Google+ Followers

Thursday, 22 January 2009

China's economic growth eases sharply

HONG KONG (MarketWatch) -- China's economy grew at its slowest pace in seven years in the fourth quarter, as slumping exports put the brakes on the world's fastest-growing major economy.
Gross domestic product expanded 6.8% in the October-to-December period, compared to a year ago, easing from a 9% expansion in the preceding three-month period, according to data released by the National Bureau of Statistics Thursday. The result was in line with a median estimate for a 6.9% expansion of 13 economists polled by Dow Jones Newswires.
For the full calendar year GDP expanded 9%, cooling from a 13% expansion in 2007.

The Eurekahedge Monthly

Welcome to the latest Eurekahedge monthly newsletter, which includes proprietary research on hedge fund trends, asset flows and performance. We now compile all in-house research into the new The Eurekahedge Report. Highlights from this month’s report:

Hedge fund assets fell US$380 billion or 20% in 2008, from just under US$1.9 trillion to just over US$1.5 trillion
September/October/November – the worst 3-month period – accounted for 85% of the fall at US$320 billion
Hedge funds returned 1% on average in December, wrapping up a tumultuous year at -12.3%

Banks lobby for eastern Europe funds

Leading international banks operating in central and eastern Europe have clubbed together to lobby the EU and the ECB to extend their anti-crisis policies to ease the credit crunch in the region. The group of nine, which wants action to ease liquidity shortages and revive lending, is urging Brussels and the ECB to extend support beyond the EU’s new member states, such as Poland, to prospective members, such as Serbia, and to Ukraine, which has few prospects of joining the bloc soon. Herbert Stepic, chief executive of Raiffeisen International, the Austrian bank, who brought the group together, said any action to support banks should not be limited to western Europe.

India’s Larsen frontrunner for Satyam

Indian engineering and construction firm Larsen & Toubro is likely to present a revival plan to the board of fraud-hit Satyam Computer Services, reports Reuters citing local media reports. Larsen was a front-runner for acquiring Satyam, and institutional investors in Satyam such as Life Insurance Corporation and ICICI Prudential Life Insurance were supporting its bid. Larsen, which holds about 4% in Satyam, did not rule out the possibility of an alliance with Satyam once the investigations into the company’s accounts had been done

Deyaar halts unsold projects

DUBAI // Dubai developer Deyaar has put all its unsold projects on hold due to the global financial turmoil but still expects to post record profits for the fourth quarter, its chief executive said today.

Markus Giebel told reporters the company had put “many projects” on hold adding “it’s wrong to deliver units which have not been promised to the customer”.

Mr Giebel did not give figures when asked about his profit forecast for 2008 and the fourth quarter, but said: “The increases are substantial ... [We have a] record breaking quarter and year.”

Finance sector moves to stop brain drain

DUBAI // Financial sector employees who lose their jobs in the credit crunch should be given help to find another post or a place on a retraining programme to help the UAE avoid a brain drain, business leaders said yesterday.

The Dubai International Financial Centre (DIFC), the financial free zone in Dubai, said it would work with those who lost their jobs to secure a new role with another financial company, or place them in educational institutions on new resident visas until they can find a new full-time job.

“If you see what happened with the Lehman Brothers – by placing employees in other companies and supporting them you will see that talent and skill are an important factor in turning the situation around,” said Nasser al Saidi, the centre’s chief economist, on the sidelines of The World in 2009 executive forum in Dubai yesterday.

Job losses threaten economy

Unemployment is one of the major threats to the economy, as layoffs spread from property and financial services to other sectors, analysts say.

As the majority of the labour force is made up of foreign nationals, they fear rising job losses could lead to a population outflow as expatriates made redundant are required to leave the country.

However, Sultan Nasser al Suwaidi, the Central Bank Governor, said the UAE was not headed for a recession, but instead looking at posting “low single-digit growth in 2009”. He said the Central Bank might ask local lenders to set aside funds for potential write-downs, according to Reuters.

Markets at four-year low

Stock markets in Abu Dhabi and Dubai slumped to their lowest levels in more than four years yesterday after oil dipped below US$33 and poor fourth-quarter results confirmed the global financial crisis is hurting the region.

The sell-off was triggered by Saudi Basic Industries Corporation (SABIC), one of the world’s largest petrochemical firms, which reported a 95 per cent drop in fourth-quarter profit. SABIC shares tumbled 9.8 per cent, leading declines on all seven bourses in the Gulf.

“SABIC is a bellwether stock, not only in Saudi Arabia but for the entire Gulf, and markets will take a cue from it,” said Shakeel Sarwar, the head of asset management at SICO investment bank, based in Bahrain.

Indian regulators shake up share rules in wake of Satyam scandal

Controlling shareholders in Indian companies will be forced to reveal borrowings made against their own shares under reforms launched by regulators that could provide more transparency about how India's most powerful business families control their empires.

The move by the Securities and Exchange Board of India to make it mandatory for the controlling shareholders of companies to disclose when they pledge shares as collateral to lenders is the biggest capital reform since the Satyam scandal erupted this month.

"Such disclosures shall be made as and when the shares are pledged as well as by way of periodic disclosures," Sebi said.

The spy who came over the fold

After the tragic events of the week, Aleksander Lebedev was not inclined yesterday to reflect on his purchase of 75 per cent of the UK's Evening Standard newspaper. "My thoughts are elsewhere right now," he said when reached by phone.

On Monday, a lawyer for Moscow's Novaya Gazeta - owned by Mr Lebedev - was shot dead in broad daylight in Russia's capital. A trainee journalist was also killed.

Mr Lebedev said he would have a different set of challenges with the loss-making London based paper: "My commitment is that for quite some period of time I will make sure that the losses are not hurting the newspaper."

Rusal considers seeking 'standstill' debt deal

Oleg Deripaska's UC Rusal is considering seeking an agreement from its more than 70 foreign banks to give it time to restructure nearly $17bn in debts, people familiar with the situation said yesterday.

Rusal is weighing up seeking a "standstill" agreement as Mr Deripaska's aluminium group grapples with billions of dollars in debt and plummeting revenues due to falling aluminium prices.

A standstill is an agreement by lenders not to take any unilateral action to enforce any of their debt claims against the company.

Sovereignty is crucial to single currency plans

When I first began analysing Gulf banks more than 20 years ago, I wrote on a piece of paper the exchange rates of the six Gulf currencies against the dollar and stuck it in front of my desk. With the exception of the Kuwaiti dinar, I could use those same rates to convert the currencies today.

Even the Kuwaiti dinar, which for most of the last 20 years has been managed against a basket of currencies, has remained within about 8 per cent of an average rate since the mid-1980s. (The dinar was pegged to the dollar for three and a half years from 2003 to 2007.)

So I am always rather bemused when the Gulf states speak of their plans for a single currency. Five out of six of them already have a single currency – it is called the dollar.

State interventions fail to pay off

When Kuwait’s government – under pressure from irate, day-trading citizens – announced late last year that it would support domestic equity prices, a Kuwaiti banker observed ruefully: “Moral hazard doesn’t exist in the Gulf.”

Oman would seem to agree. Last week the government announced it would proceed with an OR150m ($389m) stock market stabilisation fund to offer succour to the Muscat Stock Exchange, which lost 41 per cent last year.

Qatar also decided to intervene last year – albeit in a roundabout way. The Qatar Investment Authority, the country’s sovereign wealth fund, said it would buy stakes of up to 20 per cent in all the country’s banks through fresh share sales, thereby injecting extra capital for lending and extending its gold-plated sovereign guarantee across the sector.

Gulf renewables race hots up

It may have been overshadowed by events in Gaza and by the US presidential accession ceremony in Washington, but there was no disputing the seriousness of purpose at Abu Dhabi’s second world energy summit (pictured above) this week.

Abu Dhabi announced the recipient of a $1.5m prize for sustainability, which went to a subsidiary of a Bangladeshi micro-finance house. The city also committed itself to having 7 per cent of its energy coming from renewable sources by 2020. And a subsidiary of Mubadala, the owner of Abu Dhabi’s Masdar development, announced an environmental research and development tie-up with General Electric of the US

The centrepiece of the country’s claims to leadership in sustainability, though, centre on the Masdar initiative.

Gulf handicap

After a period of oil-soaked growth, Gulf economies increasingly resemble a Silk Road dromedary: ugly, stubborn and slow.

It’s not just falling oil prices that are responsible. Take the United Arab Emirates. Its $270bn economy is also heavily reliant on construction and real estate, two of the industries worst hit by the credit crunch. In Dubai, developers last week called a 12-month halt to initial work on the Nakheel Tower, a planned kilometre-high skyscraper, citing “current market trends”. House prices in the emirate fell 8 per cent in the fourth quarter, according to Colliers International, a real estate consultancy. Abu Dhabi, Dubai’s bigger, wealthier neighbour, has also seen job cuts, not just in construction and property but in financial services too. Mounting gloom recently led Standard Chartered, the UK bank, to cut its full-year UAE growth forecast to just 0.5 per cent from an earlier 2.7 per cent estimate – well below the 7 per cent rate of recent years.