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Thursday, 12 February 2009

UAE Weekly Report - February 12, 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 headline."

Kuwait's Global reaches seized Jordan deposits deal

KUWAIT, Feb 12 (Reuters) - Kuwait's Global Investment House (GLOB.KW) said on Thursday it had reached an agreement with Jordan's Housing Bank for Trade and Finance THBK.AM to release bank deposits seized by a court over a loan dispute.

Global, Kuwait's biggest investment bank, said earlier a Jordanian court had halted the operations of its Global Jordan unit and seized its deposits in local banks after a dispute over a loan from Housing Bank.

A Global spokesman said the firm had reached an agreement with the bank to release the deposits in return for unspecified collateral, clarifying earlier statements which had referred to assets.

The Russian market: why is it so unbelievably cheap? (Registration may be necessary)

“We find it hard to understand for example, why stock markets such as Pakistan have higher valuations than Russia. And it is equally hard to understand why Russian companies in general have much lower valuations than corresponding companies in other countries.”

Peter Elam HÃ¥kansson

Kuwait Stock Exchange Performance for 2008 - February 2009

"In continuation of Global Investment House coverage on the Kuwait Stock Market, we have come out with Kuwait Stock Exchange Performance 2008

The year 2008 is considered one of the most turbulent years in stock exchanges around the world. Starting with the credit crunch and ending with the bankruptcy of Lehman Brothers, many similar events stirred a hornet’s nest all around the world. Even Kuwait, which was thought of being alienated from the world crisis, was negatively affected. Kuwait Stock Exchange (KSE) ended the year with the Global General Index declining to 206.46 points from 377.86 points recorded on Dec.31 2007, a decrease of 45.37% since the start of the year. Hence, the market also ended with a market capitalization of KD33.43bn from KD57.46bn in year-end 2007, a 41.82% decline. 2008 was considered a very bad year for the KSE in terms of values, trades and volumes. The downturn was broad based and various sectors performed poorly, though they all showed varying levels of downturn. The Insurance sector was the best performer last year, limiting its losses to a decrease of 9.77% Y-o-Y, to wrap up the Global Insurance Index at 59.90 points, as opposed to the Investment sector, which declined substantially by 56.97% to reach 174.28 point by the year end 2008. 2009 will be a challenging year for the market. The KSE is expected to become range-bound this year before going back to the bullish era. Also, revenues and profits will play a major role in determining the directions for the stock market. In 2009, any positive news will improve sentiments gradually, with oil prices settling above US$40 and government finances still very strong. The KSE is passing through a worldwide correction before going back to high levels.

In order to view the full report, kindly click on the headline."

Dubai Firms Face Moody’s Cut If Abu Dhabi Acts Alone

Feb. 12 (Bloomberg) -- Moody’s Investors Service may downgrade banks and government-owned companies in Dubai, the second-largest sheikhdom in the United Arab Emirates, if oil-rich Abu Dhabi limits its support to its own institutions.

“If a trend of selective treatment within the federation becomes discernible, Moody’s stands ready to reduce its high support assumptions for banks and government-owned companies in other emirates outside Abu Dhabi,” Philipp Lotter, the Dubai- based analyst at Moody’s, said in a report on the region’s credit outlook released today.

Abu Dhabi, which holds almost all of the U.A.E.’s oil, said Feb. 4 it would pump $4.4 billion into five local banks. The next day, the cost of protecting against losses on debt sold by Dubai companies jumped to a record on concern that Abu Dhabi may not rescue Dubai firms that are struggling to refinance debt maturing this year. Dubai’s debt is estimated at 90 percent of its gross domestic product, according to the International Monetary Fund.

OCCO Eastern European Fund 30th January, 2009

"The Fund generated a 3.4% positive return over the month despite weak regional and global markets. Russia was the biggest casualty at a market level with the MSCI Russia index falling by some 11% over the month. Performance seems to be back on track, with the fund returning positive performance despite difficult market conditions (up in November, December and January). Clearly the environment we are operating in has changed, but this also presents us with new opportunities. Our strategy does not require markets to rise to be profitable, but does need markets to distinguish between stocks and take fundamentals into account to some degree, which we have started to see again. We are finding that being in touch with our companies on a very regular basis is where our edge lies more then ever, and we are speaking to them now on a very frequent basis to gain as much visibility as possible, which seems to be paying off.

In January, the Fund benefited from the strong performance of a number of corporate Eurobonds picked up at much lower levels over the proceeding quarter. Although bonds have generally rallied significantly off the lows there still seems in our opinion to be plenty of value left in selective issuers. Equity highlights included strong positive contributions from the materials and energy sectors...

Please click on the headline to access the full report for the OCCO Eastern European Fund."

Ipic denies eyeing Schaeffler stake

Abu Dhabi government-owned International Petroleum Investment Company (IPIC) yesterday denied it was taking a stake in indebted German bearings maker Schaeffler or its 49.9 per cent-owned unit Continental.

"This speculation (of Ipic investing in Schaeffler/Continental) has surfaced recently in the German media. We are quite surprised that this has arisen at all," Ipic Managing Director Khadem Al Qubaisi said.

On Tuesday, the Financial Times Deutschland newspaper reported the Ipic was considering buying a stake in Schaeffler or Continental.

Adib's full-year net profit rises 10.6% to Dh851 million

Abu Dhabi Islamic Bank (Adib) said its full-year 2008 net profit rose 10.6 per cent to Dh851 million ($231.6m) from a year earlier.

The Board of Directors recommended a cash dividend of 50 per ent of net income for the financial year 2008.

The bank's earnings per share rose to Dh0.432 from Dh0.413, it said in a statement on the Abu Dhabi bourse website.

Return on Equity (RoE) rose from 14.2 per cent in 2007 to 15.1 per cent in 2008. The bank's total assets increased by 16 per cent to Dh51bn from Dhs44bn in 2007. The bank's fourth quarter net profit fell almost 60 per cent to Dh114.8m from Dh285.4m in the corresponding period in 2007.

GCC regulatory reforms critical during crisis

Regulatory reforms will go a long way in instilling investor confidence and will attract more investments to the GCC, say experts.

The present levels of regulations in the region do support growth but there is enough scope for improvements and reforms that can improve the economic performance of the region. This becomes all the more vital in the current financial scenario, when investments are falling and investors are becoming more discernable.

"The last six months have underlined that international investment now operates in a global market, transcending national boundaries. Investors are more than ever comparing jurisdictions as to the safest and most secure environment, and high and effective standards of regulation and corporate governance are increasingly seen as key assets in attracting investment. A stable and certain system of regulatory standards and safeguards is becoming an essential, rather than a 'nice to have'," said James O'Shea, Partner at Clyde & Co, a leading international law firm in the region.

GCC companies to face challenge of refinancing $40bn debt this year

GCC companies will find it a challenge to refinance a total of $35 billion (Dh128.5bn) to $40bn worth of maturing debt instruments this year, new research has shown. Of this, approximately $20bn are associated with the UAE and $15bn are in Dubai.

"Addressing these maturities will be a significant challenge, although we do expect liquidity to return to the markets as 2009 progresses, and bond spreads to recede from some of the panic-stricken levels seen in the second half of 2008," Moody's Investors Service said in a corporate finance outlook.

As markets re-open, issuers with sound credit fundamentals and government backing should be able to close financing transactions, "but these come at a price", Moody's said.

Experts urge SCA to act against those involved in short selling

Investors who engage in short selling should be named publicly as a deterrent, said experts.

Senior figures in the industry fear that the lack of transparency and a disclosure policy is harming confidence in the UAE's markets.

Short selling involves cashing in on falls in share prices and can drive down the value of equities.

"We have advised the Securities and Commodities Authority (SCA) several times to publicly disclose the names of people who practise short selling," Ziyad Al Dabbas, a financial consultant at the National Bank of Abu Dhabi, told Emirates Business.

Fujairah building new port to export Abu Dhabi crude

The world's largest oil tankers will be able to load up crude exports from Abu Dhabi at a new port in Fujairah.

Work on constructing the facility – called the Industrial Port – is under way, Captain Mousa Murad, General Manager of Fujairah Port, told Emirates Business.

When complete the terminal will be able to handle up to 70 per cent of Abu Dhabi's total crude exports. The location near Fujairah Port means the oil will not have to pass through the strategically sensitive Strait of Hormuz.

Madoff’s wife took $15.5m ahead of arrest

Bernard Madoff’s wife Ruth pulled $15.5m out of a Massachusetts brokerage that funnelled clients to her husband in the three weeks before his December 11 arrest, according to court documents filed by Massachusetts securities regulators.

Mrs Madoff withdrew $5.5m from Cohmad Securities on November 25 and an additional $10m on December 10, according to two wire transfer receipts attached to a complaint filed by William Galvin, the Massachusetts secretary of state.

Federal investigators have alleged in a criminal complaint that Mr Madoff confessed to his sons on December 10 that he was running a $50bn “Ponzi” scheme.

Which is the real Pakistan?

Rakesh Maria, the tall and lean joint-commissioner of police in charge of investigating the Mumbai bomb attacks, allows himself few doubts about Pakistani involvement in the November assault that killed more than 180 people and traumatised a subcontinent. Speaking in his tightly guarded office last night, he left little room for ambiguity when he declared: “This thing has been planned in Pakistan; these people have been trained in Pakistan, have been equipped in Pakistan, and this thing has been launched from Pakistan.”

As to whether such malicious activities could have been undertaken without the direct knowledge of Pakistani authorities, he snorted: “I am saying these groups were operating in Pakistan. How can you say they don’t know? Either I am deaf, dumb or blind, or [they are] conniving absolutely.”

Cities use wealth to shoot for the stars

The United Arab Emirates may be most famous for its grandiose towers, artificial islands and shopping malls, but its film festivals are equally ambitious.

The Dubai International Film Festival was launched in 2004, but last year drew more than 47,000 viewers to over 180 films. Blockbuster starlets, Bollywood heroes and Arabic filmmakers all mixed to help promote Dubai as a budding film industry centre in the Gulf.

“Dubai began this idea of ‘cultural bridge’ through film, but the festival was also initially undoubtedly attributable to Dubai’s penchant for public relations,” says Antonia Carver, a programmer at the Dubai festival and editor-at-large for Bidoun, a Middle East arts and culture magazine. “But over its five years it has gradually positioned itself as the leading showcase for Arab cinema.”

Telecoms companies answer calls for safety

Hopes that the turn of the year might bring fresh vim and a recovery of sentiment to regional equity markets have been thoroughly dashed.

Apart from Saudi Arabia’s stagnant Tadawul, all Gulf bourses have continued where they left off in 2008, declining to new lows.

Where should investors head for at least some safety? Increasingly, fund managers and analysts are favouring so-called “defensive” sectors that rely little on discretionary spending. These are typically food, low-end consumer goods and telecommunications.

Qatar sets scene for film industry

The wedge-shaped neighbourhood of Tribeca in Manhattan seems an unlikely source of an import to Qatar. But to develop its own film industry, Qatar has forged a partnership with the Tribeca Film Festival in order to launch a five-day cinema event of its own in November.

Doing so brings the idiosyncratic spirit of the Tribeca festival to Qatar. The original festival was founded in the aftermath of September 11 2001, to revitalise the Tribeca and lower Manhattan districts of New York, home to the remains of the World Trade Centre. The founders of TFF, who include actor Robert De Niro (pictured above), hoped film would lure people downtown, stimulate dialogue and help heal a shattered community.

In the same vein, Tribeca Film Festival Doha aspires to encourage dialogue and use film as an agent of cultural diplomacy. It also aims to inspire and train a first generation of Qatari movie makers.