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Sunday, 1 March 2009

Emirates press corps feels chill as news turns bad

The ruling sheiks cannot stop the global economic crisis from intruding on their lofty dreams.

They can, however, try to keep it off the front pages.

A draft media law could give authorities wider powers to regulate increasingly gloomy economic reporting after years of basking in coverage of hyper-growth and gliterati just as dazzling and gossip-worthy as Hollywood's.

Global's GCC Weekly Market Report – February 26, 2009

"Global has published its new ‘GCC Weekly Market Report’. The report examines the performance of various key sectors and companies within the six GCC countries, highlighting industry as well as individual stock performances. It also entails economic and company developments, in an effort to keep investors cognizant of local and regional issues.

In order to view the full GCC research for the week, kindly click on the headline."

Dubai Shopping Festival fails to boost hotel revenue

The Dubai Shopping Festival failed to boost Dubai hotels declining revenue per available room (revPAR) during January, according to new data from STR Global.

The hospitality research company said revPAR in Dubai during January fell by almost 40 percent on certain days in January 2009 compared to the previous year.

“We are seeing a classic knee-jerk reaction to a fall in occupancy with waves of panic pricing. The last thing revenue managers want to do is suffer twice. Both from the fall in occupancy and then in rate,” said James Chappell, managing director of STR Global.

Warning over fraudulant investment scheme

The Dubai Financial Services Authority (DFSA) on Sunday warned against a fraudulent investment scheme that claims to be endorsed by the regulator.

The letters, which use the DFSA letter head, state that the recipient has won several hundred thousand US dollars in the “Middle East-Asia Promotion” sponsored by the “Emirates Foundation”.

In order to claim the prize, individuals are advised to transfer a sum of money to the DFSA for “registration of funds meant for international remittance before such funds could be approved for release”.

Global's Palestine Weekly Market Report - February 26, 2009

"Following the successful series of Global Weekly reports covering various markets in the region, and in our effort to provide the investment community, economists and researchers with an array of such market reviews, we at Global Investment House are proud to present "The Weekly report on Palestine Securities Exchange (PSE)". The report views the latest developments in PSE, trading activities, indices performance and corporate news.

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

Can 'Fellow African' Barack Obama tempt Libya's Colonel Gaddafi in from the cold?

For a team entrusted with the formidable task of shedding their country's police-state image, the minders from the Libyan foreign ministry did not seem very well prepared.

For a start, their dark glasses, smart suits and slicked-back hair made them somewhat hard to distinguish from the secret police loitering at the airport. And despite their boasts of a new official policy of "openness", some things remained clearly off-limits to prying eyes.

"Stop filming!" barked a minder, as the heavily-guarded residence of their boss, Colonel Muammar Gaddafi, loomed into view during an official drive around town. "OK you can start again," he said, as it retreated into the distance.

Global's Egypt Weekly Market Report - February 26, 2009

"Following the successful series of Global Weekly reports covering various markets in the region, and in our effort to provide the investment community, economists and researchers with an array of such market reviews, we at Global Investment House are pleased to send to you “Egypt Weekly Market Report Update”. The report views the latest developments in Cairo and Alexandria Stock Exchanges, trading activities, indices performance and corporate news.

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

DGCX growth curve is on an upward trajectory

Dubai Gold and Commodities Exchange has notched up impressive growth in 2008 despite the doom and gloom associated with the global financial crisis. A broad product offering and diverse customer base have enabled the three-year-old exchange to register trade volumes surpassing one million contracts valued at $57.5 billion (Dh211bn) in the past year, said Malcom Wall Morris, Chief Executive Officer of DGCX. This is a rise of more than 26 per cent on the previous year and has helped in turning DGCX into a leading commodity derivatives exchange in the region. In this interview with Emirates Business, Morris enumerates the challenges lying ahead for the exchange, the global commodity markets and the effects of current liquidity crunch on the markets.

The global commodity markets underwent a volatile phase in 2008. As the head of the youngest commodity exchange, how do you see the role and performance of commodity exchanges like DGCX in the future? What are the major challenges and opportunities awaiting DGCX in the current global context?

In the three years since DGCX began operations, we have listed a wide portfolio of contracts, covering precious metals, energy, currencies and alloys and have succeeded in attracting almost 230 members. This broad product offering and diverse customer base have enabled us to become the leading commodity derivatives exchange in the region, resulting in trade volumes surpassing one million contracts in 2008, a rise of over 26 per cent on the previous year.

Middle East can benefit from crisis

The onset of the global recession last year was a "defining moment in history", says an influential Dubai-based economist, illustrating how the economic geography of the world is shifting eastwards to the advantage of the Middle East and Asian economies.

"In the past 15 years, the bulk of world output is now produced in Asia and in this part of the world. Forty per cent of the world's output is now produced in Asia and the Middle East. Sixty per cent of the world's economic growth over the past 5 years has come from the emerging markets, and 70 per cent of the increase in world trade came from the emerging markets," Nasser Saeedi, chief economist at the Dubai International Financial Centre, told the Indian Business and Professionals Council (IBPC), on Wednesday.

"We have the opportunity to redraw the financial map of the world," Saeedi said.

Lack of remorse for decline of institutional way

The annual meeting of the World Economic Forum in Davos, Switzerland, this year was not the same. Gone were the sparkling parties and swagger of the “masters of the universe” as bankers made their absences felt in droves. At the same time the world at large, including the growing army of global unemployed, were hoping and demanding that investment bankers had learnt their lessons and would show remorse and contrition.

To date, with the exception of a few brave souls, the majority of senior bankers who had brought the world to the edge of a financial abyss still seem reluctant to say “sorry” for what they have done. Punishing them by cancelling corporate jet purchases is not enough, and the mood is turning ugly as politicians respond to continuing public anger.

Those who dropped out of Davos at the last moment included Vikram Pandit, the chief executive of Citigroup, and John Thain, the former chief executive of Merrill Lynch. It certainly would have been a massive public relations disaster for Bank of America, which took over Merrill Lynch, if Mr Thain had turned up. He was unceremoniously fired after paying out millions to refurbish his office and billions in bonuses, even as his bank was being rescued by the American taxpayer. Other colourful and high-profile ex-masters of the universe not present included Dick Fuld, the chairman and chief executive of the now defunct Lehman Brothers, and Sir Fred Goodwin, who was ousted in November as boss of the Royal Bank of Scotland Group.

Bond issue underscores Dubai's strengths

Once again, Dubai succeeded in putting its exceptional qualities on display last week. The reference is being made to the way the emirate moved to raise funds to meet financial commitments (paying and restricting debt) of the government and its subsidiary firms.

In effect, the authorities uncovered an ambitious $20 billion (Dh73.5 billion) bond programme. More importantly, the UAE Central Bank agreed to unconditionally subscribe $10 billion of bond issuance. The development demonstrated Dubai's ability to raise funds from local sources without causing a crowding out effect. In other words, borrowing such a sizable amount from the banking system could have undermined the ability of private sector firms to obtain credit at a critical time, namely the ongoing financial crisis.

The money will be partly used to pay off arrears to developers of state projects. Some $2.2 billion will be made available in escrow accounts through Dubai's Real Estate Regulatory Agency (Rera). In particular, the real estate sector should emerge as main beneficiary of fresh liquidity. The debt programme should help the emirate denying the financial crisis turning into an economic one.

Tadawul’s 3.8% drop reflects global market

The Saudi Arabian stock market started off the week by dropping 3.8 per cent Saturday. Analysts said it was an indication that the exchange, which recently opened its doors to foreign investors, was becoming more vulnerable to the financial crisis.

“The Saudi market is more prone to foreign institutional investment now since it has opened its doors, so we do expect more volatility [in the market] and less stability,” said Ayman el Saheb, the director of operations at Darahem Financial Brokerage in Dubai. “At the end of the day, it is a correlation with what is happening in global markets.”

Shares on US markets fell to 12-year lows on Friday on rising investor concerns as the government increased its stake in Citigroup, one of the largest commercial banks, to 36 per cent. The bank, whose shares have fallen more than 90 per cent in the past year, has already received US$45 billion (Dh165.28bn) from the US government.

ETF segment heats up with ADX entry

The exchange traded funds (ETF) segment is heating up with the Abu Dhabi Exchange (ADX) looking to get ahead of its regional rivals. Tom Healy, CEO of ADX told he expects the first ETF to be launched in the second quarter, and not the first as the exchange had earlier hoped.

"We would like to be the first one in the Gulf to launch ETF," said Healy.

ETF is a class of mutual fund considered less expensive and simpler than its better-known cousin. Offering the diversity of mutual funds, they can be sold like stocks on an exchange. The use of ETFs to implement exposure to cash, fixed income, commodities and equity indices is making them popular, notes a Barclays report.

Islamic banks resilient

Islamic banks are less vulnerable than conventional banks to the global financial crisis because they never invested in leveraged products, but the sector is still exposed to risks from tight liquidity, lower oil prices and weakening property prices, according to the latest research from Moody’s Investors Service and Standard & Poor’s.

“Islamic finance is not an island and has suffered from the liquidity drought; an industry, it can now demonstrate a track record of resilience and may even emerge stronger from the crisis,” said Mardig Haladjian, an analyst and co-author of a report on Islamic finance by Moody’s Investors Service.

The main sources of stress for Islamic financial institutions include mounting concerns on the property sector in the GCC, a sharp correction in regional stock markets and certain investments made mainly by Sharia compliant investment banks in European or American companies.

MGM Mirage draws last of loan

MGM Mirage, the casino and resort developer partly owned by Dubai World, has drawn down the last US$843 million (Dh3.09 billion) of a $4.5bn standing loan, raising questions among analysts about its ability to complete existing projects and service its debts.

MGM’s shares lost more than 20 per cent of their value on Friday after the ratings agency Standard & Poor’s cut its assessment of the company’s creditworthiness.
MGM Mirage last month said it was scaling back its $9.2bn CityCenter project on the Las Vegas strip to cut costs, raise cash and sharpen its focus. That announcement came on the heels of news that James Murren, the chief executive, had agreed to sell the Las Vegas casino, Treasure Island, for $775m.

S&P cuts its rating on MGM by two notches, to “B minus” from “B plus”, saying the company faced liquidity concerns on the back of falling earnings, according to Bloomberg. S&P said MGM may face difficulties completing CityCenter and in meeting bond payments due in 2010 without selling more assets, or luring additional investment.

Festival has to exercise own right - Atwood

"We rallied round a flag that wasn't there," author Margaret Atwood said via videolink, of the Emirates Airline International Festival of Literature (EAIFL) decision not to launch a British book at the festival.

"An independent festival has to exercise its own right and judgement - it's not the same as banning," she said from Canada.

Atwood was speaking at the EAIFL, about the book The Gulf Between Us by Geraldine Bedell, which was not launched at the festival. Bedell caused a furore in the British and US press over the issue recently, claiming that the book had been 'banned' from the festival.