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Thursday, 28 May 2009

Bank Muscat (BM) - Result Update - May 2009 (PDF)

Malaysia's MMC says Dubai World reviews oil project

Malaysia's MMC Corp (MMCB.KL) said on Thursday its partner Dubai World was reassessing a plan to jointly build a multi-billion ringgit petroleum hub in the Southeast Asian nation.

"Dubai World is currently assessing options with respect to their interest in the maritime centre masterplan ....given the current economic situation in Dubai," said MMC in a filing with the stock exchange.

MMC in 2007 said the cost of the maritime centre project, which will include a petroleum and industrial zone, was estimated at 16 billion ringgit ($4.56 billion).

Dubai World is the investment arm of the Dubai government.

($1=3.512 Malaysian Ringgit)END
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UAE court clears ex-minister of fraud

A former United Arab Emirates cabinet minister was acquitted on Thursday of fraud after he appealed a jail sentence handed earlier this year, his lawyer said.

Former state minister Khalifa Bakhit al-Falasi was sentenced to two years in prison in February for taking control of a software company after his Lebanese partner died.

A Dubai appeals court also acquitted two co-defendants -- a US citizen and an Indian citizen -- lawyer Hussein al-Jaziri told AFP.

Falasi had been stripped of his post in July on the orders of UAE President Sheikh Khalifa bin Zayed al-Nahayan, amid a crackdown on corruption in the business hub of Dubai.END

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Q+A-Why is Malaysia Port Klang scandal important?

Malaysia's government is to unveil later on Thursday an independent auditors report into the construction of a free trade zone in Port Klang, a project aimed at boosting capacity in the port.

What started off as a 1.8 billion Malaysian ringgit ($516.2 million) project has ballooned into one which could cost more than 10 billion ringgit following an acrimonious pullout by the project's Dubai-based international partner.

The issue raises the question of risk foreign investors face when doing business in Malaysia. It has been used to attack the integrity of the government by the opposition at a time when Malaysia's new prime minister is still reeling from losses in the 2008 general election.

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North Africa currency baskets (PDF)

Standard Chartered Bank introduces its baskets for the North African currencies

Egypt basket is targeted within a +/- 2.5% trading band

Morocco and Tunisia shifted to different baskets in September/October 2008

Algeria appears to be targeting its currency versus oil

The SCB India Chartbook - Q2-2009 (PDF)

1. GDP
2. Inflation
3. Money and liquidity
4. Fiscal health
5. GoISec market
6. Balance of payments
7. INR
8. Politics

Former Deyaar CEO's lawyer seeks transfer of case to criminal court

The lawyer of Deyaar's former CEO has requested that his client's case be transferred from the Dubai Misdemeanours Court to the Dubai Criminal Court of First Instance.

"My 43-year-old American client, Z.S., Deyaar's former CEO, is being prosecuted along [with] eight other suspects before the Dubai Misdemeanours Court and concurrently he is being prosecuted over the same matter in the Dubai Court of First Instance.

"I ask the court to detach him individually and refer him to the criminal court where he is currently being prosecuted in another case of alleged financial irregularities but the same subject," lawyer Ali Abdullah Al Shamsi argued when he addressed Presiding Judge Rifaat Mahmoud Tulba at the Dubai Misdemeanours Court.

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UAE to revise plans for gas expansion

The UAE is facing a severe gas supply shortage and an expected deterioration in the crisis could force it to revise plans to expand its LNG production, an Abu Dhabi gas official warned yesterday.

Despite a steady rise in domestic gas output, the shortage has widened over the past few years because of a surge in domestic consumption, prompting some power plants to use costlier diesel fuel, said Hamed Al Marzouqi, acting head of the market research at Abu Dhabi Gas Liquefaction Company (Adgas).

"The UAE faces a severe shortage of gas and the effects of the coming crisis are already being felt," Marzouqi told the Gastech conference in Abu Dhabi.

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Salama in tie-up to offer three Islamic funds

Salama, the world's largest takaful and re-takaful group, has tied up with Crédit Agricolé Asset Management (Caam) Group to offer a bouquet of Shariah-compliant funds to investors.

The three Islamic funds are Bric (Brazil, Russia, India and China) quantitative fund, an active Asian equities ex-Japan and a Global Equity fund of Islamic funds.

The funds give investors the opportunity to diversify their equity asset allocation through different investment processes (quantitative, active and multi-management) or country exposure (Bric, Asia ex-Japan, Global Equities).

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'Economy has not hit bottom'

Territories currently administered by two stat...Image via Wikipedia

The world economy has not bottomed out yet, China's central bank said in a report yesterday.

It said China's government, which has allocated four trillion yuan (Dh2.1trn) in fiscal stimulus to restore economic growth, will emphasise domestic consumption as a long-term strategy.

The People's Bank of China will ensure there's ample financial liquidity to fund investments in the country, the People's Bank of China said yesterday in its 2008 report on regional economies.

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Sukuk price sees 29% increase

The average price of GCC corporate Islamic bonds, or sukuk, has jumped by a dramatic 29 per cent since the market reached its trough in February, a reflection that confidence in the Gulf is recovering fast, international law firm Trowers & Hamlins said yesterday.

In comparison, the average price of US corporate bonds remained virtually unchanged (falling two per cent) over the same period.

"Since the market's darkest day on February 11, the average yield on corporate GCC sukuk has fallen from 17.2 to 10.1 per cent and the average credit spread over the London interbank offer rate has narrowed from 1,414 to 751 basis points," the firm said.

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Dewa seals significant $1b credit facility deal

Dubai Electricity & Water Authority (Dewa) has successfully closed a $1 billion Export Credit Agency (ECA) backed financing deal in support of its ongoing and future capital expansion.

The financing - arranged by Calyon, Citi, Deutsche Bank & HSBC - has a maturity of 13 years and is supported by comprehensive guarantees from European ECAs Coface, Hermes and SACE for contracts awarded to the French, German and Italian suppliers.

This is the first major ECA financing for a sovereign in the UAE and as such carries a high profile.

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Investment Dar files complaint

Investment Dar, the Kuwait-based investment firm that owns half of Aston Martin, says it has filed a criminal complaint against the Commercial Bank of Kuwait after a dispute over the ownership of a stake in Boubyan Bank.

In December, Investment Dar sold its 19.2 per cent stake in Boubyan Bank to the Commercial Bank of Kuwait, the second-largest lender in the country, for 94.1 million Kuwaiti dinars (Dh1.19 billion).

The sale agreement, which was approved by the Central Bank of Kuwait, gave Investment Dar the option to buy back the shares later.

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Capital’s hotels feel strain

Abu Dhabi’s hotels are starting to feel the strain of the global financial crisis and weaker tourism demand, with last month’s room revenues falling for the first time in more than a year, according to data.

Figures from STR Global show revenue per available room (RevPAR) in the capital declined by 6.9 per cent to $249.43 last month, down from $267.90 in April last year. Occupancy levels also fell to 80.3 per cent, down from 88 per cent in April last year. But average room rates in Abu Dhabi were up 2 per cent to $310.56.

“The feeder markets really have absolutely slowed right down,” said Rob O’Hanlon, a partner at Deloitte Tourism, Hospitality and Leisure. “The majority of markets are actually feeling that and Abu Dhabi is getting its share.”

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French footprints, Xtreme chicken and corporate dead wood

So much to rant about, so little space. The first order of business is to point out with a mixture of elation and anxiety the implications of France’s new, enlarged military and artistic footprint in Abu Dhabi. On one hand, it will be a true joy to expand the French connection in the UAE’s increasingly cosmopolitan urban landscape: it may finally be possible, for example, to get a halfway decent pain au chocolat along with one’s daily naan. And while one may be justifiably sceptical about the deterrent factor of a Ligne Maginot in the Gulf, it will doubtless help alleviate one of the long-standing concerns of investors to know that an attack on the UAE is an attack on France. On the other hand, this does virtually guarantee a mini-invasion of Francophones vying with the SUVs for sidewalks on which to park their Peugeots and Citroens. They’ll doubtless complain that the malls should be open air, rather than air conditioned. It seems only a matter of time, moreover, before this column is published entirely in French.

Oh well, c’est la crise. If the Anglo-American economic model wasn’t so tattered, it might well have been Barack Obama, the US president, or Gordon Brown, the UK prime minister, standing in Mina Zayed port this week. Speaking of which, this week’s column was originally intended to be written live at the Dubai-based Institute for Corporate Governance (Hawkamah) symposium on insolvency laws and creditor rights systems in the MENA region, held yesterday at the Hilton in Abu Dhabi.

Unfortunately, composing a column on-site for a modern newspaper requires wireless internet access, a convenience that the Hilton’s business centre deems to be worth more than Dh200 (US$54.45) in value. While this may be true under the circumstances, this columnist refuses to pay high fees for something that in decent hotels has become as commonplace as lights and running water. Charging hotel visitors for Wi-Fi these days is like charging them to use the toilets. The Hilton’s management, for the record, apologised, explaining that the fees were imposed by a third-party company that runs the hotel’s business centre.

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Trump Tower delayed indefinitely

Work on the Trump International Hotel and Tower project has been suspended indefinitely.

Nakheel, which was developing the project, first called a halt at the end of last year.
The Al Habtoor Leighton Group has spent the past few months making the site safe and preparing it for a possible resumption of work, according to David Savage, the managing director, but it is not known when the project will resume.

“Initially they thought it would be six to 12 months, but the honest answer’s going to depend on what happens in the market,” Mr Savage said Wednesday. “It’s a high-end product, so it’s got quite an unusual market.”

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OPEC gears for global recovery

Flag of the international organization OPEC, d...Image via Wikipedia

OPEC is relying on a recovery in the world economy to wipe out an overhang of oil supply, allowing ministers at a policy meeting today to hold back from any more output cuts.

Oil prices have almost doubled since hitting a low of US$32.40 in December, reaching a six-month high of $63.45 a barrel on the New York Mercantile Exchange today.

The Saudi Arabian oil minister, Ali al Naimi, said the higher prices reflected expectations of a recovery.

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Faith in property market a tough sell

Four multimillion-dirham properties in Dubai that went under the hammer this week failed to sell, providing further evidence that the UAE’s appetite for new homes is still subdued.

Only nine people registered to take part in Tuesday night’s auction for three villas in Arabian Ranches and a penthouse in Jumeirah Beach Residences. Of those, only three actually entered bids, all of which failed to meet the properties’ reserve prices.

The public auction at Al Murooj Rotana Hotel was a first for Madania Real Estate and attracted a crowd of more than 100 people.

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EU warns UAE over fraudulent exports

The EU has threatened to withdraw special trade privileges from the UAE unless the country reduces the number of goods sent to Europe with fraudulent paperwork.

As an emerging market, the UAE is a beneficiary of tariff-free imports under the EU’s General System of Preferences (GSP). That offers Emirati businesses an easier path into the European markets, as exported goods can be exempt from tariffs for up to 60 per cent of the items’ value.

But EU officials say the UAE and Malaysia have been identified as significant sources of improperly exported goods, raising concerns about organised crime networks, revenue losses and the country’s reputation as a reliable trading partner.

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The State of Real Estate Around the World: No Signs of Stabilization? (Registration required)

Today we take a look at the health of residential and commercial property markets around the world. Slowing economic activity and a credit crunch contributed to a decline in housing activity, prices and construction in most major economies. Eastern Europe and the Baltics, as well as the U.S. and UK, have endured some of the sharpest declines. In many countries, not only in the U.S., the bottom of the property markets still seems far off, with sales, prices and starts forecast to continue declining, albeit at a slower pace, through much of 2009.

In fact, many European economies (and Canada) tend to have housing cycles that lag behind the U.S. by about 2-3 years, suggesting that their declines could also persist beyond a U.S. housing stabilization. Sounder lending standards and lower incentives to invest in residential property in some countries may allow them to avoid the depths of the U.S. property correction but others may suffer more severely. The liquidity resulting from quantitative easing has contributed to a slower deterioration of the housing markets. Yet with high inventories in many markets, it may take some time to absorb the excess. This will continue to erode the value of asset-backed securities and banks' balance sheets and defer the revival of construction activity, a major driver of growth.

The decline in retail trade and contraction of the financial sector has worsened the commercial property outlook. Commercial vacancy rates are on the rise in almost all major centers in Europe and North America and net effective rates have declined by 25-30% in major cities in Asia, suggesting that new investment is unlikely as these cities try to absorb overcapacity in retail and hotel trade. Meanwhile, still tight corporate debt markets pose obstacles for corporate finance. Despite the weak fundamentals, REITs and other property investments have benefited from the renewed risk appetite and have been climbing off late. These property investments might well be vulnerable to any reversal of risk appetite.

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UAE hosts 89% of inter-Gulf investments

The UAE ranks first among Gulf countries in attracting inter-Gulf investments, according to an economist.

The United Arab Emirates is receiving 89% of the total inter-Gulf investments of which Saudi Arabia exports 90%, said Assistant Secretary General of Saudi Council of Chambers of Trade and Industry Ibrahim Al Qernas at the "Economic Integration among Gulf countries" meeting in Riyadh.

"Financial openness of member countries of the Gulf Cooperation Council vary", he said noting that banks are not playing an active role in the process of economic integration among members of the bloc.

On his part, dean of the King Abdullah Center for Studies and Research Dr Hamad Al-Al Sheikh said foreign assets in Gulf countries are estimated at US$ 1 trillion the majority of which are low-return US government bonds.

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UAE businessman set to buy Portsmouth

A United Arab Emirates businessman is to buy Portsmouth -- the Premier League club said on Wednesday.

Dr Sulaiman Al Fahim, the man behind the Abu Dhabi United Group takeover of Manchester City, was revealed as the purchaser on the club's official Web site.

"Portsmouth FC can confirm that it has accepted an offer from Dr Sulaiman Al Fahim to buy the club," said a statement.

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Palestinian bourse takes to the road

The Palestinian Securities Exchange has launched a drive to attract more capital from foreign investors and raise the international profile of what remains one of the smallest stock markets in the Arab world.

The campaign is aimed primarily at Palestinian diaspora communities around the world and Gulf investors.

Both groups enjoy close economic ties with the Palestinian territories, and PSE executives hope they can be persuaded to deepen their commitment by investing in companies listed on the West Bank-based exchange.

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Opinion: UAE ‘Dutch disease’ offers lesson

“Dutch disease”, rather than a blight afflicting trees or a human illness, refers to the problems the Netherlands faced in the 1960s when its economy slumped after the discovery of natural gas.

One might think such a bonanza would be entirely beneficial but economists have observed that a boom in the resource sector usually leads to a real appreciation in the currency, either through higher inflation or a stronger currency (or both). This typically damages the competitiveness of other sectors and deprives non-resource sectors of necessary investment.

In addition, when countries become overly reliant on the resource sector, which is capital intensive, they often neglect human capital – investing in fields such as education. As a result, resource-rich countries often find themselves underperforming countries such as Singapore and Hong Kong that have no natural resources.

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Women chip away at barriers to advancement

US First Lady Laura Bush (L) and Jordan's Prin...Image by AFP/Getty Images via Daylife

Khulood al-Atiyat, a 21-year-old student born and raised in Dubai, does not see any barriers in front of her career goals: to set up her own tour agency.

She believes the drive by Dubai’s leadership over the years to open opportunities to women in the emirate has led to a sea change among Emiratis in their late 40s and below. Gone are the days when families in the United Arab Emirates would universally call on their daughters to find a husband and make a home once they had finished their schooling.

Ms Atiyat says the shift has come as Emiratis become more outward looking, thanks to travel and living among a population in which the majority are expatriates – especially in Dubai, where foreigners form more than 80 per cent of the population.

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Kurdish exports resume despite Iraq impasse


For the past two years, foreign oil companies working in Kurdistan have had their hands tied. They have not been able to export their oil and have limited their development in the region. That could be set to change this weekend.

Kurdish oil is expected to start flowing through a pipeline that runs from Iraq through Kurdistan to Turkey and on to wider export markets.

Iraq’s oil ministry said yesterday it would start exports from fields in the country’s largely autonomous Kurdistan region on Sunday at an initial rate of 10,000 barrels per day.



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Saudi family groups feel the pain

Riyadh, Saudi ArabiaImage by ▌ÇP▐ via Flickr

It wasn't supposed to be this way. Ahmad Hamad Algosaibi & Brothers Company is one of the oldest and most respected family-owned conglomerates in Saudi Arabia. It was a group that could borrow on reputation alone, with a son of its founder on Forbes' world rich list.

But since one of its wholly owned subsidiaries, The International Banking Corporation (TIBC), defaulted on financial obligations to other banks this month it has sent jitters across the market.

The Algosaibi group has not responded to several requests for comment. But the fact that one of its subsidiaries defaulted has raised broader questions about the state of the oil-rich Gulf's secretive family-run businesses as they grapple with the downturn. The concern is that some may have overextended during the boom years, which saw Gulf states accumulate huge petrodollar reserves and fuelled rapid expansion, and are beginning to pay the price.

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