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Saturday, 30 May 2009

Developers changing contractors to finish projects on schedule

burj dubai, under constructionImage by Reza Vaziri via Flickr

Zawya reported that the construction industry is witnessing a rise in developers and consultants changing contractors or sub-contractors on projects or renegotiating contracts due to dropping prices of construction materials in Dubai.

Investors on the U-Bora Towers project in Business Bay recently said that the anticipated completion date for the project has now changed to March 31st 2010.

The Korean firm was transparent about the period of construction affected and explained in the letter to the investors that having completed the termination procedures, the company could now state that the sub contractor, Simplex Infrastructures Limited had defaulted on its contractual obligations. The situation had lead to a temporary suspension of construction activities in the course of work.

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The appeal of ETF investing

Exchange-traded funds (ETF) have been the most successful financial product of the new century, and ETFs focused on the Middle East have mushroomed in just the last year to nearly a dozen that trade in New York, London and elsewhere in Europe.

ETFs are gaining adherents because they are cheap, tax efficient and transparent in their holdings and operations. They trade throughout the day, rather than only at market close, and are free of red tape such as redemption fees and rules against frequent trading. They target more asset classes than do mutual funds, including gold bullion, agricultural commodities and currencies. Hundreds of them target specific industries and sectors, allowing individuals to fine-tune their holdings.

While the US market for ETFs is the oldest, largest and most liquid, substantial trading has grown up in global bourses, particularly those of the English-speaking world. With many financial advisers counselling their expatriate clients to invest strictly in their home marketplaces, that is particularly easy to do with ETFs.

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Shuaa lights the touch paper for market lift-off

It was quite a week for UAE stock markets, with all the indices heading in the right direction for once. Optimism over the two core fundamentals – property and oil prices – combined to produce a wave of positive sentiment for the first time since last autumn, and I believe this will be more than the proverbial “dead cat bounce”.

Barring major global upsets, the consensus is that energy prices will continue to strengthen for the rest of the year. Property is more uncertain, but with falls of up to 50 per cent already this year, some are beginning to see the bottom. At least one major banking institution is about to publicly “call” the property market, I hear. Brave indeed.

At the heart of last week’s surge was the UAE’s very own Shuaa Capital, which has become something of a barometer for the health of the Dubai financial community. Shuaa contributed to the optimism on DFM on three fronts: first, it produced research showing that investor confidence in the region was on the up for the first time in many months. A healthy 43 per cent of respondents thought things would improve in the next half year.

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SWFs should invest locally to start projects, says banker

Sovereign wealth funds and family offices should take equity stakes in local companies to help kickstart planned projects worth US$750 billion across the Gulf, according to a senior Calyon banker.

“The use of excess liquidity by SWFs in the region ... needs to be encouraged more, that will drive more inward investment,” said Albert Momdjian, who heads Calyon’s investment banking in the Middle East and Africa.

Calyon, the investment banking arm of Crédit Agricole, considered “petrodollar recycling” one of its main pillars of growth.

Opec warns oil too high

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

Opec warned oil consumers of another speculative attack on energy prices yesterday as crude oil hit a six-month high above $66, and one banker predicted a return to the $100 barrel.

Crude oil futures are poised for their largest monthly gain in a decade, having already risen 38 per cent this month, despite a bleak outlook for demand.

Abdalla el Badri, the secretary-general of Opec, said latest supply and demand trends did not support the current price.

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Abu Dhabi's IPIC launches $3.5 bln loan

Abu Dhabi government-owned International Petroleum Investment Company (IPIC) has launched a $3.5 billion syndicated loan to support recent acquisitions, two banking sources close to the deal said.

It is the first major new money loan in the Gulf this year, and is expected to act as a barometer for international banks' appetite for syndicated loans in the region, the sources said.

"I think this will get the market moving... I would expect it to be successful," a senior loans banker at a European institution said. The loan is split between a one-year bridge loan A that will be refinanced by bond issues, and a two-year facility B that is extendable for a further year at lenders' discretion, the sources said.

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