fina-tech

The Finance and Technology Blog. News and Analysis.

Citigroup in DIFC

Citigroup announced on Monday that it received authorization to start operating in the Dubai International Financial Center. According to Reuters, this is part of the bank’s “plans to develop a full-service investment banking business in the region, which will include equities and a dedicated equity research team”. Citigroup now operates in nine Arab countries including Egypt, UAE, Lebanon, Jordan, Tunisia, Morocco, Algeria, Bahrain and Kuwait.

Dubai International Financial Center plans to become a major international financial center just like New York, London or Hong Kong. It focuses on; banking services (investment banking, corporate banking and private banking); capital markets (equity, debt Instruments, derivatives and commodity trading); asset management and fund registration; insurance and reinsurance; Islamic finance; business processing operations and ancillary services. It now has around 190 companies registered including giants like Credit Suisse, Lloyds TSB, Deutsche Bank, and Merrill Lynch Bank.

posted by Ammar Haykal @ 2:28 AM, ,

Ebay and Yahoo announce Partnership in the Face of Google

It is becoming more tempting to watch, as each of the search giants move forward in the war to capture more market share in web search and its profitable ad-selling. I am certainly not willing to turn my market watch and my daily news doze into the sole purpose of search engines. However, in the last few days each of the competitors tried something new to get more customers. While Google introduced online Video Ads a few days ago in a move that is supposed to attract more interest from customers in its adwords program. Ebay and Yahoo announced a partnership in online advertising and online payment, the WSJ reported. According to the agreement, Ebay will show ads for Yahoo on its website, and Yahoo will promote Ebay’s Paypal system as a way for customers to pay for Yahoo services. Both the companies see Google as a risk on their online presence. Yahoo is obviously fighting brutally with Google over web search. In a research by comScore, Google captured 43.1% of the search market share, up from 42.7% in March, while Yahoo stayed at the same rate of 28%. As for Ebay, it is said that Google was working on a payment system that is different from Ebay’s paypal, but can be a replacement for the heavily used system.

posted by Ammar Haykal @ 11:38 AM, ,

Crushing Google!

Forbes published an article about the heating competition in the search engine industry. The article said that Microsoft and Yahoo are working hard to grab some share in the search market, and more importantly take a share in the strong online ad-selling market. Both companies are working on the development of their ad-selling systems to become a major rival to Google’s Adsense. During the past few years, Google pioneered as a search engine, and moved from this into ad-selling, which contributes to 60% of Google’s profits (around $1.1 billion). When anyone surpasses Google’s share in the search-engine industry, it will be the beginning of a very sharp falling for Google down to hell!

But it won’t be easy to get Google out of the way. To be able to get a share in the ad selling business, the two companies need a lot of efforts to catch up with Adsense. Adsense is now not only a good option for advertisers to make people find them; it is also a favorite for publishers who make money out of their websites with Adsense. So Adsense is already embedded in thousands of websites, and Google is giving an advertiser a way to be almost everywhere relevant on the web.

So I guess they will have to use the web search market first. It is likely that Google lose its place to other search engines in the next years. According to a market search from Intralink, Ask.com was a better option than Google in a recent search-results relevancy test. Also, Microsoft said it will take up the search market from competitors in five years. And these people can make everything happen. The company with $34 billion in cash has the means to crush Google when they plan to.

What is left for competitors to wipe Google is to clear the brand name that is pronounced by almost every internet user in the world. Google has been so famous in the last few years, that I guess every rival should spend a big budget on making people forget it. For me, Google became part of my daily vocabulary, part of my daily research for any piece of information (I Googled about 6 times while writing this). It almost became part of my life, and this is very hard for Yahoo and Microsoft to deal with. That’s why I am hoping to hear from Google soon about their defensive acts towards attacks from Microsoft and Yahoo.

posted by Ammar Haykal @ 8:43 AM, ,

Islamic Banking – Intriguing Introduction

Today I ran across a very interesting article from BusinessWeek that talks about the growing business of Islamic banking. The article is old (August 2005), I guess the figures increased, but the fact that the article states is still the same; Islamic banking is a door to knock for financial institutions! According to the article, there are around 265 Islamic banks that manage assets of over $262 billion. Among international banks that went into the Islamic banking business are HSBC with its HSBC Amanah Islamic Bank, Citibank, UBS with its stand-alone Islamic bank based in the United Arab Emirates.

This subject is really an attractive one to study and research; I think I will be writing more about it, how it is based, its benefits and setbacks, and how beneficial it is to financial institutions.

posted by Ammar Haykal @ 2:25 PM, ,

Smart move Warner Bros!

The first torrent search site, BitTorrent, made a deal with Warner Borthers to distribute over 200 of their movies and TV shows through their file-sharing program. According to the BusinessWeek, prices are not settled yet, but TV shows are expected to cost about $1 to download. This way, Warner will turn all the illegal users of BitTorrent into legal customers of their movies and TV shows.

The issue of piracy has been floating to the surface a lot lately. Microsoft reported once that it had 30% of its software pirated. That’s why they’ve been recently trying to tighten the rope around pirated windows through the “Genuine Windows” check that would decide whether a Windows operated PC is eligible for Windows updates. Still, hackers were able to bypass this check once, and twice, and a third time (very recently!) Same thing happened with copyrighted material producers. They tried to sue users and hosts of file-sharing programs and achieved some results; illegal Napster was down. But now there’s Limewire, Edonkey, Emule, BitTorrent, and many others. And they are all working and promising their users complete anonymity.

What seems to be the solution? I may be taking it too easy and simple. But I don’t think there is a solution. First, original software, music, and movies in third world countries (average 60% piracy rate) are very expensive compared to personal income there. This would give somewhat a moral excuse to use pirated material. And second, there is a multi-billion “piracy industry” that is investing in genius brains to keep running. These two reasons combined should probably make Microsoft or Warner or EMI or anyone hopeless in fighting piracy. But two strong and stubborn sides are still fighting, who will win the game?

posted by Ammar Haykal @ 10:04 PM, ,

The Gulf Bubble - What's Happening in Dubai?

The "Black Sunday" (as the the UAE based Al-Bayan called it) ended with local companies listed on DFM (Dubai Financial Market) losing $2.6 billion of its value. Individual investors as well as portfolio managers and investment houses were selling their stocks before it was too late. The Dubai Stock Exchange index dropped by 5.06% to close at 490.14 points, its lowest close since February 2005. The stock of real estate and construction giant Emaar, which is considered the leader of Dubai's exchange, fell down by 8.7%.

One point of view suggests that small individual short-term investors are dominating the transactions in the stock exchange, with no strong presence for institutional investors. An analyst told al-Ittihad Newspaper that the market crash resulted from the pressure on small investors to liquidate. He said that these investors used to borrow short-term to invest in the short term, but the market’s long-term investment needs caused pressure on short-term borrowers and caused this rush to sell stocks. One solution for this would be to limit credit options by institutions, as well as turn short-term loans to long-term ones to give the small borrowers the chance to avoid a liquidation rush. Market stability might be seen by mid May according to the analyst.

The International Monetary Fund shed some light on the problem in its Regional Economic Outlook: ME and Central Asia, May 2006. The report said that during the last two years, several Arab equity markets have been overvalued. This strong performance was an outcome of high oil prices, ample liquidity and strong credit growth. After this overvaluation, markets started corrections, and several reversals started to occur since late 2005. As margin calls increased, the report adds, investors withdrew from regional markets to cover their losses at the local market leading to March 14’s “Black Tuesday” panic selling. This market decline is, according to the report, similar to the 2000 “dot com” bubble burst and the 1989 Nikkei episode. However, the report believed stability may be on the way with the support of oil prices and economic reform, provided governments were able to protect small investors.

posted by Ammar Haykal @ 2:50 PM, ,

Buffet Getting Richer

Investment legend Warren Buffet announced an increase of 70% in net earnings for the first quarter of 2006, in the public Berkshire Hathaway he controls. The $2.31 billion net earnings resulted from exchange rates as well as from the company’s other investments. Buffet’s lack of confidence in the dollar and the forward contracts the company made resulted in a $151 million net.

Berkshire Hathaway Inc is a holding company that owns around 40 companies around the world, mainly in insurance, but also in clothing, financial services, transport, construction, jewelry, along with other service companies. The company announced a few days ago that it will buy, for $5 billion, 80% of an Israeli metal-cutting company in line with its policy to diverse internationally and through foreign currency which again results from Buffet’s lack of confidence in the US Dollar and the US economic policy.

The company got its name through its 76 year-old founder, Warren Buffet, who moved up with his investment ideas to become the second richest man in the world with $42 billion. It is really interesting to follow the news of this man and his ventures. You can find a lot of articles on the net along with books on the investment strategy of Warren Buffet and how he turned $10,000 into $42 billion. You’ll also pass by business idioms like “The Buffet Way” and “Buffetology”. One other interesting fact, Class A shares of Berkshire Hathaway are priced at $88,710 and Class B at $2,945. In a very interesting article about the stock market, Buffet defined “investing” as “laying out money today to receive more money tomorrow”. It surely is working with him.

posted by Ammar Haykal @ 3:13 AM, ,


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