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Monday, 30 March 2009

Abu Dhabi well placed to recover before other emerging markets - Healy

"Diversification, strategic partnerships, increased institutional participation and increased co-operation between the Gulf capital markets will help the GCC stock markets recover from the impact of the recent economic downturn", said Tom Healy, CEO of Abu Dhabi Securities Exchange.

Speaking at the World Exchange Congress in Monaco today, Healy outlined the impact the global 'credit crunch' had on the GCC stock exchanges. He also gave a positive outlook for the region's markets and explained ADX's strategy for future growth.

"The fall in oil prices and the fact that foreign investors had to sell out of emerging markets to cover positions in their home markets had an impact on ADXADX, but these were not the main reasons stock market prices in Abu Dhabi fell in the second half of 2008", he said.

Sovereign wealth funds

Shovel money into hole, douse with petrol, set alight. Gulf investors got burned last year after they invested billions of dollars in struggling banks. The Abu Dhabi Investment Authority and its counterparts in Kuwait and Qatar no doubt thought they were getting a great deal when they agreed to inject capital into banks such as Citigroup and Barclays. Events proved otherwise.

Big sovereign wealth funds and smaller state-controlled investment vehicles have retrenched in recent months as falling oil prices added to the pain. Still, with all that oil wealth to put to work, no one expected them to sit still forever. And with last week’s €2bn investment in Daimler, the German carmaker, by Abu Dhabi’s Aabar Investments, the sovereigns are back.

Of the ten biggest direct investments by the world’s sovereign wealth funds since 2007 – transactions totaling more than $60bn, according to Dealogic – only one was for a non-financial firm. After this expensive and lopsided diversion, further diversification makes sense.

Rothschild Competing For Advisory On $20B Dubai Bond-Source

DUBAI (Zawya Dow Jones)--Rothschild is one of two banks shortlisted to advise Dubai on how to use $10 billion pledged by the Abu Dhabi-based federal government to help the emirate through the economic downturn, according to people familiar with the matter.

The fiercely contested advisory mandate comes as Dubai intensifies its efforts to fend off the global financial crisis and gears its finances to cope with the cost of servicing the near $80 billion of debt racked up by its government and corporate entities.

If appointed, Rothschild will advise the Dubai Department of Finance on its $20 billion bond program launched last month, of which $10 billion was covered by the Central Bank of the United Arab Emirates, a person familiar with the deal told Zawya Dow Jones.

The person, who declined to be identified, said that Dubai's government will formally award the mandate this week to one of the two shortlisted banks. They didn't specify the identity of the other bank competing for the contract. Officials at Dubai government declined to comment.

A spokesperson for Rothschild in Dubai couldn't be reached.

The bank, headed by family patriarch Lord Rothschild, has gained a reputation as a financial fireman of late. It's advising Songbird Estates, the Morgan Stanley-backed group, that owns Canary Wharf in London on the refinance of more than $1.2 billion of debt and also helped the Dutch government with its $13.4 billion bailout of ING.

Dubai's $20 billion bond plan, and the subscription of the U.A.E. central bank to half the amount, followed months of concern that the emirate will struggle to repay its debt amid global financial turmoil.

The emirate's economy, 30% dependent on real estate, has been hit hard by a slowdown and concerns it may struggle to meet it's debt obligations.

-By Mirna Sleiman, Dow Jones Newswires, +9714-364-4966, END

Macquarie in a Brisconnections mess

Australian investment bank Macquarie - which prides itself on savvy investment strategies - looks to have landed itself in a right financial and legal mess in the form of toll road operator BrisConnections.

Macquarie on Monday took legal action in an effort to protect itself from having to cover millions of dollars worth of payments owed for shares in the A4.8bn ($3.27bn) toll road project. The Australian group became a key party in the venture along with Leighton Holdings, with a long-term agreement that they expected would bring hefty profits. But they are now looking at the possible collapse of the massive project.

Not only are banks which had committed to lend around A$3bn to BrisConnections looking distinctly reluctant now. But Macquarie - together with Deutsche Bank - had jointly underwritten a A$390m call due April 29 as an instalment on shares - a call that shareholders are now indicating they will almost certainly fight. What’s more, Macquarie has just piled more than A$320m into bridging loan finance for the troubled company - and another A$390m instalment is due early in 2010.

Global's Jordan Weekly Market Report - March 26, 2009 (PDF)


· ADX: Abu Dhabi Securities Exchange (ADX) announced today it will, for the first time, be hosting the Annual General Assembly for the South Asian Federation of Exchanges (SAFE), on 11 March 2009.
· ARMENIA: The Executive Board of the International Monetary Fund (IMF) today approved a 28-month SDR 368 million (about US$540 million) Stand-By Arrangement for Armenia
· BBVB: Baku Interbank Currency Exchange will from March 5 begin trading the EUR/AZN_SWAP
· BELARUS: On 13 March 2009, Belarusbank received the status of WSE IPO Parnter and was approved into the programme aimed to attract foreign companies to the Warsaw Stock Exchange.
· BOSNIA AND HERZIGOVINA: Bosnia’s 2 regions agreed to seek financial assistance from the IMF in covering budget shortfalls.
· EGX: the Egyptian Exchange (EGX) is launching a new price index
· IMF: Growth in the resource-rich Caucasus and Central Asia (CCA) is projected to slow to under 2 percent in 2009 from 6 percent in 2008
· MSM: The Areej Vegetable Oils and Deriv announced 33.3% bonus share.
· MONGOLIA: Mongolian Parliement accepted the USD 1.1 billion economical support package plan.
· NASDAQ OMX: Nasdaq Omx pushing ahead with plans for an exchange in St.Petersburg, Russia
· ROMANIA: An IMF mission, led by Mr. Jeffrey Franks, will visit Bucharest during March 11-25, following up on the ongoing economic dialogue with the Romanian authorities.
· TURKEY: American strategist George Friedman, stated that the only source that Turkey is lacking is the force management politics .
· UKRAINE: Ukraine’s Naftogaz paid its February bill for Russian gas

Qatar to steam ahead despite crisis as GCC states slow down

Qatar's economy will steam ahead in 2009 when performance in most other regional oil producers will tumble and the global financial crisis is pushing many other economies into a deep abyss.

The gross domestic product of the tiny Gulf Opec producer leapt by more than 19 per cent in real terms last year and independent estimates showed growth could still be as high as 10 per cent this year.

The reason for such a strong performance at a time when other economies are jolted by the global crisis is that Qatar is set to almost double its production of liquefied natural gas to more than 60 million tonnes in 2009 before output peaks at 77m tonnes by end-2011. "Qatar's economy is still very strong despite the global financial distress…it will remain strong as it is a real economy which enjoys many advantages and points of strength," said Abdullah bin Hamad Al Attiyya, Qatar's Deputy Premier and Minister of Energy and Industry.

HCC opens office in Dubai and aims to raise up to $150m

Toronto-based private equity firm Hilco Consumer Capital (HCC) yesterday said it has opened its international office in Dubai and wants to raise up to $150 million (Dh551m) for a fund that will invest in distressed brands globally.

The firm is talking about triple-digit returns in a possible time frame of six to 12 months. "Our investors are seeing very healthy multiples on their investment. We do not have specific time lines in our documents, so our investors are patient. That being said, we have in the past delivered very good returns over six to 12 months," HCC Global Managing Director Reyaz A Kassamali told Emirates Business.

"It's a contrarian move in this economic environment because it provides opportunities where others may not see them. The fund is open-ended; we allow new LPs [limited partners: a term that defines investors in a private equity fund] to participate as we go along."

FGB and Adib get Dh6.7bn finance for Tier 2 capital

Two Abu Dhabi-based banks have secured a total of Dh6.7 billion ($1.8 billion) in fresh capital from the emirate's government, the banks said yesterday, following similar moves by rivals as the downturn bites.

First Gulf Bank (FGB) received Dh4.5bn from the Abu Dhabi finance ministry and said it would convert it into Tier 2 capital, the second most reliable form of capital from a regulator's point of view.

Abu Dhabi Islamic Bank (Adib) got a Dh2.2bn injection in emergency government deposits and converted it into regulatory capital, following similar moves by rivals in the credit crisis.

Tamweel chief wants urgent property aid

The Government must urgently add liquidity to limit the drop in property prices and revive the economy, the chairman of Tamweel, the country’s second-argest home finance provider, said yesterday.

The fall in property prices is bringing “huge losses” to investors in the country, Sheikh Khaled bin Zayed said.

“Unless we bring in financing for the real estate sector, I do not think the economy can be revived,” Sheikh Khaled said on the sidelines of a Dubai Economic Council conference.

Sama fraud defendants just took normal commissions, trial told

Reselling property on behalf of a third party and earning commissions on that sale is normal and acceptable practice in Dubai’s real-estate market, witnesses in the Sama Dubai corruption trial told the Dubai Criminal Court of First Instance yesterday.

Lawyers acting for five defendants in the case, who include the former chief executive officer of The Lagoons project, said that the witnesses’ evidence showed that their clients’ actions were not illegal.

“All of the defendants worked as real-estate brokers before joining Sama Dubai, and all they did was outside their official duties; they brokered the sale of property, which many witnesses yesterday said was acceptable practice in the real-estate market,” said Hamdi al Shiwi on behalf of MA, 41, the Emirati former sales manager at Sama Dubai’s The Lagoons project.

Dubai outlines plan to escape doldrums

Dubai will this week outline borrowing terms to government-related companies in need of assistance as it seeks to inject much of its $10bn borrowing into the domestic economy to help lift the emirate from its economic malaise.

The government is about to appoint a financial adviser to hammer out loan terms for companies wanting credit lines from the $10bn loaned in February by the United Arab Emirates central bank to the city-state, which is suffering in the global crisis.

The first half of a $20bn government bond programme aims to help the emirate’s corporate giants pay off roughly $75bn (€56.4bn, £52.4bn) debt and meet commitments, especially in the troubled real estate sector, where some state developers have failed to pay large invoices for the past nine months.

UAE faces 2% deflation following sharp fall in rents

The UAE faces two percent deflation in 2009 driven by a 50 percent fall in Dubai rents, EFG-Hermes said in a report published on Mar. 26.

Egyptian investment bank EFG has also revised its GDP forecast to an overall contraction of the economy of 1.7 percent, meaning the country is likely to fall into recession this year.

Rents are a key driver of inflation, particularly in Dubai, and have been plunging in the last four months as the property downturn bites.

JCCI revokes weekend change

The board of directors of the Jeddah Chamber of Commerce and Industry has reversed a decision to change its weekend to Fridays and Saturdays.

The Jeddah Chamber of Commerce and Industry announced last week it was switching its weekend starting April 1 and that the Jeddah Chamber of Commerce and Industry board of directors had unanimously approved the move. However, a circular issued by the board of directors yesterday asked staff members to take note of new timings from April 1, which include the whole of Thursday and Friday off. Staff at the Jeddah Chamber of Commerce and Industry previously used to work half day on Thursdays.

Al-Sharif Awad Al-Hibaili, chairman of the JCCI Labor Committee, said a number of staff members had reservations about Saturday being a holiday and asked the board to reverse the decision to change the weekend. "The board of directors showed understanding toward the staff's request and revoked its earlier decision," he added.

Bahraini businessmen protest ex-pat tax

Hundreds of owners of small businesses in Bahrain demonstrated on Sunday in protest against a monthly tax they have to pay for each expatriate worker they hire.

The businessmen, many of them construction contractors, are unhappy with the ten dinars (26.5 dollars) per person monthly fee imposed on them by the Market Regulatory Authority, a government body, for their expatriate employees.

More than 1,000 business leaders took part in Sunday's protest, Ali Marhoun, head of the contractors' association, told AFP.