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Thursday, 15 January 2009

GCC Stock Market Review for 2008


The year 2008 was a difficult year for the markets. Though during the first half of the year, the markets performed well, they succumbedto financial crisis during the second half of the year. UAE market declined the most among the regional markets
as the NBAD Index was down 56.6% YoY to reach 5,995.0 points. This was closely followed by Saudi Arabia market. The Tadawul All Share Index ended the year 2008 at 4,803.0 points, thereby recording a decline of 56.5% YoY.

Roubini: Let me count the ways it was a sucker’s rally

Here it comes…. the latest bit of insight from ‘Dr. Doom,’ a.k.a Nouriel Roubini.

And, of course, he was right again — it’s all been a sucker’s rally:

"I have been predicting for a while that the most recent bear market sucker’s rally would lose its steam and — like the previous bear market rallies in the last 18 months — US and global equities prices would head again towards new lows. Let me now explain why…"

Firstly, let’s not forget, Roubini has always said we are facing the worst US recession in the last 50 years and the worst synchronised global recession in decades.

Griffin Ottoman Fund : December 2008

UCITS III, Eastern Europe & MENA Region long only

"Markets drifted lower in December amidst lower trading volumes ahead of the holiday season. Our relatively defensive positioning of the Fund with its 24% cash position and index hedges helped mitigate the decline in the Funds NAV per share to 4.2%."

"Russia and Turkey were the worst performing markets in Emerging Europe in 2008, losing 73% and 61% (in Euro) respectively. While we expect more negative macroeconomic data to be released in the first quarter of 2009 both in emerging as well as developed markets, we do think that a lot of the pessimism has already been priced in and that current valuations should open up attractive investment opportunities on a selective basis."

EPFR Global Fund Data News Release

Some funds ring in the New Year with inflows in first week of 2009

At first glance the flows into EPFR Global-tracked funds during the week ending January 7 suggest that little changed during the holiday season. On the heels of a year where investors pumped $422 billion into Money Market Funds and nearly pulled US Equity Fund flows back to neutral during the fourth quarter, 2009 started with Money Market Funds absorbing another $37 billion.

A closer look at the numbers, however, suggests that investor sentiment continues its slow thaw. High Yield Bond Funds had their best week since EPFR Global started tracking them weekly in 4Q04 as these funds took in $910.9 million, or 1.53% of their total assets.

EPFR clients received the data on which this summary was based on Jan 7.
To access fund data samples or inquire about subscribing to EPFR products, click here

For sales inquiries, please contact Simon Ringrose:
Tel: +1-617-864-4999 ext. 30 | Email:

Investors pull $150bn from hedge funds

Investors withdrew close to a net $150bn from hedge funds last month despite moves by dozens of funds to halt or suspend redemptions. The record December figure, equivalent to about 10% of industry assets, extends the run of outflows to four consecutive months and has increased the total net outflow for 2008 to $200bn. The size of the once lucrative industry has almost halved in the past year, to $1,000bn under management, according to TrimTabs Investment Research and Barclay Hedge. Conrad Gann, chief operating officer of TrimTabs, said he foresaw more redemptions in the first quarter of 2009.

Dubai's sand castles crumble amid credit crunch

There was always something surreal about Dubai’s fantastic development plans. Skyscrapers were rising in the desert faster than anybody imagined was possible. While some wondered about such rapid growth, others marveled at the plucky Dubaians’ go-get attitude. Nothing was considered out of reach; the sky was the limit, literally--the tallest building in the world, the most expensive hotel suites with helicopter landing pads, manmade islands, huge shopping malls, indoor sky slopes and ice skating rinks in the desert--all meant to attract foreigners and their investments. And they came, by the hundreds of thousands. Dubai was nicknamed, “Do Buy”!

Insight: The US should create a SWF

Amid a financial crisis of historic proportions it may seem odd to focus on a long-term problem. However, extraordinary times offer opportunities to transcend usual narrow interests and create institutions of enduring value. The creation of a US Sovereign Wealth Fund (SWF) represents such an opportunity.

The US should use assets it has already acquired and others it will add in the future, from the Troubled Asset Relief Program as well as other sources. The goal should be to meet the shortfall of pension provision from 2030, when the proportion of retirees will be close to 25 per cent of the population aged 16 and over. One mandate could be to either replace or augment the Social Security Trust Fund and the Federal Old-Age Survivors Insurance Fund, resulting in several positive outcomes both in the short- and long-term.

Global sukuk market down but not out

The long-term prospects for global sukuk issuance are still good despite a dramatic decline in volumes last year due to constrained global debt markets, says Standard & Poor’s Ratings Services.

“The decline in sukuk issuance in 2008 was as a result of global market turmoil, drying up of liquidity, widening of credit spreads, and investors’ wait and-see attitude,” said Mohamed Damak, a credit analyst at Standard and Poor’s, in a report on the long-term outlook for the sukuk market.

He added that part of this decline could also have been caused by comments about the Shariah compliance of some sukuk by the Accounting and Auditing Organisation for Islamic Financial Institutions.

Outlook of UAE banks 'negative'

Moody’s, the credit ratings agency, yesterday issued its first negative outlook on UAE banks since its began reviewing them a decade ago.

Analysts are concerned that loans to small-scale private developers may pose the single largest threat to the health of the banks, which may suffer in a prolonged property market correction.

“A lot of these developers have been involved in speculative financing, they were selling off-plan... and I see some of them going bust,” said John Tofarides, a Moody’s analyst, in his report.

Iran and China sign $1.7bn oil contract

Iran on Wednesday signed a $1.7bn oil contract with China bypassing international sanctions over the country’s nuclear programme.

Jiang Jiemin, the president of CNPC, China’s largest oil and gas company, and the head of National Iranian Oil Company, Seifollah Jashnsaz, signed the contract to develop part of North Azadegan oil field.

Iran’s energy sector urgently needs foreign investment to maintain production both to meet increasing domestic consumption and to maintain petrodollars in an oil-dependent economy. However, international sanctions have hindered major projects in Iran which sits on the world’s second largest oil and gas reserves.

Attraction of fixed income market grows

Gulf investors have often been accused of relying on a duopoly of asset classes, alternating between real estate and equities depending on how the mood takes them.

But with both investment avenues looking distinctly shaky, bankers and analysts are saying cannier investors should consider an asset class that may be the first to flicker back to life in 2009 – fixed income.

Debt may have unsavoury connotations in a Muslim region, and, thanks to high hydrocarbon revenues in recent years, local governments and companies have often had little reason to borrow.

Arabtec forecast to weather the storm

When Riad Kamal, a Palestinian engineer, arrived in Dubai in 1974 the first project he worked on was the Pearl Building, a 17-storey tower that was then the tallest building in the commercially minded but still unknown trading hub.

More than three decades later, Arabtec, the company that Mr Kamal founded and has nurtured into one of the leading construction businesses in the United Arab Emirates, is due to complete the Burj Dubai, the world’s tallest building. In the first nine months of last year, Arabtec’s profits more than doubled to Dh761m ($207.3m) compared with the same period the previous year.

However, the completion of the Burj Dubai will come at one of the most trying periods not just for the UAE, but also for Dubai and Mr Kamal’s construction company. The credit crunch has undermined the previously booming property market and caused developers to cancel several projects and review all future plans.