Business news - Economic, Finance & Earnings

Yemen takes tough sell message to us businesses


* US ambassador to Yemen says security support "outstanding"* Yemeni businessmen emphasize water, energy, tech* Delegation says Yemen security environment greatly improvedBy Daniel Bases and Herbert LashNEW YORK, Oct 18 It has to be one of the toughest jobs around - trying to sell U.S. businesses on the investment potential of one of the poorest nations on Earth, a country battered by Islamist militants who bomb, assassinate and kidnap. Yet it is a job U.S. Ambassador to Yemen Gerald Feierstein is taking on by leading a delegation of 10 Yemeni businessmen on a 10-day, five-city tour of the United States."We think there are great opportunities. There's money to be made investing in Yemen," Feierstein, a career diplomat, said on Thursday. This is the first time the U.S. Embassy in Sanaa has organized a Yemeni business delegation to visit U.S. companies. Just last week masked gunmen fatally shot a Yemeni who worked in the security office of the U.S. Embassy, leaving behind a wife and seven children. A month ago the embassy was stormed by protesters angry about an anti-Islam film made in California. The task of promoting Yemen seems daunting and could draw a parallel to the 2011 film "Salmon Fishing in the Yemen," starring Ewan McGregor as a fisheries expert hired by an eccentric sheik to bring fly-fishing to the parched land. Still, the Yemeni business executives, who arrived in New York on Wednesday, presented an upbeat image of their nation."The overall situation in Yemen is improving," said Fathi Abdulwasa Hayel Saeed, chairman of the Yemeni Businessmen Club. "Yes, there are challenges. Yes, there are security issues but Yemen is such a virgin country where there are a lot of opportunities to do business."I think a lot of American companies have been shy from coming to Yemen, while other nationalities like from Europe and Southeast Asia have been coming to Yemen even in the difficult times," Saeed said.

Their itinerary also takes them to Kansas City, Houston, Washington, D. C., and San Francisco.'YEMEN NEEDS POWER' The executives come from the construction, pharmaceuticals, medical and technology industries. However, much of the discussion focused on developing clean water, a precious commodity in the dry Arabian peninsula landscape, as well as renewable energy such as wind and solar power."Yemen needs power to grow the economy," said Wael Zokari, chief executive officer of Griffin International, the technology arm of conglomerate Griffin Group.

"The technology we need comes from the United States," he said. Yemen produces less than half the electricity it needs now, let alone for the infrastructure it wants to build to grow an economy that contracted 10.5 percent in 2011 to under $29 billion. The International Monetary Fund estimates 40 percent of the population lives on less than $2 a day and earlier this month forecast economic contraction of 1.9 percent for this year. However, in September nearly $8 billion in international donor pledges were collected to help support the government's budget, which is under severe strains because of frequent attacks on its oil pipelines. According to Feierstein, there is a misperception that Yemen's oil and gas production is "going to run dry over the next few years."

He said oil companies, including major U.S. producers, are interested in taking another look at the country because much of it has never been explored. A survey by Houston-based oil and gas consultant Knowledge Reservoir is under way to calculate more accurately its gas reserves, a U.S. State Department official traveling with the delegation said. POLITICAL TRANSFORMATION The storming of the U.S. Embassy in Sanaa occurred in conjunction with the violence on Sept. 11 in Libya in which the U.S. ambassador to Libya, another diplomat and two U.S. security men were killed in an attack on the consulate in Benghazi. Asked if he has enough support on security in Yemen, Feierstein responded: "Yes. Absolutely. I would say specifically that the support we have gotten from Washington, the State Department, from (U.S.) Central Command, the White House, which oversees or certainly watches these things, has been outstanding."There's never been a time where we came and asked for support where the support wasn't forthcoming."Yemen still is rattled by violence, often claimed by al Qaeda in the Arabian Peninsula (AQAP), and U.S.-led drone attacks on militants. But the executives highlighted a political transition that is holding despite militancy, while international donors have pledged billions of dollars to help rebuild the country. In February, Abd-Rabbu Mansour Hadi, the sole candidate to replaced Ali Abdullah Saleh, was sworn into office. Saleh ruled Yemen for three decades with an iron fist but was pushed out by months of street protests sparked by the Arab Spring. The hope among the executives, the U.S.-backed government, and Washington is that much like McGregor's fictional movie character, who saw his project blown up by local militants, they, like the salmon, will survive.

Your money owning your companys stock, toxic or not


May 15 Buying stock that then falls sharply is painful, especially for investors who also happen to be company employees. Some workers at Chesapeake Energy are experiencing that pain now. Overall, 38 percent of Chesapeake Energy's Savings & Incentive Stock Bonus Plan - the only 401(k) plan available to the majority of the firm's employees - is in company stock, far above the 10 percent many plan consultants advise. Chesapeake stock, hit by revelations about Chief Executive Aubrey K. McClendon's business dealings, had fallen nearly 40 percent from highs of $25.58 in March to Monday's close. The shares were down another 7 percent in Tuesday afternoon trading to $14.41. Even after scandals at Enron and MCI WorldCom derailed the retirement plans of employees who had large stakes of their assets invested in company stock, U.S. workers continue to put their retirement money into the same places where they draw their paychecks.

Financial advisers say employees like to invest in their employers for several reasons, including loyalty, hopes to profit from their work and a sense that they have a better read on the company than ordinary investors. But many advisers say that the practice increases the risk of losing your job and your retirement savings at the same time if your employer fails. We spoke with David Kudla, the CEO and chief investment strategist at Grand Blanc, Michigan-based Mainstay Capital Management, about loading up on company stock. Q: How popular is it for your clients to invest in company stock in their 401(k) plans?

A: We don't see it as often as we used to. There are a lot of companies that, for fiduciary reasons, have taken the option of company stock out of plans. What's happened to almost every company I know of that had a bunch of company stock in their plan (is that) a bunch of lawyers got together when it went down 40 percent or more and filed a class action lawsuit. That said, we still do see clients with 50 to 100 percent of their assets in company stock. Q: What should be considered too much when it comes to company stock?A: We need to get that position to be less than 10 percent of the portfolio. If the company is growing and doing well, 5 to 10 percent could be fine -- as long as it's part of a portfolio with broadly diversified mutual funds. But if the company is under financial distress, then it should be closer to none.

Q: Say a client comes in with 50 percent of assets in the shares of company where he or she works. What's your process?A: Let's take Ford as an example. People came to us with a considerable amount of Ford stock in their portfolios in the fourth quarter. We specifically didn't sell it aggressively and instead said: "Let's let the price improve a little bit."We use what we call value averaging, which is essentially looking for intermediate tops in the stock as chances to sell. Not that we can call all of them. But people who came in with Ford at $9 were able to wait and sell it for $12 a few months later. We think it's important to get out of the position in weeks or months, not days. Q: What kind of pushback do you get from clients?A: Many of them feel like their company is the one investment they know pretty well. For some people, they've used their 401(k) for years as a trading vehicle. They've been doing things like going in and out of the company stock fund, selling on a Friday and buying it again on Monday. Their thought is that if you're doing it in a 401(k), not only are you not paying capital gains but you're doing it commission-free. If we're managing that account, then they're coming to us to take over. If all you want to do is trade your company stock, then you don't need us. We don't want any part of that. We want to build to build diversified, long-term portfolios that will last.