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DELOITTE: ARE YOU READY FOR THE GCC CONSTRUCTION RECOVERY IN 2014?

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DELOITTE: Are You Ready For The GCC Construction Recovery In 2014?
  •  Deloitte: US$12 billion of previously stalled projects in the UAE have now resumed construction
  •  Deloitte:  US$17 billion of project management contracts tendered in Saudi Arabia
  • Deloitte: Qatar to spend in excess of US$70 billion in anticipation of the 2022 FIFA World Cup and Qatar Vision 2030

Over the last year the optimism within the GCC construction market has risen considerably as US$70B worth of construction projects were completed in 2013 with this number predicted to rise. Residential developments accounted for just over 43% of total completed projects, which is expected due to the region’s rapid population growth and thus the governments’ increased social infrastructure spends. The UAE and the KSA ranked in the top two positions for all sectors apart from education and healthcare where Qatar held the top spot in both.

DELOITTE: ARE YOU READY FOR THE GCC CONSTRUCTION RECOVERY IN 2014? 3According to Deloitte Middle East’s newly released annual report on the sector: “GCC Powers of Construction: Are you ready for the recovery?”, looking to 2014 and further ahead it seems like government-led initiatives will continue to drive growth in the GCC construction sector as regional governments continue to focus on social infrastructure projects. The rail industry alone in the GCC could create 50,000 jobs with most nations creating or upgrading their rail networks. These consist of the multi-nation interconnected railway network along with metro and tram projects of which there are many, including the Riyadh Metro project, Etihad Rail, Qatar Rail and the upgrades to the Dubai metro.

“With this entire extra infrastructure spend; jobs will be generated with some estimates claiming 30% of the potential 300,000 jobs created by Expo 2020 in the UAE alone are expected to be in the construction sector by it. The Dubai government has also announced that all new and existing construction projects are going to be fast-tracked to be ready for 2020,” said Cynthia Corby, audit partner and leader of the Construction industry for the Middle East.

“The demand for skills and resources will of course increase and we would hope that a well-planned and phased development strategy will prevent the price for these resources and for talent from becoming disproportionately expensive,” she added.

The Deloitte GCC Powers of Construction report is produced based on data gathered from surveys and datasupported by interviews with some of the most prominent industry leaders from the region.

In addition to articles and interviews examining key industry trends, the Deloitte GCC Powers of Construction report includes a country by country analysis of statistics, and key projects.  Highlights of this section include:

UAE

DELOITTE: Are You Ready For The GCC Construction Recovery In 2014?

DELOITTE: Are You Ready For The GCC Construction Recovery In 2014?

The UAE market is on track to reach the levels of investment last seen before the recession; it is also good to see that there are US$12B of previously stalled projects within the country which have now resumed construction. In the transport sector, US$2.9B will be invested in developing a 131km metro system in Abu Dhabi to accelerate the flow of traffic and keep pace with the growing population. The other big rail project is Etihad Rail, the US$10.8B scheme that will link Dubai, Abu Dhabi and the northern emirates, and the ports of Khalifa and Jebel Ali. Etihad Rail will eventually link up with the planned 2,177km-long GCC railway. There will also be 246km of new major roads, including a 62km highway connecting Dubai and Abu Dhabi, scheduled for completion in 2017.

Saudi Arabia

A large proportion of the high-value construction contracts awarded in Saudi Arabia in the last three years have been in the transport sector, particularly aviation and rail. These include the King Abdulaziz International Airport in Jeddah and the Riyadh Metro Project. The Kingdom is also set to award further substantial contracts in the transport sector over the next five years, with project management contracts tendered for both the US$7B Saudi Landbridge rail project and the estimated US$10B expansion of Riyadh’s King Khalid International Airport.

Qatar

In Qatar, the government is preparing to spend in excess of US$70B, mainly on infrastructure and transport but also on hotels and stadia, in anticipation of the 2022 FIFA World Cup and Qatar Vision 2030. The country continues to focus on improving its social infrastructure. Funds have also been set aside for completing the Hamad International Airport, the New Doha Port Project, the rail and metro projects, and the roads program. A major part of the spending will be on the Qatar Rail project, which is expected to cost around US$45B to build.

Rest of the GCC

Work is picking up in Kuwait and Bahrain but it is Oman that is the one to watch outside UAE, KSA and Qatar looking forward. Oman has budgeted for continued strong spending on its infrastructure and tourism sectors. The country announced US$15.5B of spending on rail at the end of 2013 as well as the construction of a new town in Duqm.

Among the pan-GCC projects, the GCC rail network is by far the largest project with a combined value close to US$200B. Construction of the network is scheduled to be completed by 2018. Meanwhile, the contract for a new causeway linking Saudi Arabia and Bahrain is scheduled to be completed in 2014. When completed, these should assist in regional and international trade, with the use of a world-class logistics network connecting all GCC nations.

The report further assesses how to look at challenges and opportunities for each of the GCC countries. Issued annually, the Deloitte Middle East Powers of Construction report serves as a comprehensive review of the construction industry for leaders. To read the full report, visit the following link

 www.deloitte.com/gccpoc2014

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Oil gains as U.S. fuel stocks drop, OPEC+ considers deal rollover

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Oil gains as U.S. fuel stocks drop, OPEC+ considers deal rollover 4

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices rose more than 2% on Wednesday, boosted by a huge drop in U.S. fuel inventories and expectations that OPEC+ producers might decide against increasing output when they meet this week.

U.S. gasoline stocks fell last week by the most on record and refining output fell to a record low in the wake of a deep freeze in Texas that shut production.

Gasoline inventories fell to 243.5 million barrels, the U.S. Energy Information Administration said, while distillate stockpiles fell by the most since 2003 to 143 million barrels.

“This drop is 100% based upon the storm in Texas,” said John Kilduff, partner at Again Capital Markets in New York. “It froze up the entire Texas supply chain and caused a drawdown on available refined product stores.”

Crude inventories rose by 21.6 million barrels, the most on record, to 484.6 million barrels, EIA said. Refining capacity use fell to just 56% of overall capacity, the lowest on record, as the U.S. Gulf Coast’s refining capacity use plunged to 40.9%, the lowest ever.

Brent crude rose $1.30, or 2.1%, to $64.00 a barrel, a 2.1 percent gain by 11:11 a.m. EST (1611 GMT). U.S. West Texas Intermediate (WTI) crude rose $1.55, or 2.6%, to $61.30 a barrel.

Oil prices earlier jumped after Reuters, citing three sources, reported that the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and allies including Russia is considering rolling over production cuts from March into April rather than raising output.

The group had previously been widely expected to ease the production cuts when it meets on Thursday.

Kuwaiti Oil Minister Mohammad al-Fares said the market was being supported by optimism over vaccinations.

Also positive for prices, U.S. President Joe Biden said the United States would have enough COVID-19 vaccines for every American adult by the end of May after Merck & Co agreed to make rival Johnson & Johnson’s inoculation.

Biden said he hoped that the United States would be “back to normal” at this time next year and potentially sooner.

(Reporting by Stephanie Kelly in New York; additional reporting by Bozorgmehr Sharafedin in London and Shu Zhang and Sonali Paul in Singapore; Editing by Edmund Blair and David Goodman)

 

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Stocks edge down as investors hit pause, watch bond yields

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Stocks edge down as investors hit pause, watch bond yields 5

By Suzanne Barlyn

NEW YORK (Reuters) – Global equity markets were little changed on Tuesday as Wall Street retreated and investors paused to gauge whether a bond yield jump had run its course, taking stock of gains from Monday’s surge.

The subdued performance of the three major Wall Street indices followed a flat close in Europe and slipping shares in Asia.

“It was such a strong opening to the month yesterday that investors could be short-term focused and saying, ‘Let’s take some of the profits that we saw yesterday,'” said Sam Stovall, chief investment strategist at CFRA Research in New York.

March began with a bang on Monday as global equities markets rose, the S&P 500 had its best day since June 5 and bond markets calmed after a month-long selloff.

In Tuesday late-afternoon trading, the Dow Jones Industrial Average rose 45.37 points, or 0.14%, to 31,580.88, the S&P 500 lost 3.1 points, or 0.08%, to 3,898.72 and the Nasdaq Composite dropped 106.23 points, or 0.78%, to 13,482.60.

The pan-European STOXX 600 index rose 0.19% while MSCI’s gauge of stocks across the globe %.

Emerging market stocks rose 0.05%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.16% lower, while Japan’s Nikkei lost 0.86%.

The European Central Bank should expand bond purchases or even increase the quota earmarked for them if needed to keep yields down, ECB board member Fabio Panetta said on Tuesday, after weeks of steady increases in borrowing costs.

Australia’s central bank on Tuesday affirmed its pledge to keep interest rates at historic lows as policymakers battle to stop surging bond yields from disrupting the country’s surprisingly strong economic recovery.

After a sharp selloff last week, U.S. Treasuries have stabilized with bond market indicators and derivatives positioning pointing to near-term calm. But an improving economy could trigger another slide in their prices.

U.S. Federal Reserve Governor Lael Brainard said she was closely watching bond markets and would be concerned if a recent rise in yields continued and began to constrain economic activity.

“Some of those moves last week and the speed of the moves caught my eye,” Brainard said on Tuesday.

A Treasuries selloff last week pushed the 10-year yield to a one-year high of 1.614%. Benchmark 10-year notes last rose 11/32 in price to yield 1.4102%, from 1.446% late on Monday.

Gold prices rose, inching up from a more than eight-month low, as a retreat in the dollar and U.S. Treasury yields lifted demand for the safe-haven metal.

Spot gold added 0.8% to $1,736.02 an ounce. U.S. gold futures settled up 0.6% at $1,733.60.

The dollar index fell 0.318%, with the euro up 0.37% to $1.2092.

Earlier, the dollar was up for a fourth consecutive day after the spike in bond yields challenged the market consensus for dollar weakness in 2021. But riskier currencies rose as bond markets calmed and stocks recovered.

Bitcoin fell 2.19% to $47,808.00 after rising nearly 7% on Monday.

Shares in mainland China and Hong Kong fell overnight after a top regulatory official expressed concerns about the risk of bubbles bursting in foreign markets.

Oil prices largely shrugged off expectations that OPEC would agree to raise oil supplies at a meeting this week.

The global oil market is rebalancing after damage to demand wrought by the COVID-19 pandemic was met with curbs on output by OPEC producers, the group’s president said.

The industry is recovering from a collapse in demand triggered by the pandemic, but U.S. shale production will not recover to pre-pandemic levels, Occidental Petroleum Chief Executive Vicki Hollub said on Tuesday.

“The recovery is looking really good to us. If you look at what’s happening in India as well as the U.S., I think the oil industry is looking like things will be pretty good for us over next couple of years,” Hollub said.

U.S. crude futures settled down 89 cents at $59.75 a barrel, while Brent futures fell 99 cents to settle at $62.70 a barrel.

(Reporting by Suzanne Barlyn; Editing by Dan Grebler)

 

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Robinhood now a go-to for young investors and short sellers

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Robinhood now a go-to for young investors and short sellers 6

By John McCrank

NEW YORK (Reuters) – Robinhood, the online brokerage used by many retail traders to pile in to heavily shorted stocks like GameStop Corp, has made an ambitious push into loaning out its clients’ shares to short sellers as it expands its business.

The broker had $1.9 billion in shares loaned out as of Dec. 31, nearly three times the $674 million a year earlier, and it was permitted to lend out $4.6 billion worth of securities under margin agreements, around five times bigger than the prior year, according to an annual regulatory filing late on Monday.

The size of the jump highlights Robinhood’s rapid growth over the past year as the number of retail investors has soared in the work-from-home environment during the pandemic and as retail brokers have largely eliminated trading fees, a model Robinhood helped pioneer.

Menlo Park, California-based Robinhood is expected to go public this year with a valuation of more than $20 billion.

Securities lending is common among brokerages, which can earn income by lending shares to hedge funds and others, who then sell the shares back into the market, betting the share prices will drop so they can buy them back at a lower price when it is time to return them, pocketing the difference.

Shares that are in heavy demand from short sellers, like GameStop, which had 140% short interest in January https://www.reuters.com/article/us-retail-trading-shortselling-explainer/explainer-how-were-more-than-100-of-gamestops-shares-shorted-idUSKBN2AI2DD, command the biggest premium from the lender.

What makes Robinhood notable is that many of the stocks its users invest in are among the most sought-after by people who want to bet against them, said one senior financial executive involved with hedge funds.

It was unclear how great a benefit the securities lending was to Robinhood’s revenue and income, which it does not disclose.

Robinhood declined comment on the filing and did not immediately respond to a request for comment on the details of which stocks it loans out.

In January, retail investors coordinated through trading forums on social media in an attempt to punish hedge funds by buying up shares of GameStop and other heavily shorted names, like AMC Entertainment, driving up their prices and forcing short sellers to close out positions at big losses.

On Jan. 28, at the height of the retail trading mania, Robinhood, along with several other brokers, restricted the buying of GameStop and other so-called meme stocks due to a massive spike in collateral requirements needed to clear the trades, angering many of its customers.

The trading restrictions sparked congressional hearings, regulatory probes and have placed greater scrutiny on short selling.

In response, Vlad Tenev, Robinhood’s chief executive officer, called for shorter stock settlement times, which would reduce clearing collateral requirements.

He also said the idea that more shares of a stock can be shorted than there are available to trade, as was the case with GameStop, is a “pathology” that could destabilize the financial markets.

Robinhood positioned itself for growth in securities lending in October 2018 by launching its own clearing broker, which acts as a go-between with the clearinghouse that settles its trades, and allows it to hold its customers’ assets. The broker can then lend out securities its customers buy on margin.

At present, less than 3% of Robinhood’s funded accounts are margin-enabled, Tenev recently told Congress.

(Reporting by John McCrank in New York; Editing by Megan Davies and Matthew Lewis)

 

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