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Wednesday, 8 April 2009

Saudi Stock Market Weekly Report - 8-April-2009

Dubai Indicts Ex-Minister Kharbash In Deyaar Case-Prosecution

Dubai's Public Prosecution indicted and refered to court Wednesday Mohammed Khalfan Bin Kharbash, former government minister and ex-chairman of Dubai Islamic Bank PJSC (DIB.DFM), for alleged embezzlement and "harming state interests", according to an emailed statement from the prosecutor's office.

Kharbash is alleged to have seized "public money and harmed the state's interests" in relation to an investigation into financial wrongdoing at Deyaar Development PJSC (DEYAAR.DFM), according to the statement.

The prosecution has also accused Kharbash of aiding Zack Shahin, former chief executive of property company Deyaar, to allegedly take company money. Kharbash was also chairman of Deyaar before he resigned early last year.

Abu Dhabi pursues gas projects despite crisis

Abu Dhabi is pumping nearly $10 billion (Dh37bn) into projects to expand its gas output capacity despite plans by several Middle East nations to shelve key hydrocarbon projects because of the global financial turmoil.

The government-controlled Abu Dhabi Gas Industries Company (Gasco), the main onshore gas operator in the emirate, said the projects will increase the firm's production in five years.

"The projects are in line with Adnoc's general plans to expand its sustainable oil and gas production capacity by developing its associated and non-associated gas resources," Gasco general manager Mohammed Al Suwaidi told Adnoc's quarterly bulletin, Adnoc News.

Several UAE corporates finalising sukuk launches

Several UAE-based corporates are finalising plans to launch sukuk issues, which have slowed down since the spreading and deepening of the financial crisis from mid-2008, according to an Islamic finance expert.

Talking to Emirates Business, Dr Hussain Hamid Hassan, Chairman of Dubai Islamic Bank (DIB) Shariah board, said: "You will see several sukuk issues hitting the market within months."

With "back to basics" emerging as the most-sought-after catchphrase in the financial services industry during the current crisis, Islamic fund raising programmes are fast gaining popularity in the GCC markets, industry experts said.

Crisis pushing bank mergers

Gulf banks could be forced to merge to avert a possible collapse resulting from a sharp decline in their performance because of the global financial crisis, a key Saudi investment fund reported yesterday.

While many banks in the six-nation Gulf Co-operation Council (GCC) managed to withstand the crisis because of their low vulnerability and strong government intervention, other banks with low capitalisation still face major risks and could resort to mergers to save themselves, said NCB Capital, an affiliate of the Saudi National Commercial Bank.

In its April report, NCB Capital said banks in the six members are facing what it described as a strenuous time with a slowdown in credit growth, declining interest margins, and increasing pressure on profits from higher provisions due to deteriorating asset quality and investment losses on equity exposure.

Learn from your losses, says Sheikh Hamdan

Sheikh Hamdan bin Zayed, the Deputy Prime Minister, has few words of comfort for those who lost money in the stock markets, saying people should live within their means.

Many investors have seen their wealth decline sharply over the past year due to falls in property prices and shares.

“I hope the Government will do something to solve this problem, but I personally do not subscribe to irrational assistance,” WAM, the state news agency, quoted Sheikh Hamdan as saying in an interview with Kuwaiti dailies Al Seyassah and Arab Times.

Investing like it's 2008

The stunning jobless numbers of the US last week warrant a return of concern away from Europe, where things seem to be deteriorating more slowly now, to the US once again. The difference is that fears that the US and the rest of the world faced financial Armageddon seem to have abated. The massive amounts of government borrowing and spending now planned have apparently arrested a freefall of the financial system and the economy, and the Treasury Department’s plan to extract toxic assets from banks doesn’t appear to have been completely derailed by the Financial Accounting Standards Board’s new ruling on mark-to-market, though the jury is still out. The Treasury is also considering broadening the list of private investors it will let buy the non-performing assets.

So optimism is rising, or put more accurately, pessimism is abating. Stocks have begun to bobble off their lows and credit markets appear to be thawing. But it’s too early to call a bottom. It is likely to cost even more to resuscitate America’s banks, and it could be six months to a year before housing prices and employment rates bottom out. Companies are still cutting salaries, benefits and jobs. The US could face years of excess capacity, a problem not only for American industry, but for exporters in Asia. And capital flows into and out of the US – the throbbing nucleus of the liquidity bubble that for so long absorbed the excess savings of emerging markets and then allocated risk capital back out to finance emerging markets’ growth – has plummeted.

Nonetheless, investors are now returning to risk, believe it or not, and concerns that had hitherto buttressed US Treasuries are now buoying emerging markets. Some of this is based on an expectation that inflation will return as the Fed’s quantitative easing takes its toll. The dollar is consequently suffering. This should be positive for commodities as inflation hedges, such as gold and oil.

iShares launches Gulf-based ETF

iShares, the world's leading exchange-traded fund (ETF) provider, has laun-ched its first ETF product with underlying assets in the GCC ex-Saudi Arabia.

The fund provides a transparent tool for investors looking to geographically diversify their asset allocation. The IGCC seeks to track the MSCI GCC Countries ex-Saudi Arabia index, providing the fund with a reputable and proven benchmark while ensuring there is adequate diversification in the fund.

"The launch is in response to client feedback asking for index-based products that are simple, cost efficient and transparent, providing instant access to the GCC equity markets," said Robert Broadwell, Head of Sales for iShares, Middle East

Abu Dhabi Airport expansion plans to go ahead despite recession

Etihad Airways is currently serving 31 destinations to and from Terminal 3 at Abu Dhabi International Airport with an average of 70 flights per day, Gulf News has learnt.

The Dh1-billion Terminal 3 will enable the airport to serve up to 12 million passengers a year, an increase of more than 5 million.

Terminal 3 is part of Abu Dhabi Airport Company's (ADAC) Dh25 billion development plan intended to expand airport capacity to meet the projected increase in business and leisure traffic, the growth of Etihad and the demand from other airlines wishing to fly into Abu Dhabi.

Iraq’s economic hopes based on fragile stability

The changing fortunes of the train station in Bayji, the industrial heartland of Iraq, might be considered a metaphor for the security situation in this fragile country.

Two years ago the station was an insurgent stronghold. Sunni militants kidnapped people and beheaded many in the gloomy passages under the tracks, and assembled car bombs in the warehouses.

Today, it is literally at the crossroads of plans to rejuvenate the economy in northern Iraq. Running half the length of Bayji, the train station lies at the nexus between Baghdad, Mosul, Kirkuk and Ramadi.