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Thursday, 5 March 2009

MGM Mirage, Deutsche Bank Talks on CityCenter Said to Collapse


March 5 (Bloomberg) -- MGM Mirage and Dubai World failed to reach agreement with Deutsche Bank AG and talks on a $1.2 billion loan to complete the Las Vegas CityCenter project collapsed, according to five people with knowledge of the matter.

Deutsche Bank was seeking equity and debt stakes in the $11.2 billion development on the Las Vegas Strip in return for the loan, said the people, who spoke on condition of anonymity. MGM Mirage and Dubai World, which would have merged CityCenter with a neighboring property owned by the bank, are now holding talks with other parties, one of the people said.

MGM Mirage, controlled by 91-year-old investor Kirk Kerkorian, fell to its lowest in at least 19 years in U.S. trading yesterday after saying it may breach terms of its senior credit facility this year. Reaching a deal with Frankfurt-based Deutsche Bank would have helped MGM Mirage and its Dubai partner finish the project without spending more of their own cash.

Bank Emirates NBD says eyes $1.7 bln regulatory boost

DUBAI, March 5 (Reuters) - Emirates NBD ENBD.DU said it was seeking to raise 6.3 billion dirhams ($1.72 billion) by converting emergency federal deposits into Tier 2 capital to provide support during the financial crisis, its chief financial officer said.

Sanjay Uppal said the conversion would boost the bank's capital adequacy ratio -- a key measure of the soundness of a bank -- to 14.3 percent from 11.3 percent at the end of 2008, when the bank wrote off 2.26 billion dirhams in assets.

"This is not really a bailout," Uppal told Reuters in an interview on Thursday. "I would consider it a bailout when the central bank is injecting money into the bank to support it," Uppal said. "I see this as systemic support.

ENBD would convert the deposits, provided last year to a number of UAE banks, to a 7-year bond paying 4.5 percent interest and non-convertible for 5 years, which would be used to supplement the regulatory capital reserve known as Tier 2.

(Reporting by Thomas Atkins, editing by John Irish)
See earlier clip at http://rupertbumfrey.blogspot.com/2009/03/enbd-to-convert-dh126bn-ministry.html

Hedge Funds in Emerging Markets [Preqin HF Investor Spotlight - March 2009]

" Hedge Fund Investor Spotlight - March 2009
-----------------------------------------------------

This month’s Preqin Hedge Fund Investor Spotlight is an emerging
markets special, focusing on institutional investors' appetite
for investments of this type. Includes an interview with top
emerging markets fund manager, 3 Degrees Asset Management.

We also take an in-depth look at Scandinavian insurance companies
and examine all the latest investor news."

GLG loses Vivendi appeal

GLG Partners has lost an appeal against a €1.5m ($1.9m) fine by the French markets watchdog for insider trading in Vivendi shares, in a blow to the UK hedge fund group. The ruling came amid a French investigation of GLG’s trading in shares of Infogrames Entertainment, the software group. GLG’s problems in France – where it is still pursuing a separate appeal on the Vivendi fine to the Conseil d’Etat, the highest administrative court – continue more than three years after it beefed up compliance systems.

Saudi Stock Market Weekly Report

Week Ending Wednesday, 4 March 2009
Tadawul All Share Index

Political impasse in Kuwait can delay approval of reforms

Kuwait's ruler could move to dissolve parliament in the leading oil exporter in the coming days to avoid deputies questioning the prime minister, parliamentary sources said yesterday.

The political paralysis could delay approval of key legislation and economic reforms that investors hope will help Kuwait through the financial crisis. The bourse closed higher for a second day on speculation about the dispute.

Parliament is due to discuss a 1.5 billion dinars (Dh18.6bn) economic rescue package on March 17, the day the body hopes to question the prime minister, Sheikh Nasser Al Mohammad Al Sabah.

Lubna says low inflation will attract more foreign investors to the UAE

The UAE will become more attractive to foreign investors as inflation begins to decline following a sharp increase over the past two years, Minister of Foreign Trade, Sheikha Lubna Al Qasimi, said yesterday.

Sheikh Lubna, in Moscow for an international investment conference, said the UAE is interested in investing in Russia but needs to get acquainted with business opportunities in the country.

During talks with a senior Russian economy official, Sheikha Lubna was told that Moscow is considering enacting laws to allow the operation of Islamic banks for the first time following an upsurge in their business worldwide.

DFSA gets tough with violators

The Dubai Financial Services Authority (DFSA) implemented two enforcement actions in 2008 involving financial penalties of about a million dollars and the suspension of one firm.

In its annual report released yesterday, the regulator of the Dubai International Financial Centre said it initiated proceedings in the DIFC Court against Shuaa Capital International and Shuaa Capital to enforce compliance in an accusation involving the manipulation of DP World's stock price on Nasdaq Dubai on March 31.

The DFSA determined that Shuaa Capital intentionally set about to raise the closing price of DP World shares so that it could mark up the book value of its proprietary portfolio in those shares for accounting purposes. The DFSA also determined that Shuaa Capital obstructed the regulator's investigation.

ENBD to convert Dh12.6bn ministry deposits to equity

Emirates NBD, the largest bank in the UAE in terms of assets, equity and profit, has initiated moves to expand its equity base by about 50 per cent, thus raising it from the present Dh25.761 billion to Dh38.361bn.

The bank has already taken a decision to seek shareholders' permission to convert the Dh12.6bn deposits it received from the Ministry of Finance as part of the Dh50bn liquidity injection programme by the ministry recently, to Tier 2 capital of the bank.

All local banks have received three to five years' deposits from this pool on a pro rata basis with respect to the size of their asset book. It is quite evident that Emirates NBD, that controls the largest asset base with a size of Dh282.413bn, has bagged the biggest chunk of this deposit pool, at about 25 per cent, which works out to Dh12.6bn.

Banks asked to be more self reliant

The Governor of the Central Bank has called on financial institutions to pay off their international debts and become more self-reliant.

“There will be a tendency to develop banking systems with 100 per cent reliance on local funding,” Sultan al Suwaidi said.

“At the moment, the UAE banking system is localising liabilities of banks; that is, getting rid of foreign interbank deposits.

Singapore fund invested ‘too early’ in banks

The Government of Singapore Investment Corp, one of the world’s biggest sovereign wealth funds, invested “too early” in Citigroup and UBS, Lee Kuan Yew, its chairman, said Wednesday.

“When the market fell, we went into UBS and Citi. But we went in too early. That is part of the ride,” he told a forum of bankers sponsored by Thomson Reuters. GIC made the banking investments at the turn of 2008.

Temasek Holdings, GIC’s smaller sister Singapore sovereign fund, suffered a 31 per cent fall in the value of its assets to $127bn between April and November 2008, a senior finance ministry told parliament last month.

Gulf food security needs delicate diplomacy

If you use Google Earth to focus on the area north of Riyadh and in the Dawasir valley south-west of the Saudi capital, you will find green circles in the desert. They look a bit like flying saucers that have landed. In fact they are farms, and their peculiar shapes stem from irrigation machines that circle around a hub.

Subsidised agricultural schemes such as these made Saudi Arabia a net wheat exporter early in the 1990s – and added a new dimension to the notion of inefficient allocation of resources.

Those days will soon be over. Reserves of non-renewable fossil water in Saudi Arabia are depleting and the kingdom has decided to phase out water-intensive wheat production by 2016. Agriculture will be re-oriented towards more value-added crops such as fruits and vegetables, using water-saving technologies such as greenhouses and drip irrigation.

Private sector fills Syria’s learning gap


Zaina had two options: she could study engineering for free at a state university, or she could study medicine, her preferred subject, at a private institution for $10,000 a year. The choice was simple.

“I didn’t want to be an engineer, I wanted to be a doctor,” the 18-year-old shrugs, sitting in the cafeteria at Kalamoon University, one of the private institutions that has opened in Syria to meet rocketing demand for tertiary education.

More and more young Syrians are finding themselves in this situation. As student numbers have risen, the entry requirements at state universities have become increasingly tough, with baccalaureate grades in the 90s needed to enrol in many classes, and 99 for medicine.

Saudis get first taste of foreign harvest

Saudi Arabia has announced the arrival of the first food crop harvested in Saudi-owned farms abroad, in a sign that the kingdom is moving faster than expected to outsource agricultural production.

Rice, harvested in famine-hit Ethiopia by a group of Saudi investors, was presented to King Abdullah recently and comes as other countries are still in the early stages of investing in overseas farms.

The Ethiopian origin is likely to raise concerns about the trend to outsource food production to poor African countries, some of which suffer from chronic hunger.

Bail-out for Dubai loses its lustre


Debt and equity investors initially reacted with joy when the United Arab Emirates central bank, after months of speculation, said it would underwrite $10bn of a $20bn bond sale by Dubai.

But more than a week on from the announcement, investors who had hoped for a silver bullet have been disappointed.

The Dubai stock market jumped 7.9 per cent on February 23, the first day of trading after the bail-out was announced, but has since lost its gains. The cost of insuring against default of Dubai’s debt has also started to tick up again, although it is still a lot cheaper than before the loan was announced.