Merger of Middle East Banking Powerhouses

The National Bank of Abu Dhabi is set on merging with FGB (First Gulf Bank) to create a 175 billion dollar institution.It will be the biggest bank in the Middle East and North Africa.The combined bank will be larger than Germany's Deutsche Bank.*
Both banks are substantial holdings of the royal families of the UAE.The deal is the first big merger since Abu Dhabi made an effort to diversify away from oil and its declining value.The merger,involving a share swap,could result in a cost savings of about 30%.The mammoth transaction,resulting in the most sizeable lender in the Middle East,could spur more financial mergers and acquisitions in the region.*
Wisdom Tree Middle East Dividend Fund (GULF)

US-Saudi Talks Focus on Syria

US Secretary of State John Kerry continues his journey to the Middle East and Asia this weekend.The trip began June 21 and extends through July 2.On Tuesday 25 June,Mr.Kerry held talks with Saudi Arabia's Foreign Minister,Prince Saud al-Faisal,in Jeddah,Saudi Arabia.
In remarks following their meeting,His Royal Highness described the talks with John Kerry as having been a fruitful,constructive discussion,transparent and open-minded.At the top of their agenda was the crisis in Syria.
Perhaps the most ominous development is the involvement of foreign forces,Prince Saud noted,foremost of which is the motions of Hezbollah with support from Iran's national guard in the mass murder of Syrians,with unlimited military support from Russia.This critical turn of events cannot be overlooked.
Over and above the regime's genocide against its own people,this adds an even deadlier element in the form of an all-out foreign invasion that breaks every international law,protocol and principle.This violates the Syrian land and turns it into a battleground for global and regional conflicts and puts it under the mercy of sectarian struggles.
Syria can only be considered an occupied land.This requires a firm stand and speedy action from the international community.
I would like to commend the US decision to send military aid to the Free Syrian Army,and express my relief for what I heard today from the US Secretary of State concerning both changing the balance of forces on the ground and maintaining the legitimacy of the Syrian National Coalition as the sole representative of the Syrian people,Saudi Foreign Minister Prince Saud said.
Mr.Kerry is currently meeting in Amman,Jordan and Jerusalem with Jordanian,Israeli and Palestinian officials on advancing the Middle East peace process.From there,he will travel to Brunei for ASEAN meetings.

John Kerry Departs for Middle East,Asia

Secretary of State John Kerry is departing for an eleven day trip to the Middle East and Asia later today,June 21.He will visit Doha,New Delhi,Jeddah,Kuwait City,Amman,Jerusalem and Bandar Seri Begawan,according to Spokesperson Jen Psaki.
In Doha,Qatar,Kerry will meet with senior Qatari officials to discuss bilateral and regional matters.He will also meet with the London 11 foreign ministers to discuss the Syrian conflict,including support for the opposition and the search for a political settlement.
While in New Delhi,the Secretary will chair the interagency delegation to the fourth annual US-India Strategic Dialogue.It will cover the full spectrum of bilateral and regional concerns,from economic engagement to security and defence,as well as climate change and space cooperation.
In Jeddah and Kuwait City,Mr.Kerry will discuss a number of bilateral and regional issues with Saudi and Kuwaiti officials.
In Amman and Jerusalem,he will meet with Jordanian,Israeli and Palestinian officials on advancing the Middle East peace process.
Finally,the Secretary will participate in ASEAN regional meetings and the 3rd East Asia Summit Foreign Ministers Meeting in Bandar Seri Begawan,Brunei,as well as hold bilateral talks with the Sultan of Brunei and other Brunei officials.

Steve Roach:A Rare Dissent

Not everyone is carefree about the current investing environment.Steve Roach,senior lecturer at Yale University and non-executive chairman of Morgan Stanley Asia,has a number of concerns.The history of post-crisis periods is clear:weak and fragile recoveries.The risk of relapse is real.Consider:1.sovereign debt;2.100 dollar oil;3.unrest in the Middle East;and 4.a U.S. consumer in need of major balance sheet repair.
The markets have dismissed the relapse possibility.Do so at your own risk.The Fed has got the U.S. economy on steroids.The risk is when we withdraw Quantitative Easing 2,you've got a weak labor market.How do you sustain an economy on that basis?
Cash flow isn't enough to get companies to go out,expand and hire.Those decisions are based on expectations of future demand.We can't stand in the way of balance sheet repair.
We're creating a whole new generation of zombie consumers,over-indebted and savings-short,Mr.Roach warns.He is a frequent guest on business television.
Founded in 1935,Morgan Stanley is a financial brain trust with offices worldwide,and offers a full scope of financial services to business,institutions and individuals.More than 45,000 people work for the mega-firm.
Morgan Stanley(MS)

Advantage View:Inside Saudi Arabia

Robert W. Jordan,former U.S. Ambassador to Saudi Arabia,has been assessing the kingdom's position in the recent wave of change sweeping the Middle East.King Abdullah is seen as a very sincere,non-corrupt ruler by his people.
We do need to carefully watch the middle class and the jobless.That could percolate over the next several years.Fifty percent of Saudis under 18 have poor prospects,but the people are impressed by the kingdom's investments in infrastructure.
There is tremendous liquidity in the Middle East,but Iran's hands are at work in the Yemen,Bahrain and Lebanon troubles.
The oil field security in Saudi Arabia is good.Overall,the business view is positive.
In Bahrain,it appears the king and crown prince will likely survive.They appear to have gotten a grip on the troubles,the former ambassador feels.
Mr.Jordan is currently Partner in Charge of Middle East Practice at law firm Baker Botts LLP.The firm has offices in Abu Dhabi,Dubai and Riyadh,Saudi Arabia.
Although a Saudi Arabian firm has created two exchange-traded funds based on the country's Tadawul stock market,they are not traded on U.S. exchanges as of yet.The Gulf Cooperation Council etfs are only available ex-Saudi Arabia.
iShares MSCI GCC Countries ex-Saudi Arabia(IGCC)

Dubai Skyscraper Construction Stopped

Nakheel,a state-owned developer in the United Arab Emirates,has halted construction on a tower that is slated to become the world's tallest.The Dubai project is feeling the weight of the financial crisis,and is suspended for a year.A decline in real estate prices is pressuring banks in the U.A.E.,and the cratering of oil revenue is crimping business activity across the Middle East.So far,the building has reached more than 160 stories,and a height of 2559 feet,or 779.98 meters.Nakheel declines to reveal the skyscraper's ultimate height,which is a point of pride for Dubai,the U.A.E. financial centre.

Bernanke Provides Context

Speaking at Harvard University,Ben Bernanke,Chairman of the U.S. Federal Reserve,has put the current situation in historical context.So far,the U.S. economy has dealt with the oil shock pretty well,Mr.Bernanke said.The Fed has learned the lessons of the 1970s.Maintaining a commitment to price stability remains a top priority.Fixing inequality by limiting economic dynamism is a step in the wrong direction.Inflation today is significantly higher than he would like,but is lower than in the 1970s.There is little indication of the beginnings of a wage-price spiral today.Inflation is up 1% this year,compared to 6% in the 1973 oil shock,which was a result of war in the Middle East.Still,the rise of some inflation expectation indicators is of significant concern to the Federal Reserve,the central banker noted.Crude prices today are up more than four-fold,much like the 1970s,but the economic slowdown today is more due to housing and financial problems than to the price of oil,Mr.Bernanke reflected.

World Economic Outlook

In a semiannual forecast,the International Monetary Fund,a group of 185 member nations,says that the U.S. has entered a mild recession that will affect most of the world.Only the Middle East will escape the downturn,on account of its oil revenue.Global goods and services will rise 3.7% in value in 2008,as opposed to 4.9% in 2007.Extensive damage has been caused by the crisis,which the IMF considers the worst upheaval since the Great Depression.

Swedish Firm Rounds Out Sun Micro

The best thing I can do is publish the story I wrote,because it remains true.The companies I mentioned are open for business today,regardless of share prices.That should tell you something about today's flash in the market.Sun Microsystems(JAVA) has purchased Swedish firm MySQL for one billion dollars.MySQL is a vendor of open source database software.Its customers include Google(GOOG),You Tube,IKEA and Facebook.The software itself is free,but integration and maintenance services for it are not.It is with these that Sun,which has a deep commitment to the open source concept,intends to make a profit.MySQL provides platforms for the Web economy,and the Web's enabling of cost reductions and efficiency are making the Internet very attractive to consumers and businesses,according to Sun CEO Jonathan Schwartz.MySQL gives peace of mind to customers.The acquisition of MySQL make's Sun's Solaris the only operating system with database software.Together with Java technology,Solaris and MySQL give Sun a fuller circle of software products to complement its breadwinner server systems.Prior to acquiring MySQL,Sun relied on Oracle(ORCL) for databases.The open source concept championed by Sun is both more economical and flexible for Internet companies.Given these advantages,Sun expects to meet or exceed analysts' expectations for its fiscal second quarter earnings and revenue,which will be reported on January 24.Sun has seen 7% bookings growth,with real strength in Asia,Africa and the Middle East.Its products are in the right phase of their life cycles to generate profits as great as,or greater than,expected.Shares of the Santa Clara,California firm were among the best performers in last week's dismal market.