Prince Al Waleed Bin Talal, through his company Kingdom Holding Co., has acquired a 3% stake of the popular social networking website Twitter for $300 million. The news sent KHC’s stock up by more than 7% during today’s trading. The deal values Twitter at $10 billion, which represents a 25% jump since late summer, when the website was valued at $8 billion. The demand for social networking websites is still growing, with investors’ appetite for such investments is still strong even with the current macro economic conditions. Facebook, which is thought to be going public next year, saw similar small private transactions multiply the firm’s value during the past couple of years.

The only issue that I have with Twitter as an investment is the ability to monetize the website. How will Twitter justify such a valuation unless it generates revenue and in turn profit? Will they add an advertising capability, similar to what Facebook did? Will they create a new type of premium accounts that users have to pay for and offer add capabilities, similar to what LinkedIn did? Other social websites are revenue generating and some are even profitable. Facebook, for example, generated revenue of $2.5 billion for the first three quarters of 2011, and profits of $714 million for the same period.

So unless Twitter finds a way to generate money, an investment into the website will be worthless.

Below is a recap of the performances of GCC stock markets for the first half of 2011:

LivingSocial, a US-based coupon web site, bought the Middle East-focused coupon web site GoNabit. These websites are similar to Groupon, where they offer daily deals and discounts to their subscribers, but the deal must attract a certain number of subscribers for it to go through. These types of websites have been attracting many users, as well as prespective buyers. Google last year offered $6 billion for Groupon, which was refused by the Company opting for an IPO.

The GoNabit purchase illustrates the growing interest of global firms in the Middle Eastern internet market. The Middle East internet market is growing faster relative to other markets due to the late adoption of the technology. This acquisition is not the first time a global internet firm has shown interest in the Middle East market: in 2009, Yahoo bought Maktoob. The development of the internet market and the global interest is healthy for the region.

2011 has been so far a volatile year for oil prices. Oil prices started the year at the $80 levels, when it shot up to the triple digits level post the Libyan crisis, as 1.5 million barrels a day were cut from the oil market. The past couple of months has seen oil prices on the downward trend. In May, fears of a lack of global recovery (lower US growth, Euro debt crisis) caused questions about demand for oil, leading the price of the commodity to depreciate. Then came June, where supply was the issue rather than demand.

In the oil market in June, we saw two camps rising: A camp that wanted to see oil prices decline, and another camp that wanted oil prices to remain at the triple-digits level. It is not a fight between producers of oil and consumers, as the world’s biggest exporter (Saudi Arabia) was in the former camp, wanting oil prices to decline to reasonable levels. During an early June meeting of OPEC, Saudi Arabia pushed for an innotiative that would see OPEC’s prodcution increase by more than 1 mn barrels per day. Saudi Arabia was supported by Kuwait, UAE, and Qatar, while Iran, Algeria, Venezuela, and Angola opposed the measure. After failing to increase the production targets, Saudi’s Oil Minister called the meeting one of the most disasterous OPEC meetings. The Saudi’s, claiming that high oil prices diminish demand and global growth, went ahead and increased produciton. Kuwait’s oil minister also announced that Kuwait will meet the Global demand for oil. The riveraly between Saudi Arabia and Iran can also be seen politically, where the two nations are trying to control the region, especially turing these turbulent times.

Last week, The International Energy Agency (IEA) came out and said that the are releasing 2 million barrels of oil per day for 30 days to cover the Libyan shortfall, as these high oil prices are hurting global growth. This sent oil prices down by 5%. The IEA’s move is significant as the Agency has acted twice prior to its recent move, once in 1991 during the Iraqi occupation of Kuwait, and again in 2005, during Huracaine Katrine, when the US was in-need of refined products. Though the move is temporary, as the Libyan oil is thought to stay out of services until the end of the year. The IEA’s move can also be seen as a market stimulus, especially during the end of QE2, as the increased supply of oil will lead to lower oil prices, and higher economic growth.

Oil prices went down 12% in June, and are down 20% from their peaks.

MSCI announced their decision on whether to upgrade the UAE and Qatar markets from Frontier to Emerging or not. They decided against the upgrades. The issues that the MSCI sited against the upgrade were the foreign ownership limits and the introduction of the “delivery-versus-payment” system. The UAE has a foreign-ownership limit of 49%, and has implemented the “delivery-versus-payment” system, but the MSCI has said that they needed more time and more feedback from market participants on the new system. Qatar has a 25% foreign ownership limit. The markets in the UAE have expected an upgrade, which caused the market to shed a 1% today after the announcement was made. An upgrade to Emerging from Frontier to either countries would have led to increased liquidity and interest from investors around the world. MSCI will look again in December on whether upgrading UAE and Qatar to Emerging markets is a possibility. Kuwait is a Frontier market and is not a contender to be upgraded to Emerging due to the numerous hurdles the Kuwaiti market faces.

It seems that the only positive news we hear about Kuwait is about its Retail sector. A new report is bullish about Kuwait’s retail sector, ranking Kuwait amongst the top 5 retail markets in developing nations. A T Kearney publishes an annual report that ranks the retail market in more than 30 developing nations, assessing thier Country and Business Risk, Market Attractiveness, Market Saturation, and Time Pressure. Kuwait came in fifth (highest in MENA), falling behind Brazil, Uruguay, Chile, and India. The report also measures the attractiveness of the Retai Apparel market, where Kuwait came in third after China and the UAE. Saudi Arabia came in fifth after Russia.

According to the report, Kuwait’s demographic trends have led to retail sector growth of 8 percent annually over the past five years. Overall, retail sales are expected to grow from $8.41 billion in 2011 to $11.92 billion in 2015. Kuwait has one of the highest retail sales per capita of any country in the Index ($4,300) due to Kuwaitis’ high disposable income helped by the welfare state. The key downside to Kuwait is the relatively small market, meaning entry will most likely make sense as part of a regional approach. Saudi Arabia’s market is highly ranked due to its big population and rising income. However, government regulations could hinder entery into the market. The UAE is highly saturated and finding good opportunities in the retial sector is difficult, according to the report.

Dubai saw a fast rise in the beginning of this decade, where construction boomed. People couldn’t get enough of Dubai real estate, as developers were selling units in their developments of the plan. Investors would sell those unfinished units for a hefty profit, sometimes doubling their invested amount or more, in a short period of time. Then came the financial crisis. Liquidity became an issue, the market was filled with speculators rather than end-users, and some developments went under water. Most unstarted projects were cancelled, however, project that were under construction continued. These developments couldn’t fill the empty space as much of their original buyers turned out to be speculators that cannot afford to pay for their units and instead relinquished their deposit fees.

Now, three years after the crisis started, some economies are starting to flourish. Sadly, the same could not be said about Dubai’s real estate market. Going forward, the outlook for Dubai’s Real Estate market is negative. Supply still outpaces demand and occupancy rates are low. In the next two year, Dubai’s office space is going to increase by 35% (one of the highest rates globally), while demand is still sluggish. Vacancy rates of Dubai offices as of the end of 2010 stood at a staggering 44%. At the end of 2009, analysts predicted that Dubai’s office market rent’s decline was on its way to bottoming-out (similar to other cities around the world). However, one year after, it seems that rent conditions are worse and are further from bottoming than expected.Office rent in 2010 fell by more than 30%. In 2011, it is predicted to decline further by as much as 20%.

The bright spot in the Dubai real estate market is the hotels sector. Demand for hotels is still strong given multiple factors, including Dubai’s attractiveness as a tourist destination, and the lack of regional competition owing to the uprisings in multiple Middle Eastern countries. Occupancy rates have been improving, registering at above 80%. Retail real estate is also positive, as demand from tourists increases.

So if you are betting that Dubai’s real estate market is going to recover soon, you might be out of luck. As Hotels and Retail might see growing rentals by the end of this year, office and residential properties still have a dark future. As the office market is adding 35% of supply it the coming 2 years and as vacancy rates are at 44%, it is going to take the market more than 3 years to take up all that supply for the pressure on rentals to start to point upwards.

Boston Consulting Group released recently a report on Global Wealth. According to them, wealth around the globe grew 8% in 2010. In terms of regions, Asia saw the highest growth in wealth (17.1%), followed by North America (10.2%), Middle East and Africa (8.6%), and Latin America (8.2%). Japan saw a decline in wealth (-0.8%), while Europe saw a below-average growth rate of 4.8%.

In terms of millionaire household concentration, Singapore has the highest at 15.5%. Three Middle Eastern countries are in the top six: Kuwait, UAE, and Qatar. Switzerland is the highest in Europe with 9.9%.

This year, the report published ranking of the Ultra High Net Worth Households, households with AUMs of $100 million and greater. Saudi Arabia came in first with 18 households out of 100,000 are UHNW. Switzerland is second with 10, followed by Hong Kong with 9, and Kuwait and Australia with 8 each.

Zain followed an ambitious growth strategy in the last decade to become one of the ten biggest telcom companies in the world. They acquired contracts and companies throughout the Middle East and Africa. Then came the global financial crisis. Debt started to be a big problem, and certain shareholders needed some cash. These conditions altered Zain’s strategy, and the company become a recurring subject in the news with regards to either sale of assets or sales of a stake in the company. Zain Africa was first sold, shrinking the company’s size by a half. Then Etisalat proposed buying 46% of Zain, and now Zain Saudi might be sold.

The question I have is why is Zain selling its Saudi associate? Intially, when Etislat offered to buy Zain, the company had to dump its Saudi operations due to Etisalat’s presence in Saudi through Mobily. But the Etisalat deal didn’t go through. They issued a statement stating that under the next CMA rules, such an acquisition is not feasible. So why sell Zain Saudi? Where will future growth come from? The remaining operations of Zain are in (barring Saudi) Kuwait, Bahrain, Lebanon, Jordan, Iraq, and Sudan. The first four countries are small markets with high mobile penetration rates, yielding low growth rates. Although the last two countries offer large telecom markets and promising growth, the political instability in both countries create many uncertainties. Saudi Arabia is a very promising market that will create lucrative growth opportunities for Zain.

It seems that Zain are liquidating its assets and paying out dividends to its investors, rather than paying out dividends from its operations. I would be seller of the stock in the long-term, as the concerns of lack of growth overweight the dividend payouts.