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									                              rise in rents seen                                                                      Abraaj Capital drops Citadel transaction                                                       Markaz gets buyback nod

    .A specialized economic report expected on Wednesday                          In response to market speculation, Abraaj Capital               However these discussions were of an initial                    Central Bank of Kuwait (CBK) approved, on
    a rise in prices of real estate property rents between                        confirmed Wednesday that following a review, it              nature to evolve a framework, deal terms and                    26/7/2011, the request of Kuwait Financial Centre
    eight to 15 percent by the end of this year and early next                    is no longer currently exploring a transaction with          mechanics that could be workable for both parties.              (Markaz) to extend the period for repurchasing 10%
    year due to expected increase in the number of residents                      Citadel Capital, a private equity firm based in              As no agreement has been reached to date                        maximum of issued shares for additional six months
    in Kuwait.                                                                    Cairo and listed on the Egyptian Exchange. This              between the two parties, Abraaj Capital feels it is             as of July 23, 2011.
       The report, issued by the Kuwait Financial Center                          does not preclude Abraaj Capital from exploring              appropriate to disclose this fact to the respective
    (Markaz) that the vacant apartments for rent currently                        such a transaction in the future should perform-             stakeholders in order to quell further speculation on              Markaz should comply with CBK’s buyback regula-
    amount to only six percent despite the entry of about                         ance, deal terms and/or circumstances change.                this matter.                                                    tions and rules, in addition to the provisions of Article
    5,500 new apartments to the market in 2011 and this                              Abraaj Capital confirmed that it had been in                 Abraaj Capital is the leading private equity and             No. 115 bis of Corporate Law. It should also abide by
    clearly demonstrates that the market for apartments is                        exploratory discussions regarding a potential                alternative asset management group in the                       the provisions of the Ministerial Decree No. 10/1987
    safe from what is called (excess supply) until now and                        transaction with Citadel Capital senior manage-              Middle East, North Africa and South Asia                        and its amendments by virtue of the two Ministerial
    the foreseeable future. (KUNA)                                                ment for the past two months.                                (MENASA).                                                       Decrees No. 11/1988 and 273/1999.

                  Market Movements                                     27-07-2011

                                           Points     Closing pts                                                Points    Closing pts
     SOUTH KOREA        - KOSPI             +5.61       2,174.31       GERMANY           -    DAX                 -96.77     7,252.68
                                                                       FRANCE            -    CAC 40              -53.81     3,734.07
                                                                       AUSTRALIA         -    All Ordinaries -     33.70     4,612.60
                                                                       HONG KONG         -    Hang Seng           -30.39    22,541.69
                                                                       INDIA             -    Sensex              -85.97    18,432.25
                                                                       JAPAN             -    Nikkei 225          -50.53    10,047.19
                                                                       PHILIPPINES       -    PSE                 -31.44     8,492.50

AUB records KD 19.1 mln H1 net profit
             Results reflect strong financial position: Al-Marzouq
                                                                                                                                                              Kuwait: Partnership potential
KUWAIT CITY, July 27:                                                                               Al-Marzouq added that Ahli United
                                                                                                 Bank, after conversion into a fully
Ahli United Bank records                                                                         fledged Sharia compliant Bank exerts all
high rate of profitability in                                                                    efforts to introduce diversified Islamic                                                              Oxford Business Group
the first half of 2011 with net                                                                  banking products & services and enhance
                                                                                                 the quality level of customer service.
profit of KD 19.1 million,                                                                          Al-Marzouq said that AUB returns on
representing an increase of                                                                      the investment deposits have significant-
50.1 percent over the same                                                                       ly exceeded the returns on similar
                                                                                                 deposits in the market as of first half of
                                                                                                                                                                        Private sector expected to play major role
period of last year.                                                                             2011 being the highest returns in the State
   This profit has been achieved
through operating income of KD 37.2
million. Earnings per share reached
                                                                                                 of Kuwait. Based on the Bank’s results
                                                                                                 for the second quarter in 2011, the profit
                                                                                                 distribution on annual deposits in
                                                                                                                                                   Kuwait set to meet electricity demand
18.9 fils per share compared to 12.6                                                             Kuwaiti Dinar has reached 3.11 percent
fils per share for the same period in                                                            on “Al-Yousr Plus” and 2.33 percent on                    By Oliver Cornock
2010. This demonstrates the solid                                                                “Al-Yousr”, the return on the investment
financial position & the ability to
maintain sustainable operating profit.
                                                                                                 deposits for three months in Kuwaiti
                                                                                                 Dinar “Bashayer Al-Duha” reached 1.54
                                                                                                 percent, and the rate of return on the
                                                                                                                                                   W      ith the recent addition of a
                                                                                                                                                          new 1400-MW power plant,
                                                                                                                                                   Kuwait appears ready to meet the
Customer deposits have increased by             Hamad Abdul Al-Mohsen Al-Marzouq,
                                                 AUB Chairman and Mng Director                   quarterly investment savings accounts in          increase in electricity demand that
15 percent.                                                                                      Kuwaiti Dinar “Al Safa” reached 1.62              occurs         every        summer.
   Commenting on the positive results           services and products. He also highlight-        percent. The Bank distinguishes its               Government authorities are also
achieved by the Bank, the Chairman and          ed that the next period would be full of         investment depositors by announcing the
the managing Director of the Bank,                                                                                                                 planning to bring additional
                                                challenges especially in light of the rapid      profit quarterly thus securing their profit       capacity on-line over the next few
Hamad Abdul Al-Mohsen Al-Marzouq,               changes taking place worldwide.                  based on the declared profit rates at each
mentioned “these results are due to                                                              period. This has enriched the customers’          years, with the private sector
                                                   Al-Marzouq affirmed that the Bank
adopting a prudent policy, implementing         continues to implement its prudent policy        confidence in the Bank.                           expected to play a major role in
the best practices and principles of corpo-     and distinct management approach. Many              As for the Financial Statements during         this expansion.
rate governance within a comprehensive          neutral international rating agencies have       the current year and the potentials of               According to estimates from the
matrix in all local and regional markets.       commended the bank’s solid and stable            profitability, Al-Marzouq said that - by          Ministry of Electricity and Water
This has enabled the Bank to overcome           financial standing future as well as the         the grace of Allah - the Bank would               (MEW), peak demand for power is
the global financial crisis that hit the mar-   quality of its assets. He also highlighted       accomplish more achievements during
kets and have had an adverse direct                                                                                                                expected to increase at a rate of 6-
                                                that “the Bank’s Risk Management sup-            the current year. Ahli United Bank has            8% per annum over the next few
impact on credit and finance activities.        ports the stable credit rating according to      become one of the distinguished Islamic                                                           Oliver Cornock, Regional Editor, GCC, Oxford Business Group
   Hamad Al-Marzouq added that the                                                               banks, and is well prepared to acquire a          years, reaching 14,256 MW by
                                                Fitch Report. The Fitch Report has com-
generated profit was mainly due to the          mended the quality control and the               significant share in Kuwaiti market,              2014. Peak demand usually occurs          and maintained by General               the country’s first independent
growing performance at all levels due to        improved asset quality in 2010. The high         deriving its strength and high solvency           in the summer, when heavy use of
the diversity of sources of income, the                                                                                                                                                      Electric for a period of seven years    water and power project (IWPP).
                                                credit rating reveals the successful con-        from a deep-rooted banking history dat-           cooling systems can strain the            from the commencement of full           Although the IWPP model is
expansion of activities, the proper risk        version of Bank’s operations to be               ing back to 70 years ago. Over this hon-          power grid. According to some
diversification and the continues cus-                                                                                                                                                       commercial operations.                  used extensively elsewhere in the
                                                Sharia’a compliant commenced in April            orable history, the Bank was, several             estimates, air conditioners account
tomer satisfaction in meeting their finan-                                                       times, placed as one of the best banks as                                                      Beyond Sabiya, a number of           Gulf, it is new in Kuwait, where
                                                2010, which rendered AUB as the ideal                                                              for around 70% of Kuwait’s peak
cial needs through introducing innovative       choice for customers’ banking needs.             per global banking standards.                                                               other plants are in the works. Al       all water and power generation
                                                                                                                                                   power demand.                             Otaibi told local press in March        capacity is currently owned by
                                                                                                                                                      However, no electricity short-         2011 that some KD2bn ($7.3bn)           the state.
                                                                                                                                                   ages are expected this summer. In         would be spent on power produc-            The private sector strategic part-
                                                                                                                                                   March the assistant undersecretary        tion projects that will be complet-     ner for the plant has not yet been
                                                                                                                                                   of planning and training at the           ed within the next three years,         determined, but the government
                                                                                                                                                   MEW, Mishan Al Otaibi, told the           including new plants at Al Zour         tendered for the project on March
                                                                                                                                                   audience at the second Kuwait             and Khairan. According to MEW           24. In an interview with
                                                                                                                                                   Electricity      Conference      and      projections, the country’s installed    Bloomberg in late March, Eyad Ali
                                                                                                                                                   Exhibition, “Although we expect           capacity will increase from 14,593      Al Falah, the assistant undersecre-
                                                                                                                                                   the increase of power consumption         MW in 2011 to nearly 17,000 MW          tary for technical services at the
                                                                                                                                                   to be about 9% compared to last           in 2014.                                MEW, said that 11 companies had
                                                                                                                                                   year, there will not be a shortage.                                               prequalified to bid.
                                                                                                                                                   Last year electricity consumption                    Expansion                       He added that the government
                                                                                                                                                   reached 11,000 MW and it is                  Moreover, the government is          would hold no more than 24% of
                                                                                                                                                   expected to reach 12,000 MW this          eager to involve the private sector     the shareholding company, while
                                                                                                                                                   summer. By the beginning of June          in this expansion. As Al Otaibi said    the strategic investor would own
                                                                                                                                                   the new power station will be             during his opening remarks at the       no less than 26%. The balance of
                                                                                                                                                   operating according to our work           event in March, “The MEW is             shares would be sold to the public
                                                                                                                                                   plan.”                                    keen on joining the private sector      in an initial public offering.
                                                                                                                                                      Indeed, in late June the first         in building and developing these           The plant will have a capacity of
                                                                                                                                                   phase of the new power plant at           new power stations, as the private      1500 MW, and is expected to
                                                                                                                                                   Sabiya, around 100 km north of            sector is very important in             become operational in 2014.
                                                                                                                                                   Kuwait City, came on-line. Six            Kuwait.”                                Authorities eventually plan to
                                                                                                                                                   gas-powered turbines have been               Indeed, the public-private part-     locate four power plants in the Al
                                                                                                                                                   activated, which will be able to          nership (PPP) model appears to          Zour area, with a combined capac-
                                                                                                                                                   generate 1400 MW of electricity,          be the route the government will        ity of 4800 MW.
                                                                                                                                                   equivalent to roughly 10% of              use to develop these plants. In            As the country’s first PPP
                                                                                                                                                   Kuwait’s current total capacity.          March 2011 Adel Al Roumi, the           power plant, the project will no
                                                                                                                                                      The plant is expected to enter its     head of the Partnerships                doubt be followed closely by for-
                                                                                                                                                   full combined-cycle commercial            Technical Bureau - the organisa-        eign investors. If successful it
                                                                                                                                                   operations in 2012, at which point        tion responsible for issuing and        could generate substantial inter-
                                                                                                                                                   its total capacity will be around         overseeing PPP projects - told          est from the international invest-
                                                                                                                                                   2000 MW. A combined-cycle plant           the state news agency that all          ment community, and with the
                                                                                                                                                   is more efficient because waste           preparations had been completed         government planning significant
                                                                                                                                                   heat is recovered and converted           for the establishment of the            capacity expansion in the future,
                                                                                                                                                   into steam, which is then used to         Northern Al Zour Power                  there will almost certainly be
                                                                                                                                                   drive a steam turbine to produce          Generating Company, the share-          additional opportunities for pri-
                                                                                                                                                   additional power. Owned by the            holding firm that will be respon-       vate sector involvement in the
                                                                                                                                                   state, the facility will be operated      sible for building and operating        sector.

                                                                                                                                                           Food prices fall 0.6 pct in June, Transport up 1 pct

                                                                                                                                               Kuwait annual inflation slows to 10-month low
                                                                                                                                               KUWAIT CITY, July 27, (RTRS):               global commodity prices, a weak dol-          In the nearby United Arab
                                                                                                                                               Kuwait’s annual inflation slowed to a       lar and increased government spend-        Emirates, annual consumer price
                                                                                                                                               ten-month low of 5 percent in June          ing following popular unrest in the        growth has hovered close to 1 per-
                                                                                                                                               helped by a fall in food prices, data       Arab world.                                cent for most of 2010, but analysts
                                                                                                                                               showed on Wednesday, but generous              But slow lending growth and ongo-       expect average inflation in the coun-
                                                                                                                                               government spending is expected to          ing weakness in the property sector        try to reach 2.5 percent this year.
                                                                                                                                               keep levels above those of neighbors        in parts of the region are seen keep-         In Bahrain, consumer prices fell by
                                                                                                                                               this year.                                  ing consumer price growth well             2.1 percent year-on-year in June, the
                                                                                                                                                  Inflation in the world’s fourth-         below the record peaks seen in most        fourth consecutive month of falls,
                                                                                                                                               largest oil exporter has been hovering      Gulf states in 2008, despite oil prices    data showed last week.
                                                                                                                                               above 5 percent since the beginning         above $90 per barrel .                        Last month, Kuwait’s parliament
                                                                                                                                               of this year, well below double-digit          In Kuwait, food costs — which           approved a 19.4 billion dinar ($71
                                                                                                                                               levels seen in 2008. It stood at 5.4        account for 18 percent of the con-         billion) state budget for the 2011/12
                                                                                                                                               percent year-on-year in May, after          sumer basket — fell for the first time     fiscal year, the biggest since at least
                                                                                                                                               climbing to a nearly two-year peak of       in four months, by 0.6 percent             2003.
                                                                                                                                               6 percent in December.                      month-on-month, the data showed.              Kuwait announced in January
                                                                                                                                                  On a monthly basis, consumer                “Kuwait has one of the highest          plans to spend nearly $5 billion, or
                                                                                                                                               prices in the OPEC member —                 inflation rates in the GCC for the         more than 4 percent of its GDP, on
                                                                                                                                               where civilian protests in recent           year. But it’s still not anywhere near     cash grants and free food rations.
                                                                                                                                               months were more limited than those         of what we saw three years ago,” said         Transport prices, which makes up
                                                                                                                                               in Bahrain and Syria — grew 0.2 per-        Nancy Fahim, Standard Chartered            16 percent of the CPI basket,
                                                                                                                                               cent in June, according to data from        economist in Dubai.                        increased by 1 percent month-on-
                                                                                                                                               the Central Statistics office.                 “One of the big drivers of inflation    month in June after remaining
                                                                                                                                                  That was below a 0.3 percent rise        this year is government spending and       unchanged for three consecutive
                                                                                                                                               in May.                                     their cash packages that they have         months, the data showed.
                                                                                                                                                  Inflation in the Gulf, the world’s       provided their citizens, which should         Analysts polled by Reuters in June
                                                                                                                                               top oil exporting region, is expected       be driving overall headline infla-         expect average inflation of 5.1 per-
                                                                                                                                               to creep higher this year on robust         tion.”                                     cent in 2011.

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