Google+ Followers

Friday, 24 April 2009

“Extraordinary” flows into emerging market funds

Funds dedicated to emerging markets posted $2.2bn in inflows during the week ending April 22, the strongest streak for the asset class since May 2008, Merrill Lynch’s Michael Hartnett said in a note released on Friday.

This week marks the seventh consecutive week of inflows for EM funds, which analysts at Deutsche Bank called “extraordinary”, noting:

between June 2008 and March 2009 there have not been more than two weeks of inflows in a row. This cumulated inflows in the last seven weeks for all EM equity funds amounts to nearly US$4.0bn.

Post card from Dubai

Oil prices determine the pace of prosperity. The oil-price boom 2002-2008 allowed countries to invest hundreds of billions of dollars in infrastructure and diversification. They also amassed billions in sovereign wealth funds, which has lifted their profile on the international stage. As oil prices recede, so does the pace of growth and wealth accumulation, although most states possess enough stored wealth to cushion the downturn.
RISK: Prolonged downturn topples GCC states’ ambitious plans.

New Asian Islamic bonds revitalise sukuk market

New sales of Islamic bonds or sukuk, by Asian governments such as Indonesia are revitalising the market, ratings agency Moody’s said in a report published yesterday.

“Sovereign sukuk issuance has already brought significant vitality to the Asian market in 2009. In the medium term this could allow activity to fully rebound,” Moody’s said in its report titled “Islamic Finance: Asian sukuk market faces new but also familiar challenges.”

Last week, the government of Indonesia issued its first international dollar sukuk, raising US$650 million (Dh2.3bn). The bond was seven times oversubscribed. In compliance with Shariah, sukuk pay investors in form of asset returns instead of interest. The strong demand for the Indonesian sukuk by Gulf-based institutional investors shows that regional appetite is returning, experts say. It also highlights the absence of good quality paper in Islamic credit markets.

Mubadala 2008 Annual Report (PDF)

Mubadala Development Company (Mubadala) is a Public Joint Stock Company headquartered in Abu Dhabi, capital of the United Arab Emirates. Its focus is on developing and managing an extensive and economically diverse portfolio of commercial initiatives. It does this either independently or in partnership with leading international organizations. Mubadala’s commercial strategy is fundamentally built on long term capital intensive investments that deliver strong financial returns.

The company manages a multi-billion dollar portfolio of local, regional, and international investments, projects and initiatives. Through its investment and development projects, Mubadala is both a catalyst for, and a reflection of, the drive for economic diversification of the Emirate of Abu Dhabi. Its impact is evident domestically and internationally in sectors such as energy, aerospace, real estate, healthcare, technology, infrastructure, and services.

Mubadala’s sole shareholder is the Government of the Emirate of Abu Dhabi.

New contractor for third concourse at Dubai Airport

Al Jaber Engineering and Contracting (ALEC), the subsidiary of Abu Dhabi’s Al Jaber Group, will take over construction of a third concourse at Dubai International Airport, an informed source has confirmed.

The contract comes a week after a consortium of builders, including Murray and Roberts of South Africa, Leighton of Australia, Dubai’s Al Habtoor Engineering and Takenaka of Japan, formally announced they had pulled out of the Dh4.9 billion (US$1.33bn) deal after failing to reach an agreement with the Dubai Department of Civil Aviation (DCA).

The two sides had been in talks since the contract was awarded in December, as DCA sought to take advantage of construction costs that have fallen by as much as 30 per cent since the start of the global financial crisis.

Shareholders 'pressure' developer to pay dividend

RAK Properties will pay a dividend despite falling sales and board objections, after shareholders pressured management, the chief executive said yesterday.
The company, the main developer in Ras al Khaimah, reported its first-quarter earnings fell nearly 39 per cent to Dh70 million (US$19m) compared with the same period last year. It attributed the drop to a lack of sales in the reporting period.

“In general, property buying has come to a halt and we did not achieve any sales during the first three months of 2009,” said Mohammed al Qadi, the chief executive of RAK Property.

But Mr al Qadi said a dividend would be paid. “The dividends were not recommended by us as a board and as a management, and we objected to it but our shareholders put us under pressure. When they saw that we had cash, they voted for it.”

Mubadala issues first annual report

Mubadala Development, the Government’s strategic investment arm, has published an annual earnings report for the first time, shedding new light on a fast-growing organisation that has expanded to Dh54 billion (US$14.7bn) in assets despite losing almost Dh12bn in last year’s global market meltdown.

Rising output from its oil and gas investments helped Mubadala nearly quadruple revenues last year to Dh6.7bn, from Dh1.8bn the year before. But the six-year-old company posted a net loss of Dh11.8bn after write-downs on a whirlwind of investments, reflecting sliding prices for oil and other assets.

Mubadala said it would continue to make acquisitions, borrowing more from banks and investors and drawing on Dh21bn in budgeted contributions this year from the Government to pursue its mandate of diversifying Abu Dhabi’s economy.

Two courts to co-operate over judgments

The Dubai International Financial Centre (DIFC) Courts and the Dubai Courts yesterday signed a co-operation agreement that would allow them to enforce each other’s judgments.

The terms of the new protocol require both the DIFC Courts and the Dubai Courts to assign one of their judges to enforce the judgments and arbitral awards wherever applicable.

The agreement, which comes into force on May 1, helps resolve a major issue facing both of the benches as each increasingly encroaches on the jurisdiction of the other.

Free-market key to Sharjah's growth

Eton and Harvard-educated, Majid Jafar could have gone on to reach the pinnacle of success on Wall Street or the City of London – maybe even both. Yet, his roots are deeply implanted in the UAE, both in terms of culture and family.

Among the leading group of second generation businessmen in the Emirates, Jafar, in his early 30s, is helping to ensure Crescent Petroleum, the company his father started more than three decades ago, remains on its successful trajectory. Emirates Business caught up with him to discuss oil prices, the current financial crisis and his respect and appreciation of the emirate of Sharjah where his commercial interests are based.

From your point of view, as a Sharjah businessman, how have you seen the impact of the development of the Emirates' economy?

In the grip of the bull and bear

Billionaire Prince Alwaleed bin Talal, with a sprawling empire of investments in some of the world's biggest companies, could be described as a human index – a one-man version of the S&P 500 or MSCI World Index.

The Saudi investor's diversified portfolio, including stakes in Citigroup, Apple, Motorola, News Corp and a web of hotel and media interests, has been subject to the rise and fall of the global economy's fortunes as share prices tumbled in the wake of the credit crunch.

There has been cause recently for guarded optimism that the worst of it could be over. This week US Treasury Secretary Timothy Geitner offered further hope for the banking sector by saying he believed the big institutions would pass the government's "stress tests" and show they had adequate capital.

ABRAMS: An Arab counterexample

In January of this year, then-Secretary of State Condoleezza Rice and the United Arab Emirates' foreign minister signed a so-called 123 Agreement.

The agreement committed the United States to cooperation with the United Arab Emirates in establishing the Arab world's first peaceful nuclear energy program. Now, as the agreement comes up for debate in Congress, opponents and critics of the 123 Agreement are raising proliferation concerns and citing the illegal smuggling of goods into Iran through Dubai, which undercuts U.N. and U.S. sanctions against the Iranian regime.

Congress should quickly approve the agreement when it is presented. The U.A.E. is a firm ally of the United States and deserves better treatment than it received in the Dubai Ports World fiasco in 2006. The 123 Agreement must be judged on its merits, not on the basis of accusations or plain prejudice.

Barclays to raise loans by £11bn

Barclays promised to increase loans to customers by £11bn this year - a 6% increase on its loan book at the end of 2008 - at the bank’s annual meeting on Thursday, at which shareholders criticised the board’s decision to seek investment from the Middle East. In signs of ongoing investor dissent, a significant minority of shareholders – representing more than 16% of total shares voted – opposed the reappointment of Marcus Agius, the bank’s chairman. Separately, the FT reports that Barclays’ largest shareholder, Qatar Holding, has cut its stake in bank to 5.8% from 6.4%.

Dubai Gets Its Breathing Room

Two months after receiving a $10 billion lifeline, Dubai's government says it has disbursed more than half of that money to indebted companies, allowing them to pay off bills and refinance debt.

The quick payouts have provided breathing room for a handful of government-controlled companies. Dubai also has recently stepped in to fill funding gaps for certain Dubai entities that were unable to refinance or pay off debt on their own.

This has reassured markets that Dubai, for the time being, can support its overstretched companies. The cost of insuring Dubai-related debt against default soared earlier this year but has fallen back again.

Bahrain shares index falls a record 4.8% as Arab Banking plunges 41%

Arab Banking Corporation, the Bahrain-based bank controlled by Libya, Abu Dhabi and Kuwait, plunged 41% in its first trading day since January, triggering the biggest slump in the country’s equity index on record.

The bank, which has units in the US, UK and Singapore, lost hundreds of millions of dollars during 2007 and 2008 because of the collapse of the US subprime mortgage market. The company, known as ABC, yesterday posted its first quarterly profit in a year and a half at US$32 million, compared with a loss of US$587 million in the year-earlier period.

ABC shares opened at US$0.405 this morning, down 56%, as two trades took place simultaneously selling a total of 50,580 shares, data compiled by Bloomberg show. The shares closed at US$0.54 after 172,577 stocks traded.

Abu Dhabi sovereign fund releases first report

Mubadala, one of oil-rich Abu Dhabi’s most active investment vehicles, on Thursday released its first annual report which showed that it made losses of AED11.8bn (€2.5bn) in 2008.

The report – the first of its kind by a Gulf state investment entity wholly owned by the government – provides a rare insight into the losses incurred by sovereign investment entities after the decline in asset prices and the collapse in global stock markets.

Mubadala is one of a growing pool of investment vehicles acting on behalf of Abu Dhabi, which is the capital of the United Arab Emirates and home to the world’s largest sovereign wealth fund, the secretive Abu Dhabi Investment Authority .