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Sunday, 22 February 2009

UAE's RAK Properties Q4 profit plunges 74%

RAK Properties posted a near 74-percent drop in fourth-quarter profit to 50.9 million dirhams ($13.86m), the latest United Arab Emirates property developer to suffer during a real estate downturn.

RAK Properties, based in the UAE emirate of Ras Al Khaimah, said it lost 60.81 million dirhams in the fair value of investments in 2008, compared with a profit of 29.38 million a year earlier.

It also booked a provision for impairment of 58.86 million dirhams for the year, it said in a statement on the Abu Dhabi bourse website, without giving details.

UAE stock markets overvalued? (Blog)

Are the U.A.E.’s stock markets (ADX and DFM) still overvalued?

By the end of last week’s trading, the market capitalisation of both stock exchanges was 450.3 billion dirhams (122.5 billion dollars).

GNP (Gross National Product) is usually higher than GDP (Gross Domestic Product) and includes capital gains and losses and interest earned outside the country, so let’s compare the size of the stock markets to U.A.E. GNP.

Al Ahlia Holding seeks $157m bank loan bailout

Kuwaiti investment firm Al Ahlia Holding Co is seeking loans of up to KD45m ($157m) to refinance debt and expects a 2008 loss as it books provisions to weather the downturn, its chairman has said.

Abdullah Al Awady said the company had cancelled deals for local real estate projects worth KD230m ($781m) in the fourth quarter of 2008 to prevent further losses amid a global credit crunch hitting the oil exporter.

"Part of that ... was assuming debts up to 130 million dinars ... things have escalated and we chose to cancel the (whole) transactions," he said.

John Laing Homes files for bankruptcy (Update 1)

John Laing Homes, an American builder bought by Emaar Properties in 2006 for $1.05bn (Dh3.85bn), has filed for bankruptcy.

The firm filed for protection in the US on Thursday under Chapter 11 bankruptcy laws, which shield companies from creditors as they restructure or sell off assets to repay debts. John Laing owes roughly $977m to banks and other creditors and has assets worth $1.3bn, court papers show.

Emaar’s purchase of John Laing in June 2006 was the cornerstone of its effort to expand into the US housing market. But Emaar, the Middle East’s largest developer, made the foray as the US housing market peaked.

Changing of the old guard at SAMA, but policies to stay same

The appointment of Mohammed al Jasser as the new Saudi Arabian Monetary Authority (SAMA) governor in the sweeping government changes undertaken by King Abdullah took some financial observers by surprise, but the changing of the old guard does not signify fundamental changes in policies.

The departing governor, ­Hamad al Sayyari, who took over as acting governor in 1983 and was confirmed in the post in 1985, was the longest-serving central bank governor in the world on his retirement, a record that the US Federal Reserve’s “guru”, Alan Greenspan, could not match. Under Mr al Sayyari’s stewardship, SAMA evolved into a respected global player with its prudent regulatory policies, which are now keenly examined by other Gulf central banks in these turbulent financial times.

The early 1980s saw the completion of the “Saudisation” phase of wholly foreign-owned bank branches operating in the kingdom. It was a bold gamble that paid off handsomely for the Saudi banking sector, bringing long-term benefits to both Saudi and foreign partners. It also brought technical expertise, the grooming of future generations of Saudi bankers and the adoption of modern banking practices, albeit at a steep price.

Defence exhibition defies global downturn

Battleships, helicopters, unmanned aircraft and other tools of warfare have been lined up as potential buyers arrive from around the world for the ninth International Defence Exhibition and Conference (Idex), which opens today.

Nearly 900 exhibitors from 50 countries were putting the final touches to their products and displays last night for the big event.

Despite the global economic downturn, government and industry officials were optimistic that militaries from around the world would continue to spend on defence and security.

Outlows from equity funds up for third week

Flows out of equity funds increased for the third week running last week, climbing from $6.2 billion (Dh22.7bn) the previous week to $9.2bn for the week ending February 18, EPFR Global data indicated.

Bond funds again took in money, absorbing a net $539 million for the week.

“Optimism is, it appears, hard to extinguish. In a week when US automakers lined up for more cash, Ireland was touted as a candidate for a sovereign default and banks in Emerging Europe cast a fresh shadow on their parent companies, flows into EPFR Global-tracked commodity sector funds accelerated, high-yield bond and Latin America equity funds extended their winning streaks, US equity funds managed for growth again outperformed their value counterparts and money market funds posted their first three-week outflow streak since mid-June,” EPFR said in a statement.

Eibor eases to 3.10 per cent

The Emirates interbank offered rate, or Eibor, has eased to 3.10 per cent from 4.20 per cent at the start of the year as liquidity within the banking system has increased, bankers said.

However, the liquidity is “trapped”, according to a senior economist and does not percolate into the real economy.

“Banks are putting their money in the interbank market, driving the interbank rates down. Hence, a lower Eibor is not necessarily a sign that things have improved. It is a sign that liquidity is there but it is trapped,” said Marios Maratheftis, Regional Head of Research at Standard Chartered bank.