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Friday, 20 February 2009

Will ETFs Replace Mutual Funds?

Despite a difficult market environment, exchange-traded funds are continuing to grow.

Investors worldwide poured $268 billion into ETFs last year, pushing total assets to roughly $730 billion at the end of 2008, according to a new report by Strategic Insight, a New York fund research and data firm. Assets worldwide are expected to hit $1 trillion in two years.

Much of that growth will be driven by broader acceptance of these investment vehicles, which resemble traditional index mutual funds but trade throughout the day like stocks. While institutions are already big users of ETFs, individual investors and financial advisers are increasingly turning to them to gain exposure to specific asset classes and to hedge their portfolios.

Global's Kuwait Weekly Report - February 19, 2009

"We are pleased to send to you Global Investment House's Kuwait Weekly Market Update. The Weekly Update contains macroeconomic and corporate news, a summary of the Kuwaiti market activity for the week, and technical analysis for a selected stock each week. We hope you find this publication useful.

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

Pakistan aims to extend emergency loan

Shaukat Tarin, the de facto Pakistan finance minister, has said he would seek an increase in the size of the emergency loan extended by the IMF to $12bn (€9.5bn, £8.4bn) from $7.6bn, due to growing economic pressures and adverse internal security conditions.

Pakistani officials and the IMF are meeting in Dubai from Feburary 14 to February 26 for talks on the first review of the loan, which was approved in November.

Officials have said fears tied to the effects of a growing Taliban led insurgency in the northern regions along the Afghan border continue to fuel a flight of capital from the country.

National Iranian Oil Company, Total to sign $5b deal by March 20

TEHRAN - The managing director of the National Iranian Oil Company and the French Total company will sign a $5 billion contract by the end of current Iranian calendar year (March 20).

According to PIN, Seyfollah Jashnsaz said that Total has never cut its relations and cooperation with National Iranian Oil Company.

"The development of the South Pars gas field phase 11 in the upstream sector and the construction of an LNG plant in the downstream sector will be Total's responsibility according to the contract," he added.

"The Anglo-Dutch Shell and Spain's Repsol are also eager to negotiate with Iran," the official noted, adding that the Italian ENIENI company is also talking with Iran regarding phase 3 of Darkhovin oilfield that is expected to be finalized by the end of the current Iranian calendar year (March 20) or early next calendar year.

Jashnsaz went on to say that negotiations with the German e.ON company about investment in Iran's LNG field have started.

John Laing Homes seeks Chapter 11

The company that does business as John Laing Homes, one of metro Denver’s largest homebuilders, filed Chapter 11 bankruptcy reorganization in Delaware on Thursday, claiming between $500 million and $1 billion in debts.

Irvine, Calif.-based WL Homes LLC, which builds under the John Laing brand primarily in Colorado, California, Arizona and Texas, has an estimated 25,000 to 50,000 creditors, according to its bankruptcy filings.

John Laing Homes recently suspended operations in metro Denver, according to local customers of the homebuilder. A local couple was told in mid-January that Laing was halting construction on their four-bedroom, $500,000 house in Denver’s Stapleton neighborhood.

BAE poised to seal Saudi Typhoon deal

BAE Systems, Europe’s largest defence contractor, on Thursday said it expected to agree a multi-billion pound deal to provide support and weapons systems for the 72 Eurofighter Typhoon aircraft to be bought by Saudi Arabia this year.

Ian King, chief executive, said the company was “in active discussions on the next phase” of a contract, signed between the UK government and the Gulf kingdom in 2007.

Saudi Arabia buys arms from Britain under government-to-government deals and BAE then acts as the prime contractor to the UK.

Sibir shares suspended after revelation

Shares in Sibir Energy, the London-listed oil company with assets in Russia, were suspended on Thursday after the company revealed that it had lent $325m (£228m) to one of its shareholders.

In a statement, Sibir admitted that Chalva Tchigirinski, a Russian tycoon who owns about 23 per cent of the shares, owed the company $210m more than the $115m that it had previously acknowledged.

Sibir is listed on Aim, the exchange for smaller companies that is more lightly regulated than London’s main market. At the latest share price of 174¾p, down 69 per cent in the past six months, its market capitalisation was £676m.

Dh49m Mizin corruption case referred to court

Dubai: The Dubai government's campaign against corruption continues, with the case involving Mizin, the real estate development company of Tatweer, being referred to court, Gulf News learnt on Thursday.

This is the second corruption case that the Public Prosecution has referred to the Dubai Court of First Instance. Gulf News earlier reported that the corruption case involving Sama Dubai had been referred to court.

According to the chargesheet, the Public Prosecution arraigned Mizin's Emirati former senior executive, S.A., and a Lebanese engineer, J.H., with bribery and financial irregularities, which amounted to nearly Dh49 million.

RAK will invest $2b in Georgia

Tbilisi: Ras Al Khaimah Investment Authority (Rakia) plans to invest about $2 billion (Dh7.34 billion) in Georgia over the next five years despite the global downturn and Georgia's war with Russia in 2008, the head of its local unit said.

A brief war between Georgia and Russia in August of last year over the break-away region of South Ossetia scared off many potential investors from the country but Rakia, a sovereign wealth fund, says it plans to fully carry out all investment projects.

"In spite of dramatic events that took place in August, Rakia has a very optimistic view and continues activities in the country," Zaza Mikadze, general director of RAK Georgia Holding, said.

Time for simple products has come

Dubai: In a comprehensive account of the credit crunch's impact on the Gulf's financial markets, Fadi Al Saeed, Head of Equities, ING Investment Management Middle East, tells Gulf News' Quarterly Financial Review about the need for simplification of products, consolidation of financial centres, and diversification of assets in accordance with personal need

Gulf News: For many people the financial sector as a whole is substantially to blame for the credit crunch. What impact have you witnessed in the area of wealth management, and how can potential investors feel comfortable with investment itself and investment advisers generally when so much has obviously gone wrong in terms of exposure and returns?

Al Saaed: This confidence and trust issue - it's the base of this industry. You go to a bank and deposit your own money, your savings. You do that because you believe in the image, the brand, the trustworthiness of the bank. Now, unfortunately, recent events have shown that some of the banks, more precisely some of the practices of banks [and more so investment banks], were actually focusing on the kind of return, not on what could be the long-term impact. And they were geared towards structuring risky products that people did not understand.

UAE preparing plan to help banks lend again

Dubai: The UAE is preparing a plan to help banks resume lending as the "unprecedented" credit crisis ends a five-year real-estate boom, the chairman of state-owned Dubai World said.

"If we want the banks to lend again to real estate, then obviously governments will have to put a plan," Sultan Ahmad Bin Sulayem, who also sits on a committee studying the effects of the global credit crisis on Dubai's economy, said in a February 17 interview in his office. "I know, I am aware, that the Central Bank and the federal government are taking steps to lend money."

"Any measure involving the federal government to address liquidity and other stresses in the economy will be very positive," said Mohieddine Kronfol, managing director at Dubai- based Algebra Capital Ltd. "This should help bring down the artificially high spreads we are seeing for the regional bonds and credit swaps."

United front on Borse Dubai sends right signals

Cash is king in today’s turbulent markets. So reports that Borse Dubai, Dubai’s stock market operator, has managed to borrow US$2.5 billion (Dh9.18bn), analysts say, may indicate that Dubai Inc may be in a better position than the rumour mill would have had you believe.

Borse Dubai, the state-owned majority owner of Dubai’s two stock markets, has reportedly closed a one-year, $2.5bn syndicated loan this week, just days before it is due to pay back $3.4bn in previous debt. Amid tight international credit markets and lingering concerns about Dubai’s debt load, foreign banks kicked in $1.2bn in loans, according to a Reuters report from London. The remaining $1.3bn came from Dubai’s own banks, the report said.

Equally important, analysts say, is where Borse Dubai appears to be getting the other $900 million it needs to make next week’s debt payment – from its shareholder, the Dubai Government.

UAE economy should ‘insulate’ itself - Suwaidi

ABU DHABI // The country should take steps to insulate itself from global economic uncertainty, the Governor of the Central Bank said Thursday.

Sultan al Suwaidi told a banker’s lunch at the Emirates Palace hotel that the country’s financial system had felt the pain of the global crisis, even though its banks had not ventured into risky structured investment products and derivatives that helped spark the crisis in the West.

“If we analyse things to find out why the UAE financial system was affected by the crisis, one major reason is that we have taken the global financial system for granted when we take part in any shortcomings,” Mr al Suwaidi said.

Dubai oil trading surges

The Dubai Mercantile Ex­change, home of the Oman crude oil futures contract, is on track to record in February its best month by volume, as the credit crisis prompts oil traders to move their deals from the opaque, private bilateral market into the exchange.

The DME is benefiting from the freezing of the over-the-counter market in Singapore, the world’s third-largest oil hub, as traders worry about counterparty risk – the possibility that the other side of their deals defaults.

Dubai oil, a competitor of Oman oil with similar characteristics to it, trades in the Singapore’s OTC market.