North Africa set for $20bn aid boost

A US$20 billion (Dh73.45bn) aid package pledged from the world's richest nations to Tunisia and Egypt is expected to offer the markets in those countries some breathing space during their government transitions.
But concerns over a convergence of issues in the global economy have unsettled investors and could overshadow any pickup in regional equities, industry experts have said.
At the Group of Eight summit in France on Friday, the leaders of the top industrialised countries said more than $20bn would be made available by multilateral development banks to Tunisia and Egypt from this year to 2013.
The US, the EU and other wealthy economies will also offer additional aid. Market commentators said a return of political stability was necessary for financial assistance to have a longer-lasting impact.
"Foreign investors, especially those that would commit to longer-term investment, understandably will be looking for improved political [clarity]," said Ann Wyman, the head of Middle East and North Africa equities at the investment bank Nomura.
"This is no small task … and expectations of how quickly it can be achieved should not be misplaced," she said.
The economies, including the stock markets, of both countries have been severely hit by high inflation, unemployment and loss of tourism.
Cairo's benchmark EGX 30 Index has steadily recovered from a two-month closure caused by nationwide protests that eventually led to the ousting of Hosni Mubarak from the presidency.
Bullishness on Egypt's equities has sent the market 11 per cent higher in the past two weeks.
Heavyweights in the property sector, including Orascom Construction Industries and Talaat Moustafa Group, have capped losses after the government said it was preparing a law to protect investors from prosecution on dealings with the Mubarak government.
At the end of last week, Orascom's shares were 2 per cent higher at 261.18 Egyptian pounds and Talaat Moustafa's were up 4.2 per cent at 4.43 pounds.
The EGX 30 closed 1.1 per cent higher on Thursday at 5,411.83 points, and Tunisia's measure, which was closed twice during the unrest in that country, ended the week 0.6 per cent higher at 4,116.44.
The Dubai Financial Market (DFM) General Index and the Abu Dhabi Securities Exchange (ADX) General Index have lived up to the "sell in May and go away" adage.
These markets have shed 8.7 per cent and 4.2 per cent, respectively, in the past two weeks amid investor doubts about whether the UAE will be included on the index compiler MSCI's emerging markets index, which is due to be decided in two weeks.
Also rattling sentiment are global worries over Europe's debt problems, tightening of monetary policy in China and the possibility that inflation will constrict economic growth.
The DFM ended the week 0.5 per cent higher at 1,534.35, after four consecutive days of losses, and the ADX slipped slightly to 2,598.23.
"We've seen a global return to risk-aversion," said Paul Reynolds, who heads Rothschild's Middle East advisory operations.
Although the UAE has been perceived as a haven amid regional political uncertainty elsewhere, global investors were still on the sidelines awaiting more clarity, Mr Reynolds said.
"The real appetite [in the markets] will come from a successful initial public offering," he said.
Three small public offerings on the ADX this year have broken a two-year hiatus of IPOs in the UAE, but Mr Reynolds said local bourses needed a material listing of "international quality" or a series of smaller listings to spur a revival.
Any substantial IPO activity from the region has been concentrated on the international market. This week will see the debut of the ports operator DP World on the London Stock Exchange (LSE).
DP World's LSE listing comes as the Qatari conglomerate Aamal announces its intention to list on the London market and the bourse's executives reveal the LSE is eyeing up to six "likely listings" from the Middle East and GCC region over the next year.
"There are a number of companies … that will be very strong candidates for offering shares to the public [on the LSE]," said Richard Webster-Smith, the manager of international primary markets at the LSE on a visit to Dubai last week.
The Arab world's largest and most liquid stock exchange, the Saudi Tadawul All-Share Index, rose 0.4 per cent to close at 6,751.11 points yesterday, the first day of the Saudi trading week. The kingdom's petrochemical companies are expected to be volatile on the exchange this week as they track fluctuating oil prices.
Bahrain's bourse slipped 0.3 per cent to 1,359.45 at the end of last week, Muscat's lost 0.8 per cent to close the week at 5,980.15, Qatar's rose 0.7 per cent to 8,400.40, and Kuwait's closed the week slightly higher at 6,374.10 points.
 
fhalime@thenational.ae