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Tuesday, 7 April 2009

MAKASEB Monthly Commentary for March 2009

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

Bank Muscat to Sell 60 Million Rials of Bonds to Boost Capital

Bank Muscat SAOG, Oman’s biggest bank, plans to sell 60 million rials ($156 million) of bonds to boost regulatory capital.

The seven-year subordinated debt, which goes on sale tomorrow, pays annual interest of 8 percent, said K. Gopakumar, the bank’s general manager and head of wholesale banking, in a phone interview today from Muscat. The sale closes May 7 and is open to domestic and foreign investors.

The sale will increase the bank’s combined Tier 1 and Tier 2 capital ratios, a measure of financial strength, by about 75 basis points, Gopakumar said. Bank Muscat had an overall capital adequacy ratio of 12.62 percent at the end of 2008, compared with the regulatory requirement of 10 percent, he said.

NASDAQ DUBAI Equities Trading Volumes Rise 62 Percent in First Quarter 2009

NASDAQ Dubai today announced that its equities trading volumes increased to 1.04 billion in the first quarter of 2009, a rise of 62 percent from the first quarter of 2008 (640 million) and of 27 percent from the fourth quarter of 2008 (817 million).

Trading in equity derivatives has also increased satisfactorily since they were listed on the exchange in November 2008. In March, 6,816 equity futures contracts traded, up from 386 in February and 90 in January.

A total of 6,865 Dubai Gold Securities (DGS) traded in March since they listed on March 2, 2009. DGS are designed to track the spot price of gold and have been declared Shari'ah-compliant. The DGS listing was the first listing on any stock exchange in the GCC in 2009.

First Persia Equity Fund March 2009 report (PDF)

The case for global equity

Drop in on any chief investment officer in the western world: while the accents change, the refrain doesn’t. Money managers enthuse about a fundamental shift underway, a transfer of power from developed to emerging economies.

Investors seem to be buying it. First-quarter net inflows into emerging-markets focused funds were $3.2bn, versus net outflows in developed markets of $59bn, according to EPFR, which tracks about $11,000bn in total assets. The FTSE All-World Emerging equity index is up 8 per cent this year, versus a 7 per cent fall in the Developed.

Decoupling, in short, is back. But does this kind of geographic diversification actually work, as an investment strategy? Historically, no. The relationship between the Emerging and Developed indices has steadily strengthened since the early 90s.

Dubai, Saudi and Egypt best bets in Mena

Equity fund Frankfurt Trust said it sees solid banks and a rising population as making Saudi Arabia the best investment pick in the Middle East and North Africa (Mena) region, along with Egypt's banks and Dubai stocks.

Redemptions and market falls have slashed the value of the trust's Emerging Arabia fund from some €400 million (Dh1.99 billion) in June 2008 to €25.5m in early April.

Emerging Arabia fund manager Birgit Ebner said she is hoping for a turnaround in the fund's fortunes as emerging markets rally. She has 29 per cent of the fund in Saudi stocks, which fell 49 per cent last year but have gained 14 per cent since March 1.

GE Energy signs deal with Emal

GE Energy yesterday signed a multi-year contractual service agreement (CSA) with Emirates Aluminium (Emal) as it nears completion of what will become the world's largest single-site aluminum smelter complex.

The CSA will support Emal's recent investment in GE gas turbines and the long-term productivity and efficiency of the turbines.

Under the CSA, GE Energy will supply a wide range of services for the gas turbines, which are equipped with its advanced emission control technologies to help Emal reduce its carbon footprint and meet the regulatory requirements set by the Abu Dhabi Environmental Agency.

ADA signs distributorship with Brazil’s Aeromot

Abu Dhabi Aviation (ADA), the largest commercial helicopter operator in the Middle East, has signed an exclusive distributorship agreement with Aeromot, the Brazilian aircraft manufacturing company.

The agreement gives ADA the marketing rights to Aeromot’s complete range of motorised glider aircraft in the Middle East and the Far East, with the exception of China and Japan, an ADA statement said.

The deal, reported in Trade Arabia, was signed between Nadir Al Hammadi, Abu Dhabi Aviation’s managing director and Claudio B. Vi├ína, president and co-founder of Aeromot, at Abu Dhabi Aviation’s headquarters in the UAE capital.

DIFC reports 5% jump in registrations

The Dubai International Financial Centre (DIFC) has reported a five per cent jump in the number of companies registered with it over the past year despite the global financial crisis.

"The DIFC has witnessed an increase in the number of client applications in the month of January 2009 compared with the same period in 2008," said Abdulla Mohammed Al Awar, Managing Director of the DIFC Authority.

"In the first quarter of 2009, the centre recorded a five per cent rise in the number of registered companies compared with the same period last year."

Qatari LNG project will boost output

It was a time for superlatives at the inauguration ceremony for Qatar’s biggest gas-export development.

The US$13.2 billion (Dh48.48bn) Qatargas 2 project included building three unmanned offshore platforms for extracting gas from the world’s biggest gasfield, and the two largest production “trains” ever built for producing supercooled liquefied natural gas (LNG).

It also included a fleet of 14 LNG supertankers from Korea, the biggest such ships ever built, and Europe’s largest LNG receiving terminal, at Milford Haven in Wales.
“This is an important day for the LNG industry and the state of Qatar,” said Abdullah al Attiyah, the Qatari deputy prime minister and minister of energy and industry.

German firms look to Abu Dhabi investors

Abu Dhabi investors are reported to have held discussions about a number of German manufacturing companies, including a possible interest in the ailing German car maker Opel.

Opel, which has said it needs €3.3bn in state aid to avoid layoffs and plant closures, is under pressure to win private-sector support, a condition set by the German chancellor, Angela Merkel, for state loan guarantees.

So far, there have been no serious public declarations of interest in investing in Opel, despite widespread speculation about a number of possible investors.

Go your own way to tackle crisis

Countries in the Gulf should take their own measures to deal with the financial crisis, the Central Bank Governor said yesterday.

“The issues that each country will have to deal with are different. Every country has taken its own crisis mitigation measures,” Sultan al Suwaidi said at the biannual meeting of GCC central bank governors in Muscat.

This time, the region’s governors met to discuss the effects of the financial crisis on the region and the success of measures taken by the individual states to mitigate them.

Toxic debts could reach $4 trillion, IMF to warn

Toxic debts racked up by banks and insurers could spiral to $4,000bn (£2,700bn), the Times reported, citing new forecasts from the International Monetary Fund due to be published on April 21. The IMF said in January that it expected the deterioration in US-originated assets to reach $2,200bn by the end of next year, but the Times understands it to be looking at raising that to $3,100bn in its next assessment of the global economy. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.

Colony Capital Weighs Secured Loan to MGM Mirage

Colony Capital, the real-estate-focused private equity firm, is considering making a loan to MGM Mirage to help the struggling casino operator refinance some of its debt, a person briefed on the talks told DealBook on Monday.

By making a loan to MGM Mirage, secured by at least one casino — as opposed to simply investing in its CityCenter development in Las Vegas — Colony could potentially gain access to at least one of MGM Mirage’s lucrative properties. MGM Mirage is seeking to ways to help finance the completion of CityCenter, a sprawling residential and casino project whose future has been called into question amid growing concern over its parent’s financial straits.

Colony is still in talks with MGM Mirage and its CityCenter partner, Dubai World over a variety of potential actions, and it may decide not to make an investment or loan at all, this person cautioned.

Small US loans act as a catalyst for Iraqi business

There is still at least one place in the world where “credit” is not a dirty word: Iraq. In dusty shops and on basic farms across the country, fledgling microfinance projects are helping to revive an economy crippled by the Saddam-era preference for the public sector, a decade of international sanctions followed by six years of violence.

“I have increased my earnings and improved my family’s quality of life,” says Hamza Abid Ali, a grape-grower from Balad who has quintupled his income since taking out a $2,400 (€2,200, £2,000) loan from the Al-Baydaa Centre, a US-backed microcredit scheme.

“I was earning only 500,000 dinars [$432, €322, £292] from each donam [unit of land] on my vineyard,” says Mr Ali, a 33-year-old father of three.