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Friday, 6 February 2009

Flows turn positive for emerging market equity funds

Funds dedicated to emerging market equities registered small inflows during the week to Feb 4, after two weeks of redemptions worth $1.6bn, data from EPFR show.

But investors continued to shun EMEA funds, which have had 8 unbroken months of redemptions, according to Merrill Lynch’s Michael Hartnett.

Flows for developed markets were also negative. Western European funds and US funds posted outflows equivalent to 1.40 per cent and 0.15 per cent of assets under management respectively, EPFR said. Japan funds registered outflows equivalent to 1.12 per cent of assets.

Insight: Hedge fund haters have a point

Walk around London’s Mayfair or New York’s Midtown at the moment and – if you can avoid tripping over unemployed bankers – you can listen in on plenty of conversations about kicking hedge funds while they’re down.

This is not about punishing flashy fund managers for their worst ever year, although there is no shortage of schadenfreude. Rather, investors are riled about fees, the famed “2 and 20” – 2 per cent a year and 20 per cent of profits – the standard hedge fund charges.

It is now commonly accepted that fees will fall, as hedge funds’ demands for capital exceeds supply from investors, and market forces work their magic. In fact, fees are already falling at many funds, something Bentley dealers and yacht brokers should be watching closely.

Ho Ching to step down as head of Temasek

Temasek Holdings on Friday named Chip Goodyear, the former head of mining giant BHP Billiton, as its new chief executive to replace Ho Ching, the wife of Singapore’s prime minister.

The unexpected transition at one of the world’s biggest sovereign wealth funds indicates that Temasek is focusing its future investment strategy on natural resources rather than financial services, where the Singapore state investment company has lost billions of dollars in the past year.

Two tales of a city — and Dubai’s luxury car giveaway

Could this be the city of uber-luxury hotels, the place with a reputation for huge salaries and extravagant living?

As highlighted in a (much-emailed) report in The Times on Friday about abandoned luxury cars in Dubai, the gold-plated gloss is peeling off this high-rolling expat oasis very quickly.

For many expatriate workers in Dubai it was the ultimate symbol of their tax-free wealth: a luxurious car that few could have afforded on the money they earned at home.

Tables turned: Latin America’s lesson for west

Here is a parlour game of political identification.

Start with country A. It boasts a free-trade policy to make it one of the world’s most open economies. A run of budget surpluses has wiped out its national debt. It has a privatised pensions system and education vouchers that allow the affluent to top up state provision. Fiscal responsibility is enshrined in law.

Now consider country B, a similar-sized emerging economy. It takes pride in an aggressive anti-poverty campaign. The proportion of young people attending university has quadrupled. Public health provision has brought strong gains in life expectancy. The state guarantees a minimum income for the elderly. A publicly owned bank is mitigating the effects of the credit crunch.

Battle erupts over budget crisis

Russia on Thursday postponed a government debate about slashing the budget as a political battle about how to manage the economic crisis erupted into a public spat.

Arkady Dvorkovich, a top presidential economic adviser, on Thursday batted back suggestions made earlier this week by a leading liberal, Igor Shuvalov, first deputy prime minister, that the budget would be cut to reduce the fiscal deficit and conserve Russia’s dwindling currency reserves.

Mr Dvorkovich told investors on Thursday the budget deficit would be fixed at 6.1 per cent of gross domestic product or more, and insisted the budget would continue to play a role in stimulating the economy. While some expenditures would be reduced, social spending would be increased.

Islamic debt funds launched amid issuance doubts

A number of Dubai-based banks and asset managers are launching funds to invest in Islamic debt, hoping to capitalise on de-pressed prices and attractive yields.

Emirates NBD, Mashreq Capital and Algebra Capital - among others - have already or are in the process of raising $50m-$100m (€39m-€78m, £34m-£69m) in capital from individual and institutional investors, as regional investors are expected to eye the returns and relative safety of Islamic fixed income, or sukuk.

"Sukuk look very interesting," said Michael Samaha, managing director of business development at Morgan Stanley in Dubai. "They're trading at spreads we couldn't have envisaged a while ago."

Focus on Dubai as Abu Dhabi looks to its own

A unilateral move by Abu Dhabi, oil-rich capital of the United Arab Emirates, to recapitalise its own banks has sparked fears that it may hesitate to support Dubai, its fellow emirate and commercial rival, as the credit crunch worsens.

A senior Abu Dhabi official said Wednesday’s decision to inject Dh16bn of capital into its five banks, but ignore other banks of the seven-emirate federation, was meant to add an addition layer of protection for local houses.

Bankers warned on Thursday that Abu Dhabi’s go-it-alone attitude could mean that the federal government may not be as willing as expected in rescuing Dubai entities which face default.

TPG cuts distressed funding

TPG is scaling back the fund it raised to invest in distressed financial companies – a move highlighting the dramatically different strategies that private equity firms are employing in response to the banking crisis.

TPG originally raised $6bn to invest in distressed financial companies but has decided to return 25 per cent of that money to investors, its investors say.

The decision is particularly striking because private equity competitors such as Carlyle are raising fresh funds for the same purpose and industry leaders – including Christopher Flowers, the private equity investor – have been promoting the idea that bargains exist in the ranks of bombed-out banks and lenders.

Dubai debt risk widens after Abu Dhabi bank injection

Dubai: The cost of insuring Dubai's debt with credit default swaps increased on Thursday after an Abu Dhabi plan to inject 16 billion dirhams ($4.36 billion) into five of its banks further shook confidence in Dubai, bankers said.

The Abu Dhabi goverment announced on Wednesday it would lend cash to banks in the emirate, including National Bank of Abu Dhabi (NBAD), via Tier 1 capital notes to bolster confidence as loan defaults mount.

The move left markets wondering whether similar steps would take place in Dubai, where banks are struggling as the emirate's once-booming property sector faces a sharp correction that has prompted developers to scale back expansion and cut jobs.

Full disclosure needed for investor confidence

Confidence is the glue that sticks capital markets together. But investor confidence has dwindled to crisis levels and local markets have nearly screeched to a halt. While the US S&P500 Index was hit hard, with stocks crashing by 38.6 per cent last year, the UAE was hit harder. The Shuaa Capital UAE Index was down 66 per cent although earnings growth was estimated at 20 per cent last year. What can we make of this?

Of course, the global financial crisis has taken its toll on our market. However, many investors rightly attribute the lack of corporate transparency and disclosure, as well as companies “managing” their earnings, to the larger share price falls and increased volatility in the UAE markets than on western exchanges. This has also served to decouple company earnings from valuations.

Court aims to spread its influence

DUBAI // Sir Anthony Evans walks into one of the conference rooms at the Jumeirah Emirates Towers hotel on Sheikh Zayed Road. With evident satisfaction he gestures towards the 110-acre commercial free zone that is the Dubai International Financial Centre.

“It was just a fenced-in patch of desert when I first came here,” he says. “It’s incredible how it’s all come up in such a short time.”

The same could be said for the rapid development of the whole of the UAE, but in Dubai perhaps nothing symbolises that pace of change so much as The Gate, the imposing building at the heart of the Dubai International Financial Centre, that has so dramatically altered the skyline.

First Persia Equity Fund February 2009 report

The First Persia Equity Fund is a Cayman Islands domiciled closed end
investment company investing in public equities listed in the Tehran
Stock Exchange. It is the World’s only investment fund licensed for
foreign investors by the government of the Islamic Republic for
investment in the Iranian stock market.

PDF copy is available from , alternatively leave a comment with contact details.

The future of the Emirates' capital

Oil-rich Abu Dhabi may have become an opulent oasis in the desert, but the forest of high-rise buildings that scrape its perpetual blue sky only hint at things to come.

This capital of the United Arab Emirates (UAE), a fishing and pearling village of mud and palm-frond huts until oil was discovered here 50 years ago, may lack the millennia of colourful history and relics of Middle Eastern cities such as Cairo and Beirut.

But it aims at becoming one of the region's major cultural centres, with future projects costed in the hundreds of billions of dollars.

Global's UAE Weekly Report - February 5, 2009

"In our effort to provide the investment community, economists and researchers with an array of market reviews, we at Global Investment House are proud to present “The Weekly report on UAE Stock Markets”. The report views the latest developments in Abu Dhabi Stock Market (ADSM) & Dubai Financial Stock Market (DFM), trading activities, indices performance and corporate news. We hope you find this publication useful.

In order to view the full report kindly click on the link below:

"Weekly UAE Market Report"

To view more reports on the Kuwaiti and other markets, please visit our website:"