Markets may consolidate, UK sukuk ruling could hit Dana Gas
Gulf stock markets look set to consolidate with little upside on Sunday while a British High Court ruling on $700 million of sukuk issued by the United Arab Emirates’ Dana Gas may depress that stock.
The fallout from Saudi Arabia’s anti-corruption crackdown continues to make investors nervous, while geopolitics have also become a major factor for regional markets, amid concern about instability in Lebanon and the possibility of strong Saudi action against Iran.
At the weekend, Saudi Arabia summoned its ambassador in Germany home for consultations over comments by German Foreign Minister Sigmar Gabriel about Lebanon. Gabriel told reporters that Europe “could not tolerate the adventurism that has spread there”, although it was not clear from a Reuters television recording that the remark was aimed at Riyadh.
Meanwhile, Dana argues that it does not have to repay its sukuk, which matured last month, because changes in the interpretation of Islamic finance over the past few years mean the instruments are no longer sharia-compliant and have become unlawful in the UAE.
A London High Court judge ruled that Dana’s challenges to the purchase undertaking behind the bonds were “unfounded” and that the agreement was “valid and enforceable”.
This was a victory for holders of the sukuk, but by no means the last legal move in the case; Dana said it would appeal the High Court ruling, and was also looking ahead to a hearing by a UAE court on whether the structure of the sukuk was valid. That hearing is scheduled for Dec. 25.
Wall Street ended Friday on a weak note, but Brent oil jumped back to $62.68 a barrel, up 2.15 percent.
Source: Reuters
