NBAD morning news summary (30-June-2015)
Global News

Greek PM urges 'No' to aid deal in referendum, says Athens won't leave the euro;
Juncker urges Greeks to vote 'Yes': Greece's left-wing prime minister urged Greeks
on Monday to reject the terms of an international aid deal in a July 5 referendum,
dismissing warnings that a 'No' vote would drive Athens out of Europe's currency
union. "I don't think that their plan is to push Greece out of the euro but to end
hopes that there can be different policies in Europe," Prime Minister Alexis Tsipras
told Greek state television. He said the stronger the vote to reject the reform-for-aid
deal, the stronger the Greek hand in any negotiations that may follow. However, the
EU's Jean-Claude Juncker urged Greek voters to defy their leaders by voting "Yes" in
Sunday's referendum. Juncker accused the Greek government of betraying his efforts
to broker a loan deal. Accusing leftist Prime Minister Alexis Tsipras and his
ministers of playing "liar's poker" with the future of Europe, the European
Commission president said if Greeks rejected what he called a final, fair offer from
creditors to save them from bankruptcy, it would be taken as a signal that they
wanted to quit the euro, and the Union. "The whole planet would take a Greek 'No'
... to mean Greece wants to set itself apart from the euro zone and from Europe," he
said. His call for a "Yes" was echoed by the speaker of the European Parliament,
German Social Democrat Martin Schulz.
Source:http://www.reuters.com/article/2015/06/29/us-eurozone-greece-commissionidUSKCN0P91B120150629

EU's Tusk tells Tsipras no chance of bailout extension: European Council President
Donald Tusk told Greek Prime Minister Alexis Tsipras on Monday that he saw no
willingness among member states to agree to Tsipras's request to an extension to
bailout loans. "After consultations with the leaders, in the absence of new elements, I
see no willingness to go against the positions expressed by finance ministers at their
June 27 meeting," Tusk said in a letter that was sent in reply to request from Tsipras
for a one-month extension of credits, Reuters reported. Tusk said that following the
expiry on Tuesday, June 30, of the bailout program, Greece could apply for new
assistance. "In Europe, the door for negotiations always remains open in a spirit of
solidarity and responsibility," Tusk said.
Source:http://www.reuters.com/article/2015/06/29/us-eurozone-greece-tuskidUSKCN0P92GR20150629

ECB's Coeure says Grexit now a possibility if "No" vote wins: It is now possible
that Greece may end up exiting the euro zone even though this is not what the
European Central Bank or other EU institutions want, ECB executive board member
Benoit Coeure said on Monday. It was the most direct admission yet by a top ECB
policymaker that a "Grexit" could happen after Athens decided to interrupt talks on
an aid-for-reforms package and call a referendum for July 5. Greece's bailout expires
on June 30 and it has a €1.6bn ($1.77bn) payment falling due to the International
Monetary Fund at the same time. "A Greek exit from the euro zone, so far a
theoretical issue, can unfortunately not be excluded anymore," Coeure told the
French financial daily Les Echos, adding that this was the consequence of Athens'
decision to end the talks. Coeure said that if Greeks vote "Yes" in the referendum for
the aid package, he had "no doubt" euro zone authorities will find ways to meet
commitments toward Greece. If the "No" vote wins, "it would be very difficult to
resume political dialogue," he said. Coeure said market reaction nevertheless
"remained relatively mild," which he said showed Greece was a unique case faced
with a unique situation. But the central bank is monitoring the situation closely and
will use all available instruments, or even new ones, if needed, he added.
Source:http://www.reuters.com/article/2015/06/29/us-eurozone-greece-coeureidUSKCN0P92P820150629

ECB will maintain support to Greek banks "until further notice", says Coeure: ECB
executive board member Benoit Coeure said that the ECB would maintain its
support to Greek banks "until further notice" and was reviewing the situation
constantly. He said the ECB's decision on Sunday not to raise a cap on emergency
funding to Greek banks (ELA) was required by the events of the weekend. It is "a
proportionate decision" because it is not "irreversible", he said. The ECB rejected a
request by Greece for €6bn of extra emergency funds on Sunday. However,
according to a Reuters article, people with knowledge of the matter said earlier on
Monday that the ECB is expected to continue limited support for its banks until the
referendum.
Source:http://www.reuters.com/article/2015/06/29/us-eurozone-greece-coeureidUSKCN0P92P820150629

German inflation inches up by only 0.1% in June vs 0.7% in May: Inflation in the
euro zone may have slowed more sharply than previously expected in June after
German consumer prices barely increased in the month, a sign that the European
Central Bank's money-printing has yet to take hold. Preliminary data for Europe's
largest economy showed on Monday that consumer prices, harmonized to compare
with other European countries (HCIP), inched up by only 0.1% on the year, a steep
drop from the 0.7% increase in May. It was the weakest reading since February and
far below the Reuters consensus forecast of a yearly increase of 0.4%. The euro zone
data is due on Tuesday (5:00 a.m. EDT).
Source:http://uk.reuters.com/article/2015/06/29/us-germany-economy-inflationidUKKCN0P91NC20150629

PBOC loosens monetary policy further by adding cash at auction: China injected
cash into the banking system in open-market operations and lowered the lending
rate on the funds, adding to a wave of monetary easing over the past week. The
People’s Bank of China auctioned 50 billion yuan ($8.1bn) of seven-day reverserepurchase agreements at a 2.5% yield, according to traders required to bid at the
sales, a Bloomberg news article reported. The contracts were offered on Thursday for
the first time in two months, injecting 35 billion yuan at 2.7%, and on Saturday the
central bank lowered benchmark interest rates as well as some lenders’ reserve
requirements. Policy makers are boosting the money supply and driving down
borrowing costs to revive an economy expanding at the slowest pace since 1990 and
help local governments refinance debts. The latest measures come as the Shanghai
Composite Index of shares is headed for a 15% drop in June, trimming this year’s
advance to 21%. The seven-day repurchase rate, a gauge of liquidity in the banking
system, dropped 16 basis points to 2.53% as of 10:15 a.m. in Shanghai, the article
reported. The cost of one-year interest-rate swaps, the fixed payment to receive the
repo rate, slipped as much as 11 basis points to a three-week low of 2.36%.
Source:http://www.bloomberg.com/news/articles/2015-06-30/pboc-loosensmonetary-policy-further-by-adding-cash-at-auction

Treasuries rise most in 8 months; Bunds, Gilts rally as Greek vote adds haven
demand: Treasuries rose, pushing yields down by the most since October, as concern
Greece may exit the euro and trigger contagion across the region fueled demand for
the safest fixed-income securities. The Treasury 10-year yield fell 15 basis points, or
0.15 percentage point, to 2.32% yesterday in New York. The yield fell as much as 18
basis points, the most since Oct. 15. It was trading almost flat today. The US 10-year
note yield increased 21 basis points last week, climbing to 2.49% on Friday, the
highest level since June 11. The 30-year bond yield dropped 14 basis points to 3.1%
yesterday. Fed funds futures show there’s a 29% chance the Fed will increase its
benchmark rate from near zero in September, down from 38% on June 26, and a 66%
chance by December, down from 73%, Bloomberg news article reported. German
bunds rose, with 10-year yields dropping 13 basis points, the most since August
2012, to 0.79% yesterday. UK government bonds also advanced, with the 10-year gilt
yield falling to its lowest level in more than a week to close at 2.07%. Yields on
similar-maturity Japanese bonds fell three basis points to 0.44%.
Source:http://www.bloomberg.com/news/articles/2015-06-28/treasury-futuresadvance-most-since-october-on-greece-safety-bid

Oil holds losses below $60 as nuclear talks set to miss deadline: Oil held losses
below $60 a barrel as investors weighed the prospects of Iran increasing crude
exports in an oversupplied market. Futures were little changed in New York after
falling 2.2% Monday amid concern financial turmoil in Greece will prompt its exit
from the euro area. While a June 30 deadline for a nuclear accord with Iran is set to
be missed, US and European diplomats meeting in Vienna said a path to a
comprehensive agreement can be reached within days. Oil is headed for its first
monthly drop since March as the Greek crisis prompted investors to avoid risky
assets, while signs of a global glut persist. West Texas Intermediate for August
delivery was at $58.23 a barrel in electronic trading on the New York Mercantile
Exchange, down 10 cents, at 11:07 a.m. Sydney time. The contract declined $1.30 to
$58.33 on Monday. Total volume was about 80% below the 100-day average. Prices
have decreased 3.5% this month. The US benchmark crude has advanced 22% since
the end of March, set for the first quarterly gain in a year, and is up 9.2% in 2015.
Brent for August settlement was 3 cents lower at $61.98 a barrel on the Londonbased ICE Futures Europe exchange. It slid $1.25 to $62.01 on Monday. The
European marker grade traded at a premium of $3.69 to WTI.
Source:http://www.bloomberg.com/news/articles/2015-06-29/oil-holds-losses-below60-as-iran-nuclear-deal-deadline-looms
Middle East & Africa News

Dubai's Limitless to pay $564m to creditors, nears debt plan approval: Dubai real
estate developer Limitless has taken a step closer to securing a second restructuring
on debt outstanding from Dubai's property crash six years ago. It said on Monday it
would repay AED 2.07bn ($564m) to creditors and has won the approval of almost
90% of banks to extend its remaining debt to December 2018. Limitless will fund
repayment, equivalent to 42% of its AED 4.45bn total debt pile, by selling half its
land bank in Saudi Arabia for AED 2.07bn to Saudi Real Estate Company, said
Limitless chairman Ali Rashid Lootah told a press conference. Under the latest deal,
it will repay AED 1.9bn in bank debt, including an early payment of AED 411m not
due until December, and a further AED 176m to trade creditors. In return, Limitless
is asking its 18 creditor banks to agree to extend its debt by two years to December
2018. The company is hoping to secure agreement from the remaining 10% of
creditors for its plans "very quickly", said Lootah. "We are asking for 2018 as we
think it is achievable and think it gives us ample time to enable us to perform in our
development and obligations towards creditors," said Lootah. He said by 2018 he
hoped the company would be debt free and making a profit.
Source:http://uk.reuters.com/article/2015/06/29/emirates-restructuring-limitlessidUKL5N0ZF1EH20150629

Mubadala buys into Trafigura's Spanish mines as part of new venture: Trading
house Trafigura has sold half its stake in three Spanish copper and zinc mines to
Abu Dhabi investment company Mubadala as part of a joint venture they are setting
up to invest in base metals mining, the companies said on Monday. Mubadala will
buy 50% of Trafigura's mining operator Minas de Aguas Teñidas (MATSA) which
owns the Agua Teñidas, Sotiel and Magdalena mines in southern Spain producing
copper, zinc and lead concentrates. Trafigura will retain the other 50% stake, the two
companies said in a statement. According to Reuters, sources close to the deal said
that the mines business is it valued at around $1.4bn, meaning Mubadala would be
paying around $700m for its stake. After four years of price declines, base metals
such as copper and zinc are seen as among those with the most upside potential,
helped by supply constraints from places such as Chile. "Investing in MATSA is a
key step in growing and diversifying our existing metals and mining portfolio,"
Ahmed Yahia Al Idrissi, chief executive officer of Mubadala Technology and
Industry, said in a statement. Trafigura is nearing completion of a two-year
investment and expansion plan for MATSA which includes construction of a new
treatment plant, which will double annual processing capacity to 4.4 million tonnes
per year.
Source:http://www.reuters.com/article/2015/06/29/trafigura-mubadalaidUSL5N0ZF26K20150629

Dubai Land Department says no increase in 4% real estate registration fees: Dubai
Land Department has confirmed that real estate registration fees that are currently
set at 4% will not be increased. It has also stated that it does not plan to raise the
charges, which are collected from dealers to complete their real estate transactions,
in the near future. The Department stressed that decisions to increase the various
fees relating to real estate are issued by Dubai Executive Council. The Council issued
resolution No. (30) of 2013 to determine the value of real estate fees, including real
estate registration charges. HE Sultan Butti Bin Mejren, Director General of Dubai
Land Department, discounted what he said were rumours relating to a real estate
registration fee increase. "A number of market players are talking about alleged
reports that Dubai Land Department will be increasing real estate registration fees
from 4% to 8%. This is a baseless rumour and only serves to encourage the return of
speculation. It confuses buyers and needlessly compels them to speed up their
purchasing decisions," he said. He added that the real estate market in Dubai is
stable and is enjoying sustainable growth, meaning that there is no requirement to
revisit the fees for various activities and servicing in the near future. In September
2013, Dubai Land Department implemented Dubai Executive Council's resolution to
increase the real estate registration fees from 2% to 4%. The charges are paid by the
seller and the buyer equally unless otherwise agreed between the two parties. The
decision was seen as being instrumental in preventing speculators reap quick profits
and threatening the interests of investors and the market in general.
Source:https://www.zawya.com/story/Dubai_No_increase_in_real_estate_registratio
n_fees-ZAWYA20150629083342/

Saudi regulator maintains Mobily shares halt until restated financials disclosed:
Saudi Arabia's bourse regulator on Monday said a suspension on the shares of
Mobily will continue until the mobile operator discloses its restated financial
statements for last year and the first quarter of 2015. Mobily shares have been
suspended since June 9, when the Capital Market Authority halted trading until the
no.2 operator in the kingdom, also known as Etihad Etisalat, disclosed the financial
impact of an investigation into its accounts. Mobily on June 28 announced that its
2014 loss has widened by SAR 830m to SAR 1.745bn ($465.3m) and its first-quarter
losses changed to a small profit. The firm said its full restated financials would be
published before its second-quarter earnings are released, due sometime in July.
Mobily has been subject to increased regulatory oversight since November last year
when the company restated a year and a half of earnings as a result of accounting
errors related to timing of booking revenue from a promotional campaign.
Source:http://in.reuters.com/article/2015/06/29/mobily-probeidIND5N0Y203U20150629

Gulf markets fall again on Greece; no panic in Tunisia: The Greek debt crisis
continued to push down Middle Eastern stock markets on Monday after Athens
imposed capital controls and shut banks, raising the prospect of Greece leaving the
euro zone. Gulf economies are better insulated from such an event than many areas
of the world, because they do not depend on foreign investment and governments
can use huge fiscal reserves to continue spending heavily. But market sentiment in
the region was hurt by a broad slide of Asian and European stocks and a near 2%
drop in Brent oil to just above $62.0 a barrel. Saudi Arabia's stock index slid 1.6%.
Petrochemicals giant Saudi Basic Industries sank 2.4%. Mining company Ma'aden
tumbled 5.0%. But Saudi Ground Services, which listed last Thursday, jumped its
10% daily limit for a third day in a row to 66.50 riyals. Dubai's index slipped 0.3%.
Emaar lost 0.4%. But Dubai bank Emirates NBD, a creditor of Limitless, gained 2.2%
after the real estate developer reported progress in its debt restructuring. Abu
Dhabi's index dropped 0.8% as Etisalat lost 2.9% after saying a further earnings
restatement and provisions at its Saudi Arabian unit Etihad Etisalat would hit its
own earnings. Kuwait index edged down 0.1%, Oman fell 0.01% and Bahrain index
edged up 0.2%. Egypt's market slid 1.7%. Tunisia's stock market reopened and fell
1.0% after Friday's attack on a holiday resort which killed 39 people. Before the
attack, it was trading near record highs.
Source:http://www.reuters.com/article/2015/06/29/mideast-markets-wrapidUSL5N0ZF25W20150629

Turkish lira drops most since election as Greece concern spreads: Turkey’s lira
weakened the most in three weeks and stocks fell as Greece’s deepening financing
crisis triggered a sell-off of emerging-market assets. Bonds declined. The currency
depreciated 1.25% to 2.6980 per dollar on Monday, the biggest drop since June 8. The
lira has lost 13% this year, the worst in emerging markets after Brazil’s real. Turkey
is Greece’s fourth-biggest trading partner. Turkish politicians are trying to form a
coalition government after the June 7 elections that failed to hand the ruling AK
Party an outright majority. Inability to do so may lead to fresh elections. The Borsa
Istanbul 100 Index fell 1.4% to 82,344.06 points, the biggest decline in two weeks, led
by Turkiye Garanti Bankasi AS and Akbank TAS, the nation’s largest banks by
market capitalisation. The yield on two-year government bonds rose one basis point
to 9.75%. MSCI Inc.’s emerging markets index retreated 1.9%, the most since Dec. 1.
Source:http://www.bloomberg.com/news/articles/2015-06-29/turkish-lira-dropsmost-since-election-as-greece-concern-spreads
Rakesh Sahu
Chavan Bhogaita
Market Insights & Strategy
Global Markets
National Bank of Abu Dhabi
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