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Tuesday, 10 March 2009

MAKASEB Monthly Commentary for February 2009

"Greetings from Makaseb,

Please click the headline to view the Fund Manager's Monthly Commentary for the Makaseb Funds for the month February 2009."

The roaring noughties and the crash of ‘09

Contango smashing

The contango between the front-month April contract and the second-month May contract has been severely smashed over the last day.

Having averaged a difference of about $2 per barrel over the last couple of weeks, the two contracts are now trading at an interval of around $1 — April at some $47.54 per barrel and May at $48.52 per barrel.

The big question now is does this mark the sign of a renewed rally or is it simply a good opportunity to short oil?

Emirates to cut flights to Beijing and Shanghai

Emirates will cut flights between Dubai and its two destinations in China – Beijing and Shanghai, with effect from March 29.

The airline currently operates 14 services a week each to both Beijing and Shanghai. And the planned cuts will bring that down to 12 flights a week each, according to an Emirates spokesperson.

"Starting March 29, Emirates will not operate EK 304/305 (Dubai-Shanghai-Dubai) on Tuesdays and EK 308/309 (Dubai-Beijing-Dubai) on Sundays. From July 1 the same services will not operate on Mondays and Thursdays respectively," the spokesperson told Emirates Business.

GFH says Gulf banks and firms poised for mergers in 2009

Gulf banks are expected to record lower earnings in 2009 as they continue to suffer from the global financial turmoil and this could trigger a wave of mergers in the sector this year, a key regional bank said yesterday.

The Bahraini-based Gulf Finance House (GFH) said it also expected consolidations in the private small and medium enterprises while a decline in assets of some firms would tempt investors to acquire some of them.

In a study about the impact of the global economic distress on the GCC, GFH presented a gloomy outlook for the economies of the 28-year-old group as a result of an expected 60 per cent plunge in oil export earnings.

Regional private equity keeps its powder dry

Regional private equity players say they are well positioned to benefit from the economic storm as companies look for alternative means to raise funds.

“Moving forward, what the crisis has done is make companies turn to private equity players... to look for liquidity, expansion and growth,” said Frederic Sicre, the executive director of Abraaj Capital, one of the largest private equity houses in the UAE. “There is still a large amount of dry powder, or money to be invested from private equity funds, available to fund growing businesses.”

Mr Sicre estimated that of the total of about US$25 billion (Dh91.82bn) of funds raised in the region by private equity firms, less than $10bn had been invested. The latest report by the Boston Consulting Group on private equity outlook estimated that $450bn existed globally in fresh money available for investment.

Qatar reaffirms North Field moratorium

Qatar’s moratorium on further development of its vast North Field gas reservoir will not be lifted until at least 2013, according to a senior executive of Qatar Petroleum.

The moratorium will stay in place until all the planned North Field gas projects have been brought on stream, “which is probably in 2013 or a little later,” Saad al Kaabi, the government-owned petroleum company’s director of oil and gas ventures, said yesterday on the sidelines of a gas industry exhibition in Doha, the Qatari capital.

As the manager of Qatar Petroleum’s entire portfolio of oil and gas assets, Mr al Kaabi oversees the development plan for the North Field reservoir, including technical aspects of the moratorium. He reports directly to the chairman and managing director, Abdullah al Attiyah, who is also the Qatari deputy prime minister and energy minister.

Dh110bn ‘shortfall in banking system’

The banking system has a Dh110 billion (US$29.94bn) shortfall between loans and deposits that the Government must make further efforts to close, says Sultan al Suwaidi, the Central Bank Governor.

“The current situation requires a stimulus plan for banks and the economy in view of this ‘gap’, which could be bridged in collaboration with the Ministry of Finance,” Mr al Suwaidi said at the 10th meeting of the Dubai Economic Council, according to a statement published on WAM yesterday.

Mr al Suwaidi was referring to one of the most persistent challenges for the country’s banks, and for the economy, in the current financial crisis: how to keep banks lending while keeping to a Central Bank rule that requires the amount of loans not to exceed deposits. As a group, banks’ loans now exceed deposits by a significant margin and many banks are cutting back lending in an effort to bring the ratio back into line.

Amlak and Tamweel merger decision soon

Discussions regarding the merger of Dubai mortgage companies Amlak Finance and Tamweel are nearing completion and should be announced soon, Sultan al Mansouri, the Minister of Economy, said today.

Mr Mansouri is serving on a special committee set up last month to co-ordinate a proposed merger between the two Dubai-based home finance companies, which have been adversely affected by the effects of the global financial crisis. Amlak and Tamweel were supposed to join under the umbrella of Real Estate Bank, according to announcements made in November.

“We are almost finalised with the issue now. And we will let you know,” Mr Mansouri said during a tour of the Abu Dhabi Co-operative Society at Abu Dhabi Mall.

Inquiry turns to bad cheques

An Emirati businessman who has been accused of defrauding depositors out of Dh847 million (US$230m) in a bogus investment portfolio appeared yesterday before the Dubai Misdemeanours Court and was charged with issuing two cheques that bounced for insufficient funds.

Abid al Boom, who prosecutors say defrauded 3,500 depositors, remains in custody while an investigation continues. He appeared calm in the dock yesterday while his lawyer asked for a verdict of not guilty. The defence argued that the cheques bounced because Mr al Boom’s accounts had been frozen by prosecutors.

“In truth, Mr al Boom has many bounced-cheque cases against him,” said Salem al Shaali, the defence lawyer, “but we are confident the judge will find him not guilty as he had no intention of bouncing any cheques. The reason they bounced is because his bank accounts were frozen.”

Sales manager denies making Dh17m in fraudulent land deals

A former Dubai Industrial City sales manager accused of charging clients almost Dh17 million in illegal commissions and said he deserved the money pleaded not guilty in a court yesterday.

The defendant, AZ, a 32-year-old Emirati, appeared before the Dubai Criminal Court of First Instance charged with misappropriating public funds.

He allegedly charged eight clients extra commissions on a number of sale and rental agreements for land belonging to Dubai Industrial City, a member of Tatweer, Dubai’s state-owned property developer, that was set up on 560 million sq ft of land to help spur industrial growth.

Istithmar set to launch fresh asset sales

Istithmar World Capital is looking to sell more assets after offloading some stakes in recent months as the Dubai investment company returns cash to its parent, one of the more indebted wings of the government.

The five-year-old company will seek to harvest profits on long-held companies in spite of the depressed global market for assets, but it will not resort to fire sales, said David Jackson, chief executive.

“The timing’s lousy, but people are saying, okay, you told us that in 2009 we’ll start to see money coming back from you, so where is it?” he told the Financial Times.

Seven charged over alleged $501m Dubai fraud

Dubai’s public prosecution has charged seven businessmen with crimes related to an alleged scheme to defraud Dubai Islamic Bank of $501m, official records show.

The bill of indictment, seen by the Financial Times, alleges the crimes were committed between 2004 and 2007 by two former employees of the bank and five businessmen linked to trade finance company CCH and a real estate project in Dubai, the Plantation.

The case, expected to go to court soon, is likely to become a high-profile test for the emirate’s judicial system as questions swirl about the rule of law in the Gulf’s commercial centre, hit hard by the global financial crisis.

Syria in exchange debut

Syria will on Tuesday take a step towards developing itself as a modern market economy by launching an exchange to boost growth and its nascent private sector.

The Damascus Securities Exchange will trade six listed companies as part of its move to attract investment and develop its commercial sector.

The government hopes the exchange will grow quickly, offering domestic companies the chance to raise money for expansion and providing institutional and retail investors with opportunities to diversify.

Qatar to buy shares from banks

Qatar’s government said on Monday it would buy listed shares worth an estimated $6bn within the investment portfolios of local banks to buttress the country’s domestic financial sector.

The intervention comes amid mounting concerns that even the Gulf’s fastest-growing economy is suffering from the credit crunch.

The central bank governor of the United Arab Emirates – one of the harder hit Gulf states due to the deteriorating fortunes of Dubai, one of its seven emirates – urged authorities to step up efforts to stimulate the economy.

Downturn will not deter march of Arab women

The venue was splendid, a 19th-century former hôtel particulier in the heart of Paris. The women who gathered in a main hall on a recent rainy day had arrived in style, some sporting fur coats, others clutching Hermès bags.

Yet this was not a social event nor a fashion show. The guests were some of the Arab world’s top businesswomen and their trip to Paris was to learn about business opportunities, even in today’s depressing economic times.

They were letting themselves be charmed by the French government, which has suddenly discovered that the wealth of Arab women and their rising profile in the business world represents a lucrative source of capital.