Gold in the Middle East

The World Gold Council issued a report Wednesday (February 17th) which indicated that the demand for gold in the Middle East fell by 32% in the fourth quarter of 2009. The world demand for gold also dropped by 11% in 2009 because industrial demand and jewellery demand declined.

Egypt and the UAE experienced the biggest slump in gold jewellery demand in the Middle East with the UAE falling by 32% and Egypt by 35%.

The report also said that Exchange-Traded Fund demand for gold rose by 85% in 2009 compared with 2008 on the strength of an exceptional first quarter but was lower for the following quarters of the year.

In Dubai on Tuesday, Philipp Lotter, senior vice-president of credit rating agency Moody's in the Middle East, advised Dubai World to sell more assets in order to make it easier to restructure its $22 billion debt.

Lotter also said that Istithmar, the investment arm of Dubai World, had sold some of its real estate assets, including properties in London and the "W" Hotel in New York by the end of 2009.

Sultan Bin Saeed al-Mansouri, UAE Minister of Economy, said on Monday, that the UAE economy is expected to grow by about 3% in 2010.

Al-Mansouri indicated that the growth rate will be between 2.5 and 3 percent, expressing his optimism regarding the future. He had previously announced in December that the UAE economy would expand by 3.2 percent in 2010.

In Saudi Arabia, Dr. Abdullah Al-Quwaiz, the Saudi ambassador to Bahrain and former general manager of Gulf International Bank, spoke during an economic forum Sunday (February 14th) at the Dammam Chamber of Commerce and Industry. The event focused on the ability of Saudi financial institutions to withstand the global economic crisis. Al-Quwaiz said that Saudi banks enjoy a high level of liquidity, most of which comes from customer deposits. He indicated that the capital adequacy of these banks was above 16.7% in 2009.

Statistics compiled by Moody's and Standard & Poor's published recently indicate that the capital ratios of the top 45 banks in the world do not reach 8%.

In Syria, the Kuwait Investment Company which is listed on the stock exchange revealed Monday that it intends to enter the private banking sector following completion of studies in the field.

The announcement follows a similar one made by the Egyptian investment bank, H C Securities & Investment, which said it was also planning to enter the Syrian banking market.

The Syrian parliament approved a draft law allowing foreign investors to own up to 60% of the capital of any private banking institution in Syrian financial markets. The law aims to encourage foreign investment and attract more capital from the Gulf in particular.

In Bahrain, the Central Bank of Bahrain announced on Tuesday that it intends to introduce tighter limits on banks' credit and investment exposure. The Central Bank plans to introduce an upper limit on commitments to underwriting securities or syndicated loans of 30% of banks' capital for a period of 90 days.

The bank, which oversees financial activities in Bahrain, also said it plans to introduce tighter regulations on banks' exposure to directors and associated companies. The aggregate limits on this will fall to 25% from 40% for conventional banks, while it will also tighten the limits for Islamic banks.

In Lebanon, the Finance Ministry indicated Tuesday (February 16th) that it selected BLOM Bank, Fransa Invest Bank and BNP Paribas to manage a refinancing of medium-term Eurobonds maturing in March, which is being issued under the Republic of Lebanon's Global Medium Term Note Program. Moody's, a credit rating agency, raised Lebanon's rating to B2/B/B.