UPDATE 2-Kuwaitis go to the polls, economy tops agenda

Reuters: [2008-05-17 16:36:00]

(Adds turnout, fresh quotes)

By Ulf Laessing and Rania El Gamal

KUWAIT, May 17 (Reuters) - Kuwaitis voted in a parliamentary election on Saturday that they hoped would bring in fresh faces able to bury political feuds and push through economic reforms.

Some 275 candidates are running for the 50-seat National Assembly, among them 27 women hoping for their first success after failing to win a single seat in 2006.

Women won the right to vote and stand for office in 2005 but face an uphill struggle attracting voters in a Gulf Arab country where many still believe a woman's place is in the home.

"I'm against women in parliament. I think everybody should stay in his place," said Samira al-Azm, a voter in her fifties.

Nearly 362,000 Kuwaitis, over half of them women, are eligible to vote, but polling got off to a slow start on a hot, dusty weekend. By noon an average 25.6 percent of voters had cast their ballots, state new agency KUNA said.

Kuwait's ruler, Sheikh Sabah al-Ahmad al-Sabah, dissolved parliament in March to end a standoff with the cabinet that had delayed economic reforms aimed at preparing Kuwait for the era when its vast oil reserves run out.

The last assembly focused on questioning ministers over their conduct, forcing several to resign. The OPEC producer has yet to appoint an oil minister since the last quit in November.

Amid the political squabbles, reforms such as a bill to attract foreign investment were left on the back burner.

"I expect many of the old assembly not to make it. Their performance was not good enough. They were pursuing their own interests, not solving Kuwait's problems," said Hanaa, 33.

REFORM HOPES

Kuwait's bourse, the second-largest in the Arab world, rose after parliament was dissolved on hopes the new chamber would be more business-friendly but has since shed some of its gains.

"Investors now want to see some action," said Mustafa Behbehani, a director at Gulf Consulting Co in Kuwait.

The two-month campaign has been marred by protests, arrests and confusion after a new law redrew electoral districts to ensure a more balanced representation in a parliament that has tended to be dominated by Islamist blocs and tribal alliances.

Candidates have also been detained on vote-buying allegations and, under the new rules that have cut the number of constituencies from 25 to five, no one can predict who will win.

Analysts said the main Islamist and tribal blocs would do well in the enlarged districts where independents may struggle.

"They will enter the parliament. They are a big part of the society," said Amani Bouresli, a finance professor at Kuwait University. "But we expect a big change, almost 40-50 percent change, because of the five constituencies. There will a change in the faces but not in the formation of the assembly."

Kuwait, which sits on 10 percent of the world's oil, wants to wean its economy off energy exports and emulate the success of neighbours like Dubai and Bahrain which have transformed themselves into financial centres and tourist destinations.

Oil makes up over 90 percent of Kuwaiti government revenues and 55 percent of the gross domestic product in 2006, according to official data. That compares to 3 percent of GDP in Dubai.

Part of the problem is that ordinary Kuwaitis oppose reforms that would cut their benefits. They pay no taxes and are content with state jobs and handouts and free health and schools.

Many Kuwaitis are also fed up with a state which, despite its oil wealth, allows roads, hospitals and schools to crumble.

Reforms will be even harder to push through with global food prices rising and inflation at a record 9.5 percent in January. (for more Kuwait elections see factbox on reform [L17396506], factbox on political system [nL17415668] and facts on Kuwait [nL13895566]) (Editing by Lin Noueihed and Philippa Fletcher) ((+965 246 03 50, ulf.laessing.reuters.com@reuters.net))

Keywords: KUWAIT ELECTIONS/

UPDATE 1-Kuwaitis go to the polls, economy tops agenda

Reuters: [2008-05-17 12:33:00]

(Adds quote, details on political groups)

By Ulf Laessing and Rania El Gamal

KUWAIT, May 17 (Reuters) - Kuwaitis voted in a parliamentary election on Saturday that they hoped would bring in fresh faces able to bury political feuds and push through economic reforms.

Some 275 candidates are running for the 50-seat National Assembly, among them 27 women hoping for their first success after failing to win a single seat in 2006.

Women won the right to vote and stand for office in 2005 but face an uphill struggle attracting voters in a Gulf Arab country where many still believe a woman's place is in the home.

"I'm against women in parliament. I think everybody should stay in his place," said Samira al-Azm, a voter in her fifties.

Nearly 362,000 Kuwaitis, over half of them women, are eligible to vote, but voting began slowly on a hot, dusty weekend morning.

Kuwait's ruler, Sheikh Sabah al-Ahmad al-Sabah, dissolved parliament in March to end a standoff with the cabinet that had delayed economic reforms aimed at preparing Kuwait for the era when its vast oil reserves run out.

"Oh voter - which Kuwait do you want?" said the daily al-Rai in an editorial, urging voters to back candidates who put national interest first.

The last assembly focused on questioning ministers over their conduct, forcing several to resign. The major OPEC producer has yet to appoint an oil minister since Badr al-Humaidhi resigned in November.

Amid the political squabbles, reforms such as a bill to attract foreign investment were left on the back burner.

REFORM HOPES

Kuwait's stock market, the second-largest Arab market, initially rose after parliament was dissolved on hopes the new chamber would be more business-friendly, but has since shed gains.

"Investors now want to see some action," said Mustafa Behbehani, a director at Gulf Consulting Co in Kuwait.

The two-month campaign has been marred by protests, arrests and confusion after a new law redrew electoral districts to ensure a more balanced representation in a parliament that has tended to be dominated by Islamist blocs and tribal alliances.

Candidates have also been detained on vote-buying allegations and, under the new rules that have cut the number of constituencies from 25 to five, no one can predict who will win.

But analysts said the main Islamist and tribal blocs, already influential and established, were likely to perform well in the large constituencies where independents may struggle.

Kuwait, which sits on 10 percent of the world's oil, wants to wean its economy off energy exports and emulate the success of neighbours like Dubai and Bahrain which have transformed themselves into financial centres and tourist destinations.

Oil makes up over 90 percent of Kuwaiti government revenues and 55 percent of the gross domestic product in 2006, according to official data. That compares to 3 percent of GDP in Dubai.

Part of the problem is that ordinary Kuwaitis oppose reforms that would cut their benefits. They pay no taxes and are content with state jobs and handouts and free health and schools.

Many Kuwaitis are also fed up with a state which, despite its oil wealth, allows roads, hospitals and schools to crumble.

Reforms will be even harder to push through with global food prices rising and inflation at a record 9.5 percent in January. (Editing by Lin Noueihed and Myra MacDonald) ((+965 246 03 50, ulf.laessing.reuters.com@reuters.net))

Keywords: KUWAIT ELECTIONS

REFILE-Kuwaitis go to the polls, economy tops agenda

Reuters: [2008-05-17 09:21:00]

(Refiles to fix typo in headline)

By Ulf Laessing

KUWAIT, May 17 (Reuters) - Kuwaitis voted in a parliamentary election on Saturday that they hoped would bring in fresh faces able to revive economic reforms to wean the country off its dependence on oil.

Some 275 candidates are running for the 50-seat National Assembly, among them 27 women hoping for their first success after failing to win a single seat in 2006.

Women won the right to vote and stand for office in 2005.

Some 361,685 Kuwaitis, over half of them women, are eligible to vote. Members of the security forces are not allowed to vote.

The Gulf Arab state's ruler, Sheikh Sabah al-Ahmad al-Sabah, dissolved parliament in March to end a standoff with the cabinet that had delayed economic reforms aimed at preparing Kuwait for the era when its vast oil reserves run out.

"Oh voter - which Kuwait do you want?" said the daily al-Rai in an editorial, urging voters to support candidates putting national interest first and seeking to work with the government to approve reforms aimed at enlivening the country's economy.

Kuwait's stock market, the second-largest in the Arab world, initially rose on hopes the new chamber would be more business-friendly, but has shed some gains recently.

"Investors now want to see some action," said Mustafa Behbehani, a director at Gulf Consulting Co in Kuwait.

The two-month campaign has been marred by protests, arrests and confusion after a new law redrew electoral districts to ensure a more balanced representation in a parliament that has tended to be dominated by Islamist blocs and tribal alliances.

Candidates have also been detained on vote-buying allegations and, under the new rules that have cut the number of constituencies from 25 to five, no one can predict who will win.

The last assembly focused on questioning ministers over their conduct, forcing several to resign. The major OPEC producer has yet to appoint an oil minister since Badr al-Humaidhi resigned in November.

Kuwait, which sits on 10 percent of the world's oil, wants to wean its economy off energy exports and emulate the success of neighbours like Dubai and Bahrain which have transformed themselves into financial centres and tourist destinations.

But Kuwait's political standoff means even a long-awaited bill aimed at attracting foreign investment has yet to pass.

Oil makes up over 90 percent of Kuwaiti government revenues and 55 percent of the gross domestic product in 2006, according to official data. That compares to 3 percent of GDP in Dubai.

Part of the problem is that ordinary Kuwaitis oppose reforms that would cut their benefits. They pay no taxes and are content with state jobs and handouts and free health and schools.

Many Kuwaitis are also fed up with a state which, despite its oil wealth, allows roads, hospitals and schools to crumble.

Reforms will be even harder to push through with global food prices rising and inflation at a record 9.5 percent in January.

"They don't treat you, they torture you," said a woman, describing dental treatment at a flagship state hospital.

(Editing by Lin Noueihed and Myra MacDonald) ((+965 246 03 50, ulf.laessing.reuters.com@reuters.net))

Keywords: KUWAIT ELECTIONS

PRESS DIGEST - British Business Press - May 17

Reuters: [2008-05-17 05:06:00]

The Times

BA FORCED TO CONSIDER '900 MILLION POUND FALL' IN PROFIT

British Airways <BAY.L> has been forced to consider a possible 900 million pound fall in profit as a result of the rising price of oil. Martin Broughton, the chairman, admitted on Friday that the board had discussed what the plan of action would be if the airline was in a "break-even position" by the end of this financial year, saying "the crude objective is not to get into a break-even situation but to stay profitable." The pessimistic comments alarmed investors. Nick van den Brul, aviation analyst at Exane BNP Paribas, said: "There is clearly a lot of bad news to come."

TAKEOVER BATTLE AT BRITISH ENERGY HOTS UP, 2 MORE APPROACHES

British Energy <BGY.L> is at the centre of an increasingly heated takeover battle as it emerged on Friday that the power company had received two more preliminary offers, one valuing it at almost 11 billion pounds. The company has received takeover or other approaches from EDF Energy <EDF.PA>, RWE <RWEG.DE>, Iberdrola <IBE.MC> and Suez <LYOE.PA>, the French industrial group. The company said it had been approached by "several parties wanting to make a full offer". The shares jumped 5.2 percent on news of the additional approaches, closing up 35.5 pence at 715.5 pence.

COMPUTACENTER SCREENS A GLOOMY QUARTER

Computacenter said it expected lower profits in the first half of the year due to slower trading in the UK and France. The company, which provides IT services to large companies, governments and investment banks, said like-for-like sales were down 1.5 percent in the first three months of 2008, while they fell 7.1 percent outside the UK, mainly as a result of weak sales in France. Mike Norris, the chief executive, said: "There's no doubt that if you have an economic downturn, IT spend will be hit."

The Daily Telegraph

QATARIS TOLD 100 MILLION POUNDS NEEDED FOR CARE HOME GROUP

The Qatari government-owned Four Seasons, one of the UK's biggest nursing home chains, has been told by bankers that a cash injection of more than 100 million pounds is necessary to stabilise the business. Royal Bank of Scotland <RBS.L> and Credit Suisse <CSGN.VX> are in fraught discussions with Paul Taylor, who heads Three Delta, the UK investment fund of the Qatari Investment Authority. Taylor has been trying to negotiate refinancing of Four Seasons' 1.3 billion pound debt, which must be completed before June to avoid a massive one-off interest payment. The banks have made refinancing conditional on the Qataris and Taylor pumping a minimum of 100 million pounds of fresh equity into the business.

SCOTS TV CHANNEL WOULD SHOW CLASSICS

The broadcaster SMG, which operates the ITV <ITV.L> franchise in Scotland, has put forward a proposal to the Scottish authorities for a new Scottish digital TV channel that would show BBC programmes and popular shows from its own archives. The plan was unveiled at the company's annual general meeting on Friday. Rob Woodward, the chief executive, said the channel would need 15 million pounds of public money.

MCKENNA CALLS TIME ON NEW BROKING ARM

Ingenious Securities, the stockbroking business of banker-to-the-stars Patrick McKenna, is being shut down. It is thought that all staff have lost their jobs, with one employee saying: "We have not been given a chance to show what we can do." McKenna, who recently paid himself between 75 and 100 million pounds in profits from the business, said: "The decision to close our securities business has not been an easy one."

The Independent

CENKOS FRUSTRATED AGAIN AS TALKS WITH ARDEN BREAK DOWN

Cenkos Securities <CNKS.L>, the broking house, has stumbled in its second takeover approach for Arden Partners <ARDN.L> after negotiations broke down. Cenkos said on Friday that discussions with Arden "have now ceased", just three months after a 1.6 billion pound bid for Close Brothers collapsed at the discussion stage. A source close to Arden said: "Cenkos were really keen to get a deal done and they got pretty close. Rivals came in and it was Arden's duty to the shareholders to evaluate them. It slowed the whole process down and Cenkos didn't want to hang around."

REGENT INNS SALES SLIDE 11 PERCENT AS SMOKING BAN HITS HOME

The smoking ban and falling consumer confidence were blamed for a sharp fall in sales at Regent Inns <REGI.L>, which operates the Walkabout pubs and Jongleurs comedy clubs. Like-for-like sales fell 11 percent in the period from 30 December 2007 to 14 May 2008. "This downturn in sales has principally arisen in Walkabout, while Jongleurs has continued to trade robustly," Regent said. The shares closed up five percent at 16.5 pence.

BLOOMSBURY SHARES RISE ON UPBEAT REPORT

Bloomsbury Publishing <BLPU.L>, the group that published the Harry Potter books, reported "encouraging" operating performance since the start of the year following good sales of Khaled Hosseini's books A Thousand Splendid Suns and The Kite Runner. "The group continues to make progress in all areas," the group said in a statement. "The measures that we are taking to reduce costs are already delivering positive results." The shares rose five percent, closing up seven pence at 154 pence.

UPDATE 4-Fannie Mae relaxes loan down-payment requirements

Reuters: [2008-05-16 23:05:00]

(Adds OFHEO response, Freddie Mac policy)

By Lynn Adler

NEW YORK, May 16 (Reuters) - Fannie Mae, the largest U.S. home funding source, is setting a single national standard for down payments on mortgages it buys, including areas where home prices are falling, in an effort to stimulate the housing market.

On loans it purchases, the company will accept down payments as low as 3.0 percent for single-family, primary residences in all U.S. markets starting June 1. That replaces a policy set in December that mandated higher down payments in markets where home prices are dropping, Fannie Mae said on Friday.

The rule change comes as many in the housing industry call for Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, the second-largest federally chartered home funding company, to make more affordable housing available. The two government-sponsored, shareholder-owned companies buy mortgages, freeing up funds for more lending.

Fannie Mae's new down payment policy is a "sound" move that could help unfreeze the U.S. housing market and uncover pent-up demand for mortgages, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said on Friday.

"It's still sound underwriting and makes sense in this type of market," he told reporters after a speech at a Federal Reserve Bank of Chicago conference. OFHEO is the regulator for Fannie Mae and Freddie Mac.

Both companies have tightened standards on loans they purchase, such as mandating higher credit scores, and have raised fees to better reflect risk as defaults and foreclosures escalate.

Fannie Mae "will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, senior vice president of single-family credit policy and risk management, said in a news release.

U.S. home prices have tumbled nearly 16 percent from their June 2006 peak, according to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas. The biggest losses are mainly in areas that had the most sweeping gains in the five-year record housing surge earlier this decade.

Lenders grappling with fast-souring mortgages on their books are reluctant to create new ones despite government interventions and a series of interest rate cuts from the Federal Reserve, said Gregory Miller, chief economist at SunTrust Banks Inc. in Atlanta.

Borrowers with high-cost adjustable mortgages who initially could not afford to refinance into fixed rate loans may benefit most from lower down payments, Miller said.

"Relaxing standards in areas where prices are falling suggests that we're going to some of the more damaged regions of the country -- there are very few markets where prices aren't falling -- and allow some of those households the opportunity to refinance back toward solvency or allow another cohort of potential housing demand," Miller added.

Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages through its automated underwriting system, and ratios of up to 95 percent for other loans. A conforming mortgage meets the requirements for loans that Fannie Mae and Freddie Mac can purchase.

Freddie Mac early this month instituted a 95 percent loan-to-value floor for mortgage it buys, so the down payment can't increase to more than 5 percent of the estimated value, according to spokesman Brad German. It accepts lower down payments on some affordable loan products, he said.

"We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model ... will limit risk layering and assess each loan more precisely," Sullivan added.

The size of conforming loans was temporarily increased in March by their regulator to as high as $729,000 in high-cost areas from $417,000, in an effort to stimulate lending in one of the worst U.S. housing markets since the Great Depression.

Fannie Mae also said it would continue to allow loans with Community Seconds, in one of various assistance programs, for up to 105 percent combined loan-to-value ratio.

With Community Seconds, a borrower has a second-lien mortgage to help cover down payment and closing costs, with funding usually provided by a state or local housing agency, employer or a nonprofit organization.

"We recognize that down-payment assistance programs remain a viable tool for borrowers who can afford a mortgage long-term, but might need a little help getting started," Sullivan said.

On May 6, when Fannie Mae reported first-quarter results, it announced other initiatives, including a plan to provide up to $10 billion to help Housing Finance Authorities (HFA) serve first-time homebuyers "of modest means." In some cases, Fannie Mae said, it will buy HFA mortgages that have greater than 97 percent loan-to-value ratios.

(Additional reporting by Ros Krasny in Chicago; Editing by Frank McGurty) ((lynn.adler@thomsonreuters.com; +1 646 223-6307; Reuters Messaging: lynn.adler.reuters.com@reuters.net)) Keywords: FANNIEMAE/DOWNPAYMENTS