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Thursday, 2 April 2009

Saudi Stock Market Weekly Report - 1-April-2009

DFM halts eight stocks

The Dubai Financial Market halted trading of eight stocks yesterday due to failure to report earnings for the fourth quarter of 2008. Arab Emirates Investment Bank was the only local listing to be suspended from trading for missing the deadline to report earnings. The other seven suspended shares are Kuwaiti firms in light of a similar suspension in their main market.

“The DFM listing department was keen to send reminders to some companies in order to comply with the deadline and get full disclosure in the financial reporting,” said Fahima al Bastaki, senior vice president and market development division director at the DFM. [CK] “Our reminders were clear about the need to receive comprehensive disclosures that comply with [the Securities and Commodities Authority’s] requirements.”

By the end of March 2009, the total number of UAE public joint stock companies listed on the DFM that disclosed their annual results stood at 40 companies out of 41, “with the exception of Amlak Finance, Tamweel and Drake & Scull for procedural reasons.”

Publicly listed firms had 90 days from the end of the fiscal year to report earnings.

The foreign firms listed on the DFM that failed to report earnings are some of the largest financial services firms in Kuwait, including Global Investment House and Kuwait Finance and Investment Company. The other firms are International Investment Group, Al Madina for Finance and Investment, Gulf Petroleum Investments, Grand Real Estate Projects Co, International Financial Advisors and International Investment Group.END

Oil-Rich Arab State Pushes Nuclear Bid With U.S. Help

The mating of the words "nuclear" and "Persian Gulf" normally sets off alarm bells in Washington. Yet this oil-rich Arab state just across the gulf from Iran is on a crash course to develop nuclear power with U.S. backing.

Dozens of American engineers, lawyers and businessmen have converged on Abu Dhabi in recent months to help the United Arab Emirates get the Arab world's first nuclear-power program running by 2017. "I don't know anyone else who has rolled out a nuclear program of this magnitude this fast," says Jeffrey Benjamin, an American engineer who in October was named project manager for Emirates Nuclear Energy Corp., which oversees Abu Dhabi's nuclear program.

Even as the U.S. remains determined to block Iran from developing nuclear weapons, President Barack Obama sees the U.A.E. program as a "model for the world," according to a senior White House official, and by mid-April could move to present a bilateral nuclear-cooperation treaty to Congress for approval. The ability to make electricity through nuclear power is a long way from the ability to build weapons -- and, proponents say, the agreement could make bomb-making harder.

A "friendship bridge" from Puget Sound to the United Arab Emirates

IMAGINE an international market where Boeing and Microsoft have regional headquarters, where the University of Washington runs a training program, and where several Seattle architectural firms are engaged in large projects.

Now imagine that this international market was nothing but sand 30 years ago, that one of the principal cities has a sovereign wealth fund of nearly $300 billion, and that they are positioning their region to be a global center in finance, air transportation, culture and tourism.

Fortunately for our region, which has one in three jobs tied to international trade, this is no mirage. Such an economic oasis exists in Abu Dhabi and Dubai in the United Arab Emirates (U.A.E.). Recently, 83 civic leaders from the Puget Sound region spent 10 days there on an international study mission. The mission, sponsored by the Greater Seattle Chamber of Commerce and the Trade Development Alliance, represents one of the largest and longest of its kind to the U.A.E.

Colony Said to Discuss CityCenter With MGM, Dubai (Update2)

Buyout firm Colony Capital LLC has held discussions with MGM Mirage and Dubai World that include a possible investment in the unfinished CityCenter project on the Las Vegas Strip, said a person familiar with the discussions.

It isn’t certain whether the talks will lead to an investment in CityCenter, said the person, who declined to be named because discussions are private.

An infusion would bolster cash-strapped MGM Mirage and CityCenter, the biggest project on the Las Vegas Strip with a casino, hotels, apartments and shopping. The multibillion dollar development, due to open in December, is threatened by cost overruns, MGM Mirage’s debt problems and a global recession that led to the Strip’s biggest gambling decline on record last year.

TrimTabs Investment Research Estimates 700,000 to 750,000 Jobs Lost in March; Job Loss of 4.3 Million in Past Twelve Months Biggest since 1970


TrimTabs Investment Research estimated today that the U.S. economy lost 700,000 to 750,000 jobs in March as wages and salaries plunged 4.5% year-over-year. TrimTabs estimated that the economy shed 4.3 million jobs in the past 12 months, the largest annual job loss since 1970.

"Job losses have been accelerating in recent months," said Charles Biderman, CEO of TrimTabs. "Investors who think the economy is bottoming out are going to get quite a shock this spring." TrimTabs uses daily income tax withholdings into the U.S. Treasury to estimate changes in employment. According to TrimTabs, the country lost 2.1 million jobs in the past three months and 3.4 million jobs in the past six months.

"For the job loss in March, we refer to a range rather than an exact figure because several special factors skewed the withholdings data," Biderman said.

GCC sovereigns Resort to the Bond Market (Registration required)

In recent days and weeks, most of the GCC governments have announced plans (or hinted at) issuing sovereign bonds. Kuwait, Abu Dhabi, Dubai (of the UAE), Qatar and Bahrain have all suggested they would issue bonds in coming months, totalling several billion dollars.

In recent years, the issuance of sovereign debt by GCC governments has been quite limited to Bahrain and Oman in light of the enormous surpluses accrued in light of the once-soaring oil prices. In fact a few sovereigns, and sub-sovereigns like Abu Dhabi, did not even have credit ratings. Instead most of the limited bond issuance was by government-linked companies throughout the region. Yet, and as we have explained in a recent piece, with the reversal in hot money, in addition to the the losses and continued losses in the region’s equity markets, the cost of long-term borrowing sky-rocketed, highlighting the vulnerability of relying on external finance even as new revenues began to fall as investment returns and oil revenues fell sharply. Also, with external finance expected to grow at a slower pace in the face of the continued global liquidity crunch, GCC countries are left with no other option but to try to explore other sources of financing to tap the latent funds available in the region and from foreign investors looking for relatively safer credit risks.

Limitless reviews $12bn India project

Limitless, the global master-development arm of Dubai World, yesterday said it is currently reviewing its position on its $12 billion (Dh44bn) mixed-use project in India as it is yet to acquire land, a company official said yesterday.

"Limitless and India's DLF won the bid to build Bidadi in October 2007. Under the agreement, government agencies are responsible for the land acquisition. Unfortunately, after 18 months, the land acquisition has not advanced. As a result, Limitless and DLF have notified the government that they are reconsidering their position," Rebecca Rees, Corporate Media Relations Manager, Limitless, told Emirates Business.

Rees said the joint venture is liaising with Bangalore Metropolitan Regional Development Authority (BMRDA) in relation to the progress on the project.

Mashreq launches Egyptian operations

Dubai-based Mashreq yesterday launched its Egyptian operations with 10 branches in Cairo and Alexandria and a capital outlay of EGP560 million (Dh367m, $100m).

Speaking at the launch, Chief Executive Abdul Aziz Al Ghurair said banks played an important role in Egypt's recent economic growth.

"The Egyptian banking sector is a key player in the growth of the country's economy, especially in light of the remarkable GDP growth that averaged seven per cent over the last two years," Ghurair said.

SCA tightens supervision on margin trading

The Securities and Commodities Authority (SCA) has issued a notification to all brokerage companies in the country banning them from getting incomplete sale/purchase orders signed by their clients.

The SCA has warned that brokerage firms as well as violators would be held criminally accountable in accordance with the provisions of the Penal Law.

"Pursuant to SCA's control and oversight role to protect investors' rights and interests, the SCA stresses that all companies currently dealing with securities should strictly abide by the requirements to complete all sale/purchase orders before obtaining the client's signature and at the same time not to obtain the client's signature on any incomplete orders that are void of the key information," said the SCA.

Kuwaiti oil firm in buying mode

Kuwait Foreign Petroleum Exploration Company, or KUFPEC, the international investment arm of Kuwait Petroleum Company (KPC) is on an urgent global hunt for corporate acquisitions and oil-producing assets, and it is not too picky about what to buy.

Charged by KPC with nearly doubling its output by next year, the company was seeking to negotiate one or more substantial deals by the end of this year that would add at least 10,000 barrels of oil equivalent per day (boepd) of oil and gas production and 30 million barrels equivalent of reserves, said Shayma Amin, an international business analyst and petroleum engineer with KUFPEC.

“KUFPEC has gone into acquisition mode this year,” she told an oil conference in Dubai. “Our production targets are very sharp. We need to reach our targets. The only way to do so is by corporate acquisitions.”

TDIC signs mortgage deals with five banks

In a move to boost buyers’ confidence in Abu Dhabi, the Tourism Development and Investment Company (TDIC) today announced agreements with four banks and a finance company to provide mortgage financing for buyers.

Lee Tabler, the chief executive of TDIC, said the agreements would “demonstrate that, despite the current financial climate, Abu Dhabi is still a viable and attractive investment opportunity”.

The offerings are more generous than those being offered by most banks. Lending to property buyers has been cut back dramatically as a result of the slowdown in the property sector.

Sharjah will launch ‘bottomless’ stimulus package for smaller firms

Sharjah will launch a “bottomless” stimulus package amounting to hundreds of millions of dirhams to insulate tens of thousands of small and medium-sized businesses against the global downturn, the head of the emirate’s chamber of commerce said yesterday.

Speaking at a press conference, Hussain Mohammed al Mahmoudi said there were signs the enterprises, which are the engine of the emirate’s economic growth, were feeling the pinch of the downturn.

The chamber of commerce has issued 646 new commercial licences so far this year, six per cent fewer than in the same period last year, marking the first drop in a decade.

Abu Dhabi raises $3bn through bond issue

Abu Dhabi’s first bond issue in almost two years has been well received by international lenders, raising US$3 billion (Dh11.01bn). The success shows that cautious global lenders are willing to provide funds to highly rated governments in the region, according to bankers.

The debt offering, issued in one of the tightest credit markets in decades, was oversubscribed more than two times as investors offered to buy about $7bn of the bonds. The emirate limited the amount it borrowed to the $3bn.

The issue will be split in two, with one five-year tranche of $1.5bn, and a second tranche of $1.5bn with a tenure of 10 years. They would be priced at 400 and 420 basis points (or hundredths of 1 per cent) over US treasuries respectively, one banker said. The emirate had not decided on how the money would be used, although much of it would be for general budget expenditures, government officials have said.

Dubai turns to PR to revive its image

Dubai has appointed London public relations group Finsbury to handle its financial communications strategy as the city state seeks to head off negative media coverage of its troubled economy.

Finsbury, part of WPP Group, will handle the emirate’s global financial communications at a time when the financial crisis is hitting its globalised economy hard.

“Finsbury will have a global mandate with a focus on the City of London,” said Dubai’s department of finance. “They are there to explain to stakeholders the new financial strategy of Dubai.”

Crisis-hit Dubai restructures corporations

Under the radar, Dubai has launched a wide-ranging restructuring of its top government-affiliated companies as the emirate struggles to put its house in order to confront the global crisis.

The restructuring is aimed at reducing costs and consolidating the sprawling empires that have been instrumental in fuelling Dubai’s debt-driven growth, at a time when all the city-state’s revenue sources, including trade, tourism and finance, have been hit.

Dubai’s assets have been grouped in three silos – Dubai World, the Investment Corporation of Dubai and Dubai Holding. The latter is owned by Sheikh Mohammed bin Rashid Al Maktoum, the ruler.

Saudi Arabia will play part in recovery

As the world’s leaders meet in London to seek ideas and funds in order to prevent a systemic collapse of the global economy, many eyes have turned to Saudi Arabia as an obvious source of cash.

The kingdom’s contribution to rescuing the global financial system has been far from negligible. It is investing more than $70bn to bring its oil production capacity to 12.5m barrels a day by the end of this year.

More than 40 per cent of the new total capacity will remain unused so that global consumers can tap into it at a later stage. Saudi Arabia’s current control of production capacity makes Tehran and Moscow, to name but two, completely dependent on its adjustments.