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Thursday, 30 April 2009

Dubai World may consider restructuring group debts, as Dubai entities placed on creditwatch negative

Dubai World, the government-owned investment group, is considering “all options” to manage debt, including the restructuring of a US$3.5 billion Islamic bond issued by its property unit Nakheel, Standard & Poor’s Ratings Services said.

“Recent media reports indicate that Nakheel is opening a dialogue with existing holders of its US$3.5 billion sukuk coming due in December 2009, with a view to restructuring the debt,” the rating agency said today in an e-mailed statement.

“S&P has discussed these reports with Dubai World and has been told that ‘all options’ in dealing with outstanding liabilities are being considered as part of an ongoing review, including a restructuring.”

Global's UAE Weekly Report - April 30, 2009 (PDF)

CityCenter Funding No Longer in Question (Update 1 Analysis)

MGM Mirage and Dubai World said late Wednesday they have resolved their differences and received the $1.8-billion secured credit facility from lenders necessary to complete and open CityCenter, a $10-billion mini-city between MGM’s Bellagio and Monte Carlo resorts on the Las Vegas Strip. Anchored by the 4,000-room Aria hotel-casino, the multi-tower development remains on schedule to open for business during the fourth quarter, according to the partnership.

The revised partnership agreement and financing plan has Dubai World and MGM Mirage funding their remaining $800 million in equity contributions to CityCenter through letters of credit, and for Dubai World to reimburse MGM Mirage for the equity payments it made to lenders on behalf of the partnership while the two were litigating.

Another key term of the partnership agreement has MGM Mirage now “responsible for completion costs to the extent net condominium proceeds are less than $243 million and for completion costs in excess of the current budget of $8.5 billion.” MGM says that until CityCenter is completed any obligation in this regard “will be supported by the assets of Circus Circus Las Vegas and certain adjacent land through a completion guarantee.”

George Magnus, green shoot weed-whacker

“Recession’s end“, Bloomberg commentators included in their headlines on Wednesday night, while others noted that inventory reductions indicate that the economy is nearing a bottom. Green shoots, green shoots, green shoots, blah blah blah.

UBS’s senior economic adviser George Magnus is here to put an end to all this talk of plants, taking aim via his weed-whacking financial commentary this morning on banks, capital and what’s really needed to fix the financial system. Here are some excerpts:

This paper is about why it is such a slog to fix the financial system, and why we can’t really entertain ideas about economic recovery, other than short cyclical hiccoughs, aka green shoots, until it is fixed. The plot hasn’t changed since we first heralded Minsky’s financial instability as the template for this crisis, but the story evolves and the numbers change. So we will examine below where we are in terms of financial stability, and, using the just published IMF Global Financial Stability Report, highlight the key numbers that matter when it comes to three overarching, but incomplete, tasks: full re-capitalisation of banks, the swapping of debt-for-equity as part of a major debt restructuring, and the isolation of bad assets.

Saudi Stock Market Weekly Report - 29-April-2009

DI could redeem some investment

Dubai Investments (DI), one of the largest diversified holding companies in the UAE, said it incurred losses on its investment portfolio due to mark-to-market requirements but has "prudently" managed the challenging market conditions of 2008 and expects growth in 2009.

The mark-to-market accounting rules set asset values as per the prevailing market prices.

DI's interests range from dairy products to glass production and real estate development. It made a profit of Dh1.58 billion in 2008 with total income of Dh4.36 billion.

Hedge funds battle to attract investments

As delays in payments to investors continue, hedge funds are finding it difficult to attract new investments despite reduced redemptions, according to a senior executive.

Kamal Fayad, Fund Manager and General Partner for Evolvence Middle East and North Africa (Mena) hedge fund, said: "People are still afraid to invest. It is tough to raise cash even now. The performance of the regional market is still uncertain and factors like tight liquidity are keeping investors at bay."

Most funds are struggling to handle redemptions. Recent reports have indicated a slowdown in redemptions in hedge funds in the first three months of this year.

ENBD to private-place perpetual bonds

Emirates NBD, which reported a net profit of Dh1.26 billion for the first quarter of the current year, will be issuing Dh3.5 billion worth Tier 1 perpetual debt notes in the second quarter through a private placement.

This will help the bank achieve the Central Bank requirement of reaching minimum 11 per Tier 1 capital ratio by June 30, 2009. Emirates NBD, which had a Tier 1 capital ratio of 9.4 per cent as of December 31, 2008, could improve it to 9.7 per cent as of March 31, 2009 leaving a gap of 1.3 per cent more to be achieved within three months.

To a question whether these notes will be exclusively placed with Investment Corporation of Dubai (ICD), the largest shareholder in the bank, Sanjay Uppal, group Chief Financial Officer of the bank said: "The modalities of the private placement are still being worked out."

'Second quarter to see growth in many sectors'

Orhan Osmanoy, Chief Executive Officer of The National Investor, said stock markets in the UAE have not reached the maturity phase yet and their age does not exceed eight years.

"It is not right to blame the foreign investor and consider him the reason for losses in the markets."

The national investor is the main factor in the market and Abu Dhabi market is having big opportunities to develop.

Market conditions force ADX to delay ETFs further

The Abu Dhabi Securities Exchange (ADX) is postponing plans to launch exchange-traded funds (ETFs) due to market conditions, its chief executive said yesterday.

Speaking during an international investment forum in Abu Dhabi, Tom Healy said the global financial crisis had delayed plans to introduce ETFs but stressed such plans remain on track.

ADX had already delayed the launch of ETFs from the end of 2008 to the first quarter of 2009, and then again to April.

Bank warns of further bad loans

Emirates NBD, the UAE’s biggest lender, yesterday warned that non-performing loans would continue to rise through the year, as analysts predicted the credit profile of Gulf banks would worsen.

The bank’s first-quarter net profit rose 5 per cent to Dh1.3 billion (US$354 million), beating analysts’ estimates, as it cut costs. But the bank is taking a “cautious stance” on the rest of the year.

“Uncertainties remain,” said Rick Pudner, the chief executive of Emirates NBD. “We will take measures to offset possible adverse effects of the current economic environment.”

US to blacklist Iran's petrol suppliers

US Senators have introduced a new bill to restrict Iran’s imports of petrol, targeting a key energy source for the country’s economy.

The proposed law, supported by 25 members of the Senate, would grant the Obama administration the power to bar any company that sells petrol to Iran from operating in the US market. The law’s backers say it would pressure the Iranian government to change course on its nuclear policy, but experts say it could also push political tensions in the country to the breaking point.

Iran has tremendous reserves of crude oil, but the growth in its oil refining capacity has not kept up with demand, forcing it to import petrol and other oil products.

Emaar withholds dividends

Shareholders of Emaar Properties gathered last night at the company’s annual meeting in Dubai to learn there would be no dividend.

“Because of the world financial crisis and the shortage of liquidity in the market, the board of directors has recommended that we will not be distributing any dividends this year,” said Mohammed Alabbar, the chairman of Emaar.

More than 80 per cent agreed with the move, with one shareholder saying: “We have to consent, but we hope it’s really in the interest of the people.”

Mubadala offers $1.75bn bonds

Mubadala Development, the Abu Dhabi Government’s strategic investment arm, offered US$1.75 billion (Dh6.42bn) in bonds to international investors, just days after publishing its annual report for the first time that disclosed almost Dh12bn in losses.

Bankers familiar with the deal told Reuters that it included $1.25bn in five-year bonds that were likely to pay an interest rate 3.95 percentage points more than the rate on five-year US treasury bonds.

Mubadala will also sell $500 million in 10-year bonds, bankers said, at 462.5 basis points over US treasuries. That would translate into an interest rate of roughly 6.2 per cent on Mubadala’s five-year bonds.

Dubai rents plummet in new RERA index

The long-awaited updated RERA rental price index has been published, entitling tenants to up to a 50 percent discount on previously issued guidelines, Arabian Business can reveal.

The new index, which appears in the form a 'Rental Increase Calculator' on Dubai property watchdog RERA’s (Real Estate Regulatory Authority) website, allows tenants to negotiate significantly cheaper rents than the ones previously issued by the government body in January. Landlords use the index to set rents in Dubai.

"Dubai’s soon to be official April Rental Index"

Obama action expected soon on UAE nuclear pact

President Barack Obama is expected to soon certify a nuclear energy agreement with the United Arab Emirates, setting the stage for action in Congress on a pact that could be worth billions of dollars to U.S. companies, a U.S. business official said on Wednesday.

Danny Sebright, president of the U.S.-UAE Business Council, told Reuters he expected Obama to issue a presidential determination that the agreement, signed in the last days of the administration of former President George W. Bush, is in the best interests of the United States.

That would set the stage for U.S. Secretary of State Hillary Clinton to formally notify Congress of the United States' intention to enter into the nuclear energy cooperation deal with one of Iran's neighbors, giving lawmakers 90 days to vote down the pact if they choose, he said.

MGM Mirage, Dubai reach pact to finish CityCenter

Casino operator MGM Mirage said Wednesday that it agreed with partner Dubai World and the pair's lenders to finish an $8.5 billion casino complex on the Las Vegas Strip.

MGM Mirage said Dubai World, the investment arm of the Dubai government, would drop a lawsuit it filed against the Las Vegas-based casino company, which is majority owned by investor Kirk Kerkorian.

The pact secures MGM Mirage's payment obligations for construction costs with its Circus Circus Las Vegas casino and adjacent land. MGM Mirage and Dubai World each agreed to fund their remaining payments for CityCenter with letters of credit, and the lenders agreed to immediately fund $1.8 billion to finish the project, rather than wait until each partner had fully paid its share.

Comment: Gulf must learn lessons of crisis

At the recent G20 summit, leaders of the world’s leading economies committed themselves to a wide-ranging and specific set of actions aimed at shortening the global economic crisis and strengthening international financial regulation.

International groups such as the Financial Stability Forum (now renamed and empowered by the G20 as the Financial Stability Board), the Counterparty Risk Management Credit Group, which comprises leading international banks, and the Committee of European Bank Supervisors have also made recommendations on how the structure and regulation of financial markets can be improved.

We have yet to see an equivalent Arab response to the crisis; still less, a set of recommendations for what Arab financial markets can learn from the turmoil in the west.

Mubadala appoints former BP executive

Mubadala, a state investment vehicle of Abu Dhabi, on Wednesday said it had appointed a former BP executive to its oil and gas division in a sign of the company’s growing ambitions in the sector.

Steve Peacock, who was BP president Middle East and South Asia, takes over as chief operating officer for Mubadala Oil and Gas, with the company seeking to become a ”globally competitive oil and gas exploration and production company.”

Mubadala is wholly owned by the Abu Dhabi government and has been one of the oil-rich emirate’s more active investment vehicles, with a portfolio that straddles an increasingly broad range of sectors, from finance to aerospace and real estate.

Islamic banks take share of the pain

Islamic prohibitions against fixed interest and most complicated financial instruments have helped Islamic banks avoid the avalanche of derivative debt losses that have wreaked havoc across the world financial system.

Devout Muslim investors have also fared better when buying global equities that do not violate Islamic principles. Sharia screening has shielded them from exposure to over-leveraged corporates, conventional banks, gaming companies and sellers of alcohol such as hotel groups, all of which have suffered from precipitous drops in value.

The FTSE All-World Index has shed 42.3 per cent over the past 12 months, while the sharia-compliant version of the index has lost 37.6 per cent over the same period.

Almarai prospers on diet of dairy

At what is claimed to be the world’s largest integrated dairy company, young men in white overalls hose down parlours while black-and-white Holstein cows stand patiently as milk is sucked from their udders.

It is a process that is repeated almost non-stop throughout the day. Almarai churns out 674m litres of milk a year from a herd of some 55,000 cows that are spread across six farms and milked four times a day.

The setting could not be further removed from the landscape of rolling green fields normally associated with dairy farming. These farms are in the midst of sprawling desert in the heart of Saudi Arabia. Outside temperatures can exceed 50°C in the summer and, rather than lush grass, the cows lie on sand.

Wednesday, 29 April 2009

Dubai Aerospace Inks $500M Financing Deal With US Ex-Im Bank

DAE Capital, the aircraft leasing and financial business arm of government-owned Dubai Aerospace Enterprise, Wednesday said it signed a $500 million financing commitment with U.S.-based Export-Import Bank.

The deal will finance the delivery of 10 Boeing (B) aircraft by guaranteeing commercial loans or providing the loan itself.

The aircraft will be allocated for purchase and leaseback agreements with Emirates Airline and Garuda Indonesia, DAE said in an emailed statement.

Senior business figure's stark warning over lending

Banks’ unwillingness to lend is paralysing business in the UAE and risks prolonging the downturn, a senior business leader has warned.

Mishal Kanoo, deputy chairman of conglomerate The Kanoo Group, which has operations in everything from travel to machinery and oil and gas, heaped blame on international and local lenders in the country and said they did not ‘trust’ the companies and individuals, to whom they lend.

“Start being the backbone of the economy, because if you don’t you will crush us [business],” Kanoo said.

UAE's Mubadala sees managed assets tripling in 5 yrs

Abu Dhabi investment firm Mubadala Development Co, which will price benchmark dollar bonds on Wednesday, expects its managed assets to rise three-fold from 54 billion dirhams ($14.7 billion) by 2014, its CEO said.

"Given our current asset base of 54 billion dirhams over the next five years it will grow over three times," Waleed al-Muhairi told a conference.

The investment body made a loss of 11.8 billion dirhams last year due to the global financial crisis, it said on April 23.

Qatar in talks to buy stake in Porsche

Qatar is in talks to buy a stake in Germany's Porsche and may also invest in other carmakers as the Gulf gas exporter looks to park some of its sovereign wealth abroad, according to media reports.

Qatar is "seriously" considering taking a stake in the luxury sports car manufacturer, Prime Minister Sheikh Hamad bin Jassem Al Thani told Qatar's Al-Arab newspaper in remarks published on Tuesday.

Focus magazine reported last week that the Emir of Qatar had informed Porsche of his interest in buying a stake.

Saudi to launch $5bn investment firm

A new $5.33 billion (Dh19.56 billion) investment firm owned by the government of Saudi Arabia, the world's largest oil exporter, will start operations next week, a senior Saudi official said on Tuesday.

The government announced last year its intention to set up the firm, called Sanabil al-Saudia, with a mandate to invest in equities, bonds, real estate, foreign currencies and commodities in Saudi Arabia and abroad.

"It is expected that Sanabil's advisers will begin work next week," said Mansour al-Maiman, secretary-general of the Public Investment Fund (PIF), the finance ministry's investment arm.

Saudi Arabia to recover faster, says S&P

Saudi Arabia, the Middle East’s largest economy, will recover “more quickly” than other Gulf countries because of “satisfactory” liquidity and business confidence, Standard & Poor’s Ratings Services said.

The initial public offerings on the Saudi bourse this year indicate local investors have “considerable liquid assets with which to support attractive business propositions,” S&P said today in an e-mailed statement. “Deposit rates at local banks remained low, indicating that liquidity has been satisfactory and confidence maintained.”

The kingdom will spend US$400 billion over the next five years to stimulate the economy, while the fiscal stimulus plan next year will consume 3.5% of gross domestic product.

Investors eye opportunity in Iraq

Lost all your money on the stock market? Seen your real estate investments crumble? These days, in the midst of a mind-boggling financial crisis, the idea of investing in Iraq may not seem so crazy.

That is exactly what an increasing, though still small, number of brave investors are doing.

“What is risky these days? If you think about the people who were investing in AAA guaranteed paper only a few years ago, the concept of risk has changed fundamentally,” says Richard Blakesley, managing director of Fairfax, a London private equity fund planning to invest as much as $200m (€153m, £136m) in Iraq this year. With its eye on plastic pipes, concrete, asphalt and food production businesses – all areas where Iraq needs investment for import substitution – Fairfax plans to increase its Iraq fund to $1bn.

Senior Saudi calls for political reforms

A senior member of the Saudi royal family has called for political and economic reforms in the world’s largest oil producer, warning that the kingdom is not prepared to face the challenges of the 21st century.

Prince Talal bin Abdelaziz, who has no role in decision-making and is known for his outspoken views, said there needed to be increased dialogue within the ruling family and called for greater powers for the Shura Council, an unelected consultative body, to pave the way for eventual elections.

“This region is roiling with turmoil and radicalism and the aspirations of a young population, and I am afraid we are not prepared for that. We cannot use the same tools we have been using to rule the country a century ago,” Prince Talal, who is a half-brother of King Abdullah, told the Financial Times.

Tuesday, 28 April 2009

Political fat tails

Probability distributions didn’t do a great job predicting financial meltdown, and we’re not sure they’ll be much better at predicting general events. But, since it’s not far-fetched to think that political extremes can follow economic ones, for what it’s worth, here is the political application of fat tail risk.

Risk consultancy Eurasia Group is exploring the “increasing likelihood of radical political disjunctures”, or fat tail events in national-level politics.

Dubai contractors still concerned over payments

Some Dubai-based construction contractors are concerned over when they will receive further payments from state-linked developers despite cash beginning to trickle into their accounts in the former Gulf Arab boomtown.

Five out of eight contractors contacted by Reuters said that while they had started receiving money from the developers, payments were still slow and way behind schedule.

Dubai, which owns stakes in major local developers, launched a $20 billion bond programme in February, issuing the first half to the United Arab Emirates central bank to enable the government to help firms meet debt and other obligations. "No, it's still not enough. We are waiting to see the full impact of the bonds filtering through to these companies," said a director of a large construction firm, speaking on condition of anonymity.

Eurasia Group releases new report, "Fat Tails in an Uncertain World" (PDF)

As the global economic crisis has increased pressures on political leaders, institutions, and the stability of countries, certain "fat tails," highly volatile and seemingly improbable political scenarios, have become much more conceivable. Eurasia Group names ten places around the world where there is the potential for dramatic political changes.

Eurasia Grp Says UAE Faces "Fat Tail" Risk On Econ Crisis

The United Arab Emirates, the world's fifth-largest owner of oil reserves, faces growing political uncertainty from the effects of the global financial crisis, according to U.S.-based Eurasia Group.

The influential think-tank ranks the oil-rich emirates amongst a list of 10 states including Pakistan, Russia, Mexico and Argentina that could face a "fat tail" political crisis from the impact of the current economic downturn.

"The weakness of existing federal institutions and personalization in U.A.E. politics exposes Emirati leaders' inability to respond in unison to the current crisis," Eurasia Group said in the report entitled "Fat Tails in an Uncertain World."

In Dubai, Defaults Hit Developers

Developers here are scrambling to prevent a wave of investor defaults as they struggle to survive this city-state's real-estate bust.

During a frenzied property boom, many investors bought property on speculation, expecting to be able to quickly flip homes -- sometimes entire floors in buildings -- before construction was finished. But in recent months, prices have cratered, some falling by more than 50%.

Buyers of unfinished homes have all but disappeared. That has left many investors either unable or unwilling to make final payments, which often are due upon completion and amount to as much as 50% of the total price of the home.

Saudi banks to perform well this year on better interest income

Saudi Arabia's banks are expected to perform well in 2009 because of better interest income after a turbulent year as a result of the global financial distress, the Kingdom's largest bank said yesterday.

Balance sheets released by seven of the country's 12 commercial banks for the first quarter of 2009 showed the sector is so far doing well as their earnings leaped by nearly six times over those in the fourth quarter of 2008, the National Commercial Bank (NCB) said in its weekly bulletin, sent to Emirates Business.

NCB, the largest Saudi bank by assets, said 2008 was a challenging year which was also underscored in the fourth quarter as the Kingdom's banking sector pushed ahead with a drive to boost provisions against investment losses.

Sukuk market in the Gulf needs to be regulated, say analysts

The Gulf can foster growth in Islamic bonds (sukuk) market by adopting regulations and going in for measures such as credit rating, say analysts.

Even as the GCC holds a lion's share in the global sukuk market, estimated at $130 billion (Dh477bn), it lags behind when it comes to regulations. And a model like the one followed by Malaysia can help it tap the massive potential that the segment holds, they said.

"The GCC market holds a significant share of global market when it comes to volume. But if we talk of a regulated market, the comfort levels of having prudent policy guidelines from regulators are still not there, whether it is related to type of issuances or ratings," said Moinuddin Malim, Head of Corporate and Investment Banking, Badr-Al-Islami. Mashreq.

Aldar profits drop 35% as sales slow

Aldar Properties, Abu Dhabi’s largest property developer, saw its profits drop by 35 per cent in the first three months of the year compared with the same period last year, as sales slowed to a near halt and the company focused on building its projects.

Profits for the first quarter were Dh888.6 million (US$241.9m). The company’s drop in net operating profit to Dh14.2m was worse, compared with Dh982m for the same period last year.

Net operating profit is income that comes from cash-generating items on the balance sheet, like sales of property.

Lines drawn in Etisalat fight

Etisalat could face fines worth millions of dirhams if it fails to follow a Telecommunications Regulatory Authority (TRA) directive on competition in the fixed-line telephone market, the authority said yesterday.

In 2005, the TRA ordered Etisalat and its competitor, du, to introduce a system allowing customers to switch their landline accounts from one to the other. Until the middle of last year, neither had introduced it.

Last June, the regulator gave both companies until January to comply with the order. While du has since complied, Etisalat told the regulator last month that the costs and practicalities involved meant it would hold off until late next year, when it had switched all of its customers to the new national fibre-optic network.

Government monitors bank liquidity

The Government will monitor more closely the health of local banks and the quality of their assets, according to a statement released by the Central Bank yesterday.
But it said the banking system had enough access to credit and large enough stores of capital to weather further financial ­trouble.

Government measures taken in the past year to battle the effects of the financial crisis – including federal government pledges of more than Dh120 billion (US$32.67bn) in emergency funds to the local banking system – have resulted in “a marked improvement in the banking soundness indicators, including liquidity, which we closely monitor”, said Saeed al Hamiz, the director of banking supervision at the Central Bank.

The ratio of liquid assets to short-term liabilities increased from 76 per cent in January to 92 per cent this month in the country’s banking system. The ratio measures how much extra cash banks have on hand compared with their upcoming payments and is used to determine their solvency.

Redundant workers to get visa extension

People who lose their jobs could be allowed to stay in the country for up to six months, the Minister of Labour said yesterday.

Saqr Ghobash said the change was included in one of two laws aimed at helping expatriate workers. Both are finished and awaiting approval, he said.

The first, which will give extra protection to labourers, could be passed by the Cabinet and signed into law within two weeks.

Coface maintains UAE's A2 rating

The probability for corporate defaults in the Gulf Cooperation Council (GCC) states remains low overall, according to the country ratings assigned by global credit insurance firm, Coface. In its latest quarterly rankings, Coface has maintained the GCC and Middle East and North Africa (Mena) country ratings at their previous risk level.

The UAE is ranked at A2, although the rating had been on a negative watchlist since December 2008. However, according to the Coface ratings report, the probability of corporate defaults remains low.

"The slowdowns in construction and financial services is expected to continue in 2009 as a result of the credit crisis and decline in demand," says the report on the UAE rating.

Judge denies bail to Deyaar's ex-CEO and two suspects

A court has rejected a bail request which Deyaar's former chief executive made yesterday following 14 months in detention during which time he claims he suffered heart disease.

"Your honour. Today [Monday] I have been brought to court from hospital after three months of treatment. I have been detained for nearly 14 months now during which time I encountered heart disease& I pledge you to grant me bail so I can recover," said the 43-year-old American ex-CEO, Z.S., who was in a neck brace when he pleaded not guilty to alleged corruption and fraud charges before the Dubai Misdemeanours Court.

Z.S. said the time he spent in detention has made his family suffer and he has incurred damage to his health and suffered financial harm when he addressed Presiding Judge Rifaat Mahmoud Tulba Othman.

UAE goes shopping for US weapons (Video)

Despite the global economic crisis, the United Arab Emirates, a country of under a million people, is set to see its total defence spending for this year soar to over $7bn.

Al Jazeera's Owen Fay reports on the reasons behind the tiny Gulf nation's increased defence spending, which has seen it become the world's third largest importer of American weapons.

Reform in Gaddafi's Libya is still shrouded in ambiguity

The western part of the waterfront in downtown Tripoli looks like a massive construction site. Cranes tower over the landscape, while armies of labourers, many of them migrants from sub-Saharan Africa, scurry around doing the heavy menial work.

Some 20 major building projects, including international luxury hotels and swish office blocks, are to be completed in the area in the next few years transforming the appearance of the city and confirming Libya's emergence from four decades of isolation.

Residents say the scale of the new construction is a response to soaring demand for office space, hotel rooms and housing as more foreign companies turn their attention to opportunities in the oil rich North African state.

Monday, 27 April 2009

70 percent price-fall looms for UAE real estate

The Swiss banking giant UBS has downgraded the real estate sector in the United Arab Emirates (UAE), the Wall Street Journal reports.

The main drivers for the downgrade are seen as the massive oversupply of properties, expected price falls of up to 70% and prospects of widespread defaults.

Property prices in Dubai have nosedived since September 2008, when the effects of the U.S.-triggered world financial crisis and falling crude prices caught up with the property boom in Persian Gulf sheikhdoms.

The UBS research note, released on Tuesday, goes on to say: ""We believe the recent run up in equities with positive global market sentiment, U.A.E. government bailout as a backdrop is unsustainable,… We don't yet see fundamentals improving, hence we view overall systematic risk as mispriced.""

From CDO Salesperson To Exotic Dancer

'The financial markets are full of hard luck stories these days, so I thought it only right to share my experiences.

I joined Lehman Brothers straight out of college in 2004. Although I didn't really know what I was getting into, a friend of mine worked for the firm, and there was a vacancy in fixed income support, so I tried out for it and lucked out. When it came down to it, however, the job was really nothing more than a glorified PA, as I ran around photocopying things, and undertaking menial tasks like going out to get lunch for busy traders.

After a while, however, I started to get into what I was doing, and learning the lingo. Gradually, I learned what terms like 'ABS', 'MBS' and 'CDO' stood for (although I never really got what they actually were). In time (after 18 months or so), I even found myself on the telephone speaking to clients, who were eager to buy 'top-rated commercial paper' from the firm. Although nervous at first, I soon discovered that as long as the clients thought they were getting investments which would yield good returns, they didn't mind speaking to a young buck, and my confidence quickly grew. Very soon I had my own small portfolio of clients (mostly smaller clients who no-one else had the time to cover). Anyway, although I was never the best salesperson on the block, I closed several deals and walked off with a decent bonus in 2006 (not huge by any means, but substantially more than I ever expected to earn in any one year).

Kuwaitis make education a battleground

In the 1960s and 1970s Kuwait was dubbed the “pearl of the Gulf”, and laid claims to being a leader in the region in technological innovation and progressiveness.

It was a country where women wore the trendiest fashions and openly danced with men at mixed parties. But times have changed as a significant shift has seen the country grow more conservative in terms of religion, especially since the 1990-91 Iraqi invasion and occupation.

In recent years, Islamists have increased their strength in parliament and pushed an agenda of strict conservatism focused primarily on social issues, such as trying to force female lawmakers to wear the hijab and prohibiting mixed dancing in public places.

Google aims for bigger Arab audience

When it comes to the internet, the Arab world punches well below its weight.

Less than 1 per cent of the internet’s content is in Arabic, while the world’s approximately 370m Arabs form more than 5 per cent of the global population.

Internet usage has jumped 1,000 per cent over the past seven years in the Middle East, yet it still lags well behind other regions. Overall internet penetration has reached 10 to 12 per cent, although with the region’s large number of shared connections, up to 50 per cent of the population is estimated to have access to the net.

Reassurance must be sown in foreign fields

Driving south-east out of Riyadh, the highway soon snakes its way through scruffy desert and offers a glimpse of something of the unexpected in Saudi Arabia.

There you find “fields” where once there was only desert, with huge irrigation pivots that appear longer than a football pitch is wide, spraying water on to crops. Saudi Arabia has neither rivers nor lakes, yet the desert-kingdom boasts a thriving dairy and arable industry. The latter is largely the result of an initiative during the 1970s oil boom for the kingdom to become wheat self-sufficient. After spending tens of billions of dollars, the project succeeded – amazingly, to the point where the kingdom was a wheat exporter in the 1980s.

But last year the government acknowledged that producing 2.5m tons of wheat a year was unsustainable and production is to be phased out by 2016. The decision coincided with a food crisis that triggered a massive spike in prices and caused producing countries to introduce export restrictions.

Dubai Says It Will Meet All Contractual Obligations

The government of Dubai, the second largest sheikhdom in the United Arab Emirates, denied a press report that it will not settle all of its debts with construction companies.

“The government of Dubai will continue to meet all its contractual obligations, including to construction contractors,” Dubai’s department of finance said today in an e- mailed statement. The government “has no intention to limit at any time the number of contractors licensed to operate in the emirate.”

The government statement was a response to an April 24 article in MEED magazine that said that Dubai will only settle debts with contractors that it wants to work with in the future.

Saudi Arabian Banks’ Target Share Prices Raised by Deutsche

Al-Rajhi Bank and Samba Financial Group were among 10 Saudi lenders whose target share price was raised by Deutsche Bank AG because of the strength of their capital positions and “positive” first-quarter earnings.

Al-Rajhi’s price estimate was raised to 60 riyals from 49.5 riyals on the bank’s limited exposure to market risks, Deutsche Bank said in e-mailed note today. Deutsche increased target prices for the 10 lenders by an average of 15 percent.

“Existing levels of capital in the Saudi banks sector may be sufficient to weather any additional losses against investment portfolios, combined with high levels of government- led economic stimuli,” Deutsche said. “We regard the first quarter 2009 preliminary results as being broadly positive.”

Kuwait's KIA pumps $1.4bn in bourse fund

Kuwait Investment Authority (KIA), the Gulf Arab state's sovereign wealth fund, has injected about KD400m ($1.37bn) so far into a fund to support the bourse, an official said in published remarks on Monday.

Kuwait Investment Co (KIC), a unit of KIA, has managed the fund since Dec 24, the firm's Chairman Bader Al Subaie was cited as saying by local newspapers Al Qabas and Al Watan. KIC has managed to bring back gradual stability to the stock market through the fund, the papers added.

KIC could not immediately be reached for comment.

IPIC Gets Credit Ratings From 3 Companies; May Tap Bond Market

International Petroleum Investment Co., an investment arm of the Abu Dhabi government which bought stakes in European companies including Daimler AG, received investment-grade ratings from three providers.

Moody’s Investors Service assigned an Aa2 rating, the third-highest level, while Fitch Rating and Standard & Poor’s allocated an AA grade, the credit rating companies said in statements received today. Businesses usually ask for credit ratings before tapping debt markets.

IPIC invested more than $2 billion in the past 18 months. The company’s managing director, Khadem al-Qubaisi, said Jan. 10 IPIC aimed to boost its holdings to as much as $20 billion in the next five years from $12 billion to $15 billion now as it seeks to benefit from falling asset prices.

Abraaj, DIC among top PE companies

Dubai-based Abraaj Capital and Dubai International Capital Private Equity have been ranked among the world's top 300 private equity players as the two companies raised $8.8 billion (Dh32bn) over the last five years.

A Private Equity International report showed that Abraaj raised $6.49bn, while Dubai International Capital $2.37bn during the period. Abraaj Capital was ranked 54th worldwide and topped in the Mena region, while Dubai International Capital was ranked 127th globally.

Bahrain-based Investcorp and Arcapita were ranked 59th and 66th respectively. Investcorp's portfolio increased by $5.958bn and Arcapita raised $4.839bn in five years. Cairo-based Citadel also made into top 100 private equity players, ranked 75th by raising $4.1bn.

'Economy likely to recover in second half of this year'

Recovery in the UAE economy can be expected by the second half of this year and the region would outperform many other economies in 2010 and 2011, a senior economist has said.

"We have started to see early signs of recovery. For the coming few months, liquidity situation would be tight but UAE, which is structurally much stronger than many other economies, would see a growth of three to four per cent and outperform other economies," Marios Maratheftis, Regional Head of Research, Middle East, Standard Chartered Bank, told Emirates Business.

He said this year the region was expected to see a growth of around 0.5 per cent and recovery could start by the second half of this year. "It does not mean we would go back to previous growth levels. A growth rate of three to four per cent would be high enough if it is a good quality growth."

Qatar ready to assist companies

The Qatari government is willing to pump cash into firms needing help during the financial downturn, after stepping in to support banks, a newspaper quoted the prime minister as saying on Sunday.

The government could help financial companies and other firms outside the banking sector by directly injecting cash if needed, and not through the country's sovereign wealth fund, Al Raya reported Shaikh Hamad Bin Jasem Al Thani as saying.

The government has bought stakes in local banks through the Qatar Investment Authority, the sovereign wealth fund, to support the economy and help boost financing for upcoming development projects, the prime minister said.

Mubadala seals oil deal with Bahrain

Mubadala Development and the US oil company Occidental Petroleum have signed a production sharing agreement with Bahrain’s government to boost output from the country’s main oilfield, finalising last month’s preliminary deal.

The partners said they would form a joint operating company for the project, with Occidental holding 48 per cent, Mubadala 32 per cent and the National Oil and Gas Authority of Bahrain (NOGA) 20 per cent.

Development activities aimed at doubling the field’s oil output to 75,000 barrels per day (bpd) within five years, and eventually to more than 100,000 bpd, would start immediately, they said.

Global changes focus after losses

Global Investment House, a Kuwaiti investment bank, lost 360.5 million dinars (Dh4.53 billion) in the fourth quarter of last year due to sharp declines in the value of its investments and loan book.

Global now plans to move its focus away from investments and concentrate on generating income through fees, a profitable part of the bank’s business through the financial crisis, said Maha al Ghunaim, the chairman and managing director.

“[Last year] was a year of unprecedented global market turbulence. Global has not been immune to this and we unfortunately reported our first ever loss in 2008.”

Emaar says no credit notes for investors

Emaar Properties, the UAE’s largest property developer, has no plans to issue credit notes that allow customers to swap their investments between projects, the company said in a statement.

However the firm is allowing those who have invested in projects still to break ground to transfer their purchases to those that are under development.

“As part of our commitment to customers, we are currently offering several options including end-users having the option of transferring their purchases from projects that will be completed at a later stage to those in the advanced stages of development,” the statement said.

“Emaar has not issued or is planning any document that will enable customers to transfer their payment to others.”

The statement added that no projects launched by the firm have been put on hold and that “all the developments are progressing and in line with Emaar’s strategy to complete all commenced projects.”END

Warm reception for debt as markets start to thaw

Omar bin Sulaiman was surprised when he took the call from an international banker late one evening in February asking to buy the next round of Dubai’s government bonds.

A week earlier, the same banker had told him he had no cash to spend. Six months after the global financial crisis first began freezing regional credit markets, bankers say they now are willing to do whatever it takes to buy Gulf debt.

Dr Sulaiman, one of five members of the emirate’s supreme fiscal committee, shared the tale with a gathering of British businessmen in Dubai last week to illustrate how Gulf sovereign debt is back on the shopping list of international investors.

West's finance demands threaten emerging markets

Demand for debt finance from developed economies struggling to emerge from the global financial crisis may squeeze the funding needs of smaller states, warns Sultan al Suwaidi, the Central Bank Governor.

Mr al Suwaidi’s comments come as Gulf states prepare to sell more than US$34 billion (Dh124.88bn) in sovereign bonds to try to stimulate lending and help revive their economies.

Regional governments have already raised $6bn from global buyers through bond issuances in the past three months, all of which have been several times oversubscribed.

'No projects on hold': Emaar

Emaar Properties spokesperson:

"No projects launched by Emaar Properties are currently on hold. All the developments are progressing and in line with Emaar's strategy to complete all commenced projects.

"As part of our commitment to customers, we are currently offering several options including end-users having the option of transferring their purchases from projects that will be completed at a later stage to those in the advanced stages of development.

"Emaar has not issued or is planning any document that will enable customers to transfer their payment to others.

"Being a listed company, all matters of significance to the Company are made available in public domain on a timely basis to avoid any speculation.

"Any information in contradiction to the above relate to misrepresentation of the facts."-Ends-

© Press Release 2009 from ASDA'A Public Relations

We aim to be the largest mortgage lender in UAE

Abu Dhabi Finance, launched amid the financial crisis in November 2008, wants to become the best and the biggest residential mortgage lender in the country and promises availability of liquidity in the market for property buyers.

The company, a five-way joint venture between Mubadala, Aldar, Sorouh, Tourism Development and Investment Company (Tdic) and Abu Dhabi Commercial Bank (ADCB), was launched with an initial capital of Dh500 million and with the aim of helping the booming real estate industry of the emirate.

The company, according to its CEO Philip Ward, has no immediate plans to spread its wings beyond Abu Dhabi, which remains the main focus at the moment. However, he did not rule out going into Dubai and other emirates' markets in the near future.

Global Investment House plans to close investment arm

Troubled Kuwaiti investment bank Global Investment House said it plans to wind up its principal investment business as it swung to a full year loss.

The company posted a net loss of KD257.6m ($885.2m) in the year ended December 31 2008, compared with a profit of KD91.4m ($314m), after making impairment charges of KD297.4m ($1bn).

Global, Kuwait's biggest investment bank, posted a AED360.5m ($1.36bn) loss in the fourth-quarter alone - mainly due to impairment charges for investments and loans.

Sunday, 26 April 2009

Dubai's Deyaar to Set Up Distressed Property Fund

Deyaar Development PJSC said it would set up a 500 million dirham ($137 million) fund to buy back distressed property sold to investors who can no longer pay for their purchases.

Markus Giebel, the chief executive of the big Dubai-based property developer, said the company will seed the fund with AED100 million, and seek investors for the remainder of the capital, which he says Deyaar has almost finished raising.

The fund will offer to buy up distressed properties from investors who have defaulted on their real-estate purchase agreements with Deyaar. But instead of selling the property off in today's distressed market, Deyaar plans to hold onto the units and offer them for rent, providing cash flow for the company. When property prices recover in Dubai, the fund will then sell the units off again, he said.

Mr. Giebel said the fund's returns are modeled on a forecast recovery of Dubai's property market in three to four years time. In recent months, Dubai property prices have tanked, some falling more than 50% amid today's global economic downturn, a glut of supply and tight local lending requirements.END

UAE's MAG says in talks to buy Continental plant

United Arab Emirates-based industrial and property group MAG said on Sunday it was in "initial" talks with Continental AG to buy a factory in France but it was too early to talk about striking a deal.

"The MAG Group confirms that it is currently in contact with official authorities in France and with Continental regarding the possible sale of the plant in Clairoix," MAG said in a statement.

"Discussions are in the initial phase ... further meetings and in-depth studies should be conducted on the industrial, economic and financial plans to enable MAG Group to bring together the different elements to take a position on this opportunity," said MAG, which is headquartered in the emirate of Sharjah.

Abu Dhabi glamour circuit taking shape

The Mole sent a team to Abu Dhabi this week to check out the site for the city's inaugural Grand Prix.

The GP in the United Arab Emirates is replacing Brazil as the season finale and takes place on 1 November.

The 5.5km Yas Marina Circuit should certainly be eye-catching as it is being constructed just off the coast on Yas Island.

Global swings to Q4 loss, says no debt deal

Kuwait's Global Investment House (GLOB.KW) swung to a loss in the fourth quarter and said it would take longer to reschedule its debt.

Reuters calculated it had a 360.5 million dinar ($1.36 billion) net loss in the fourth quarter versus a 29.47 million dinars net profit in fourth quarter 2007.

Reuters calculated the fourth-quarter net loss based on a net profit in the first nine months of 102.9 million dinars.

Dubai considers dates for second US$10 billion bond

Dubai is considering at least two dates this year to issue another US$10 billion of bonds, a government executive said on Sunday, as the emirate seeks to raise more funds to support state-linked companies.

Dubai launched a US$20 billion bond programme in February and issued the first half to the United Arab Emirates central bank.

It has since given more than US$5 billion in loans to firms struggling to meet debt and other financial obligations amid a real estate downturn, Nasser al-Shaikh, director-general at Dubai department of finance, said in a radio interview last week.

UAE Central Bank Governor Attends IMF/World Bank Meetings in Washington

UAE Central Bank Governor, Sultan bin Nasser Al-Suwaidi, recently visited Washington, DC, where he attended the International Monetary Fund (IMF)/World Bank Group spring meeting.

At the IMF/World Bank meeting, the UAE Central Bank Governor called on IMF members to adopt long-term policies that will help prevent future economic downturns of this scope and magnitude, and to "move decisively on ratifying agreements for a new income model." The IMF/World Bank Group meeting is attended by senior policymakers from 185 countries, whose collective goal is to secure financial stability, facilitate international trade and promote sustainable economic growth.

In a statement issued at the meeting, Al-Suwaidi said that countries in the Middle East region had not been spared the impact of the global financial crisis. However, he noted that "financial buffers accumulated during the boom years, as well as much strengthened policy and macroeconomic frameworks" in the UAE and many Arab countries "allows the scope for supportive policies to cushion the impact of the crisis." "Countries with pegged exchange rates have additionally benefited from the continued monetary easing in the US, further reinforcing the stabilizing role of the exchange rate peg in oil producing economies," added Al-Suwaidi.

UAE group ends bid to buy share in US Textron

Talks between a group of UAE businesses, plus a Kuwaiti company, to buy US aircraft manufacturer Textron Inc have called to a halt, according to Kuwait newspaper.

A report in the national daily Al Watan, citing anonymous people, said the deal had been called off on the back of concerns of a political outcry about a non-US group owning a large share of the firm.

Other issues such as more undeclared losses at Textron and the group's lack of technical know-how to separate Textron’s civilian and military operations within three years as had been planned, were also cited as reasons for the deal collapse the Kuwait newspaper said.

Has the UAE witnessed the "Green Shoots" of transparency, in the past week?

(Hopefully this, my second attempt at commentary, will be formatted correctly. My error, previously, was not accepting the automatic guidance of Blogger!)

It has been interesting following the fortunes of two US politicians: Governor Kaine travelled to Dubai, via Israel, and has been applauded by friend and foe alike; whereas Mayor Fenty travelled to Dubai, and attended the Ladies Tennis Tournament, which an Israeli Passport Holder was not granted a visa to compete in.

As the Washington Post highlights: Governor Kaine publically disclosed his plans, including the subsidised cost of travel, ahead of departing; whereas Mayor Fenty, whose trip was also subsidised, specifically by The Government of UAE, appeared to depart furtively and gave no coherent explanation when questioned after the event!

A difference in communication styles, with entirely different results, congratulations for Governor Kaine, chastisement for Mayor Fenty!

Here in the UAE, Finsbury's recent appointment appears to be bearing fruit, Nasser Al Shaikh spoke very fluently on Tuesday about the Dubai Government Bond and I have not heard one critical comment about his, relative for the region, candour.

Taking the Mayor Fenty role, in Dubai, is Nakheel which hides behind the mask of "supplier confidentiality", so I am reliant on my own contacts who confirm Nakheel are processing payments, but only at a rate of 75%, over an unquantified period of time. (If anybody from Nakheel reads this blog, do feel free to post a comment, none of which are moderated or deleted.)

So "green shoots" of transparency are appearing in Dubai, but this past week certainly surprised many, when the Federal Capital of UAE, Abu Dhabi, moved well ahead in the transparency "green shoot" stakes.

Mubadala issued an 84 page document, detailing the 2008 performance of its activities, where are those commentators who were critical of Sovereign Wealth Funds non-disclosure only 15 months ago, when I researched this article?

Possibly other GCC Institutions will follow Abu Dhabi's lead in disclosure,but such expectations must be tempered by the fact there is no statutory obligation to undertake such disclosure, which underlines the ground breaking nature of Mubadala's 2008 Accounts.

As there are Fenty's and Kaine's everywhere, so it proves to be the case for Abu Dhabi, but as I state quite clearly this is not a social commentary blog and would direct you here.

UAE, Malaysian, Indian, Chinese investors interested in Iran

The managing director of the Persian Gulf Mines and Metals Special Economic Zone, Hormozgan Province, has said that the United Arab Emirates, Malaysia, India, and China are interested in investing in the zone.

Bahman Ayar Rezaii said on Saturday in Bandar Abbas that based on a plan the zone will be turned into a hub of industry and energy with annually 10 million tons of steel, 500,000 tons of aluminum, and 3000 MW of electricity production capacities.

He went on to say that $500 million has been invested in the zone in the last Iranian calendar year (ended March 20), predicting the figure would touch $700 million in the current (Iranian) year. Industrial goods and minerals are currently exported to Pakistan, Taiwan, Japan, and the United Arab Emirates, he noted.

Is Nakheel not paying?

A report in the UK-based magazine New Civil Engineer quotes analysts as saying that real estate developer Nakheel has not paid debts amounting to more than $290 million. The money is owed to engineering companies in the UK such as Atkins, Mouchel, Scott Wilson and WSP.

Nakheel has declined to comment, saying only that it “doesn’t disclose confidential information about supplier contracts.”

Earlier this month, Atkins revealed that delays in payment for its Middle-Eastern projects had forced the company to use around $36 million of its own cash to keep operations running over the past three months. “We expect that cash collection will remain challenging for at least the next few months,” the company said.

Kuwait bank sells investment in Reliance Petroleum

Global Investment House KSCC, a Kuwait-based investment bank, said its private equity unit has sold its investment in India's Reliance Petroleum Ltd.

Global Capital Management, the private equity group of Global Investment House, was one of the 10 largest investors in the unit of India's most valuable company, it said in an e-mailed statement.

"We have been liquidating our position in tranches to optimise our returns," Shailesh Dash, managing partner at Global Capital Management, said the statement. "We have achieved an internal rate of return of more than 70 per cent on this transaction."

Bahrain says financial sector well-poised to weather crisis

Bahrain's banks and financial services industry have weathered the global financial crisis well and are poised to return to a strong growth trajectory this year, according to top government and central bank officials.

Speaking at a media event organised by BNP Paribas, on the sidelines of the Bahrain Grand Prix 2009, Shaikh Mohammad Bin Eisa Al Khalifa, CEO of the Bahrain Economic Development Board, said Bahrain always believed in gradual and steady development of its financial sector and thus its exposure to the global crisis was within manageable limits.

"We have always seen growth in the financial sector as something that should be gradual and steady.

Sabic's turnover falls by more than half

The turnover of Saudi Basic Industries Corp (Sabic) fell by more than half in the first quarter, while sales costs fell by 38.2 per cent, according to financial statements.

Sabic's turnover stood at 19.82 billion riyals ($5.29 billion) in the three months to March 31, down from 39.98 billion riyals in 2007.

This is the first time that Sabic disclosed turnover figures.

Qatar Emir eyes Porsche stake

The Emir of Qatar plans to buy a stake in Porsche, possibly shoring up the German sports-car maker's strained finances, a German magazine reported.

The Emir has informed Porsche of his interest, Focus magazine reported in an excerpt of an article to be published on Monday.

Porsche declined to comment. Officials in Qatar were not immediately available for comment.

Iran holds back on gas to UAE

Iran will not start delivering natural gas to the UAE until the price has been “corrected” in a contract with Crescent Petroleum, Oil Minister Gholamhossein Nozari said on Saturday.

The National Iranian Oil Company (NIOC) and UAE-based Crescent agreed on a deal in 2001 to deliver natural gas from Iran’s offshore Salman field to the UAE to meet the neighbouring Gulf country’s growing energy demand.

But the agreement was stalled over demands by Iran for a “fair” gas price.

Asked when the issue would be resolved, Mr Nozari told a news conference, reiterating Tehran’s official line: “Not until the price issue, as the focal point of the contract, is corrected will we begin to export any gas.”

Political hot air evaporates the region’s natural gas hopes

The Middle East’s chances of one day selling pipeline gas to Europe are fading as the strategic Nabucco project remains stuck in a web of political brinkmanship.

Construction of the proposed €7.9 billion (Dh38.43bn) Turkey-to-Austria link, which would provide a vital conduit for Caspian and Middle-Eastern gas to reach markets in Europe, is supposed to start in 2011, after the project partners make a final investment decision next year.

But scepticism abounds that the targets will be met due to wavering EU support for the pipeline, Turkish efforts to use it as a political bargaining chip, the shifting landscape of Central Asian relations with Russia, and long delays likely in the development of significant gas exports from Iraq and Iran.

Analysts query IMF gloom

The latest world economic outlook from the IMF paints a bleak picture of global prospects, one that brings it in line with the gloomiest predictions that for months have been emanating from private-sector economists.

The fund now predicts a global economic contraction of 1.3 per cent.

But the IMF’s prognosis for this region marks a particularly sharp contrast with its last forecast, sparking some economists to question whether the organisation, based in Washington, is now erring on the side of an increasingly popular pessimism.

Saudi auditor seeks king’s help to boost fiscal accountability

The country’s top anti-corruption agency sought the king’s intervention last week in recovering public funds from other state agencies, saying that it required his continuous support to carry out its duties in “an unbiased and objective manner”.

The head of the general auditing bureau, Osama Faqeeh, told King Abdullah during a meeting on April 19 that the expansion in government expenditures on development projects and large-scale investment programmes across the country requires more co-operation among government agencies.

Saudi Arabia announced during a G20 summit in London this month that it was embarking on a plan to spend US$400 billion (Dh1.46 trillion) on infrastructure projects during the next five years.

Saturday, 25 April 2009

Dubai Gets Its Breathing Room

Two months after receiving a $10 billion lifeline, Dubai's government says it has disbursed more than half of that money to indebted companies, allowing them to pay off bills and refinance debt.

The quick payouts have provided breathing room for a handful of government-controlled companies. Dubai also has recently stepped in to fill funding gaps for certain Dubai entities that were unable to refinance or pay off debt on their own.

This has reassured markets that Dubai, for the time being, can support its overstretched companies. The cost of insuring Dubai-related debt against default soared earlier this year but has fallen back again.

We have to let our actions speak for us

When someone is chosen by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to act as his personal head of finance and administration, they know they have arrived.

They are handed an incredible responsibility and cannot afford to slip – ever. It is as demanding as it is rewarding. One would expect to stumble, falter and crumble under the pressure. But Nasser Al Shaikh would have none of that.

Appointed to Sheikh Mohammed's Executive Office in 2001, the son of leading businessman Hassan bin Al Shaikh, had no idea he would become one of Dubai's most influential, trusted and powerful people.

Abu Dhabi's Ipic raising new loan of up to $5b

Abu Dhabi government-owned International Petroleum Investment Company (Ipic) is raising a new loan of up to $5 billion, banking sources close to the deal said on Thursday.

The loan, which will be co-ordinated by Bank of Tokyo-Mitsubishi UFJ, HSBC and Santander, will be used to finance IPIC's recent acquisitions, a banker close to the deal said.

"The loan does not finance a specific acquisition, it finances IPIC's recent acquisition spree," he added.

Contractors get paid as developers use bond issue

Dubai construction companies are starting to get paid as Government-backed property developers tap into the first half of the US$10 billion (Dh36.7bn) bond issue.

Contractors have struggled to get their dues in the past six months as developers grapple with cash flow issues, but some are beginning to see payments trickling through.

Nasser al Shaikh, the director general of the Dubai Department of Finance, said this week that firms had drawn Dh18.3bn from the bond, with the main recipients being property companies.

Thaw between Turkey and Armenia shifts alliances in South Caucasus

A rapprochement between Turkey and Armenia this week provided further evidence of a shift in the balance of power in the South Caucasus that is propelling gas-rich Azerbaijan closer to Russia, analysts said.

The process that began when Georgia went to war with Russia last summer over its breakaway territories of South Ossetia and Abkhazia, could jeopardise European plans to reduce dependence on Russian gas by importing extra Caspian supplies. Azerbaijan views the announcement on Wednesday by its ally Turkey and historic foe Armenia of plans to normalise ties as a betrayal that would leave it relatively isolated in the South Caucasus, where Armenia already enjoys strong ties with Russia and Iran.

Ilham Aliev, the president of Azerbaijan, has intensified pressure on Turkey, suggesting during a visit to Moscow this month for talks about gas and the disputed region of Nagorno Karabakh, that a Turkish betrayal could hit bilateral gas trade.

Friday, 24 April 2009

“Extraordinary” flows into emerging market funds

Funds dedicated to emerging markets posted $2.2bn in inflows during the week ending April 22, the strongest streak for the asset class since May 2008, Merrill Lynch’s Michael Hartnett said in a note released on Friday.

This week marks the seventh consecutive week of inflows for EM funds, which analysts at Deutsche Bank called “extraordinary”, noting:

between June 2008 and March 2009 there have not been more than two weeks of inflows in a row. This cumulated inflows in the last seven weeks for all EM equity funds amounts to nearly US$4.0bn.

Post card from Dubai

Oil prices determine the pace of prosperity. The oil-price boom 2002-2008 allowed countries to invest hundreds of billions of dollars in infrastructure and diversification. They also amassed billions in sovereign wealth funds, which has lifted their profile on the international stage. As oil prices recede, so does the pace of growth and wealth accumulation, although most states possess enough stored wealth to cushion the downturn.
RISK: Prolonged downturn topples GCC states’ ambitious plans.

New Asian Islamic bonds revitalise sukuk market

New sales of Islamic bonds or sukuk, by Asian governments such as Indonesia are revitalising the market, ratings agency Moody’s said in a report published yesterday.

“Sovereign sukuk issuance has already brought significant vitality to the Asian market in 2009. In the medium term this could allow activity to fully rebound,” Moody’s said in its report titled “Islamic Finance: Asian sukuk market faces new but also familiar challenges.”

Last week, the government of Indonesia issued its first international dollar sukuk, raising US$650 million (Dh2.3bn). The bond was seven times oversubscribed. In compliance with Shariah, sukuk pay investors in form of asset returns instead of interest. The strong demand for the Indonesian sukuk by Gulf-based institutional investors shows that regional appetite is returning, experts say. It also highlights the absence of good quality paper in Islamic credit markets.

Mubadala 2008 Annual Report (PDF)

Mubadala Development Company (Mubadala) is a Public Joint Stock Company headquartered in Abu Dhabi, capital of the United Arab Emirates. Its focus is on developing and managing an extensive and economically diverse portfolio of commercial initiatives. It does this either independently or in partnership with leading international organizations. Mubadala’s commercial strategy is fundamentally built on long term capital intensive investments that deliver strong financial returns.

The company manages a multi-billion dollar portfolio of local, regional, and international investments, projects and initiatives. Through its investment and development projects, Mubadala is both a catalyst for, and a reflection of, the drive for economic diversification of the Emirate of Abu Dhabi. Its impact is evident domestically and internationally in sectors such as energy, aerospace, real estate, healthcare, technology, infrastructure, and services.

Mubadala’s sole shareholder is the Government of the Emirate of Abu Dhabi.

New contractor for third concourse at Dubai Airport

Al Jaber Engineering and Contracting (ALEC), the subsidiary of Abu Dhabi’s Al Jaber Group, will take over construction of a third concourse at Dubai International Airport, an informed source has confirmed.

The contract comes a week after a consortium of builders, including Murray and Roberts of South Africa, Leighton of Australia, Dubai’s Al Habtoor Engineering and Takenaka of Japan, formally announced they had pulled out of the Dh4.9 billion (US$1.33bn) deal after failing to reach an agreement with the Dubai Department of Civil Aviation (DCA).

The two sides had been in talks since the contract was awarded in December, as DCA sought to take advantage of construction costs that have fallen by as much as 30 per cent since the start of the global financial crisis.

Shareholders 'pressure' developer to pay dividend

RAK Properties will pay a dividend despite falling sales and board objections, after shareholders pressured management, the chief executive said yesterday.
The company, the main developer in Ras al Khaimah, reported its first-quarter earnings fell nearly 39 per cent to Dh70 million (US$19m) compared with the same period last year. It attributed the drop to a lack of sales in the reporting period.

“In general, property buying has come to a halt and we did not achieve any sales during the first three months of 2009,” said Mohammed al Qadi, the chief executive of RAK Property.

But Mr al Qadi said a dividend would be paid. “The dividends were not recommended by us as a board and as a management, and we objected to it but our shareholders put us under pressure. When they saw that we had cash, they voted for it.”

Mubadala issues first annual report

Mubadala Development, the Government’s strategic investment arm, has published an annual earnings report for the first time, shedding new light on a fast-growing organisation that has expanded to Dh54 billion (US$14.7bn) in assets despite losing almost Dh12bn in last year’s global market meltdown.

Rising output from its oil and gas investments helped Mubadala nearly quadruple revenues last year to Dh6.7bn, from Dh1.8bn the year before. But the six-year-old company posted a net loss of Dh11.8bn after write-downs on a whirlwind of investments, reflecting sliding prices for oil and other assets.

Mubadala said it would continue to make acquisitions, borrowing more from banks and investors and drawing on Dh21bn in budgeted contributions this year from the Government to pursue its mandate of diversifying Abu Dhabi’s economy.

Two courts to co-operate over judgments

The Dubai International Financial Centre (DIFC) Courts and the Dubai Courts yesterday signed a co-operation agreement that would allow them to enforce each other’s judgments.

The terms of the new protocol require both the DIFC Courts and the Dubai Courts to assign one of their judges to enforce the judgments and arbitral awards wherever applicable.

The agreement, which comes into force on May 1, helps resolve a major issue facing both of the benches as each increasingly encroaches on the jurisdiction of the other.

Free-market key to Sharjah's growth

Eton and Harvard-educated, Majid Jafar could have gone on to reach the pinnacle of success on Wall Street or the City of London – maybe even both. Yet, his roots are deeply implanted in the UAE, both in terms of culture and family.

Among the leading group of second generation businessmen in the Emirates, Jafar, in his early 30s, is helping to ensure Crescent Petroleum, the company his father started more than three decades ago, remains on its successful trajectory. Emirates Business caught up with him to discuss oil prices, the current financial crisis and his respect and appreciation of the emirate of Sharjah where his commercial interests are based.

From your point of view, as a Sharjah businessman, how have you seen the impact of the development of the Emirates' economy?

In the grip of the bull and bear

Billionaire Prince Alwaleed bin Talal, with a sprawling empire of investments in some of the world's biggest companies, could be described as a human index – a one-man version of the S&P 500 or MSCI World Index.

The Saudi investor's diversified portfolio, including stakes in Citigroup, Apple, Motorola, News Corp and a web of hotel and media interests, has been subject to the rise and fall of the global economy's fortunes as share prices tumbled in the wake of the credit crunch.

There has been cause recently for guarded optimism that the worst of it could be over. This week US Treasury Secretary Timothy Geitner offered further hope for the banking sector by saying he believed the big institutions would pass the government's "stress tests" and show they had adequate capital.

ABRAMS: An Arab counterexample

In January of this year, then-Secretary of State Condoleezza Rice and the United Arab Emirates' foreign minister signed a so-called 123 Agreement.

The agreement committed the United States to cooperation with the United Arab Emirates in establishing the Arab world's first peaceful nuclear energy program. Now, as the agreement comes up for debate in Congress, opponents and critics of the 123 Agreement are raising proliferation concerns and citing the illegal smuggling of goods into Iran through Dubai, which undercuts U.N. and U.S. sanctions against the Iranian regime.

Congress should quickly approve the agreement when it is presented. The U.A.E. is a firm ally of the United States and deserves better treatment than it received in the Dubai Ports World fiasco in 2006. The 123 Agreement must be judged on its merits, not on the basis of accusations or plain prejudice.

Barclays to raise loans by £11bn

Barclays promised to increase loans to customers by £11bn this year - a 6% increase on its loan book at the end of 2008 - at the bank’s annual meeting on Thursday, at which shareholders criticised the board’s decision to seek investment from the Middle East. In signs of ongoing investor dissent, a significant minority of shareholders – representing more than 16% of total shares voted – opposed the reappointment of Marcus Agius, the bank’s chairman. Separately, the FT reports that Barclays’ largest shareholder, Qatar Holding, has cut its stake in bank to 5.8% from 6.4%.

Dubai Gets Its Breathing Room

Two months after receiving a $10 billion lifeline, Dubai's government says it has disbursed more than half of that money to indebted companies, allowing them to pay off bills and refinance debt.

The quick payouts have provided breathing room for a handful of government-controlled companies. Dubai also has recently stepped in to fill funding gaps for certain Dubai entities that were unable to refinance or pay off debt on their own.

This has reassured markets that Dubai, for the time being, can support its overstretched companies. The cost of insuring Dubai-related debt against default soared earlier this year but has fallen back again.

Bahrain shares index falls a record 4.8% as Arab Banking plunges 41%

Arab Banking Corporation, the Bahrain-based bank controlled by Libya, Abu Dhabi and Kuwait, plunged 41% in its first trading day since January, triggering the biggest slump in the country’s equity index on record.

The bank, which has units in the US, UK and Singapore, lost hundreds of millions of dollars during 2007 and 2008 because of the collapse of the US subprime mortgage market. The company, known as ABC, yesterday posted its first quarterly profit in a year and a half at US$32 million, compared with a loss of US$587 million in the year-earlier period.

ABC shares opened at US$0.405 this morning, down 56%, as two trades took place simultaneously selling a total of 50,580 shares, data compiled by Bloomberg show. The shares closed at US$0.54 after 172,577 stocks traded.

Abu Dhabi sovereign fund releases first report

Mubadala, one of oil-rich Abu Dhabi’s most active investment vehicles, on Thursday released its first annual report which showed that it made losses of AED11.8bn (€2.5bn) in 2008.

The report – the first of its kind by a Gulf state investment entity wholly owned by the government – provides a rare insight into the losses incurred by sovereign investment entities after the decline in asset prices and the collapse in global stock markets.

Mubadala is one of a growing pool of investment vehicles acting on behalf of Abu Dhabi, which is the capital of the United Arab Emirates and home to the world’s largest sovereign wealth fund, the secretive Abu Dhabi Investment Authority .

Thursday, 23 April 2009

Kaine says Virginia is competing for a big investment from a company in Dubai

Virginia is one of two states competing for a sizable economic development investment being considered by a Dubai-based company, Gov. Timothy M. Kaine told reporters during an overseas conference call yesterday.

Kaine, who arrived in United Arab Emirates early yesterday after a three-day stay in Israel, sounded encouraged by meetings with the company. He was preparing to continue economic development discussions at a dinner last evening with the U.S. ambassador. Dubai is eight hours ahead of Virginia.

"We've had a very good afternoon here," Kaine said.

Business booms in Emaar credit notes

A secondary market is booming in the sale of Emaar credit notes, Arabian Business has learnt.

In the last few weeks developer Emaar has started reimbursing investors on delayed projects with transferable credit vouchers instead of offering them a cash refund.

In February, Emaar said it was putting new projects on hold to stem the oversupply of units in Dubai's property market.

Saudi Stock Market Weekly Report - 22-April-2009

Stimulus needs to come with regulations: experts

Regulations must be set by the UAE Government that will ensure funds given by the Central Bank to local banks and lending institutions are earmarked.

"Liquidity has come into the system but it is now being held by the banks. It is good to have government stimulus but the stimulus needs to come with directives," said Blair Hagkull, Chief Executive, Jones Lang Lasalle.

The experts also called for interest rates on mortgages to come down.

Mortgage lenders urged to stimulate market

Dubai Property Society (DPS), an association of professionals engaged in the real estate sector in Dubai, on Wednesday sought new steps to encourage mortgage lending to revive the property sector that has seen a sharp fall in transaction volumes.

At a media briefing, representatives of leading companies said both government authorities and the private sector need to work in tandem to boost demand.

Shaikh Khalid Bin Zayed Al Nahyan, executive chairman of Tamweel, said Dubai-based mortgage lenders Amlak and Tamweel will resume providing finance to home buyers within weeks. The two would resume lending activities before moving ahead with a likely merger.

IPOs raises Dh306 million in ME

Initial public offerings (IPOs) in the Middle East raised Dh306.8 million ($83.6 million) in the first quarter, 2.1 per cent of the amount raised in the same period last year.

A first quarter global IPO update by Ernst & Young revealed that there was a significant drop in capital raised, as only two IPOs were launched. The first quarter of 2008 saw 13 IPOs raising a total of Dh14.6 billion ($3.98 billion).

The two IPOs launched were Saudi Arabia's Etihad Atheed Telecommunications Company that raised Dh293.6 million ($80 million) on the Riyadh Stock Exchange, was the largest IPO in the Middle East.

Most of $10bn to be injected directly

Dr Omar bin Sulaiman, Governor of Dubai International Financial Centre (DIFC), yesterday said a portion of the $10 billion (Dh36.7bn) that the Dubai Government raised as subscription from the UAE Central Bank to its long-term bond programme would go to government-linked companies seeking to repay debt, and a majority of the funds would be injected directly into the economy.

"The most important thing is that the economy gets the money because that is the main focus. Remember that even if you pay debt it means you feed cash to pay the economy so the net effect is the same," said Sulaiman, who also serves on the emirate's six-member Supreme Fiscal Committee.

Addressing an open forum of the British Business Group, Sulaiman clarified that the Dubai Government itself has paid all its contracts and has no pending dues. "Some of the big corporates that are linked with government or owned by government got delayed in their payments to contractors and part of the support fund is to pay those suppliers. Some of them have already been paid. Some are in the process of getting paid," he said.

DIFC confident retail sector will offer big business opportunities

Dubai International Financial Centre (DIFC), which has recently amended its regulations to allow firms based in the centre to serve retail clients, is upbeat the retail sector would provide bigger business opportunities.

The retail insurance for one is expected to benefit from the centre's broader infrastructure. "Market penetration is increasing as customer awareness of both conventional and Islamic insurance products develop. The broader infrastructure will only encourage clients in this exciting sector of the retail financial services industry," Peter Hodgins, partner at Clyde & Co LLP said.

Hari Bhambra, a senior partner at Praesidium said there has been a lot of limitation on wealth management business when DIFC was solely a wholesale financial services environment. With the new setup, fund managers can now consider funds in the Dubai International Financial Centre to have greater access to retail investors.

Emaar draws up plan to deal with toxic assets

Emaar Properties has drawn up a plan to deal with toxic assets held by the company.

"We have identified our toxic assets, categorised them and we are taking decisions on some of those assets," said Chief Operating Officer Naaman Atallah.

"We don't generally make a lot of noise about our policies but we have adopted a strategy to clean up our toxic assets," he added.

It’s not quite the Great Depression; we’ve moved on

Some kind of clarification is in order: last October, this column deliberated on the desirability and difficulties of teleportation, in particular the riddle of how to define where we are without altering where we’ve been, or put differently, rewriting our history to define our present.

But don’t get confused. While quantum physics and revisionist history may make it possible to alter the past, this doesn’t mean one can actually go back in time. Time travel, like teleportation, remains impossible.

Yet more and more people are lately asking why, if this global recession is supposed to be the worst since the Great Depression of the 1930s, the world doesn’t look a lot more like it did in, say, 1933? If things are so bad, they ask, why aren’t there more people huddled around burning oil drums warming their fingers or camped out in tent cities? Why hasn’t Angela Merkel been deposed as German chancellor by an Austrian megalomaniac? Why are photos and films still in colour and not in black and white?

Family-owned businesses head for DIFC

The Dubai International Financial Centre (DIFC) is targeting family-owned investment firms worldwide as the region’s leading financial free zone seeks to reposition itself.
“During this difficult time, a lot of families have started getting together and creating family offices,” Omar bin Sulaiman, the governor of DIFC, told the British Business Group in Dubai Wednesday.

The centre’s broadening of target clients has been triggered by recent layoffs of financial experts in the region, many of whom come from wealthy families. With few other finance jobs on the horizon, Dr Sulaiman said these professionals had gone into managing the family wealth and were opening up shop in the DIFC.

“A lot of people who got laid off or left some of the global financial firms have been hired by their families now to create organisations,” he said “Families from the region and from outside the region are establishing themselves at the DIFC right now. This will continue.”

Tamweel and Amlak look to lend

The UAE’s two largest Islamic home loan companies will need to secure adequate funding before they can re-start lending, the chairman of Tamweel said yesterday.
“Where the funds will be coming from... is at the heart of the matter,” said Sheikh Khaled bin Zayed. “Within a matter of weeks Amlak and Tamweel are going to be lending again. But a few formalities need to be worked out.”

Trading in Tamweel and Amlak Finance was suspended in November after the companies all but stopped lending because of the global liquidity crunch. They accounted for about 60 per cent to 65 per cent of the mortgage market.

On Tuesday, Nasser al Shaikh, the director general of Dubai’s Department of Finance and chairman of Amlak, said state-affiliated real estate companies can to draw on the Dubai Government’s US$10 billion (Dh36.73bn) bond.

Tadawul plans to introduce derivatives and ETFs

Saudi Arabia is considering to introduce derivatives and other sophisticated investment tools into its bourse as part of an overall strategy to develop the market and encourage citizens to invest at home.

Tadawul, the largest and busiest bourse in the Middle East, said it is also pondering introducing exchange-traded funds (ETF) and taking further measures to boost transparency and ensure all listed firms comply with governance rules.

The Gulf Kingdom's Capital Market Authority (CMA), which oversees the Riyadh-based Tadawul, said the new plans are part of a development strategy aimed at "ensuring disciplined and fair dealing in the bourse."

Dividend boost for investors unlikely to last

In addition to enjoying a recent rally in most regional markets, Gulf investors are receiving another welcome boost: dividend payments for 2008.

Middle East companies, and Gulf-based corporates in particular, have traditionally been generous with dividends. Leading shareholders often exert great pressure on boards to be generous with dividends, even when management foresees tough times and wants to retain earnings.

Thus, while the economic and financial outlook deteriorated sharply towards the end of 2008, it was still overall a bumper year for profits, and boards have disbursed some of this to shareholders.

Bahrain retools its labour market

Among the numerous street protests that have gripped Bahrain in recent months, none were so genteel as the weekly gatherings in March of businessmen at the doors of Tamkeen, the recently rebranded labour fund.

The focus of the protesters’ anger is a BD10 ($26.6) monthly tax on every foreign worker, introduced last July. The funds are to be used by Tamkeen – “the enabler” – to train Bahraini nationals for work in the private sector, as part of wider reforms intended to cut unemployment, diversify the economy and reduce the public wage bill.

“The labour market reforms are about making the private sector the employer of choice, and equipping Bahrainis for those roles,” says Abdulellah al-Qassimi, chief executive of the fund.

Telecoms group lines up growth

The Middle East may not have been spared in the global financial meltdown, but some companies and industries are expected still to boast robust earnings and continued expansion – albeit at a more measured pace than before.

Etisalat is likely to represent one such pocket of growth. The United Arab Emirates’ state-controlled telecommunications provider is cash-rich and, despite the impact of the financial crisis, is actively looking to expand its services and make acquisitions.

Telecoms operators enjoy “stickier” demand than most consumer service providers, and Etisalat’s domination of its home market, the second-largest Arab economy, means that it is likely to continue to be a cash cow.

Dubai economy expands by 1%

Dubai’s economy grew one per cent in the first quarter of this year compared to the last quarter of 2008, according to a senior official.

Omar bin Sulaiman, the governor of the Dubai International Financial Centre, said government spending and an increase in confidence thanks to a $10bn loan from the United Arab Emirates central bank had helped foster recovery after the sharp slowdown witnessed last year.

“We estimate Dubai’s economy to have grown by one per cent in the first quarter, fuelled by the government stimulus package and the increase in expenditures,” he told a meeting of the British Business Group in Dubai on Wednesday, adding that confidence was returning to the economy.

Wednesday, 22 April 2009

Take profits in Barclays?

We only ask because the bank’s friends in Qatar have just announced the sale of 35m shares.

From a stock exchange announcement released on Wednesday afternoon.

Exclusive: GIH’s Ghunaim says lessons have been learnt from default (Registration required)

At the beginning of the year Kuwait’s biggest investment company, Gulf Investment House, announced that it had defaulted on about $2.5 billion in
debt. It became the first big financial institution in the Gulf to default since the credit crisis began. In an exclusive interview its chairwoman Maha AlGhunaim tells Dominic O’Neill how she plans to turn the company’s fortunes around.

Two years ago Maha Al Ghunaim, the chairwoman of Global Investment House (GIH), was the darling of the Middle East’s investment community. Now, the
company she helped create is an emblem of all that has gone wrong in the Gulf.

As Euromoney saw today, however, the chairwoman is still to be found in the brand new skyscraper she built for her company at the height of the Gulf’s boom.
Much of the bank’s human capital appears to be intact too. Despite an overall reduction of 10% in the workforce, and salary cuts of up to 20% for senior staff,
no-one above the rank of vice-president has quit, according to Al Ghunaim.

Dubai home prices may fall 70%, prompting major industry restructure

Dubai house prices may slump as much as 70% from their peak late last year as demand drops and banks fail to resume mortgage lending, prompting mergers, UBS said.

“We are still in relatively early stages of the property down-cycle in United Arab Emirates,” Saud Masud, a Dubai-based analyst at the Swiss bank, wrote in a report to clients dated yesterday. “We believe risk-reward profiles are not yet compelling for investors to consider market re-entry, hence continued price declines are expected.”

Economic growth in Dubai slumped after the worst financial crisis since the 1930s hurt its property, financial services and tourism industries. The economy may contract 2% to 4% this year, Standard & Poor’s Ratings Services said in a report last month.

Wynn Resorts Gets OK To Ease Terms Of Credit Pacts

Casino giant Wynn Resorts Ltd. (WYNN) completed amendments to its credit agreements Tuesday, giving it added flexibility to weather the industry downturn.

The move come as the casino industry has been slammed by collapsing Las Vegas property values and a downturn in consumer spending and travel. Several small casino companies have either entered bankruptcy protection or are flirting with it. Others are slashing costs and struggling to cut massive debts incurred for expansions and buyouts.

Under Wynn's amendment, lenders agreed to waive leverage covenants until June 2011 and increase the thresholds after that point. The deal also provides added flexibility for its interest coverage ratios and extends the maturity on about $610 million of the remaining $697 million revolving commitments from August 2011 to July 2013, among other things.

The company has about $1.3 billion in cash and $4.5 billion in long-term debt.

Last week, MGM Mirage (MGM) and partner Dubai World reached a preliminary agreement on a plan to complete City Center, their jointly owned $8.6 billion Las Vegas project, people with knowledge of the talks told The Wall Street Journal.

The project had looked precarious after Dubai World, the investment arm of the Persian Gulf emirate, skipped two construction payments on the project worth $135 million, and sued MGM Mirage over allegations of cost overruns and mismanagement of the project. Some had feared MGM would have to seek bankruptcy protection.

Wynn shares were unchanged at $31.59 in after-hours trading Tuesday.END

Planned mega Islamic bank to cast its net wide

The planned mega Islamic bank will have its investment operations spread globally rather than restrict its activities to Muslim countries, the Saudi businessman behind the ambitious project said.

With more than $200 billion (Dh734 billion) of funds at its disposal, the as yet unnamed bank may find it easy to cast its net wide, believes Shaikh Saleh Kamel, president of Saudi Arabia's Dallah Albaraka Group, which will be one of the bank's founders.

"We will be all over the world. Economics has no one country or religion," Kamel told reporters on Monday. "We will invest where we can make profit."

Saudi Arabia lifts restrictions

Saudi Arabia has lifted all restrictions on citizens of other Gulf Cooperation Council (GCC) states engaging in economic activities and independent professions in the Kingdom.

This was aimed at accelerating the process of economic integration in coordination with the steps taken to establish the GCC Common Market. This decision was taken by a meeting of the Council of Ministers, chaired by King Abdullah Bin Abdul Aziz on Monday evening, and this was after reviewing the decision of the 28th Supreme Council of GCC leaders held in Doha last year.

The Cabinet also passed a series of regulations facilitating the transfer of jobs of people employed by maintenance, catering and cleaning companies outsourced by government departments.

Etisalat to deepen links in Pakistan

Etisalat is considering steps to deepen its involvement in Pakistan, including eventually raising its stake in the country’s largest telecommunications company, according to the UAE company’s chief and Pakistan’s investment minister.

The moves could also include pushing service further beyond major cities into rural areas and bidding for a new-generation 3G licence.

The expansion is part of a plan to see the firm reach into the four largest economies in the Middle East and 17 countries around the world.

Diversified economy can pay strong dividends

Diversification remains the key to achieving sustainable industrial growth even in the current economic slowdown, according to a new report by the Dubai Chamber of Commerce and Industry.

The study, which sets out the challenges facing the UAE's industrial sector, says the government is firmly focused on encouraging the non-oil sector.

It is particularly committed to supporting the industrial sector, which contributed 49.4 per cent to the overall economy in 2007.

Dragon Oil denies speculations of Enoc selling its stake in the firm

A top official from Dubai-headquartered Dragon Oil has denied speculations that Enoc – its majority shareholder – is planning to sell some of its stakes.

"I am not aware of any move by Enoc to dispose of its stake," Abdul Jaleel Khalifa, CEO and Executive Director of Dragon Oil, told Emirates Business. "Indeed, we are proud of having Enoc as a majority shareholder that enables us to leverage the strong relationship between the UAE and Turkmenistan. Enoc's support has played a key role in positioning Dragon Oil in where it is today."

He said the company is planning to adopt a Bermuda incorporation this year, Dragon Oil would remain headquartered in Dubai.

ADIC plans global property fund

State-owned Abu Dhabi Investment Co (ADIC) is planning to launch an international property fund, along with four other funds, to invest in firms whose valuation has been affected by the global financial crisis, its head of private equity said.

“The next two years will provide a fantastic time for private equity, a window of opportunity that you will not see in a few years to come,” Samir Assaad Samaan told reporters at a private equity forum in Abu Dhabi.

Abu Dhabi has amassed an enormous cushion of surplus oil export revenues during a six-year rally in crude prices and the government is looking abroad for investments.

Dubai focuses on local economy, investments abroad not a priority

Acknowledging the hard and real impacts of the current crisis, Dubai is now revisiting its growth targets, focusing its eyes on domestic matters and most of all – is learning from its shortcomings.

"There are certain areas that we need to improve on," Nasser Al Shaikh, Director General of Dubai's Department of Finance told Emirates Business. "The real estate sector, for example, has witnessed a huge growth after launching leasehold and freehold. We did not have an authority to look at and regulate that sector. Real Estate Regulatory Authority (Rera) was just established a couple of years ago but we did not have all the legislations in place.'

"If you look at Rera, they have quite a number of new pieces of information being launched in the past six months to regulate the real estate market," he added. "This is one of the areas that we can develop because the cycle of real estate is becoming one of the most important GDP contributors here. We need better regulations. And I think Rera is already taking those steps."

UAE firms' profit decline lowest in GCC

The global financial turbulence depressed the profits of most companies operating in the Gulf by 19.8 per cent in 2008 but the telecommunication sector emerged unscathed, according to a regional bank study.

Qatar, one of the fastest growing economies in the world, was an exception as its companies performed even better while the UAE firms recorded the lowest profit decline among the other members of the Gulf Co-operation Council (GCC), showed the study by the Kuwaiti-based Global Investment House (GIH).

Kuwait suffered most, with its companies reeling under a staggering profit decline of nearly 92 per cent.

Second tranche of Dubai $20bn bond this year

Dubai has already distributed more than half of the funds from its $10bn bond and will be issuing the second $10bn tranche within this year, a top government official told DubaiEye Radio, which is operated by Arabian Radio Network, an Emirates Business sister company.

Nasser Al Shaikh, Director General of Dubai's Department of Finance, said the $10bn bond, fully subscribed by the UAE Central Bank in February, has been loaned to several quasi-government companies at a marginal interest rate.

"All the support that we extend to is in the form of loans, the tenor of which is a bit shorter than our commitment to the central bank to ensure that we have the money paid to us before we repay it to the central bank. The interest rate is four-plus per cent, which is just a margin addition to cover our administrative costs," Al Shaikh said.

Amlak, Tamweel to restart lending

The federal government is planning to reactivate Amlak and Tamweel as two independent companies before they can be merged as one entity, Emirates Business has learnt.

In an interview yesterday, Nasser bin Hassan Al Shaikh, Director-General of Dubai's Department of Finance and Chairman of Amlak Finance, said the priority of the federal government is to reactivate the two companies so both firms can start to extend mortgages once again before working on the merger.

"As far as I know, their intention is to reactivate the two companies and then work on the merger," he said. "They don't want to merge the two companies before they activate them, which makes sense because Amlak and Tamweel – which represent more than 60 per cent of the mortgage industry in Dubai – are very important to the real estate."

Tuesday, 21 April 2009

Sabic sees first quarter loss

Saudi Basic Industries, the world’s largest petrochemical company, reported worse than expected first quarter results on Tuesday which it attributed to tumbling prices for its products worldwide and to the write-down of goodwill on a 2007 purchase.

The company, the largest listed on the Saudi stock exchange, said that it had lost SAR974m ($259.3m) in the first quarter compared to a profit of SAR6.92bn in the same period last year. The loss was bigger than analysts’ expectations.

Mohammed bin Hamad al-Mady, Sabic’s CEO, said that end-users were having difficulty in obtaining financing and that global slowdowns in the automobile, electronics and building sectors had affected demand for petrochemicals generally and for plastics in particular.

End of Economic Gloom? Not as Early as You Wish. Roubini’s latest Article for Project Syndicate (Registration required)

Mild signs that the rate of economic contraction is slowing in the United States, China and other parts of the world have led many economists to forecast that positive growth will return to the US in the second half of the year, and that a similar recovery will occur in other advanced economies.

The emerging consensus among economists is that growth next year will be close to the trend rate of 2.5 per cent.

Investors are talking of 'green shoots' of recovery and of positive 'second derivatives of economic activity' (continuing economic contraction is the first, negative, derivative, but the slower rate suggests that the bottom is near).