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BUSINESS
Monday, October 18, 2010
Dollar continues to decline The dollar continued to decline against a basket of currencies last week reaching a new 15-year low against the yen, historical low against the Swiss franc, and parity against the Australian dollar. The euro reached a high of 1.4157 levels following the speech by Ben Bernanke, the Federal Reserve’s Chairman, where he laid out the reasons to engage in quantitative easing II. The Sterling Pound reached a high of 1.6104 before closing the week lower at 1.5990. The yen strengthened against the dollar reaching a new 15-year high of 80.87 to close at 81.40. The Swiss franc reached a historical high of 0.9461 and closed the week at 0.9585. The Aussie also reached parity at 1.0003 against the dollar and closed the week at 0.9910. Finally, spot gold reached a new all time high at $1,387.10.
BMW Mideast wins Green Sustainable Energy Award DUBAI: BMW Group Middle East, the world’s leading premium automotive manufacturer, won an industry honor at Thursday’s 2010 Middle East Motor Awards. Beating a number of renowned competitors in the region, the BMW ActiveHybrid X6 scooped the title of ‘Best Hybrid SUV’ in the special award category for green sustainable energy. Celebrating the best in the region’s automotive business, the Middle East Motor Awards (MEMA) sets out to recognize the leading players in the automotive industry and to spotlight emerging technologies in the motor trade. With votes cast by automotive experts from across the region, BMW Group Middle East was again acknowledged for its commitment to sustainable mobility, following its recent ranking as the world’s most sustainable automotive company in the respected Dow Jones Sustainability Index for the fifth year running. Phil Horton, Managing Director of BMW Group Middle East said: “Winning this award is an incredible achievement for BMW Group and reinforces the company’s position as the most sustainable automobile company worldwide. This award further validates the advances BMW has made in design and sustainable mobility.” For the BMW Group, mobility and sustainabil-
ity are inseparably linked. BMW has already enjoyed significant success on the path to zeroemissions vehicles; with over 1.4 million vehicles already fitted with Efficient Dynamics technologies that reduce emissions and improve efficiency during phase one of the Efficient Dynamics strategy. BMW activated phase two of its EfficientDynamics strategy in the region earlier this year with the launch of the BMW ActiveHybrid 7 and X6 models, integrating the latest electric and petrol engine technologies to further reduce fuel consumption and emissions. “The introduction of the latest EfficientDynamics technology in the Middle East marks a significant milestone on the company’s journey towards zero-emissions. In particular, the BMW ActiveHybrid X6 offers the power, safety and luxury demanded across the region with cutting edge hybrid technology that makes this model a true innovator in its class. It is with innovative vehicles like the BMW ActiveHybrid X6 that change will occur in the region and BMW are proud to be at the forefront of this change,” added Horton. BMW Group Middle East, together with its importer AGMC, is currently displaying a premium line-up of vehicles at the 2010 Sharjah Motor Show, including a range of special edition cars to delight the motor show visitors.
Viva Kuwait launches VIVA Festiva Viva Kuwait introduces 4G iPhone KUWAIT: Viva Kuwait yesterday announced the beginning of a seasonal festival titled “Viva Festiva”. The festival includes many surprising packages tailored and designed to fulfill the needs of customers providing flexible and exclusive plans to choose from. By launching the first surprise of “Viva Festiva”, Viva Kuwait offers current and new customers of post-paid packages the privilege of having the KD55 monthly or yearly offer plan, which enables them to make free unlimited local voice calls and SMS (terms and conditions apply), free unlimited local video calls and MMS, free unlimited local mobile internet usage, free unlimited local Blackberry services, in addition to a special discount on international SMS. Choosing the yearly plan of the KD55 offer pro-
vides subscribers with even more fascinating surprises such as free golden number and Blackberry devices along with all the benefits of the monthly plan. This offer is available at all Viva Kuwait branches and authorized dealers with a variety of devices to choose from. “Viva Festiva” is the time of joyful offers and packages customized to fit their needs and to stay connected with family members, and friends anytime and anywhere. Viva Kuwait will launch iPhone 4, the thinnest Smartphone in the world with the highest resolution display ever built into a phone, in Kuwait in the coming months. For further information please visit www.viva.com.kw. For more information on iPhone 4 please visit www.apple.com/iphone.
Mindshare MENA holds forum to explore changes DUBAI: Mindshare MENA hosted yesterday its inaugural Mindshare Media Summit 2010 in Dubai in the presence of prominent speakers such as Nick Emery, Chief Strategy & Client Services officer, Mindshare worldwide; Russell Buckley, AdMob Evangelist, Google; Gilles Storme, Head of Sales EMEA, RockYou Ahmed Nassef, VP Middle East, Yahoo and Mazen Hayek Group Director of PR & Commercial/Official Spokesman of MBC Group. The inaugural Mindshare Media summit was organized by C squared. This summit aimed to provide a definitive guide to the key changes within the media advertising landscape. Selected guests were exposed to a hand-picked selection of some of the advertising industry’s most pioneering media minds, who outlined the emerging opportunities for advertisers and demonstrated how to embrace new media channels. “The Mindshare Media Summit 2010 is part
of our commitment to show the market how we are moving beyond the realm of media solutions to respond to market changes” says Samir Ayoub, CEO of Mindshare MENA region. “Understanding the optimum value and interaction between brands, consumers and media channels will create competitive advantage for our clients. The summit provides us with inspiration and essential learning for the future of our partnership together.” As a global network, Mindshare defines itself by being trusted by a wide range of leading clients and the diverse cultural and national make up of its community of employees. Mindshare MENA has 260 employees operating in 16 offices across 10 countries. Mindshare’s people are acutely aware of what’s happening in their city, their country, their specialist area of expertise to deliver innovation, creativity and superior results for the business and its stakeholders.
Federal Reserve meeting minutes The FOMC minutes of September 21 meeting, revealed that members were dissatisfied with the performance of the US economy even though most did not expect either renewed recession or deflation. The committee considered a range of options, focusing on Treasury purchases but including the possibility of adopting target paths for either prices or nominal GDP. Most participants appear to have thought that the status quo would justify renewed easing relatively soon, but a few thought more weakening would be required. Producer prices rose in September Wholesale costs for goods other than food and energy rose in September for a second month at a pace that suggests limited demand is restraining inflation. The so-called Core Producer Price Index increased 0.1 percent. Including volatile food and energy costs, wholesale prices rose 0.4 percent. Consumer Price Index increases The cost of living in the US rose less than forecast in September, indicating companies are keeping a lid on price increases to stoke demand. The Consumer Price Index rose 0.1 percent. Excluding volatile food and fuel costs, the socalled core rate was unchanged for a second month. Trade gap climbs The trade deficit widened more than forecasted in August as growing US demand for foreign autos and capital equipment swamped gains in exports. The gap grew 8.8 percent to $46.3 billion. Imports rose 2.1 percent, while exports increased 0.2 percent. The gain in purchases of goods made overseas is a positive signal that American companies are continuing to invest in new equipment and rebuilding inventories. Foreign sales of US goods rose to the highest level in two years. Retail sales Retail sales climbed more than forecast in September, easing concerns that consumer spending will weaken and endanger the recovery. Purchases rose 0.6 percent following a 0.7 percent gain in August that was larger than previously estimated.
NBK WEEKLY MONEY MARKET REPORT University of Michigan consumer sentiment Consumer sentiment unexpectedly dipped in early October to its weakest level since July. The University of Michigan’s preliminary October reading on the overall index on consumer sentiment came in at 67.9, down from 68.2 in September. Unemployment claims The number of Americans filing first-time applications for unemployment benefits unexpectedly increased last week, indicating the US job market is still struggling to recover. Jobless claims rose by 13,000 to 462,000 in the week ending October 9. The total number of people on unemployment insurance rolls decreased to the lowest level since November 2008, while those getting extended benefits declined. Europe German inflation accelerated Inflation in Germany, Europe’s largest economy, accelerated in September led by increasing prices for heating oil and food. The inflation rate rose 1.3 percent from a year ago after increasing 1 percent in August. Economic indicators European exports increased in August, suggesting the euro-region economy is weathering a global slowdown and a stronger Euro. Exports from the economy of the 16 nations that use the single currency rose a seasonally adjusted 1 percent from July, when they slipped 0.2 percent. Inflation accelerated to 1.8 percent in September from 1.6 percent in the previous month. That is the highest since November 2008. United Kingdom Inflation topped 3 percent limit for seventh month United Kingdom inflation exceeded the government’s 3 percent limit for a seventh month in September as higher clothing and food costs kept price pressures on the economy.
Al-Mazaya set to lease at Mazaya Towers in Kuwait Business Town KUWAIT: Flags, banners, posters and billboards announcing the launch of leasing at Mazaya Commercial Towers, Al-Mazaya Holding’s flagship project situated in the heart of Kuwait Business Town and the largest office space project in Kuwait, have been erected across Kuwait Business Town. In conjunction with the launch of leasing, Al-Mazaya is completing the final touches on the 98 percent completed project and connecting electricity to the towers, af ter obtaining the necessar y approval from the municipality and Ministry of Electricity. Mazaya Towers has become a destination of choice for firms and investors due to the smart technology and modern equipment provided and Al-Mazaya is gearing up to sign a number of leasing contracts with renowned firms and large brands in the Arab business world. AlMazaya Holding will manage the property while also providing additional services such as round the clock security, cleaning and parking services, and regular maintenance, among others. Speaking on the occasion, Eng Salwa Malhas, Executive Vice President for Business development and Marketing at Al-Mazaya Holding, said: “Despite the crisis which hit the global and regional markets, our belief in the importance of income-generating projects such as Mazaya Towers has been strengthened, particularly because these types of projects may generate satisfactory revenues. In light of the demand we witnessed on our recent incomegenerating projects, which have achieved and are still achieving success despite the crisis, we can expect similar success for our project in Kuwait Business Town. Despite the increasing supply in the Kuwaiti office space market, which has reduced rents, investors still prefer high quality projects in terms of location, finishes, services and management. This is exactly what Al-Mazaya is seeking to provide in all of its projects. “We expect an increase in the demand for office space in Kuwait during the coming period, particularly with the green light given to the KD30 billion growth plan launched by the Kuwaiti government over the coming four years. This plan, which aims to reduce the country’s reliance on oil rev-
enues and enhance private sector involvement, will certainly create opportunities for local and international firms to take part in the multi-billion Kuwaiti dinar growth plan. These firms will seek offices for their operations in Kuwait and, as such, will help increase demand for office space. The new plan will attract more investment to Kuwait and will boost private sector involvement in government projects. This is a positive factor and a main driver for economic and real estate activities,” she added. AlMazaya has two office towers in Kuwait Business Town. The company received a “No Objection Cer tificate” from the Kuwait Municipality in addition to the approval from Ministr y of Electricity to connect electricity to the project, which will take place by the end of the month. Al-Mazaya’s marketing team has prepared a comprehensive marketing plan targeting radio stations, newspapers and magazines, as have placed advertisements on towers and roads. In addition, all public sector establishments and large private sector firms have been supplied with the benefits and features of operating from Mazaya Tower in Kuwait Business Town. Mazaya Towers are strategically situated in the heart of Kuwait Business Town on Omar bin AlKhattab and Khalid bin Al-Walid roads, the main business districts in Kuwait. The KD30 million project consists of various high tech, fully equipped smart offices, and facilities include state of the art conference halls equipped with modern technology, high-level security systems, modern interiors, parking for residents and visitors, high-speed elevators and a cafeteria. Mazaya Towers are also provided with state of the art communication and IT networks that suppor t all types of applications, including sound, data and video applications for the commercial compound’s tenants and visitors. Mazaya Towers’ tenants and visitors will also be provided with convergent networks and a broad range of information technology services, including wire and wireless inter net ser vices, digital advertisements, telephone calls, security and data centre services.
Gulf Bank begins countdown to Al-Danah Millionaire draw KUWAIT: As the Al-Danah Millionaire draw date is approaching, Gulf Bank is announcing that the last day to deposit or open an account is October 31, 2010. The bank is encouraging customers to make those final deposits in the next two weeks to have the opportunity to become Gulf Bank’s Al-Danah Millionaire and participate in Kuwait’s most exciting and talked about prize draw. Customers opening an account or increasing their deposits must do so before the end of the month to ensure they are eligible for the Millionaire
draw. The chances to win are significantly increased by the more money and the longer the money is kept in the Al-Danah Account. Gulf Bank urges existing Al-Danah customers to increase their deposits and new account holders to e ns ure t he y ha v e t he minimum K D 200 b a la nc e deposited to have the chance to participate in the draw. The minimum deposit needs to be kept in the account for two months in order to qualify for the draw. The Al-Danah account has rapidly become one of
the most popular in the country - giving individuals a resourceful way to save money and at the same time the incentive to automatically qualify for the single biggest prize draw in the Middle East. Opening an AlDanah account is simple; just visit one of Gulf Bank’s 52 branches or call the Bank’s Telebanking service on 1805805. You can also log on to www.e-gulfbank.com, G ulf B a nk’ s b iling ua l w e b s it e , or w w w. e gulfbank.com/aldanah to find all the answers you need regarding Al-Danah.
Consumer prices rose 3.1 percent from a year earlier. Clothing and footwear costs jumped a record 6.4 percent. Core inflation, which excludes the cost of food, tobacco, alcohol, and energy prices, was at 2.7 percent. Consumer confidence fell Consumer confidence fell in September to its lowest level in a year, in another sign that a coming round of spending cuts is souring the public mood. The Nationwide Consumer Confidence index fell nine points to 53 last month, reversing the gain seen in August and resuming a downward trend that had been in place since the run-up to the election in May. The job report Unemployment claims climbed for a second month in September with the biggest increase in eight months, a sign the economy is losing momentum. Jobless benefit claims rose by 5,300 from the previous month to 1.473 million. Overall unemployment in the quarter through August fell by 20,000 to 2.45 million. The claimant-count unemployment rate stayed at 4.5 percent in September. The unemployment rate in the quarter through August slipped to 7.7 percent, the lowest since May 2009. Japan Machinery orders gained Japanese machinery orders unexpectedly advanced in August, a sign that a recovery in earnings may encourage companies to spend on plant and equipment even as the Yen surges. Factory orders rose 10.1 percent from July, the largest increase since December. The data is an indicator of business investment in three to six months. Kuwait Dinar at 0.28165 The USDKWD opened at 0.28165 last morning.
Commodity rally continues despite risk of correction WEEKLY COMMODITIES REPORT By Ol e S Hans en
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lobal markets, including commodities, continue to focus on the implications of the long awaited second round of quantitative easing from the US Federal Reserve. So far the expected introduction of QE2 has hammered the dollar against other currencies raising fears that it could have a destabilizing effect on the global economy. The dollar has lost more than ten percent in value versus the euro in just one month with only one out of 45 global banks predicting such an aggressive weakening over such a short period of time. The effect on commodity markets has been very visible as precious metals continues to rally to new record highs as a cocktail of higher future inflation expectations combined with a weaker dollar lends the support required to break up into new territory. The Reuters Jefferies CRB index has rallied strongly this past month with only a few markets moving in the opposite direction. Several commodities from different sectors have shown double digit returns. The CRB index together with ten of the markets below has entered into overbought territory increasing the likelihood of a correction. For now though the dollar holds the key to any near term movements. It is also worth noting the discrepancies in performance within sectors with the most noticeable being corn which has outperformed wheat by nearly 19 percent in just one month, more on that later. Gold and especially silver broke higher this week with silver having rallied eight weeks in a row, the best run since 2006. Real interest rates, which are nominal interest rates minus inflation, moved lower as QE2 and a subsequent weaker dollar had the market increasing the future inflation expectations. Both metals are now technically very overbought, just like the dollar is much oversold, but until we have further news from the US Federal Reserve there has been no incentive to reduce risk in this sector with gold bulls looking for 1,400 an ounce as long the dollar stays weak. Support is located at last week’s low at 1,325 followed by 1,300. The price of Crude oil has now settled into its new range between 80 and 85 dollars. The strong rally from the 70 dollar low which was driven by the weakening dollar, strong Chinese demand and signs of a reduction in US storage levels came to a halt this week. Traders were unwilling to add to their already long positions before seeing further clarification about QE2 and the subsequent impact on the dollar. OPEC ministers met this week and decided to keep production targets unchanged but at the same time urged member nations to comply with their quotas from December 2008. Currently compliance averages around 60 percent, somewhat higher than recent readings but still well below acceptable levels with Nigeria and Angola the worst offenders. They see the world market as being well supplied and prices are at levels that are acceptable to producers as well as consumers. Money managers, such as hedge
funds, nearly doubled their long position in WTI crude last week on the back of the recent move back above 80 dollars. On that basis a move back below 80 dollars now carries the risk of long liquidation as many are unwilling to carry unprofitable positions for long. Likewise a move above 84.50 should ensure that momentum carries it towards 87.15, the April high. Turning to agricultural the USDA delivered a major shock to the market last Friday when they sharply reduced their forecast for corn and soybean output. Hot August weather was followed by heavy rains which reduced yields across the US Midwest. What followed on Monday was the biggest one day rally in corn since 1973 as it rallied to the maximum allowed limit of 8.5 percent just short of the psychological level of 6 dollars per bushel. The USDA forecast that by September 2011 the corn stockpile will shrink to less than four weeks supply at 900 million bushels, the lowest in 14 years. This week the US Environmental Protection Agency added further pressure to the supply outlook as they raised the cap on the amount of ethanol blended into gasoline from ten to fifteen percent for cars less than four years old. The outlook for wheat, despite the lost output from Russia this summer, looks somewhat better and this has led to the near 19 percent difference in performance this past month. Chinese demand, especially for soybeans remain strong. The recent dramatic rise of the price of corn could tempt US farmers to switch production away from soybeans thereby cutting supplies and boosting prices. Technically corn has found resistance towards $6 per bushel and technical traders would like to close the price gap between 528.25 and 554.5 that emerge when the market spiked higher last Friday. Talk of a global food crisis still lingers given the strong price rises among agricultural products these past few months. The three S&P GSCI sub indicies covering food related products have rallied between 18 and 28 percent year to date primarily due to adverse weather in the growing regions combined with the economic pick up among emerging economies which has led to a change in consumer habits. Meat analysts forecast higher prices for beef, and poultry as producers will be forced to pass on higher feeding cost as the supply of corn and barley tightens. The US cattle herd is the smallest since 1973. One of the reasons behind this reduction is due to the price of main feed ingredient which is 70 percent above the 10 year average.