also saw robust growth, it accounted for a marginal 3%, or $53bn, of total investment flows.
Unctad representative, Kalman Kalotay, who presented the findings of the report from Geneva, however, said sub Saharan Africa’s portion of global flows had increased from a mere 1% five years ago, which meant the region was seeing modest gains.
The improvement was driven by the spike in the commodities market and more FDI-friendly policy changes.
High Growth Markets for US Companies
| International export growth, growth abroad and capital investment are keys to securing domestic US manufacturing strength. By 2050 post US markets will account for almost 50% of the Global Economy. Astute entrepreneurs are looking outward and focusing on evolving and growing international markets. Capturing Global Opportunities: 18 High Growth Markets for US Companies United Arab Emirates China Qatar South Korea Vietnam India Taiwan Indonesia Saudi Arabia Thailand Malaysia Singapore Turkey Nigeria Brazil Mexico South Africa Russia ------------------------------------------------------------ CEO Forum 15th-17th March 2009 - Jumeirah Beach Congress Center, Dubai, UAE The Business Forum that brings together executives from the United States and around the world, to meet key principals in the region to explore and expand business opportunities and access Gulf capital. For Information about this opportunity for your company: E mail: usexportcouncil@ US Export Council provides assistance to American firms seeking access to international export markets in the Gulf States, Middle East and Africa. http://www.usexportcouncil.com |
US is still the largest recipient of Foreign Direct Investment
GLOBAL foreign direct investment (FDI) grew 30% last year, reaching a record level of $1,83-trillion.
The flows were largely driven by increased cross-border merger and acquisition activity, the United Nations Conference on Trade and Development (Unctad) said in its annual world investment report, released yesterday.
The global financial crisis had not affected investment flows last year, but as the turmoil reaches boiling point, clobbering investment confidence and drying up liquidity, investment activity is expected to hit the skids with the robust FDI flows of last year expected to crimp 10% this year.
However, sovereign wealth funds — state-owned investment funds — may prove to be a buffer in leaner times.
These funds have emerged as new actors in the global investment scene.
While only 0,2% of the $5-trillion under their management were FDI-related, sovereign fund investment activity has risen sharply in recent years, with $31bn of the $39bn invested by sovereign funds over the past twenty years, having been committed in the past three years.
Developed countries received the bulk of FDI flows — $1,2-trillion — with the European Union attracting almost two thirds of inflows, while the US maintained its position as largest recipient country.
Developing countries however also made strides.
FDI flows into developing countries reached their highest level ever, climbing 21% to $500bn last year.
While investment in sub Saharan Africa also saw robust growth, it accounted for a marginal 3%, or $53bn, of total investment flows.
Unctad representative, Kalman Kalotay, who presented the findings of the report from Geneva, however, said sub Saharan Africa’s portion of global flows had increased from a mere 1% five years ago, which meant the region was seeing modest gains.
The improvement was driven by the spike in the commodities market and more FDI-friendly policy changes.
Subscribe to:
Posts (Atom)
