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Sunday, 3 May 2009

Dubai World eyes Zimbabwe game park in Africa push

State-owned holding company Dubai World said on Sunday its African unit was investing in a wildlife game reserve in Zimbabwe as part of plans to boost its investments in Africa.

Dubai World Africa, which in March said it bought three top-end South African wildlife game parks, has been pursuing investments that boost its exposure to Africa's tourism sector, including investments in hotels and beach resorts.

"(Africa) is a place where you can see growth... double-digit growth," Dubai World Chairman Sultan Ahmed bin Sulayem told the Arabian Hotel Investment Conference.

Global's GCC Islamic Index –Weekly Brief dated April 30, 2009

A little bit of humour, not to be taken too seriously!

Markets/Rallelujah (print edition heading)

A pandemic of green shoots, a world infested by signs of hope of recovery, and a big market rally. The FTSE All-World index has risen by 31 per cent since its March low. The VIX index – a gauge of market fear – has more than halved from its year-end high, although it still remains well above pre-crisis levels. Best of all, the interbank lending market is creaking open. The so-called Libor-OIS spread – the premium over expected central bank interest rates that commercial banks charge each other for three-month money – is down to 80 basis points, a quarter of its crisis peak, although still more than treble what Alan Greenspan, for what his opinion is still worth, believes is “normal”.

Investors no longer talk about Great Depression II. Instead, the world merely faces Great Recession I. Immunised by pessimism-beating cheap money and higher government spending, confidence has returned. The risk of a swine flu pandemic? A run on face masks, not on markets. Chrysler’s bankruptcy? At last! For now, there is no such thing as bad news; the optimism is self-fulfilling.

Economic apocalypse deferred, gold prices have dropped. Even a 56 per cent rise in UK company failures left the London stock market unmoved on Friday. For the first time in almost 20 years there is also more invested in low-yielding US money market funds than in equities. Johnny-come-lately investors could take the market higher still.

Yet this is largely a trading call. Cheap credit and government largesse are palliatives that at some point will be withdrawn. The financial system is not fixed, merely stabilised. Housing markets have not yet touched bottom. Unemployment is rising, as are taxes. Even China can’t save the world by itself, and the chance of an emerging markets crisis, given the withdrawal of cross-border lending, remains high.

More immediately, government bond yields are rising, as are corporate bond spreads. The best of the rally has already passed.

Economic crisis far from over, says Deutsche Bank

The economic crisis is far from over and could turn much deeper than is commonly believed, says Dr Henry Azzam, CEO Middle East and North Africa of Deutsche Bank. Speaking at the Arabian Hotel Investment Conference today, Azzam said that even if the economy has hit bottom, it will look more like a 'U' shape in its life cycle, which means no quick recovery.

In the near term, the biggest threat to the economy in the Middle East is deflation, which would lead to protectionism and weaken oil prices, he warned.

On the positive side, there have been some glimmers of hope, based on the fact that oil prices have stabilised at around $50 a barrel and some stock markets in the region have done well in recent months, including Saudi Arabia, which is up 17% so far this year, and Abu Dhabi, which has risen 5.7%.

Azzam noted that there will be a 'convincing' recovery only when confidence returns to the international financial markets and the US economy turns around to the point when it can 'pull everyone else behind it'.

For 2009, Azzam predicts negative growth for Saudi Arabia and Kuwait and positive growth for the UAE, Bahrain, Oman, and Qatar, which will be the only country in the Gulf that will see double digit growth this year. END

Global's Egypt Weekly Market Report - April 30, 2009

Loans Funding Dubai’s Investment in U.K. Property Breach Terms

Loans used to fund Dubai’s purchase of a 1930s London office block that’s leased to the U.K. government are breaching terms amid tumbling property values, according to Barclays Plc, the manager of the debt.

Istithmar, a unit of the government-owned Dubai World, bought the Adelphi building in 2006. Barclays made the 214 million-pound ($318 million) loan to a special-purpose company based in Liechtenstein set up to finance the property, and packaged it with other debt into a commercial mortgage-backed security called Indus (Eclipse 2007-1) Plc.

The borrower breached conditions which limit the amount of debt owed compared with the value of the property, Barclays said. Spokesmen for Istithmar didn’t return phone calls and e- mails seeking comment.

Also read:

Kuwait bank urges measures to avoid downgrade

Kuwait's central bank urged a better political climate and measures to weather the global crisis after warnings by some agencies of a downgrading of the country's sovereign rating, the state news agency reported.

Moody's Investors Service said in March it may cut Kuwait's sovereign rating due to a protracted political crisis which is threatening the country's ability to cope with the financial downturn.

"Such an event as a drop in rating alerts us to the urgent need to sustain a political atmosphere that best prepares us to counter the economic challenges," Shaikh Salem Abdul Aziz Al Sabah, governor of the bank, said. "We ourselves have to reach a national consensus on economic issues ... and take steps and measures to overcome the economic slump."

Saudi stocks hit six-month high on US cue

Saudi stocks rose to the highest in almost six months, led by Saudi Basic Industries Corp, after improved consumer confidence figures pushed US stocks higher.

Saudi Basic Industries, the world's biggest chemical maker, also known as Sabic, climbed to the highest since April 18.

The US Standard & Poor's 500 Index increased to its highest since January yesterday after the Reuters/University of Michigan final index of consumer sentiment rose to 65.1, the second straight gain, from 57.3 in March.

Kuwait funds take beating

When the Prime Reserve Fund in the United States fell below its par value due to Lehman Brothers' collapse last September, the world's fund industry broke into a cold sweat.

It was after all a money market fund, which by definition is expected to be stable and almost never falls below its par value.

While news of the Prime Reserve Fund made headlines for days and turned out to be symptomatic of the crisis befalling the global economy, here in the region, we have had our own money market drama, with far less coverage.

Regional IPO market picks up steam with five offerings

After a miserable first quarter this year, IPO activity seems to be picking up again, thanks to four recent, oversubscribed insurance IPOs in Saudi Arabia and a fully-subscribed IPO for Vodafone Qatar.

According to Zawya data, mirroring global trends, IPO offerings in the Middle East and North Africa (Mena) declined by a whopping 97.6 per cent during the first quarter of this year, compared with the same period in 2008. Mena markets raised $99.15 million (Dh364m) in three IPOs in Q1 2009 compared with $4.09 billion raised from 17 IPOs in Q1 2008.

However, the recent oversubscriptions of the IPOs of Al Rajhi Co for Co-operative Insurance (747 per cent), ACE Arabia Co-operative Insurance (600 per cent), AXA Co-operative Insurance Company (267 per cent) and Weqaya Takaful Insurance and Reinsurance (200 per cent) point at a change in the trend. IPO offers for all four Saudi insurance companies, which between them were seeking SR260m (Dh254m) from the market, closed in April.

Bond issues to help boost UAE economy

Sovereign bond issues announced recently in the UAE will offset a sharp decline in its income and mitigate the impact of the global financial crisis on the domestic economy, according to experts.

International rating agencies have already given high marks to the Abu Dhabi bond programme, indicating the emirate still enjoys a strong financial position despite reports about a steep fall in its overseas investments.

Besides that fall, Abu Dhabi's $10-billion (Dh37bn) bond plan will also cushion the sharp drop in its oil revenues and a plunge in the foreign assets of the UAE Central Bank following large withdrawals by the country's cash-strapped banks.

DI eyes markets abroad

The head of Dubai Investments (DI) says the group will scale back its activities in the UAE and instead look to expand abroad.

“We will slow down our investments [in the UAE] in 2009 because we are more cautious and it is not clear which sector we would like to invest in,” Khalid Kalban, the chief executive of DI, said on the sidelines of the company’s recent annual general meeting.

DI, one of Dubai’s largest investment firms, has stakes in about 45 UAE-based companies and ventures active in industries ranging from manufacturing to retail and trade. It has recently set up a new plant to produce coated glass and expanded its capacities in the steel fabrication, district cooling and building products sectors.

Crude stockpiles spilling over

Rotterdam, the biggest port in Europe, is running out of space to store crude oil as tanker deliveries continue to pour in faster than the oil is moved on to local refineries.

As a result, tankers are being diverted from the port, which also serves as Europe’s largest oil-refining centre. Other ships are waiting outside the harbour until storage space for crude becomes available.

About 75 million barrels of oil can be stored at Rotterdam’s port facilities – roughly five days of supply for the 27-nation EU. Even so, “a lot of tanks are fully loaded”, Jeroen Kortsmit, the manager for commercial affairs at the Dutch maritime information provider Royal Dirkzwager, told Bloomberg.

Confidence can do without a frosty reception

All you need in this life is ignorance and confidence, and then success is sure.” So said Mark Twain in words worth pondering as markets digest whether a late winter rally can blossom in the spring.

Policy makers are trying to supply the confidence. Just like Barack Obama, the US president, Ben Bernanke, the Federal Reserve chairman sees the contraction in markets subsiding, the first necessary step before a recovery.

Wen Jiabao, the Chinese premier, sees the world’s third-largest economy in “better than expected” shape as its massive stimulus package starts to bite in the second quarter. Saudi Arabia, believing crumbling oil demand will stabilise in the second half, is not rushing to cut output further, even as oil inventories overflow.