North Africa/Middle East

First Abu Dhabi Bank (FAB) has started an auction process for a Dubai hotel operated by Shangri-La and owned by indebted construction group Al Jaber with a starting price of 700 million dirhams ($190.59 million), two sources said, Reuters reported. Al Jaber, best known as a contractor but with interests across a range of sectors, has struggled since a construction downturn in the United Arab Emirates after the global financial crisis.

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Middle Eastern markets can hardly be accused of complacency over the latest surge in regional tensions, even if global investors are taking a more relaxed view of events. The region accounts for three of the world’s 10 worst-performing equity indexes since the U.S. drone attack that killed Iran’s General Qassem Soleimani last week, while the dollar-denominated bonds of Iraq, Lebanon, Bahrain, Egypt and Oman are among the 10 biggest losers in emerging markets, Bloomberg News reported.

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Saudi Aramco shares have dropped more than 10 per cent from their peak as the Kingdom’s markets have been hit by growing jitters over the deteriorating situation in the Middle East following the US assassination of a top Iranian military commander, the Financial Times reported. The state oil company’s shares fell 1 per cent on Monday following a 1.7 per cent fall on Sunday. The slump has left Aramco’s shares trading at 34.2 riyal, the lowest level since the group floated on Saudi Arabia’s stock bourse last month.

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Lebanon needs a $20 billion-$25 billion bailout including International Monetary Fund support to emerge from its financial crisis, former economy minister Nasser Saidi told Reuters on Friday, Reuters reported. Lebanon’s crisis has shattered confidence in its banking system and raised investors’ concerns that a default could loom for one of the world’s most indebted countries, with a $1.2 billion (917.01 million pounds)Eurobond due in March.

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In 2008, as mountains of bad debt collapsed and economies around the world crumbled, carefree gamblers at the central bank-owned Casino du Liban rolled dice and spun roulette wheels, the Financial Times reported. Unscathed by the global financial crisis, Beirut glittered as the Middle East’s party capital and purveyor of discreet financial services. Lebanon offered wealthy investors something they could not get elsewhere — high interest rates for low risk investments.

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Lebanon’s central bank governor has suggested he’s struggling to contain the divergence of the pound from its peg to the dollar as the country faces its worst financial crisis in decades, Bloomberg News reported. “No one knows,” Riad Salameh said, when asked how much further the pound would depreciate on the black market. “When I spoke in the past, the dollar hadn’t reached 2,000 pounds,” he said, according to the state-run National News Agency. The pound has been pegged at 1,507.5 to the dollar since 1997.

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If 2019 was the year when a clutch of Middle East markets burst into the mainstream, then 2020 will test whether the foreign money keeps flooding in. The year opened with five Gulf Arab economies joining JPMorgan Chase & Co.’s emerging-market bond indexes, Bloomberg News reported. The spotlight stayed firmly on the region as Saudi Aramco’s $12 billion international bond debut in April was followed by preparations for its historic public offering at the end of the year. Gulf dollar bonds outperformed their emerging-market peers with returns of 15% this year.

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Lebanon, a politically troubled but upper middle-income Middle Eastern state, is in the midst of a deep financial and political crisis. Banks have been intermittently closed since mid-October and depositors across the country are finding it impossible to gain access to dollar balances, the Financial Times reported in a commentary. While capital controls have not officially been introduced, it seems banks have taken it upon themselves to conserve liquidity and capital by dictating what level of funds clients can withdraw or transfer abroad.

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Lebanon’s worst economic crisis in decades is forcing authorities to wade deeper into the kind of fiscal engineering that the International Monetary Fund said risks undermining the central bank’s credibility, Bloomberg News reported. The central bank bought 3 trillion pounds ($2 billion) of Treasury bills from the government at 1 percent, well below market rates, according to a person with knowledge of the matter.
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Lebanon’s caretaker Prime Minister Saad Hariri said he discussed with the heads of the International Monetary Fund and the World Bank a possible plan to ease a deepening financial crisis, Bloomberg News reported. Eurobonds rose after Hariri’s office said on Twitter that he asked the two institutions for technical assistance for the plan, which he said would be implemented by a new government. He also asked the World Bank for help in securing trade finance to prevent any shortages of essential goods.

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