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Monday, 6 April 2009

Dubai launches budget airline

The Gulf emirate of Dubai announced on Monday the launch of its first budget airline called flydubai, which will be taking to the skies in two months despite the global financial crisis.

Flydubai will start with flights to the Lebanese capital Beirut on June 1 and to Jordan's capital Amman on June 2, company chairman Sheikh Ahmed bin Saeed al-Maktoum told reporters.

"We are committed to bringing a new option to the market and to growing the region's budget air travel business," Sheikh Ahmed said at a press conference.

Australia's Crown: no Vegas project investment talks

Australian casino operator Crown Ltd (CWN.AX) denied on Monday media speculation that it was considering an investment in the $8 billion CityCenter project in Las Vegas.

The Wall Street Journal reported on Sunday that Crown's owner, Australian billionaire and gambling magnate James Packer, is weighing a stake in the development, which is owned by MGM Mirage (MGM.N) and Dubai World [DBWLD.UL].

The project faces uncertainty after Dubai World sued MGM over the development and expressed concern about MGM's ability to survive. (Reporting by Jonathan Standing)END

Gulf states fail to agree on new timetable for common currency

The global financial crisis appears to have claimed a new casualty: the Persian Gulf dream of creating a common Arab market in the next few years with its own currency modeled after the European Union.

Gulf central bankers met today in Muscat, Oman to discuss plans to create a unified currency, a vision whose near-term prospects are in doubt as the oil-rich states draw up their own plans to deal with the impact of crude prices that have tumbled almost 70% from their highs. The six-nation Gulf Cooperation Council last month dropped its 1 January 2010 deadline for a common currency.

“All attention is now focused on the global financial crisis,” said Eckart Woertz, an analyst with the Dubai-based Gulf Research Center. “It’s important to develop a greater degree of unity to go down the path of monetary union. Now it’s every man for himself.”

GCC fiscal surplus at $605bn in six years

Strong crude prices allied with high output to allow Gulf oil producers to accumulate a staggering fiscal surplus of nearly $605 billion (Dh2.22 trillion) over the past six years, according to a key Kuwait bank.

Saudi Arabia, the world's oil basin, controlled more than half that surplus which was achieved despite a sharp rise in actual expenditure by the Gulf Co-operation Council (GCC), the National Bank of Kuwait (NBK) said in a study about the bloc's fiscal developments.

The study said more than a third of that surplus was recorded in 2008 but expected the GCC nations to slip back into a deficit this year due to a steep decline in crude prices and their oil output.

Kuwait is mistaken in cutting spending: GIH

Kuwait is making a mistake in its decision to slash public spending as this will further depress its economy that has already been jolted by the global financial turmoil, an investment bank in the country said yesterday.

After recording strong growth in 2008 due to a surge in oil prices and the country's crude output, Kuwait's economy has started to slow down and growth is expected to plunge through 2009, Global Investment House (GIH) said in a strategic report on Kuwait.

"There is an urgent need on the part of the Kuwait government to adopt an expansionary fiscal policy at this critical juncture to minimise the impact of the economic crisis. However, as per the preliminary reports, the government has expressed its intention for a contractionary budget for 2009-2010," the report said. "Almost everybody was expecting the new budget to be much of a capital expenditure budget that might see actual deficit due to increased spending on mega projects. In fact most of the GCC countries as well as other economies around the world are announcing expansionary budgets. We believe in the current circumstances it is much better to record a budget deficit while increasing capital expenditure rather than reporting ongoing increasing surplus while keeping capital expenditures at a lower level."

Dubai Government to receive Dh1.5bn in dividends

The Government of Dubai will receive about Dh1.54 billion as dividend for 2008 from six listed companies in which it holds varying percentages of shareholding.

The biggest chunk – more than Dh560 million – has come from Emirates NBD, the country's largest bank by assets, in which the Dubai Government owns 55.6 per cent through the Investment Corporation of Dubai (ICD).

The emirate's government owns equity stakes in several companies listed on the Dubai and Abu Dhabi stock exchanges.

All the best for the West, but what’s in it for the Gulf?

The Group of 20 (G20) meeting in London, which the British prime minister Gordon Brown said marked the emergence of a “new world order”, is likely to go down in history as a triumph of form over content and a victory for the “smoke-and-mirrors” school of economists.

In particular, the Middle East appears to have put little into, and therefore got little back from, the meeting, which was the region’s best opportunity yet to make its mark on the post-crisis world.

I suppose it was an achievement of sorts that all those heads of state were able to sit together for a day without a major diplomatic incident, and the impression of unity, however fleeting, in the face of the great challenges facing the global financial and economic systems is to be welcomed.

DGCX trading soars 70 per cent by strong demand on currencies

Trading volumes on the Dubai Gold and Commodities Exchange (DGCX) last month were a record for March and indicate a recovery from a long slowdown.

Interest in commodities trading in Dubai fell sharply in the last quarter of last year, as traders reduced their positions on all of the emirate’s markets. Trading volumes since January are still down 33 per cent compared with the same period last year.

However, total volume for the first quarter of the year is up 70 per cent from the end of last year, boosted by increased interest in currency trading, said Malcolm Wall Morris, the exchange’s chief executive.

RBS needs five years to get over ABN fallout

Royal Bank of Scotland will take at least three to five years to recover after the disastrous acquisition of ABN Amro assets that were instrumental in damaging its balance sheet, chief executive Stephen Hester said at the bank’s annual meeting on Friday. Mr Hester said insufficient risk controls, a short-term profit focus and misguided strategy were among a series of problems that, combined with the ABN deal, saw the once-great Scottish bank fail, the Telegraph reported. At the same meeting, chairman Philip Hampton declared, “we should bring to an end the public flogging and focus on the good and enduring people and businesses of RBS and allow them to earn our way back to success.”

Kuwait sovereign fund head urges coordination

Heads of sovereign wealth funds which control three trillion dollars of assets opened a meeting in Kuwait on Sunday with a call for coordination in the face of the global economic meltdown.

"This crisis places an extra pressure on our group to have increased coordination and greater cooperation," Bader al-Saad, managing director of Kuwait's sovereign fund, Kuwait Investment Authority, said at the opening session.

Sovereign wealth funds bought stakes in many big banks including UBS, Citigroup and Merrill Lynch to help bale them out during last year's credit crunch but the funds' overall values have plunged amid sharp falls in stock market indexes.

Dubai's rulers say success of the emirate is no mirage

The United Arab Emirates turned out in force for the Dubai World Cup last weekend. Western expats and Sudanese construction workers were among the thousands who joined Dubai's ruler Mohammed bin Rashid Al Maktoum to watch Well Armed romp home 14 lengths clear to collect more than $6m (£4m) in prize money.

Sheikh Mohammed was not going to let a global financial crisis distract from his annual festival of flat racing. A passionate enthusiast he (and his entourage) spent almost the entire night in the parade ring inspecting some of the world's finest thoroughbreds. The Dubai prime minister only returned to his seat for the firework display that preceded the main race.

But for many others at the Nad Al Sheba racecourse, the horse racing – however spectacular – was of secondary concern. The World Cup was a chance to swap notes on the financial maelstrom that has engulfed Dubai over the last year.

Istithmar to extend cash life-line to Barneys-NY Post

The Dubai investment agency that owns Barneys New York Inc will inject at least $10 million into the struggling high-end retailer, the New York Post reported on Sunday.

The new capital from the Dubai government investment agency Istithmar World should enable Barneys to pay down its revolving credit facility and free up cash, positioning it to ride out the current U.S. economic recession, the Post said.

The newspaper said Barneys, which still has no chief executive, recently laid off 76 workers.