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Tuesday, 21 April 2009

Sabic sees first quarter loss

Saudi Basic Industries, the world’s largest petrochemical company, reported worse than expected first quarter results on Tuesday which it attributed to tumbling prices for its products worldwide and to the write-down of goodwill on a 2007 purchase.

The company, the largest listed on the Saudi stock exchange, said that it had lost SAR974m ($259.3m) in the first quarter compared to a profit of SAR6.92bn in the same period last year. The loss was bigger than analysts’ expectations.

Mohammed bin Hamad al-Mady, Sabic’s CEO, said that end-users were having difficulty in obtaining financing and that global slowdowns in the automobile, electronics and building sectors had affected demand for petrochemicals generally and for plastics in particular.

End of Economic Gloom? Not as Early as You Wish. Roubini’s latest Article for Project Syndicate (Registration required)

Mild signs that the rate of economic contraction is slowing in the United States, China and other parts of the world have led many economists to forecast that positive growth will return to the US in the second half of the year, and that a similar recovery will occur in other advanced economies.

The emerging consensus among economists is that growth next year will be close to the trend rate of 2.5 per cent.

Investors are talking of 'green shoots' of recovery and of positive 'second derivatives of economic activity' (continuing economic contraction is the first, negative, derivative, but the slower rate suggests that the bottom is near).

‘Fund of funds’ redemptions soar in Q1

Hedge funds may be faring better now than they were in the fourth quarter of 2008, but it seems the general investor backlash against high fees and risky exposure continues to thwart the ‘fund of funds’ part of the industry (what with their double fees etc.)

In its latest findings, Hedge Fund Research, an industry data provider, estimates investors redeemed up to $104bn from hedge funds in the first quarter, versus the record $152bn withdrawn from the industry in the fourth quarter of 2008. The first-quarter figure makes up some 7.4 per cent of industry assets.

However, here’s the clincher: withdrawals from ‘fund of hedge funds’ specifically totalled $85bn in the first quarter — that far exceeds the fourth quarter 2008 redemption of $50bn and accounts for the majority of capital withdrawn from the hedge fund industry overall.

UAE Economic and Strategic Outlook - April 2009 (PDF)

Charlemagne European New Frontiers Fund (PDF)

Huge new Dubai airport could face further delay

Dubai's airport chief said Monday a new airport envisioned as the world's biggest passenger and freight hub could see its first flight pushed back further than planned.

In addition, Dubai Airports CEO Paul Griffiths said the number of runways at the colossal Al Maktoum International Airport has been scaled back to five from the six slated originally.

The new $US33 billion facility and surrounding multi-use development, being built in the desert outskirts of Dubai, now isn't expected to see action until at least June 2010, a year later than a previously planned inauguration, Griffiths said in an interview. Even that date is up in the air.

Former Deyaar board member charged with accepting bribe

The sixth corruption case in Dubai, involving a former Deyaar Development board member charged with allegedly accepting a Dh11.75-million bribe, has been referred to the criminal court. D

Dubai Public Prosecution has charged the 40-year-old Emirati, S.A., with requesting and accepting the Dh11.75-million bribe to facilitate the selling of a property in the emirate, Gulf News has learnt.

According to the arraignment sheet, S.A. collected the bribe when he was a Deyaar board member in return for easing the process of selling the property to his compatriots E.J., and A.Z., both of whom are businessmen.

BofA’s bleak view hits US stocks

US stocks suffered their worst one-day fall in six weeks on Monday as Bank of America rattled investors with a bleak picture of economic conditions in the coming months. BofA’s warning came as the US bank reported a better-than-expected $4.2bn in Q1 earnings, reflecting strong results at recently acquired Merrill Lynch. But investors focused instead on BofA’s swelling provisions for credit losses and its dire prognosis of the US economy. BofA shares fell 24%, contributing to a 4.3% decline in the S&P500.

Pandit faces fresh doubts at Citi

Vikram Pandit, Citigroup’s chief executive, will on Tuesday try to convince investors at the group’s annual meeting that Citi is on the road to recovery, even as it emerged that officials at the Federal Deposit Insurance Corporation have privately discussed replacing Pandit if Citi needed more government aid. The FDIC is just one of various regulators to have a say on Pandit’s future if Citi requires a fourth bailout after the completion of “stress testing” of its health.

Firms prefer high fees to increased margins

The change in risk appetite in the market has given rise to new trends in big corporate and project financing, according to leading bankers in the UAE.

With the cost of funds increasing, banks are forced to raise their price commensurate with the market, but reputed borrowers do not want this to reflect fully in the margins the banks charge.

"This is the reason why the banks are resorting to charging a high fee over and above the margin," said a banker.

Slowdown bites, but Etisalat still profits

Etisalat has reported a Dh2.18 billion (US$594 million) profit in the first quarter of this year, up by 4 per cent from the same period last year, with its core mobile business feeling the effects of an economic slowdown that its chairman said “no sector is immune to”.

The impact of a slowing economy was seen most clearly in new mobile subscriber numbers. After adding 250,000 new mobile users in the final three months of last year, the company added just 41,000 in the latest quarter, a number lower even than its 52,000 new fixed-line internet users.

The results were in line with the predictions of industry analysts, who expect lower new subscriber numbers this year for both Etisalat and its competitor, du. A shrinking UAE population and a slowdown in leisure and business tourism will hit the sector, analysts say.

Firms delay flotation plans

Most Gulf companies seeking to raise funds through initial public offerings (IPO) will delay their plans to go public until at least the end of this year, senior banking and finance officials said today.

“If anything happens in a major way, it is going to happen in the end of the fourth quarter, or most likely coming into 2010,” said Jeff Singer, the chief executive of NASDAQ Dubai, at the Arab Banking Conference in Dubai.

“We’ll be in a wait and see mode for the capital markets probably through 2009.”
Gulf share sales have ground nearly to a halt as investors have fled equities and companies have shelved plans to return to capital markets.

UAE holds course on oil plans

The UAE continues to invest in expanding oil production capacity despite an uncertain global outlook for demand.

“Our projects in the UAE are going ahead. These decisions were taken a long time ago and we are building capacity,” said Mohammed al Hamli, the Minister of Energy, on the sidelines of an oil and gas conference in Dubai. “There is no question of delaying any plans.”

He told the conference that “a new round of heavy investments” in oil development would be required to avoid another cycle of high prices.

Mubadala seeks investors for bonds

Mubadala plans to launch its first corporate bond sale in the latest sign that government companies are returning to the debt markets.

The Abu Dhabi Government-owned investment fund plans a series of meetings with investors in Europe and the US, according to a circular sent to potential investors from bankers at Citigroup, Goldman Sachs and the Royal Bank of Scotland, who have been hired to arrange meetings.

“Abu Dhabi has created a very good precedent and a pricing and risk benchmark for further issues,” said Phillip Lotter, a sovereign bond analyst at the ratings agency Moody’s.

Emerging market credit fundamentals deteriorating, S&P says

Credit fundamentals in emerging market sovereigns have deteriorated markedly over the past seven months, according to an unusually literary* report released on Monday by Standard & Poor’s.

The report - titled “The Race is Run; the Runner Spent” - notes S&P has downgraded 10 of its universe of 43 emerging market sovereigns in the last six months, including one default. The rating agency also “worsened the outlook without a downgrade” on another ten; nearly half the group now has a negative outlook, compared with less than a fifth in late September.

Arab states have a stake in Iran’s talks

When Egypt this month announced that it had broken up a Hizbollah cell plotting attacks on its soil, hardly anyone outside the Middle East took notice. It was assumed Cairo had dreamed up a menacing tale to justify a new round of arrests of Islamists.

But then something curious happened: the chief of Hizbollah, Lebanon’s Shia group, appeared on television to declare that, while allegations of a plot against Egypt were nonsense, Hizbollah had indeed sent an agent to Egypt to organise help for Palestinians.

Cairo could not contain its satisfaction, even with a partial confession. And it promptly unleashed its rhetorical fury, transforming the controversy into a full-blown diplomatic row with Hizbollah and, more worryingly, with Iran, the group’s backer.

Operator vows to remodel Algiers port

DP World, the Dubai-based global ports operator that has just begun work at the container terminal in Algiers port, says it will reduce ships’ waiting time from up to three weeks now to four days by the beginning of next year.

High demurrage costs caused by long periods waiting at anchor and to unload make Algiers one of the costliest Mediterranean ports.

Mohamed Al Khadar, general manager of DP World Algeria, says it costs €280 ($365) to ship a container from the UK to New York but to ship one from France to Algeria costs €600.

Bahrain exploits grand prix pulling power


As the Gulf’s oppressive summer approaches, a small army of workers is bedding down petunias beside the Shaikh Khalifa bin Salman highway while cars roar past from Manama airport to Bahrain’s southern desert. Above them flourishes a thicket of billboards in the red-and-white livery of the country’s national flag.

Public hoardings sponsored by the Economic Development Board advertise the appeal of “business friendly Bahrain”, while others assure passers-by that Bahrain International Circuit is “where the heart lies”.

The fourth leg of the annual Formula One motor racing championship is coming to the unsettled kingdom this week. Rather than just a sporting fixture, Bahrain’s government sees next Sunday’s race as a chance to market itself to the world.