Middle Eastern woes

Middle Eastern woes – The political turmoil and unrest in the Middle East has caused much instability in the global stock market as investors flee to safe-haven investments such as gold and silver. Oil prices, in particular, have seen an uptick since the nervousness in the region started. The latest clashes involved protestors and Muammar Gaddafi’s forces in Libya. Several Singapore companies have projects and businesses in the Middle East. Among the stocks under our coverage, Boustead Singapore is involved in a joint-venture project in Libya and has just announced the evacuation of its entire non-Libyan staff from the country. The impact on the project could not be ascertained now but we have already conservatively assumed zero profits from the project and the latest development is unlikely to have a major impact on our bottomline forecasts. Separately, Hyflux has desalination plants in Algeria, as well as ongoing project negotiations worth an estimated $1.2b in Libya. Under the circumstances and even in an optimistic scenario, the projects in Libya would be severely delayed. We have accounted for this in our previous report due to the lack of earnings visibility. As for Olam, the company has exposure in other parts of Africa, such as Nigeria and Cote D'Ivoire, which could be under risk should the unrest spread

source : kim eng