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Thursday, 16 April 2009

Collateral Damage Part 6: Underestimating the Crisis (PDF)

The sixth paper in the Collateral Damage series considers actions taken by companies around the world in light of the unfolding economic crisis, as reported in a new BCG survey of more than 400 major companies based in seven developed countries. Our key finding is that too many companies appear to be doing too little, too late. We offer some thoughts about how to instill a sense of urgency into an organization—including treating a company like a turnaround.

Global's Kuwait Weekly Report - April 16, 2009 (PDF Arabic)

Global's Kuwait Weekly Report - April 16, 2009 (PDF English)

Joint venture pulls out of $1.3bn Dubai airport deal

A joint venture company on Thursday confirmed it has withdrawn from a $2 billion project to build Dubai’s Airport Concourse 3.

In a statement on the company's website, the Al Habtoor - Murray & Roberts - Takenaka joint venture (HMRT) announced it was pulling out due to its "inability to conclude an acceptable contract".

The group won the award in December 2008 and had been working with airport chiefs to finalise the contract terms but an agreement has not been possible.

Saudi Stock Market Weekly Report 15 April, 2009 (Registration required)

Emirates NBD launches Emirates Investment Services in Riyadh

Emirates NBD, the largest banking group in the Middle East in terms of assets has announced the launch of Emirates Investment Services in Riyadh (EIS - KSA), Kingdom of Saudi Arabia. Emirates Investment Services, a subsidiary company of Emirates NBD has chosen an ideal location for its offices, in the heart of the business area at Al Tahlia. Licensed and approved by the Saudi Capital Markets Authority (CMA), EIS will provide Brokerage, Asset Management, Corporate Finance Advisory, Investment Advisory and Custody services to Kingdom's market. The launch was announced during a press conference held today (Wednesday, 21st of January, 2009), in Riyadh.

Commenting on the launch of EIS - KSA, Mr. Khaled Kalban, Chairman, Emirates Investment Services - KSA said: "As part of the Emirates NBD Group in the UAE, EIS will be ideally positioned to cross-sell products and services to existing clients, use the existing expertise and client base from within the Group to develop and grow its business in the Kingdom. EIS would also be looking to offer investment alternatives to Saudi Clients in the UAE market."

Since August 2008, EIS- KSA has been providing state of the art securities brokerage and investment banking services. Headed by Ahmed El Edwy, EIS has built up a team of professionals to provide approved services to investors and corporate entities in Saudi Arabia. Expansion plans are in place by opening additional offices in other cities in the future.

Shariah fund beats peers

With year-to-date (YTD) return of 15.76 per cent by the close of March, the world's first Shariah-compliant gold hedge fund – the Dubai Shariah Asset Management (DSAM) Kauthar Gold Fund (DKGF) has outperformed its peers in the first quarter since launch.

The fund's YTD return stands higher than all other gold-based products, DSAM data showed.

Adherence to Shariah laws adds to the fund's strength, its managers said.

While the Philadelphia Gold and Silver Index (XAU), one of the most watched gold indices in the markets saw a return of 8.59 per cent until April, direct investment into the gold futures at Chicago Mercantile Exchange (Comex) in January this year would have guaranteed returns up to 4.35 per cent by April 1.

DFSA to increase on-the-spot checks to keep a closer eye on DIFC firms

While denying reports of bankruptcy in any of the DIFC-based companies and insider trading on Nasdaq Dubai, a Dubai Financial Services Authority (DFSA) official said the authority, however, would be looking at the firms more closely and will make more on-the-spot checks.

"We do not know any Chapter 11 approach here," Paul Koster, Chief Executive of DFSA, told Emirates Business. "If you take England – when Lehman Brothers collapsed – it became very apparent that the bankruptcy approach in the UK is very different from the US. It's one of those aspects that has not been globalised. The bankruptcy proceeding is very complicated and could have different approaches."

DFSA currently supervises and regulates 317 entities: 245 authorised firms, 55 ancillary service providers and 17 registered auditors.

Pay up, NBQ tells Global

A dispute between the National Bank of Umm al Qaiwain (NBQ) and Global Investment House of Kuwait over the delayed payment of Dh1.44 billion (US$392 million) could be settled in a UAE arbitration court, company sources say.

NBQ is demanding payment from Global, the troubled Kuwaiti investment firm, in accordance with a deal arranged last year in which Global would purchase a 20 per cent stake in NBQ.

In July, the two banks agreed that Global would buy a bond from NBQ worth Dh2.36bn, which eventually would convert into 330 million new shares of the bank. Although the bond has not been issued, Global has paid NBQ Dh918.2m as an advance on the sale.

Shuaa shareholders vote to save the company

The shareholders of Shuaa Capital, one of the country’s largest investment banks, yesterday gave the green light to their management to continue operations and resolve a long-running dispute over a convertible bond.

According to national law, shareholders have the option to dissolve a company if its annual losses amount to more than half of its capital. Last year Shuaa posted a Dh949 million (US$258.3m) loss, compared with Dh550m in paid-up share capital.
Shareholders yesterday gave the board blanket permission to renegotiate the terms of the bond with Dubai Banking Group. As part of this, they also authorised the issue of more shares to pay for the bond, should that become necessary.

Shuaa has said it wanted to find “a creative solution” to end the dispute. The vote was unanimous on both issues.

China growth slows to record low

China’s economy slowed in the first quarter to its weakest pace on record, but an improvement in data for March offers tentative signs that the worst may be over for the world’s third-largest economy, reports Reuters. Annual GDP growth fell to 6.1%, down from 6.8% in the preceding quarter and slightly below economists’ forecasts of a 6.3% rise - marking the weakest growth since quarterly records began in 1992.

NYSE chief cautions on March rally

The March stock market rally that fuelled hopes of a broader economic recovery was deceptive because “real money” investors remained on the sidelines, said the chief executive of NYSE Euronext, the world’s largest stock exchange. In rare comments about market movements, Duncan Niederauer told the FT that the rally was driven by short-term traders trying to exploit high volatility and not by large institutional or other long-term investors.