In collaboration with Qatar Development Bank (QDB) to help bolster Qatar’s private sector, Qatar Shell officially signed three more local companies to its supply chain, for the company and their partner Qatar Petroleum, at the Pearl Gas to Liquids (GTL) plant, the world’s largest Gas To Liquids plant in Ras Laffan Industrial City.

The landmark signing ceremony comes after Qatar Development Bank partnered with Qatar Shell to provide local companies and manufacturers access to specific new business opportunities.

The Manufacturing of Personal Protective Equipment contract was awarded to Qatari Industrial Equipment W.L.L. represented by their Chairman, Nasser Sulaiman Al Haider. The Heat Exchanger Re-Tubing contract was awarded to GEA Batignolles Technologies Thermiques Qatar W.L.L represented by Tariq Al Mana. And the translation services contract was awarded to Snow Comms Conceptual Communications & Events represented by their Managing Partner, Mohammed Al Mannai.

Wael Sawan, Chairman and Managing Director of Qatar Shell Companies, signed the contracts with the three local companies.  The signing was witnessed by Abdulaziz Bin Nasser Al Khalifa, Chief Executive Officer, Qatar Development Bank.

Commenting on this initiative, Al Khalifa said, “Qatar Development Bank plays a vital role in encouraging the private sector companies, especially small and medium enterprises, through providing financial aid, support and opportunities. Thus, QDB launched this joint initiative as a clear example of what can be done to enhance opportunities for the SME sector, in coordination with leading international companies, such as Qatar Shell, to enable the private sector to capitalise on available opportunities, which will benefit all stakeholders. SMEs grow and flourish through acquiring such contracts. Similarly, global companies and customers get the services they need from a local source, which means quality can be ensured and QDB can achieve its goal in developing the private sector.”

Speaking at the signing, Wael Sawan, Chairman and Managing Director, Qatar Shell companies, said, “We are very proud that our partnership with QDB has resulted in the successful award of contracts to three SMEs to be the supplier of choice to Qatar Shell and the Pearl GTL plant. The companies joining us today have been shortlisted from 26 local SMEs who registered their interest.  Besides their commercial viability, the three winners were selected based on their ability to adhere to Shell’s technical standards and global tendering process, which have been developed over years of dedicated work on the world’s largest energy projects.”

Sawan continued, “Qatar Shell aims to support the National Development Strategy and to help Qatar fulfill its National Vision 2030 by empowering local SMEs to compete internationally and we are looking forward to announcing additional business opportunities for local companies in 2014.”

In May 2013, QDB and Qatar Shell held a workshop where more than 100 local Qatari SMEs were presented with four specific business opportunities that would allow them to become the supplier of choice for the Pearl GTL plant. Qatar Shell is still in the negotiation stage for the fourth business opportunity, which is the manufacturing of stud bolts.

SMEs and entrepreneurs that participated in the workshop were also briefed on the financial support options made available to them by QDB through their variety of finance products and solutions, Qatar Shell’s tendering process as well as the challenges and opportunities in the SME sector.

Following the announcement of the business opportunities, 26 local companies registered their interest. Seventeen passed the pre-qualification stage, 12 submitted their bids and three were finally selected based on their commercial bids and technical capability. All registered companies are added to a database where they will receive invitations to future workshops and business opportunities.

Doha will host the GCC Digital Security Forum on the 4^th and 5^th of February 2014 under the patronage of the Qatar Minister of Information and Communications Technology, Dr. Hessa Al Jaber. The Forum is being organised by MEEZA in cooperation with Al-Iktissad Wal-Aamal Group.

Qatari Minister of Information and Communications Technology, Dr. Hessa Al-Jaber

The Forum aims  to confirm that digital crimes continue to be a growing global concern, as it  is estimated that as much as USD 1 trillion was lost globally in 2013 as a result of cybercrimes, according to a report by International Telecommunication Union Report. The total global direct cost of cybercrime reached USD 113 billion up from USD 110 billion and the average cost per victim of cybercrime increased this year to USD 298 up from USD 197 in 2012, according to Norton Cybercrime Report 2013. These numbers do not reflect the true damage done to brands, organisations and entire markets, especially in the Middle East, a region that lacks accurate estimation of losses resulting from digital crimes.

This Forum also comes at a time when digital defense strategies have reached the forefront of priorities of governments and public and private institutions. Specialised government agencies have been established to protect economies and societies from digital attacks and intrusions estimated to cost hundreds of billions of dollars annually. In the light of this, the GCC countries have decided to collaborate to build a safer digital space to protect economies and societies.

The Forum features prominent speakers including ministers, top professionals and experts from international organisations and regulatory entities and unions, leaders from the public and private sectors and digital security officials from vital sectors such as the infrastructure, telecommunications, and banking and financial markets, in addition to solutions and services providers in the field of digital security. Overall, it is expected to attract more than 400 participants from 15 countries.

The Forum focusses on digital security and its impact on various economic sectors and the role of governments in the development of digital security systems within institutions and companies, in addition to laws and enforcements needed to prevent and fight digital crimes, new trends and solutions for digital threats. Prospects of cooperation between countries in the region and between governments and the private sector  to enhance the protection of vital sectors and institutions will also be discussed as well as providing a safe environment to promote the Internet economy, e-commerce and e-services in the Gulf region.

On this occasion, Dr. Al-Jaber said, “Organising such forums highlights the importance of the issue of digital security and its associated technological expansions, as the technological development of information systems and networks are accompanied by some negative phenomena, depicted in cyber crimes, which began to take multiple forms and shapes and involve significant threats against individuals and institutions. We need to spread constant awareness of all that’s happening within the field of digital security and constantly explore means of defense and protection and further develop digital security systems within institutions and companies, as well as legislation and related laws.”

Dr. Al-Jaber added, “It is our pleasure to work with MEEZA on the organisation of this key event in the Gulf region in view of the important and efficient role carried out by this company in the field of information security and protection and its broad expertise in this area. We are confident that the Forum will provide a positive contribution towards raising awareness and the exchange of experience and solution-finding in the field of digital security, especially since it brings together all the stakeholders at the state level and the Gulf countries at large.”

MEEZA’s Chairman, Rashid Al Naimi, said, ” I would like to extend our gratitude to His Excellency Dr. Al Jaber for supporting this regional event with the hope that it would become an event of reference in this field and to contribute effectively in raising awareness and promoting protection culture in our institutions and provide a safe environment for the digital economy in Qatar and the Gulf countries.”

Al Naimi added, “MEEZA enjoys a leading position at the level of digital security at an exceptional phase in the region and the world. The company has all the necessary capabilities to lead the maturing process in the area of digital security, not only on the technology front, but also from the perspective of future decisive policies and strategies to determine our ability to protect our economic sectors and make them stronger and more resilient.”

Al Naimi went on to say, “The Forum is an opportunity for every Information and Communication Technology (ICT) user within companies, institutions and local, regional and international organisations. It goes along with Qatar National Vision 2030, which focusses on raising economic and social development to new levels and the unique competitive capacities that we must achieve in order to reinforce and develop our role and to have a prominent place at the Gulf and international levels. Such a vision does not focus on the economic aspect only, but also includes the human dimension, as it considers the citizen as the main development target around which all policies are centered”.

For her part, MEEZA’s CEO, Ghada El Rassi, indicated that the Forum comes at a time when stakeholders from public institutions and companies are working to develop strategies not only aimed at protecting themselves against digital attacks, but with the objective of thwarting piracy acts, detecting their sources and taking appropriate actions to prevent them. According to El Rasssi, all economic sectors in the Gulf countries and other countries in the region and the world are nowadays connected to networks, and thus they have become exposed to different types of digital intrusions. She stressed that based on all that, the Forum is an opportunity to review major topics in the field and to come out with conclusions that can be translated, within a short time frame, into policies and action plans whose implementation will be followed up and discussed at future editions of the Forum.

Al Rassi continued, “The Forum will discuss topics such as the reality of digital security in the region and necessary policies and legislation for the regulation and protection of the digital sector. It will also address, with the participation of the most prominent international figures in this field, the reality and future prospects of digital protection strategies available and the situation of economic sectors against the reality of digital threats, as well as the role of planning and security monitoring centers and the security aspect of data centres and cloud computing.”

Faysal Abou Zaki, Deputy CEO of Al-Iktissad Wal-Aamal Group, said, “The GCC Digital Security Forum comes at a time when there is a massive increase in the importance of the Internet and digital services in all aspects of daily life, as well as in the various facets of economic activities, where ICT plays a key role. Thus, the protection of these systems, networks and associated databases is a top priority among governments and institutions in the region and the world.”

Abu Zaki added “There is no doubt that the support of the Ministry of Information and Communications Technology in Qatar, led by H.E Dr. Hessa Al-Jaber, and the key role of MEEZA Qatar, in addition to the vital topics that will be raised in the Forum by world renowned experts, and the high level of participation that the Forum will attract, will mark the GCC Digital Security Forum as a point of reference for the digital security industry.”

US Congress approved a two-year budget deal last week, further avoiding another government shutdown. While this marks a positive step by lifting a cloud hanging over the world’s largest economy, it does not tackle the challenges of the US long-term fiscal outlook.

The budget deal in fact only increases discretionary spending — the part of federal spending that is not subject to health and social security entitlements or interest payments — marginally in 2014-15 without addressing the long-term rise in nondiscretionary spending, like Medicaid, Medicare, Social Security and interest payments. According to QNB Group, this budget deal is unlikely to change the overall long-term fiscal outlook and does not alter QNB Group’s forecast for US economic growth of 1.5% in 2014.

Following the collapse of a bipartisan commission in 2011 to tackle the large fiscal deficit, a large reduction in government spending became mandatory on 1^st  March 2013. This led to a significant fall in government spending, which has negatively impacted US economic growth this year. Democrats and Republicans failed to reach an agreement on the 2014 US budget last September, which led to a partial government shutdown for 16 days in October. A further mandatory sequestration of government spending would have taken place on 1^st  January, 2014.

The budget deal reached last week between Democrats and Republicans restores a small amount of government spending that would have been cut under the sequestration. The deal marginally increases discretionary spending. According to the US Housing Budget Committee, the budget deal restores USD 45 billion of discretionary spending in 2014 and USD 18 billion in 2015 that would otherwise have been cut from the US budget. This USD 63 billion cumulative rise in discretionary spending levels only represents 0.3% of GDP, which is unlikely to make a significant difference to the already weak US economic outlook. Most of this increase will be funded through higher airline passenger fees and other taxes.

The main benefit of this budget deal is that it avoids another government shutdown over the next two years. The deal will increase discretionary spending in the short-term, easing the pain of sequestration. However, the budget deal keeps government spending lower than envisaged before the sequestration, which will lead to an additional drag on US economic growth of about 0.5% of GDP in 2014. QNB Group therefore forecasts the US economy to grow by only 1.5% next year.

Critically, the budget deal does not eliminate the potential for a new fiscal crisis. Also, the deal does not include an increase in the US debt ceiling, which will again become binding on 7^th February , 2014. Unless this ceiling is raised, the US government will not be able to fund its operations, which would raise again the risk of an unprecedented default on US government debt.

Over the medium term, the problem of containing health and social security entitlements has not been addressed by this budget deal. According to the Congressional Budget Office, these entitlements are expected to rise significantly to about 15% of GDP by 2023 as a large portion of the US population, the so-called baby boomers, retire. This represents a significant challenge to keep the fiscal deficit under control, while having sufficient room to address the growing infrastructure needs of the US economy. The current budget deal leaves it to a subsequent Congress to address this challenge.

Overall, the budget deal does not change the US long-term fiscal outlook, according to QNB Group. While it avoids another government shutdown, it does not address the challenge of reducing entitlements over the medium term. Moreover, it does not address the risk of a possible government default once the US debt ceiling becomes binding again early next year. As a result, QNB Group keeps to its current forecast of 1.5% US growth in 2014.

His Excellency Sheikh Abdulla bin Saud Al Thani, Chairman, Qatar Development Bank (QDB), congratulated His Highness Sheikh Tamim bin Hamad Al Thani, Emir of Qatar, on Qatar National Day and announced that, in line of H.H the Emir’s strategy on national food security, QDB launched a new financing scheme for Qatari small and big farms owners, aimed at purchasing and raising female livestock.

The launch of the new scheme comes with QDB’s strategic plans to provide all support for private company owners and Qatari businessmen in various sectors, in a way that is aligned with Qatar National Vision 2030. The aim is to enhance economic diversification in Qatar, stimulate the business sector and promote Qatari products internationally. Additionally, QDB offers other services related to food security strategy, as it has financially supported a number of projects in livestock, fisheries and agriculture.

The new Sharia-compliant scheme is launched in cooperation with the Livestock Management Unit of the Ministry of Environment and Widam Food Company. It provides small farms owners with financial loans of up to QAR 250,000, with a payment period of up to five years, while it provides big farm owners with financial loans of up to QAR 750,000, with a payment period of up to eight years, with only 1% interest to encourage the sector.

Commenting on the launch, Mr. Abdulaziz bin Nasser Al Khalifa, CEO, QDB said, “QDB started this initiative a year ago. During that period, the bank cooperated with the Ministry of Environment since it is the main supporter in this sector, and Widam Food Company, given the major role it plays in the local market, and in carrying out a comprehensive study of support mechanisms and implementation methods.”

Al Khalifa added, “Our partnership serves as an excellent example of efficient cooperation between the public and private sectors, and reflects QDB’s strategy to support the livestock sector through providing small and big farms and livestock projects owners with all facilitations available to enable them to purchase female livestock, under the supervision of the Ministry of Environment, with QDB’s financial aid and in cooperation with Widam, in order to increase local production. Providing small and big farms owners with female livestock will transform these farms into production entities that assist local market and contribute in the economic self-sufficiency of Qatar. We appreciate the leading role played by the Ministry of Economy and Commerce and the constant support it provides to such initiatives.”

Eng. Farhood Hadi Al Hajri, Deputy Manager of Livestock Management and Head of the Technical Committee of Livestock Projects in the Ministry of Environment said, “I would like to express my deep thanks and gratitude to Boards of Directors in both QDB and Widam Food Company for their efforts towards supporting the livestock projects and owners of small and big farms. These efforts helped in shaping the scheme which will contribute in supporting local production and increase the level of self-sufficiency in Qatar. I also appreciate the Ministry of Economy and Commerce and its hard work in supporting such projects and the local production in general. This scheme is of great importance, not only in supporting the growth of local economy, but also in the contribution it has in food security projects.”

Mr. Yousif Muhammad Saleh Al Awadi, General Manager, Widam Food Company,  said, “I would like to express my thanks and gratitude to QDB for placing its confidence in us, through entering this agreement in cooperation with the Livestock Management Unit of the Ministry of Environment, which will further our plans to support livestock sector. Based on its deep expertise in the sector, our company’s mission is to provide high-quality livestock suitable for Qatar’s climate, to be raised in accordance with the highest standards and made available for targeted clientele in the near future through our company’s outlets in Qatar. Widam is always keen on working with various stakeholders to maintain the trust and confidence it gained over the years.”

In addition to the financial support, QDB will organise training courses and workshops, in cooperation with the Livestock Management unit of the Ministry of Environment, designed to guide applicants on how to deal with small projects from an economic point of view. On the other hand, Widam will handle purchasing of special breeds of livestock suitable for living in Qatar and obtaining all necessary approvals required by the Livestock Management Unit of the Ministry of Environment.

His Excellency Dr. Mohammed bin Saleh Al-Sada, Minister of Energy and Industry and Chairman and Managing Director of Qatar Petroleum (QP), and His Excellency Mr. Ali Shareef Al-Emadi, Minister of Finance and Secretary General of the Supreme Council for Economic Affairs and Investment, announced the forthcoming Initial Public Offering (IPO) of shares representing 25.725% of the issued share capital of Mesaieed Petrochemical Holding Company Q.S.C. (MPHC).

MPHC has been established by QP, under the initiative of the Supreme Council for Economic Affairs and Investment, to combine some of the most important drivers of QP’s success in the petrochemical industry. MPHC has also been selected to initiate an IPO of its shares, given the reliable financial track records of its underlying portfolio companies and the potential for attractive dividend distributions in the future.

The IPO is being undertaken as part of the State of Qatar’s policy to encourage long-term investment and the continued development of a personal savings culture among Qatari nationals, and will give Qatari citizens the opportunity to share in the State’s current and future wealth. This IPO will initiate QP’s ten-year investment and savings programme that the State of Qatar is implementing for Qatari nationals.

Under the guidance of the Emir, His Highness Sheikh Tamim bin Hamad Al Thani, it has been directed that shares in MPHC should be offered to IPO subscribers on innovative and attractive terms, including an attractive price and additional rewards in exchange for long-term shareholder loyalty.

The purchase of shares in the offering will entitle Qatari nationals to benefit from the allocation of additional free Shares (Incentive Share) after five years and ten years, provided that by such award dates they have retained at least half of their original shares purchased in the offering at all times following the offering. For each share purchased in the IPO, each qualifying investor will receive one additional Incentive Share, free of charge over the period, thus encouraging long-term investment.

H.E Dr. Al-Sada hailed the IPO and said, “It comes while our beloved country was still celebrating its National Day, the day of pride and dignity, a day on which we remember the glories of the past and from which we move towards the future with the same Qatari vigour and determination carried from generation to generation.”

H.E Dr. Al-Sada said, “This IPO is not an isolated event but is part of a series of IPOs that Qatar Petroleum intends to undertake during the next ten years in implementation of the directives of H.H Sheikh Tamim bin Hamad Al Thani The Emir of the State of Qatar to launch initiatives to encourage a long-term investment and saving culture.” He added that “This is a continuation of our leadership’s policy of putting citizens first, and caring for their welfare and prosperity. It is also a manifestation of a wise policy that has created a partnership for a better future for us and for generations to come. For this, we express gratitude to His Highness’ efforts for the development of our country.”

He continued, “This IPO is an important step toward realising Qatar’s National Vision by being part of the long-term investment and saving programme, realising economic diversity and widening the participation of the private sector in the process. It will also be a unique opportunity for all participating Qatari nationals to benefit directly from the development of the economy and the prosperity of the petrochemicals sector in Qatar. All Qataris are therefore invited to take part in the IPO of MPHC and to benefit from and take part in our economic growth and development.”

Terms of the IPO

The price per share will be QAR 10 plus offering and listing costs of QAR 0.20 per share (total of 10.20 QAR per share).

The offering comprises a total of 323,187,677 ordinary shares, representing 25.725% of the Issued Share Capital of the company. On the basis of the offer price, the size of the offering will be QAR 3,231,876,770 and the total equity value of the company represents QAR 12,563,175,000.

The IPO subscription period will be open from 31^st  December 2013 until 21^st January 2014.

Free Incentive Shares will be offered to IPO shareholders under certain conditions (please see below for more details).

Free Incentive Shares

MPHC will offer significant benefits to its IPO shareholders.

In particular, with the stated policy of the State of Qatar to encourage long-term investments and the continued development of a personal savings culture among Qatari nationals, QP has committed that each Qatari national who subscribes in the IPO will receive, the conditional right to receive an Incentive Share free of charge, for each offer share allocated to them in the IPO,

Incentive Shares are ordinary shares of MPHC which rank equally with the offer shares in all respects. 50% of the Incentive Shares will be awarded on the date falling five years from the IPO date and the remaining 50% will be awarded ten years after the date of the IPO. Incentive Shares will be awarded to Qatari nationals who have retained at all times at least half of their offer shares by such dates. In addition, to encourage wealth retention for the young, 50% of the Shares subscribed for at the IPO on behalf of minors cannot be traded on Qatar Exchange for as long as those subscribers remain minors. Further details about the Incentive Shares are available in the MPHC prospectus and the IPO Guide titled “Our IPO; How You Can Take Part”.

Participating in the IPO

The IPO subscription period will open on 31^st  December 2013 and will close on 21^st  January 2014. It is anticipated that the shares will be admitted to trading on the Qatar Exchange in February 2014. The IPO will be open within Qatar to all Qatari nationals and certain selected Qatari institutions.

Taking part in the IPO will be simple. Qataris can participate by completing and submitting an application form, which will be available from participating branches of the receiving banks in Qatar.  These receiving banks and their participating branches are:

 The Lead Receiving Bank:

• Qatar National Bank                          All branches in Qatar

The participating branches of the following banks:

It is not necessary for an applicant to provide a National Investor Number as part of the application process. Further details are available in the prospectus.

IPO Timetable and Key Dates

31^st  December 2013                              Start of IPO subscription period

21^st  January 2014                                  End of IPO subscription period

By 30^th January 2014                           Allocation of Shares completed and refunds made to shareholders, where applicable

February 2014                                          Anticipated MPHC Listing on Qatar Exchange

31^st  December 2018                              First Incentive Shares award date

31^st  December 2023                              Second Incentive Shares award date

Ali bin Hassan Al Muraikhi, Chairman, Qatar Steel International, and Hasnawi Shaiboub, Chairman, Sidar Company, Algeria, signed the Articles of Association for the Algerian Qatari Steel Company recently in Algiers, a press release issued by Industries Qatar said.

The signing ceremony was attended by a Qatari delegation, headed by H.E Dr. Khalid bin Mohamed Al Attiyah, Minister of Foreign Affairs, H.E Dr. Mohammed bin Saleh Al Sada, Minister of Energy and Industry and Ahmad bin Mohamed Al Sayed, CEO, Qatar Holding. On the Algerian side, the ceremony was attended by Amara bin Younes, Minister of Industrial Development and Investment. The joint venture is scheduled to be registered in January 2014.

Qatar Steel International, equally owned by Qatar Steel Company and Qatar Mining, will hold 49% of the new company, while Algeria, represented by Sidar Company and National Investment Fund, will hold a 51% stake, as per the Algerian Investment Law, 2009. The engineering and construction works are expected to take approximately four years.

@The Peninsula

The following is the weekly money market review by IBQ:

The US Federal Reserve reduced its monthly bond purchases from USD 85 billion to USD 75 billion, the first step toward undoing the extraordinary stimulus that Chairman, Ben Bernanke, initiated to help the US economy recover from the recent recession.

The decision came after an “improved outlook for the jobs market,” as stated by Bernanke. The US Dollar gained significantly against most of its major counterparts, after the US announced the beginning of the reduction of the Quantitative Easing (QE) programme, which is seen to have debased the US currency, reinforcing prospects that the world’s largest economy is improving.

The move also prompted investors to take on more risk as the US Federal Reserve improved their outlook for the economy, pushing stocks to reach record highs. The Dow Jones Industrial Average rose by 292.71 points to touch a high of 16,174.05, while the S&P 500 rose to a high of 1,811.08 following the Fed’s announcement.

The US Dollar maintained its strong footing despite a higher-than-expected surge in initial jobless claims. The Euro started at 1.3735 and reached a high of 1.3811. The currency then quickly dropped against the US Dollar amid the Fed’s tapering announcement and after S&P’s downgrade of the European Union’s long-term rating. The Fed’s decision signals improvement in the labour market signalling higher rates in the near future, which boosted the US Dollar against the currency. On the other hand, the Eurozone’s lacklustre economic recovery forces the European Central Bank to keep rates at historical lows driving the Euro lower. The single dropped to a low of 1.3623 and closed the week at 1.3671.

The British Pound Sterling also dropped against the US Dollar amid the Fed’s decision. However, the currency maintained its strong footing and closed higher.  The pound opened at 1.6294 and surged to a high of 1.6483 amid volatile trading during the Fed’s announcement. The currency reached a low of 1.6219 and closed at 1.6333.

The Japanese Yen continued to drop against the US Dollar as the Bank of Japan (BoJ) kept their monetary policy unchanged. The Bank also maintained its view that the economy is continuing to recover moderately. The US Dollar reached 104.59, a five-year high against the Yen. Additionally, the market is expecting the BoJ to continue its ultra-easy monetary policydespite the Fed’s decision. The pair opened at 103.13 and dropped to a low of 102.47. The US Dollar then surged to 104.59 and closed the week at 104.07.

The Australian Dollar lost heavily last week. Opening at 0.8946, it dropped to a low of 0.8820, a three-year low. The currency traded near its low and closed at 0.88.

Unchanged consumer prices: The US cost of living was unchanged, signalling that it will take time for inflation to approach the level desired by Federal Reserve officials. Lower petrol, new cars and clothing prices held the Consumer Price Index unchanged.

Existing home sales decline: Previously owned US home sales declined for the third consecutive month to the lowest level of the year as rising mortgage rates and a limited supply of properties discouraged buyers. Purchases dropped 4.3% to a 4.9 million annual rate, the National Association of Realtors said.

Unemployment claims rise: Jobless claims climbed by 10,000 to 379,000.

Europe

German investor confidence rises: German investor confidence rose to the highest level in more than seven years, showing signs that the recovery in Europe’s largest economy is strengthening. The ZEW Economic Sentiment Index of investor and analyst expectations, which aims to predict economic developments six months in advance, jumped to 62.0 from 54.6.

EU loses triple A rating: The European Union lost its top credit rating from S&P, which indicates the deteriorating creditworthiness of the bloc’s 28 member nations. S&P cut its long-term rating on the EU to AA+, with a stable outlook from AAA and maintained its short-term rating at A-1+.

United Kingdom

UK inflation unexpectedly slowed to the least in four years, moving closer to the Bank of England’s (BoE) 2% prediction of inflation. Consumer prices rose 2.1% from to 2.2%.

BoE minutes: The nine-member Monetary Policy Committee was unanimous in voting to keep interest rates on hold at 0.5% and to leave the Bank’s GBP 375 billion of bond purchases unchanged. The policy makers said that a stronger British Pound Sterling, and government steps to limit household energy bill rises, had improved the inflation outlook.

Inflation could hit its 2% prediction for the first time in more than four years, the minutes said, as smaller rises in utility bills could reduce inflation by 0.15% compared to previous forecasts. Britain’s economy has strengthened, with 0.8% growth and BoE predicts expansion of 2.8% next year, above the long-run average. However, output is still 2.5% below its pre-crisis peak.

Gold plummets

Gold extended its drop against the US Dollar to reach its lowest level as the Fed lowered its expectations for both inflation and unemployment. The metal was one of the hardest hit by the Fed’s announcement to taper its QE programme by USD ten billion to USD 75 billion. Gold reached a low of USD 1,185.10 and closed the week at USD 1,203.92.

@The Peninsula

Qatar’s retail sector, which has a total of ten new malls at various stages of construction and some at the planning stage, look “stable” in the short-to-medium run, according to Al Asmakh Real Estate Development Company (AREDC).

With Qatar’s status as the world’s richest country and increasing per capita income translating into higher disposable per capita income, the inclination towards shopping and eating out, is higher than other GCC countries, AREDC Valuation and Research Department said.

Owing to this, retailers in malls and hypermarkets have been doing well and are comfortable to pay monthly rents without compromising their location, it said. The report added that fashion and luxury stores occupy about 38% of space in a mall.

Overall, the retail segment, which has entered the recovery mode of  the business cycle, looks stable in the short-to-medium run. However, forthcoming supply, which is likely to be delivered in the next two to five years, may impact the organised retail segment negatively in the longer term, it said.

Hypermarket, souqs and retails shops may not experience too much change in rents and occupancy, the report added.

Within Qatar, the retail market can be segmented into four basic zones – malls, souqs, hypermarkets and unorganised shops, the report stated. It added that unorganised retail occupies 70% of total retail space and no further space can be expected as per the Doha Town Planning Scheme.

The top three malls – Villaggio, City Centre and Landmark  –  occupy almost 50% of overall shopping activities among the mall segment, according to the report.

For grocery and daily shopping, hypermarkets are preferred over malls. Hypermarkets such as Lulu, Safari Mall, Family Food Centre and Grand Mall have been doing very well in attracting footfalls. Hypermarkets comprise of around 158,000 sqm, which is nearly 5% of total retail supply.

Approximately 550,000 sqm net leasable area is expected to be delivered on and near Al Shamal Road. This is 53% of expected supply and 96% of existing net leasable area in 13 operational malls, it said.

Factors such as stabilised occupancy rate and rentals in malls play a vital role in the organised retail segment, the report said.

Qatar has clear a classification on retail shopping experience. Salwa Road and Barwa Commercial Avenue are preferred for larger establishments such as car and furniture showrooms. These areas offer better parking facilities for visitors which is unlike most parts of Doha.

Areas such as C and D Ring Roads, Al Sadd, Bin Mahmoud and Al Nasr comprise branded retail shops whereas Old Town Area is for budget stores.

The report found that the concept of glamour and residential locations for retail has changed after the opening of Grand Mall Hypermarket. It also highlighted that all prominent malls have ongoing commitments from occupants. AREDC Research Wing said that because of this, rentals across all malls have remained virtually “stable” since 2011.

Villaggio, City Center and Landmark commands premium rental rates. The average price may be QAR 280 per sqm per month. However, rents in other malls are in the range of QAR 200 to QAR 250.

In  retails shops, the highest rental can be seen in Al Sadd with an average of QAR 250 per sqm per month, while C Ring Road and Salwa Road may fetch an average rent of QAR 200.

In Old Town, where several shops have been rented out to a single tenant for more than 20 years, the average monthly rental rate is in the range of QAR 150-180.

@Gulf Times

The following is the monthly banking sector update by QNB –

Growth of loans and deposits was flat. Loans declined by 0.1% but are up by 11.9%. Deposits also dipped by 0.2%.

The banking sector’s Loan-to-Deposit Ratio (LDR) remained at 107%. Going forward, some banks will be issuing Tier 1 bonds. Commercial Bank of Qatar (CBQK) and Doha Bank (DHBK) announced that they will be raising QAR 2 billion each in Tier 1 bonds to improve their Capital Adequacy Ratios (CARs) as well as provide additional funds aiding loan book growth.

Public sector deposits retreated by 5.0%, while private sector deposits gained by 3.7%. Delving into segment details, the government institutions segment, which represents 58% of public sector deposits, ticked up by 1.4%. However, the government segment retracted its positive momentum by 16.4%. The semi-government institutions segment followed in the footsteps of the government segment slipping by 4.2%. On the private sector front, the consumer segment expanded by 6.1% and the companies and institutions segment ticked up by 1.2%.

The overall loan book exhibited flattish performance. Total domestic public sector loans declined by 1.1%. Public sector loans are up 8.8%. The government segment loan book contracted by 7.6%. On the other hand, the government institutions’ segment, which represents 66% of public sector loans, inched up by only 0.8%. We believe public sector loan growth will be the primary driver of the overall loan book in 2014. Our assumption is based on the expected uptick in project mobilisations in the coming months. Private sector loans inched up by 0.9%. The services segment posted the biggest growth, up by 9.9%, while the real estate sector loan book , which contributes 28% to private sector loans, retreated by 1.2%. Consumption and others, which contributes 31% to private sector loans, declined 1.5% .

Specific loan-loss provisioning stood at 1.4%.

Drake & Scull Qatar (DSI Qatar) has won  a mechanical, electrical and plumbing (MEP) contract for an  approximate value of QAR 400 million for the upcoming Mall of Qatar in the Al Rayyan district of Qatar. The win is the latest in a series of multi-million commercial and residential deals signed by the company.

Al Khaliji Commercial Bank has financed a total of USD 160 million for two Nakilat shipyard joint ventures, Nakilat-Keppel Offshore & Marine (N-KOM) and Nakilat Damen Shipyards Qatar (NDSQ). The bank would fund USD 120 million to N-KOM and USD 40 million to NDSQ.

Signing for the financing was held at Nakilat’s headquarters on 17^th December and was attended by senior management of Nakilat, N-KOM, NDSQ and Al Khaliji.

Managing Director, Nakilat and Chairman of N-KOM and NDSQ, Abdullah Fadhalah Al Sulaiti said, “This agreement is a clear demonstration of the strength of our businesses at Erhama bin Jaber Al Jalahma Shipyard. N-KOM’s and NDSQ’s track records are testament to the success of the Emir’s vision for a world class marine industry within Qatar.”

Al Khaliji’s Group Chief Executive Officer, Robin McCall commented on the financing agreement. “The financing of Nakilat’s onshore assets consolidates Al Khaliji’s position as a major player in the marine industry backed by our continued growth, our internationally recognised credit rating and the trust our clients have placed in us to continue to deliver innovative financing solutions. Nakilat continues to play an instrumental role in establishing the State of Qatar’s marine industry and has built a strategic relationship with Al Khaliji. As Qatar continues to generate steady revenues from the hydrocarbon sector to support its plans of diversifying the economy, Al Khaliji will continue to play an important role in financing oil, gas and marine industry projects and supporting the country’s solid growth and progress.”

@The Peninsula

Qatar is poised to boost contracted liquefied natural gas exports to Europe in five years as prices in the region are at their highest since 2006.

Qatari shipments to Europe under medium or long-term contracts will rise 22% next year, the biggest jump since 2009, according to data from Poten & Partners Inc., a New York-based ship broker. Centrica, the UK’s biggest supplier of energy to homes, last month extended an import contract with Qatargas, the world’s biggest LNG producer, to 2018 and increased volumes by 20%.

“We are offering good deals because we are ready to sell,” Ibrahim al-Ibrahim, Vice Chairman, RasGas, said in an interview in Doha. “We have a certain amount of gas. We want to sell it.”

Qatar signed supply accords with Germany’s E.ON SE and Petroliam Nasional Berhad’s (Petronas) UK unit and is increasing shipments to Europe from 2015 as it may face competition from Australian projects that are closer to Asia, home to the world’s biggest consumers. The US will start exporting the super chilled gas by 2016, the International Energy Agency in Paris said in June.

Qatar will supply an extra 6.64 million metric tonnes to Europe in 2014 in addition to the 19.65 million contracted to the region, the Poten data showed. That is the biggest jump since 2009, when the Gulf nation started three of the world’s six largest production plants. Europe will receive a total of 71.5 million tonnes of LNG under contracts next year, according to Poten.

“Qatar is aware of the potential competitive threat posed by the Australians,” Trevor Sikorski, Head of Natural Gas, Coal and Carbon at Energy Aspects Ltd. in London, said in a 20^th December research report. ‘‘For Qatar, this is about destination options.’’

The new contracts allow Qatargas to ship volumes to markets in Asia if prices there are higher, the Doha-based company said 17th December by e-mail, declining to provide further details on cost structures.

‘‘These recently concluded fully divertible sales and purchase agreements with Petronas UK, EON and Centrica allow Qatargas to meet the needs for LNG in Europe, while retaining the ability for Qatargas to respond to demand signals from other regions, such as Asia, by diverting LNG,’’ the company said.

About three-quarters of global LNG is supplied under medium or long-term contracts, mainly linked to oil costs, with the remainder sold under agreements lasting less than four years or on spot markets, according to the International Group of LNG Importers, a Paris-based lobby group.

Spot LNG this month rose to their highest prices as South American utilities and Northeast Asian buyers competed for spare cargoes to offset cuts in hydroelectric and nuclear power generation. The price in Northeast Asia, the biggest consuming region, climbed 10%  to USD19 per million British thermal units, according to assessments by New York-based World Gas Intelligence. The average price for spot shipments delivered to Northeast Asia is USD 16.47, according to Bloomberg calculations using WGI data.

Britain’s LNG terminals supplied an average 27.1 million cubic metres a day of gas this year, compared with 38.3 million last year and a record 69.7 million in 2010, according to flow data from National Grid. The nation was scheduled to receive one tanker this month.

Qatargas raised the annual volume under the contract with Windsor, England-based Centrica by 0.6 million tonnes to three million tonnes from June 2014 to December 2018. EON is set to get 1.5 million tonnes a year from Qatargas to Rotterdam for five years from 2014, while the UK unit of Malaysia’s Petroliam Nasional is set to receive 1.14 million tonnes a year for five years, according to company statements disclosing the accords.

‘‘We are doing everything we can to get Asia first,” Rasgas’s al-Ibrahim said.

“Growing demand in Asia-Pacific, the Middle East and South America combined with a limited number of LNG projects coming on-stream over the next few years is expected to keep LNG prices at significant premiums to liquid market indices, such as NBP indices,” Qatargas said. “While some new supply sources by new exporters such as Australia and the US are expected to ease the market in the next half of the decade, strong global LNG demand growth could still result in a tight market in the longer term.”

@Blooomberg

Ooredoo has launched the first commercial 3G network in Algeria, the company has announced. Ooredoo Algeria, formerly known as Nedjma, started commercial 3G services in ten major cities.

The 3G network enables customers with 3G-enabled devices to experience the fastest mobile broadband in Algeria, at no additional cost, Ooredoo said in a statement.

Dr Nasser Marafih, Group CEO, Ooredoo, said: “With this week’s successful launch of 3G services in Algeria, we aim to enrich the lives of people by bringing them the fastest and most reliable mobile broadband service ever offered in the country.”

In addition to Algeria, Ooredoo rolled out a nationwide 3G network in Tunisia in 2013, along with providing 4G services in Qatar, Kuwait, Oman and the Maldives.

@www.arabianbusiness.com. 

Qatar Investment Authority (QIA) is in talks to invest USD 200 million in residential property in India. QIA is holding conversations with Kotak Realty Fund, run by Kotak Mahindra Bank Ltd., which would manage the investments on behalf of the fund.

Sovereign wealth funds and other long-term investors are eyeing opportunities in India’s real estate sector, betting that property prices are bottoming out after slumping this year on the back of the slowest economic growth in a decade.

House sales in major Indian cities, including Mumbai and Delhi, fell 22%. House prices grew by 9%, according to property data firm Liases Foras.

Vikram Gandhi, Founder, VSG Capital Advisers said the timing to invest in Indian property was ideal. “If you have a long-term perspective and you believe that the need for capital in a country is quite high, which it is, and the supply is limited right now because people are not investing, then this is the best time to invest,” he said.

QIA’s investment comes after the Abu Dhabi Investment Authority appointed Kotak to invest USD 200 million in Indian real estate on its behalf.  The investments are a shot in the arm for India’s property developers, many of whom are burdened with debt that is expensive to service at steep interest rates.

Banks are also reluctant to lend because of fears of defaults, while private equity funds, which poured in billions of dollars at the height of the property market in 2007, have turned cautious after project delays impacted returns and exits.

@Reuters

Bait Al Mashura Finance Consultations has signed an agreement with the World Bank to reinforce cooperation in a host of areas, including research and knowledge sharing in Islamic finance.

According to Al Mashura, this cooperation agreement is the first of its kind in favour of a consultancy firm in Qatar and the region.

Bait Al Mashura is a consulting firm providing Shariah compliant consultation to Islamic as well as conventional financial institutions. It also provides audit, supervision, training and development services to promote Islamic Banking in Qatar and overseas.

In addition to cementing cooperation between the two institutions in the field of Islamic finance, the agreement will reinforce cooperation for exchanging scholarly visits and conducting lectures in Qatar and elsewhere.

Under the agreement, the parties have also agreed to extend invitations to the Executive Management of the company to deliver lectures and present papers at workshops organised by the World Bank.

Signing of the agreement coincided with the visit of Washington-based Abayomi A. Alawode, Practice Manager and Head of Islamic Finance, World Bank’s Financial Systems Global Practice. During his visit to Bait Al Mashura, Abayomi introduced the initiatives of the World Bank and its efforts towards the development of Islamic finance. He also shed light over the areas of interest for the World Bank related to the further development of Islamic finance.

Dr. Khalid Al Sulaity, Vice Chairman, Bait Al Mashsura Board of Directors, said that the cooperation agreement comes as a result of the company’s eagerness to strengthen the cooperation with various national, regional and international organisations to take advantages of the different experiences and contribute to the further development of Islamic finance industry in Qatar as well as at the regional and global levels.

@The Peninsula

Qatar’s current key interest rates are here to stay, but authorities need to address inflation associated with surging credit and consumer demand, according to National Bank of Kuwait (NBK).

“Qatar’s key lending and deposit rates are unlikely to change from their current levels of 4.5% and 0.75% respectively, given the need for broad alignment with the US Federal Funds rate, in the context of the fixed exchange rate regime,” NBK said in a report. The Fed funds rate is currently at a historic low of 0.25%. “However, over the medium term, inflation associated with surging credit and consumer demand as well as continued monetary expansion, may need to be addressed by the authorities,” it said.

Credit growth was at a robust 18% as of October 2013, with lending to the public sector outpacing the private sector, the report said. Within the private sector, lending to the real estate and construction sectors slowed in 2013, while the consumer sector picked up pace. “Overall credit growth should accelerate further as more development projects are tendered,” the report said.

Observing that total assets of Qatar’s commercial banks topped QAR 900 billion, increasing by 14%, NBK said while credit growth has been the primary driver of the increase in banks’ assets, domestic investments have also played an important part. Banks have been increasingly active in the bond markets, purchasing government-issued domestic debt.

Given that deposit growth had outpaced credit growth, helped in large part by government deposits in the banking system, the report said concerns over domestic liquidity have receded.

The sector’s loan-to-deposit ratio fell from 111% at the end of 2012 to 106%, it added and foreign currency deposits continue to play an important part in the broader monetary picture.

Among the drivers, net foreign assets of the banking system increased significantly in 2013, on overseas investments and credit by commercial banks as well as an increase in the Qatar Central Bank’s (QCB) holdings with foreign banks, it said.

Finding that recently, the Qatari Riyal, in tandem with the US Dollar, has been depreciating against the Euro on both a nominal and real basis, NBK said “If sustained, domestic prices of imports from the EU may rise, adding to inflationary pressures.”

Rising rental prices as well as costs in entertainment were the dominant drivers of inflation in Qatar in 2013, according to the report.

“Over the next two years, burgeoning consumer demand, underpinned by annual population growth of above 7%, should push headline inflation to 4% and 4.5% in 2014 and 2015 respectively,” it said, adding that tight conditions in the residential market will exert upward pressure on rents.

NBK said the authorities will need to be aware of inflationary pressures associated with double-digit growth in the non-oil sector, mounting public debt – largely due to the issuance of bonds – and capacity constraints.

However, QCB is committed to preserving financial stability and managing liquidity and inflation through a mix of macro prudential and monetary measures, the report said.

The authorities have launched a strategic plan for the regulation of the financial sector, extended the QAR four billion-a-month programme of domestic debt issuance to bonds and sukuk with longer maturities and established the Qatar inter-bank offered rate in 2012 to develop a more liquid and transparent inter-bank market.

NBK found that average inter-bank rates for the year were also down by ten basis points compared to 2012,  in the case of the one-month facility.

 @Gulf Times

Growth in Qatar’s Gross Domestic Product, adjusted for inflation, accelerated slightly to 6.2% from 6%, the Qatar Statistics Authority said.

Output in the mining and quarrying sector, which includes oil and gas production and accounts for more than 40%  of GDP, grew 1.8%.

The financial and real estate sector increased by 10.5%, while the construction sector expanded 13% on the back of government spending on infrastructure projects.

@Reuters

Fixed deposits of banks in Qatar have surged 71%, reflecting that individuals turned to safety of their money when the stock market turned volatile. According to the Qatar Central Bank data, fixed deposit of banks in Qatar surged to QAR 72.87 billion from QAR 42.58 billion.

Investors suffered losses in 2008 when the Qatar stock market fell sharply, following the crash in stock markets around the world because of the global financial crisis. Qatar Exchange Index, which crossed the 12000 mark in 2008 and touched a peak of 12433, fell sharply to 4335.85 the same year following the sell-off in major global financial markets.

After that, the stock market has gradually recovered but has remained volatile, keeping investors alert.  Qatar Exchange has also been unable to live up to the expectations of investors in providing returns. The Index has not been able to cross the peak of 12433 and is trading at 10360.

Money has been steadily flowing into fixed deposits. In 2009, when stock markets crashed, individuals rushed to banks to move their money and fixed deposits increased by 20% to QAR 51.07 billion at the end of 2009 from QAR 42.58 billion in 2008. The rush continued the following year as fixed deposits grew by 27% to QAR 64.89 billion in 2010. The deposits then grew by 5% to QAR 68.27 billion in 2011 and then by 6.7% to QAR 72.87 billion in 2012.

Apart from the fixed deposits, money has also gone into savings accounts or demand deposits. Savings deposits have jumped 102% to QAR 37.17 billion at the end of 2012 from QAR 18.43 billion.

Rising savings is good news as the recent Saving Index Report revealed that 72% respondents from Qatar said that they could not save as much as they had planned.

@The Peninsula

Qatar is set for another phase of massive development in its chemicals and petrochemicals sector with a targeted output of 23 million tonnes per year (TPY) by 2020.

Qatar’s liquefied petroleum gas (LPG) production, which currently stands at 11 million TPY, will go up by 0.5 million TPY in 2014 with the commissioning of the Barzan Gas Project, which will play a significant role in meeting the energy needs of giant local projects, including the facilities planned for hosting the FIFA World Cup 2022.

Some important contributing projects for the proposed chemicals and petrochemicals production boost are Al Karaana and Al Sejeel, in addition to the Qatar Fertiliser Company (QAFCO) expansion at Mesaieed, which is the world’s largest single-site producer of both ammonia and urea.

Already, Qatar is the world leader in liquefied natural gas (LNG), producing 77 million TPY. And with two world scale gas-to-liquids (GTL) plants at Ras Laffan, Qatar has emerged as the GTL capital of the world. Qatar’s energy sector development has been driven by the huge North Field gas reserves, the largest non-associated gas reserve in the world.

In 40 years since the North Field gas discovery, Qatar’s LPG industry has grown rapidly, particularly so, in the last decade, His Excellency Minister of Energy and Industry, Dr. Mohamed bin Saleh Al-Sada said.

More LPG volumes are expected from the offshore Bul-Hanaine oil field development, which will not just enhance crude oil production, but will also add important quantities of ethane, propane, and butane.

Recently, Qatar announced a new offshore field discovery in North Field’s Block 4 North, with as much as 2.5 trillion cubic feet of natural gas. This is Qatar’s first new discovery in 42 years, coming after four years of intensive exploration activities.

While energy sector single-handedly spurred the country’s growth until the early 1990s, Qatar’s rapid expansion in the last two decades has seen major contributions from sectors such as construction, transport and communication, banking and finance, real estate and business services.

The country has a significant pipeline of infrastructure projects estimated to be worth USD 183 billion, committed to be delivered ahead of FIFA World Cup 2022.

The largest of these is the Doha Metro. The network will cover a distance of about 216 km and will have some 100 stations. Good progress is already being made on the project with Q Rail awarding design and construction contracts totalling USD 5.4 billion.

A light rail system is also planned to link the new Hamad International Airport with central Doha and the various stadiums that are being built to host the World Cup.

The key driver of growth will therefore continue to be the non-hydrocarbon sector, at least until 2015, when the Barzan Gas Project is expected to start production.

@Gulf Times

Qatar has been ranked as one of the top countries in the world for effectively managing its energy resources. The country has made rapid strides in “building institutions” and “better governance” of its extractive industry, global research firm, McKinsey Global Institute, noted in its latest report on energy-driven countries.

Qatar made it to the top of the charts based on criterion set by MGI for effectively handling its resource sector and contributing to the rising global economy. The country ranked second among the top ten countries in the world in terms of economic development.

The report, “Reverse Curve: Maximising the potential of resource-driven economies,” set six benchmarks to indicate the economic performance of 81 resource-rich countries that play a pivotal role in supplying natural resources to a rising global economy.

The benchmark index included building the institutions and governance of the resources sector,  developing infrastructure, ensuring robust fiscal policy and competitiveness,  supporting local content, deciding how to spend a resources windfall wisely and transforming resource wealth into broader economic development.

Under the “Economic Development” category, Qatar ranked second after Norway and received seventh place in “Institutions and Governance,” featuring in high slots under other categories.

Oman and UAE are among other GCC countries that have ranked top slots. “The Gulf countries, including Qatar, have made progress on some of these metrics, but they still have to improve their competencies in spending the windfall and fiscal policy and competitiveness,” the report noted. It also warned that the top players cannot rest on their achievements and will need to move quickly to remain relevant in the new global energy order. For example, Qatar is the world’s largest producer of liquefied natural gas, but by 2017 the country is facing big competition with Australia.

On the importance of the size of a country and its relative importance of the resource sectors, the report noted in countries with relatively small populations, such as Qatar, the extractive industry is far more important to economic development than in larger countries that are likely to have a more diversified economy and a larger domestic market. As a result, the extractive industry is the subject of much closer scrutiny by government in smaller countries.

@The Peninsula