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Thursday, 8 January 2009

Morgan Stanley Launches Open-Ended Saudi Arabia Equity Fund

DUBAI (Zawya Dow Jones)--Morgan Stanley Saudi ArabiaMorgan Stanley Saudi Arabia said Wednesday it has launched an open-ended fund to invest in Saudi listed equities and initial public offerings in the Kingdom.

The Morgan Stanley Saudi Equity Fund offers Gulf Cooperation Council (GCC) investors exposure to the Kingdom through investment in Saudi Arabian equities, providing long-term capital appreciation and growth.

Gazprom battles to restore reputation

As the dispute between Russia and Ukraine appeared to be edging towards resolution, the cost of the showdown for Gazprom, Russia’s state-controlled gas company, was already apparent.

Gazprom has been caught in a very difficult position.

Katinka Barysch says Russia and Ukraine are equally to blame

Video from FT.COM

Reasons to be upbeat amid the gloom

Last year was a torrid one for Gulf investors, who saw $535bn of stock value evaporate from local markets. They now face a dramatically different financial landscape, but some may glimpse opportunities amid the detritus.

According to Markaz, a Kuwaiti investment bank, more than a third of companies in the Middle East and North Africa are now trading below book value. In the Gulf, the average price of equities has dropped to 1.3 times book value, from 3.7 times at the start of last year. Price to earnings ratios have slumped – sometimes to low single digits.

MSCI Barra is also considering including the Qatari, Kuwaiti and United Arab Emirates stock markets in its important emerging markets index this year, which could cause passive index-tracking money to flood in. Though economic growth forecasts for the Gulf have been slashed, no one is predicting any recessions.

Insolvency laws face test

In the paternalistic societies of the oil-rich Gulf, the social contract between rulers and subjects goes beyond legal and financial perks. Governments have also traditionally frowned on the idea of high-profile companies going bankrupt.

As the region seeks to chart a path through the global financial storm, such quaint ideas of state support for the private sector will be tested, lawyers say.

“There is the possibility of the first major insolvency [this] year given the climate,” says Bruce Embley, Freshfields’ Middle East corporate practice head. “These will be very interesting test cases.”

Abu Dhabi outlines plan to cut oil dependency

Abu Dhabi, the oil-rich capital of the seven-state United Arab Emirates, is targeting an annual economic growth rate of 7 per cent over the next six years as it strives to diversify away from hydrocarbons.

From 2015 onwards economic growth will slow to an annual 6 per cent, and by 2030 the small but wealthy emirate expects to have quintupled gross domestic product, according to a government economic programme released on Wednesday.

Dubai diversification leaves it well placed

After more than a decade of double-digit economic growth, Dubai, the financial hub of the Arab world, is feeling the pains of the global financial plunge. The city had an easy ride when oil prices were sky-high, world markets were supportive and foreign investment was lubricating its wheel of fortune.

Now that credit is tight, the durability of the Dubai project is being put to the test.

In spite of initial denial, the impact of the global credit crunch is proving pervasive and has visibly altered confidence in the emirate. The once-booming real estate sector is shaky; the tourist business is losing momentum; and the financial sector and the stock market are racked by negative sentiment. Even the formidable retail sector and the vibrant import/export and re-export trades are not looking reassuring.

Funds of funds have to work harder

“For Monica and Walter Noel, their hilltop retreat on Mustique is all about the mix – of family, friends, great times and a sexy global design style,” declared Town & Country in 2005 about the founder of the hedge fund group, Fairfield Greenwich, his Swiss-Brazilian wife and their five photogenic daughters.

Three years earlier, the Noels were photographed for a Vanity Fair article called “Golden in Greenwich”. The piece marvelled at their lifestyle, with the “glamazon” daughters, having married globe-trotting financiers, living in London, New York, Rio de Janeiro and Lugano.

It was a fairy tale existence, in more ways than one. The Noels’ millions, it turns out, were largely derived from Bernie Madoff’s alleged $50bn (€36bn, £33bn) Ponzi scheme. The fees to investors on Fairfield’s biggest hedge fund, the Madoff- managed Fairfield Sentry, produced two-thirds of Fairfield’s $250m revenues, and $200m profits, in 2007.

Biased rankings partially to blame for crisis

Many investment decisions in global financial markets were made based on rankings made by international rating agencies, which are recognised establishments.

In line with these rankings, some shares sky-rocketed, while others plunged, as if rating agencies have a magic wand that enables them to control stock markets all over the world.

However, the global financial crisis revealed that such rankings were custom-made to match the interests of certain financial institutions in a way that enabled them to achieve biggest share of profits.

Noor puts overseas expansion on hold

Dubai: Dubai's Noor Islamic Bank has halted its overseas expansion plans, citing difficult global economic conditions and a tight credit market.

The bank, launched with more than $1 billion in capital and ambitions to become a major global Islamic banking player, would however continue to expand in the home market, chief executive officer Hussain Al Qamzi said on Tuesday at the launch of the group's two Islamic insurance business units.

"There is a crisis. This has affected the whole world. We are going to be affected because the whole baking sector is affected," Al Qamzi told reporters, and added: "We have put on hold some of our overseas expansion plans."

Shuaa delists shares

Dubai: Shuaa Capital, the leading financial services institution in the Gulf Cooperation Council (GCC), on Wednesday confirmed that its shares have now been delisted from the Kuwait Stock Exchange (KSE) with effect from 1 January 2009, pursuant to the decision taken by the company's shareholders in June 2008.

All shares of ShuaaCapital will now be traded on the Dubai Financial Market (DFM).

Dirham-dollar swap brings down rates

Abu Dhabi: Inter-bank interest rates have dropped considerably since the Central Bank launched the swap facilities (US dollar/UAE dirham) last month, the UAE Central Bank has announced.

In a statement issued yesterday, the Central Bank said although the drop was more obvious in short-term interest rates (one month), long-term (2 to 12 months) interest rates also saw some decline.

The statement said that the one-month interest rate dropped from 4.71 per cent at the end of October to 4.4 per cent by the end of December and fell further to 3.8250 per cent on January 7.

Abu Dhabi's new growth path

Abu Dhabi: The Abu Dhabi government has announced a long-term plan that would turn the emirate into a knowledge-based economy and reduce its dependence on the oil sector as the main source of economic activity, the Emirates News Agency (WAM) reported on Wednesday.

The plan is in line with the vision of President His Highness Shaikh Khalifa Bin Zayed Al Nahyan.

The document, titled Abu Dhabi Economic Vision 2030, contains a comprehensive plan to diversify the emirate's economy and achieve a noticeable growth in the contribution of non-oil sector to the gross domestic product (GDP) of the emirate by 2030.