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Citigroup expects 2018 to be its best year for investment banking in the Middle East and Africa in at least a decade, likely led by Saudi Arabia, a senior executive at the U.S. bank said.

Nigeria, Egypt and the United Arab Emirates would also be the main growth drivers as bond sales, mergers and acquisitions and public share sales pick-up, Miguel Azevedo, Citigroup’s head of investment banking, Middle East and Africa, said.

“The pipeline in the Middle East and Africa is as good as we have seen since the global financial crisis of 2008,” he told Reuters in an interview, adding that emerging markets represented a larger weight of Citi’s earnings than for others.

“GDP growth for advanced economies this year is between 2.5 and 3 percent, while for emerging markets it is between 4.5 and 5 percent. For investment banking, the growth should maybe be even more,” Azevedo said.

In the Middle East and Africa, getting deals done would depend on market stability, but swings in global stocks in recent days represented a correction and were not “enough to put any of these transactions off”.

Citigroup said last month it had won formal approval from Saudi Arabia’s Capital Market Authority to begin an investment banking business there, enabling its return after an absence of almost 13 years.
SAUDI DRIVE

Several international lenders are seeking to build a Saudi presence as opportunities emerge from reforms to wean the economy off a reliance on oil revenues. Those include privatisations such as the planned listing up to 5 percent of Saudi Aramco [IPO-ARMO.SE].

Citi was among those invited to pitch for a role in the stock market listing, sources told Reuters last month and the bank has already hired former Saudi Fransi Capital executive Majed al-Hassoun to head its Saudi investment banking business, which it is developing with further hires.

“There is a very significant privatisation push ... this could create the opportunity for investors to deploy capital to develop the industrial base and infrastructure,” he said.

The bank also expects significant opportunities in Nigeria, which has low debt levels and was expected to return to the bond markets in 2018, while Nigerian companies were also forecast to issue bonds and launch initial public offerings, Azevedo added.

Nigeria issued a $3 billion two-part international bond in November, a deal managed by Citigroup and Standard Chartered.

Egypt’s outlook was also positive after the 2016 currency devaluation and IPOs were slated in sectors such as industrial and manufacturing and financial services and consumer, he said.

Reporting by Tom Arnold; editing by Alexander Smith (Reuters)

Africa-focused oil and natural gas producer Tullow Oil reported on Wednesday a surprise annual operating profit after three years in the red, and said it expected first oil from Kenya in 2021 or 2022.

The company reported an operating profit of $22 million for the year ended Dec. 31, compared with a loss of $755 million in 2016. Analysts were expecting a loss of $103.6 million, according to company-compiled consensus.

Tullow said working interest production was 32 percent higher at an average of 94,700 barrels of oil equivalent per day (boepd) in 2017. It forecast 2018 production in the range of 86,000 to 95,000 boepd.

The company said it planned phased development in Kenya, with final investment decision expected in 2019.

Reporting by Arathy S Nair in Bengaluru; Editing by Amrutha Gayathri (Reuters)

Seychelles inflation rose to 4.5 percent year-on-year in January from 3.48 percent a month earlier, the National Bureau of Statistics said on Wednesday.

Reporting by Clement Uwiringiyimana; Editing by Raissa Kasolowsky (Reuters)

Petrochemicals group Sasol completed a 13.6 billion rand ($1 billion) expansion of a wax plant in South Africa that will boost its annual production, the firm said on Tuesday.

Sasol, the world’s top maker of motor fuel from coal, has increasingly diversified into chemicals, gas and clean energy projects, in part to meet a global shift to low-carbon products.

The project to produce wax, used in adhesives and printing, is one of the company’s largest investments in South Africa. It was funded through Sasol’s own cash and is part of a strategy expands its chemicals businesses.

Sasol said it aimed to ramp up production to 137,000 tonnes per annum of wax within the next two years at the Sasolburg site, 100 km (62 miles) south of Johannesburg.

Sasol produced 63,000 tonnes of wax in the six months to the end of December.

The wax, which will be exported, is used in hot melt adhesives to seal cereal boxes or milk cartons and in printing ink products such as 3D printing, adhesives, inks, paints, candles and emulsions.

The company, mostly known for pioneering the conversion of coal to fuel, also produces gas-to-liquids and polymers used for packaging materials among other uses.

Sasol Co-Chief Executive Officer Bongani Nqwababa said production was running ahead of schedule.

The company began construction of the plant in 2015.

“With completion of this project, South Africa is now one of the leading countries of wax production globally,” he said.

($1 = 12.0759 rand)

Editing by James Macharia and Edmund Blair (Reuters)

South Africa’s rand was weaker early on Tuesday, hurt by a broad recovery in the dollar and locally by the political stalemate as the ruling African National Congress (ANC) said it would meet later in the week to discuss the president’s future.
At 0640 GMT the rand was 0.16 percent weaker at 12.1450 per dollar compared to an overnight close of 12.1250 in New York.

Senior officials of the ANC met on Monday as pressure grew on President Jacob Zuma to step down or for the party to push him out, spurring some short-term gains in the rand.

Zuma’s scandal-plagued tenure has been seen as a weight on the economy, and the rand has soared to its firmest in over two years as the likelihood of his removal heightened after Cyril Ramaphosa was elected party chief in December.

Analysts said the lack of clarity on Zuma was keeping investors cautious and would dent short-term demand.

“This combined with a broad based dollar recovery has the rand on the back foot, and until such time as we have clarity on this, the local unit is likely to remain under pressure, with the 12.00 level likely to provide support,” said Nedbank’s Reezwana Sumad in a note.

Bonds were a touch weaker with the yield on the benchmark paper due in 2026 adding 0.5 basis points to 8.51 percent.

Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 3.5 percent.

Reporting by Mfuneko Toyana; Editing by Robin Pomeroy (Reuters)

Gold prices rose on Tuesday as a rout in global equities prompted investors to seek shelter in safe havens such as gold, although expectations of more U.S. rate hikes this year weighed on the market.
Spot gold was up 0.3 percent to $1,342.95 per ounce at 0722 GMT following Monday’s 0.5 percent gain.

Prices fell 1.2 percent on Friday, the most since Dec. 7, 2017, after stronger-than-expected U.S. payrolls data shored up expectations that a pick-up in inflation will spur further rate hikes this year, boosting the dollar, in which it is priced.

U.S. gold futures for April delivery rose 0.7 percent to $1,345.60 per ounce on Tuesday.

ANZ analyst Daniel Hynes said he suspected an even bigger rally in prices considering the correction in the equity markets.

“The rate hikes have already been priced in by the market... but it’s certainly got the ability to temper the upside in gold prices,” Hynes said.

Asian shares fell sharply after Wall Street suffered its biggest decline since 2011 on Monday as investors’ faith in factors underpinning a bull run in markets began to crumble. [MKTS/GLOB]

Gold is seen as a safe-haven investment due to its ability to retain value even at times of financial or political uncertainty. It is also used as a hedge against inflation.

Last week, the U.S. Federal Reserve kept interest rates unchanged but said inflation likely would rise this year and hinted at “further gradual” rate increases.

The yellow metal is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.

Spot gold may retest a resistance at $1,354 as it seems to have stabilised around a support at $1,326 per ounce, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.9 percent to $16.89 per ounce. It fell 3.7 percent on Friday in its biggest one-day decline since December 2016.

Platinum gained 0.6 percent to $995.60 per ounce, while Palladium was down 1.4 percent to $1,015.40 per ounce after touching its lowest since Dec. 14, 2017.

“The PGMs (platinum group metals) are certainly going to benefit from the better economic backdrop we’re now seeing in 2018. In fact, I think the rest of the complex will certainly outperform gold in the medium term,” Hynes said.

Palladium rose to an all-time high of $1,138 on Jan. 15 on higher automotive demand and supply shortage.

Reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Subhranshu Sahu (Reuters)

Sierra Leone’s finance minister on Friday played down a decision by the IMF to delay a disbursement because of the West African country’s failure to improve revenue collection, saying the fund would return in May to discuss the programme.

The IMF said on a statement on its website on Wednesday it had delayed its disbursement of the second tranche of programme financing “due to a weak budget revenue outlook, where measures that were to be taken under the programme to increase revenue did not yield”.

“The IMF is currently working with the government to identify appropriate corrective measures,” it said.

Finance Minister Momodu Kargbo told Reuters: “There is no suspension of any support to Sierra Leone”, and that the next tranche of its $224 million 5-year programme would be discussed in May when officials from the fund visit Freetown, after a presidential election on March 7.

“Relations between Sierra Leone and the IMF are very normal,” he said.

Both the IMF statement and the minister’s comments followed a story in Africa Confidential, a London-based publication, which sited a leaked U.S. diplomatic cable reporting that President Ernest Bai Koroma’s government had had its IMF funding suspended because of foot-dragging on reforms such as taxing luxury car imports, and removing subsidies on fuel and rice.

“Two issues are on the table: to float the price of fuel and impose the levy on rice ... By the time of the second review those decisions should be taken,” Kargbo said.

Any reforms that spike the cost of fuel or rice, a basic staple in Sierra Leone, would not be popular with the poor ahead of the election to replace Koroma, who cannot run again but is backing his former foreign minister Samura Kamara as successor.

Sierra Leone depends on exports of diamonds and iron ore for revenue. After recovering from civil war ending in 2002, it saw explosive growth early in this decade, but its economy was then battered by an Ebola epidemic and falling commodity prices.

Reporting by Umaru Fofana; Writing by Tim Cocks; Editing by Alison Williams (Reuters)

Egypt’s natural gas production rose by 1.6 billion cubic feet (bcf) per day in 2017, reaching 5.5 bcf per day currently, Petroleum Minister Tarek El Molla said on Sunday.

Production, which has increased thanks to newly discovered fields, will exceed 6 bcf per day before the end of this calendar year, Molla said at a news conference.

Reporting by Ehab Farouk; writing by Arwa Gaballa; editing by Jason Neely (Reuters)

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