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Monday, 1 June 2009

Rothschild appoints Mideast advisors

Rothschild, a corporate finance advisory firm, said Monday it has appointed Ibrahim Belselah and Patrick Choffel as senior advisers for its Middle East operations.

Belselah, a UAE national based in Dubai, has spent over 18 years working for the government of Dubai as director of finance for the Dubai Municipality.

Choffel joins Rothschild Middle East following 40 years with American International Group Inc (AIG).

Rothschild was appointed in April by the Dubai government as an advisor on the creation of a financial support fund for state-linked entities worth at least $10 billion.END

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Do buy Dubai (and Saudi too), Merrill says

FT Alphaville has featured a series of bearish articles on the Emirates of late (see related links for examples), so here’s a bullish counterpoint: Merrill Lynch believes the region is “a compelling trading buy for investors looking for laggards.”

Dubai is the best trade, and Saudi Arabia the best investment, according to Michael Hartnett, Merrill’s chief global equity strategist:

Hard to find much that has underperformed US banks in past 3 years. But Dubai has, thanks to its real estate and oil bust. It’s now cheap, unloved and the combo of oil>$60/b and improving credit spreads are powerful drivers, in our view. We believe the best investment case in the region remains Saudi Arabia.

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Here are some headlines from this issue:

The Abu Dhabi Securities Exchange (ADX) said today it encourages the establishment of listed healthcare funds and the listing of more healthcare and life sciences companies on the exchange.

Albania formally applied for the European Union.

Bahrain will add to efforts by the Arab Gulf states to create an active bond market in the region by raising more than $1bn in a debt sale in local currency and US dollars, the central bank revealed on Tuesday.

On the 1st May of 2009 the Baku Interbank Currency Exchange (BBVB) was officially visited by representatives of the Istanbul Stock Exchange (ISE) in the name of Chairman of ISE Husseyn Erkan and Directors of foreign securities market Murat Bolat, and also General Director of Turkish Deravatives Market (TurkDEX) Chetin Ali Donmez.

The Bucharest Stock Exchange (BVB) and RBS Bank (Romania) SA will launch onTuesday, April 28,2009, the Market Making on the EUR/RON Futures contract listed on the BVB Derivatives Market.

Central Securities Depository of Iran (CSDI) held its ordinary and extraordinary Annual General Meetings on May 20, 2009.

The NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) reported the successful launch of Iraq Stock Exchange's (ISX) new trading and clearing system based on NASDAQ OMX technology.

On April 30, 2009 the Exchange Council of the Kazakhstan Stock Exchange (KASE) elected Kadyrzhan Damitov (49) as KASE President for a two-year term.
The Executive Board of the International Monetary Fund (IMF) today completed the first review of the Kyrgyz Republic’s economic performance under the 18-month Exogenous Shocks Facility (ESF) arrangement and approved the immediate release of SDR 16.65 million (about US$25.5 million).

Muscat Securities Market modifies its MSM30 Index starting from 1 July 2009.

PSE holds a press conference to announce the outcomes of its Road Show to Chile. In a press conference held in Ramallah, the Palestine Securities Exchange (PSE) discussed the outcome of its recent road show to Chile.

The Executive Board of the International Monetary Fund (IMF) today approved a 24-month SDR 11.4 billion (about €12.9 billion or US$17.1 billion) Stand-By Arrangement for Romania to support an economic program designed by the Romanian authorities and intended to cushion the effects of the sharp drop in capital inflows while addressing the country’s external and fiscal imbalances and strengthening the financial sector.

The first working committee meeting of OIC member states' stock exchanges forum was held May 6, 2009 in Esteghlal Hotel, Tehran.

Global Investment to Sell Stake in Al-Salam Bank

Global Investment House KSCC, Kuwait’s biggest investment bank by assets, plans to sell a 14.1 percent stake in Al-Salam Bank in a June 11 auction to reduce its holdings.

The sale of shares in the Bahrain-based Islamic lender will be held on the Bahrain Stock Exchange at a “minimum acceptable” price of 140 Bahraini fils (37 cents) per share, Global said in a statement on the Kuwait Stock Exchange Web site today.

The company expects 6.4 million dinar in profit from the sale of its 162,889,333 shares. The gain will be included in Global’s second-quarter financial statement.

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Gulf Shares Gain as Oil Reaches Seven-Month High; Dubai Soars

Persian Gulf shares gained, pushing Dubai’s index to the highest in more than five months, as surging crude oil prices bolstered economic prospects for the region.

Emaar Properties PJSC, the United Arab Emirates’ largest property developer, advanced to the highest level in almost seven months, while phone company Zain led gains in the Kuwaiti market. Petrochemicals companies such as Saudi Basic Industries Corp. led Saudi Arabia’s bourse higher.

“Oil is up, European stocks are up, which is boosting local sentiment,” said Mohammed Galal, head of foreign institutional sales at Al Futtaim HC Securities in Dubai. “Volumes over the past two days indicate market strength.”

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Sa(a)d investments

If you want to know why HSBC was underperforming a rising market on Monday morning, look no further than this fascinating story from Saudi Arabia.

It concerns businessman Maan al-Sanea, who was ranked 62 amongst Forbes’ world billionaires list this year, with a net worth estimated at $7bn.

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'UAE banks do not need further support'

The UAE banks do not need further support from the Central Bank and the government as there has been an improvement in their financial position in recent months, the Central Bank Governor said yesterday.

Sultan bin Nasser Al Suwaidi also announced the UAE would stick to the dollar peg and to its position not to join a monetary union to be launched by other members of the Gulf Co-operation Council (GCC).

Speaking to reporters, Suwaidi acknowledged that the Central Bank is about to enforce one of the toughest rules on capital adequacy for banks by the end of June but defended it as a measure to strengthen the banking sector. "If you ask me about the need for more support to the banks in the UAE, I would say the banks no longer need any support at this stage… the situation has largely improved," he told reporters at the Central Bank.

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UAE cracks down on illegal money

The UAE said yesterday it would sign new agreements with 17 international organisations as part of its ongoing campaign to combat money laundering and funding of terrorism.

The Central Bank said they had agreed to sign the memoranda of understanding with those organisations at an international anti-laundering conference, which ended in the Qatari capital Doha on Saturday.

"The UAE is committed to international co-ordination in fighting laundering and financing of terrorism… we want to enhance co-operation with all our counterparts in this regard," said Abdulrahim Al Awadi, Assistant Executive Director of the UAE's Anti-money Laundering and Suspicious Cases Unit.

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FGB's bond facility for Petrofac unit

First Gulf Bank (FGB), one of the largest equity-based banks in the UAE, yesterday announced it is providing a performance bond facility to a Sharjah-based company for a Dh8.8 billion petroleum project in Abu Dhabi.

The facility has been given to Petrofac's engineering and construction business, part of Petrofac Group, to cover a contract awarded by the Abu Dhabi Company for Onshore Operations (Adco), part of the Abu Dhabi National Oil Company (Adnoc).

The contract is one of the largest awarded in the Middle East to an engineering, procurement and construction (EPC) contractor. However, neither side has revealed the value of the facility.

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GCC to adopt single visa system -- Kuwaiti official

GCC immigration chiefs are expected to approve a single visa application system at a meeting here Sunday, Kuwait's immigration chief said.

A la the European Schengen visa, the planned European visa will enable Gulf visitors to tour all the six GCC member countries, Kuwaiti General Administration for Immigration Director-General Brig. Kamel al-Awadhi told KUNA on the sidelines of the 24th meeting of GCC immigration chiefs.

The single Gulf visa application system was suggested and given the thumbs up during a recent meeting of undersecretaries of GCC interior ministries in Riyadh, he said.

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RAK Airways 'in no way closing' - new CEO

The new CEO of troubled carrier RAK Airways said on Sunday the airline was in “no way closing” following reports its operations and services had stopped.

Speaking exclusively to Arabian Business, Kristian Kirchheiner said the carrier was still operating charter flights after dropping scheduled services in late 2008.

RAK Airways’ chairman Sheikh Omar bin Saqr Al Qasimi was quoted earlier on Sunday by Business 24/7 as saying that scheduled flights had been suspended for commercial reasons. He also said there was no point keeping the airline in business, according to the newspaper.

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Regional sovereign wealth funds target Dubai real estate investment

Regional sovereign wealth funds are "looking at Dubai today" as opportunities based on attractive valuations become more interesting, according to Dr Omar Bin Sulaiman, governor of the Dubai International Financial Centre.

"I think you will see a big shift in sovereign wealth funds. A lot of them are actually looking at Dubai today... and believe it or not, one of the sectors they are looking at is real estate.

"There are opportunities today for buyouts and to take advantage of the situation where they can come in on the real estate side or the infrastructure side," Bin Sulaiman said, addressing members of the Indian Business and Professionals Council in Dubai.

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A welcome note showing signs of upturn

It was an investment bank research report that pricked the UAE property bubble last summer; perhaps now another analyst’s note will set in train the process of reflation across the crucial real estate sector.

As the UAE sizzled last August, Morgan Stanley produced an innocuous-seeming piece of research into the property sector, which forecast a 10 per cent dip in property prices for the rest of the year. The rest, as they say, is history. The equity market went into a tailspin as it found confirmation of long-held fears that real estate, the dynamo of the UAE, and especially Dubai, economies, was overpriced.

Although there were more significant dog days to come – notably the collapse of Lehman Brothers the following month – from that August day onwards the market knew that something was wrong in the UAE and a reckoning was looming.

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Abraaj taps Saudi growth

Abraaj Capital, a private equity firm based in Dubai, has opened an office in Riyadh to tap investment opportunities in the largest Arab economy.

With Dh22 billion (US$6bn) in assets under management, Abraaj is the largest private equity group outside Europe and North America,

“As the largest Arab economy and the centre of the energy world, Saudi Arabia offers substantial investment opportunities,” said Amr Dabbagh, the Governor of the Saudi Arabian General Investment Authority, which licensed Abraaj Saudi Arabia Ltd.

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Gulf to push on with monetary union

Saudi Arabia and three other Gulf states will proceed with their monetary union plan and the location of a Gulf central bank would not be open for renegotiation, the Saudi finance minister said.

“It is not derailed, it will continue. The monetary union will proceed as planned,” Ibrahim al Assaf told Reuters in an interview in Oman on Saturday, less than two weeks after the UAE abandoned the single currency project.

“As long as we are moving in the right direction, this is the most important.”

The UAE, the second-largest Arab economy, broke ranks with Saudi Arabia, Kuwait, Qatar and Bahrain by dropping out of the single currency plan in protest over the decision to base the Gulf central bank in the Saudi capital, Riyadh.

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Mubadala and GE move ahead on joint venture

Mubadala Development and General Electric (GE) yesterday appointed chief executives for an US$8 billion (Dh29.38bn) commercial finance joint venture and an executive education centre as part of a partnership in which Mubadala will become one of GE’s largest shareholders.

The executive teams for the commercial finance and executive education ventures, announced last year, were mostly in place and operations at both should begin this summer, Khaldoon al Mubarak, the chief executive of Mubadala, said yesterday.
“The plan is what it was 12 months ago and we are moving swiftly forwards,” Mr al Mubarak said.

Ron Herman, a 25-year GE veteran, is to lead the commercial finance venture, a funding arm to which GE and Mubadala will each contribute $4bn.
Most recently, he was the chief executive of GE Equity, the company’s private equity financing unit.

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DMCC and Nakheel merge property interests

The property arm of Dubai Multi Commodities Centre (DMCC) has been merged with Nakheel, one of the emirate’s largest property developers. The move is the latest sign of consolidation among Dubai’s property companies as they restructure their operations to cut costs.

“DMCC’s property-related operations have been integrated with Nakheel to better accommodate current market conditions and optimise resources and expertise,” said a company spokesman.

Both companies are owned by Dubai World, which is owned by the Dubai Government. A source close to the deal said Nakheel would now be involved in all projects being developed by DMCC.

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Property salesmen caught in sting

Two former property salesmen were sentenced to three years in prison and fined Dh3.8 million (US$1m) yesterday for pocketing Dh3.08m in illegal commissions.

KM, 28, an Egyptian former sales executive, and WJ, 32, an Emirati former sales manager, both worked for the developer Nakheel, where they sold land on the Palm Jebel Ali. They were found guilty at the Dubai Criminal Court of First Instance of charging an extra two per cent – Dh5.13m – on a land deal worth Dh265m.

The judge, Fahmi Mounir, pronounced the sentence in the absence of the two defendants, who had not been brought from jail.

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Abdul-Aziz, founder of the Saudi kingdom in its present form in 1932, is thought to have had around 70 children by at least 21 wives, with 16 or more sons still surviving. Together they and their own sons form a group of some 200 princes who wield most of the power, write Abeer Allam and Andrew England.

Total membership of the royal family is put at 7,000-25,000. Most receive stipends from Saudi oil revenues and their opulent spending has often been a cause of criticism.

King Abdullah, 84, ascended the throne in August 2005 as the fifth son of the founder to rule. Among the more powerful members of the family are a group of Abdullah’s half-brothers who are known collectively as the Sudairi seven. They are the sons of Abdul-Aziz by one of his wives.

The late King Fahd was the eldest of this group and the six remaining sons hold key positions, including Crown Prince Sultan, whose health has been called into question following a recent operation in New York. He serves as deputy prime minister and has been minister of defence and aviation since 1962. His sons include Prince Khaled, deputy defence minister, and Prince Bandar, who grew to prominence while serving as Saudi ambassador to the US but whose current influence is open to speculation.

The next most senior royal is Prince Naif, interior minister since 1975 and credited with leading the domestic fight against al-Qaeda. Also one of the Sudairi seven, his appointment as second deputy prime minister in effect elevated him recently to third in line to the throne.

Traditionally the successors were chosen by the king, who consulted main members of the family. But in 2006 King Abdullah formed the Allegiance Council to select future crown princes and kings. It consists of 35 members who are either sons or grandsons of Abdul-Aziz and was supposed to kick in only after Prince Sultan succeeded. Still, Prince Naif’s appointment caused some to query whether the council was in danger of being bypassed.

Sceptics included Prince Talal, another of King Abdullah’s half-brothers, who is among the most outspoken advocates for reform but holds no official position. His son, Prince Alwaleed, is one of the Middle East’s most prominent global investors, with stakes in Citigroup, Four Seasons Hotels, News Corporation and Time Warner held through his Kingdom Holding Company.

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Guns, women and misappropriated funds: Iraqi Trade Minister charged

Guns, women and fistfuls of allegedly misappropriated dollars: the trail leading to the arrest of the former Iraqi Trade Minister has the perfect ingredients for a corruption scandal.

Abdul-Falah al-Sudani, who resigned from his position last month, was held after his aircraft was ordered back to Baghdad airport having taken off for Dubai.

Mr al-Sudani, a member of the Dawa party of the Prime Minister Nouri al-Maliki, is due to be transferred today to al-Samawah in southern Iraq, where he will face charges of mismanaging the Trade Ministry by importing expired foods, engaging in illegal contracts and nepotism.

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UAE's Dana Gas to go ahead with Kurdistan project

UAE's Dana Gas will go ahead with its project in Iraq's Kurdistan region despite the federal government's rejection of the deal, a Dana Gas source told Reuters on Sunday.

This month the UAE's Crescent Petroleum and affiliate Dana Gas formed a consortium with Austria's OMV and Hungary's MOL to pump enough gas from Iraq's Kurdistan region to kick-start the Nabucco pipeline to Europe via Turkey.

Shortly following the announcement, the Iraqi federal government rejected the deal signed by the Kurdish Regional Government (KRG), creating a potential hurdle for the project.

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Islamic banks: trouble beneath calm waters?

As Western regulators stress test top banks, Islamic finance wants to broaden its regulatory approach and improve disclosure rules amid concerns that unhealthy banks may have slipped under the radar.

Few Islamic financial firms have reported headline-grabbing losses so far, but the industry's relatively modest size and opaque framework could mask more trouble than appearances suggest, bankers and lawyers say.

Rather than stress testing individual banks as in the United States, however, Islamic bankers and lawyers say the sector needs better disclosure rules within stronger regulatory frameworks.

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Saudi Arabia to UAE: GCC Central Bank location is final. (Blog)

There was news last week of Prince Saud Al-Faisal visiting the UAE to discuss their reservation over the location of the GCK (Gulf Central Bank). Well, what was expected happened: the Emaratis insisted and the Saudis stood firm on their respective positions over the GCK’s location.

“It is not derailed, it will continue. The monetary union will proceed as planned,” stated the Saudi Finance Minister Ibrahim Al Assaf in Oman on Saturday. ”As long as we are moving in the right direction, this is the most important,” he continued.

Mr. Al Assaf finished off his interview by ending speculation over changing the location of the GCK from Riyadh, “No. This is a decision that has been taken by our leaders.”

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Abdullah’s agenda

At a resort complex on the outskirts of Riyadh, an eclectic group of Saudi psychologists, religious scholars and security officers watch a video showing bearded men, some with wild manes of dark hair, disembarking from an aircraft. They are greeted by Sheikh Ahmed Gilan, an ebullient cleric who belies the stereotype of the country’s austere religious figures.

“You are being welcomed once again as sons of the kingdom,” the beaming Sheikh Ahmed says.

It is no ordinary homecoming. The video traces a group of Saudi extremists returning from US detention in Guantánamo Bay 18 months ago. After a spell in Saudi jails, they were transferred to the resort turned rehabilitation centre under the care of the doctors and academics watching the video, among them Sheikh Ahmed. The programme is part of a campaign by the kingdom to tackle the militant extremism that has so darkened its name.

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Saudi executive’s accounts frozen

Saudi Arabia’s central bank has ordered the kingdom’s banks to freeze the accounts of Maan al-Sanea, a businessman and significant shareholder in HSBC, senior bankers said on Sunday.

The Saudi Arabian Monetary Agency issued the directive in two letters sent to banks on Thursday and Saturday, and included certain members of Mr al-Sanea’s family, bankers who have seen the letters said.

Mr al-Sanea is chairman and chief executive of Saad Group, a Saudi conglomerate that he founded in the early 1980s. He was ranked 62 in Forbes’ world’s billionaires list this year, with a net worth estimated at $7bn (€4.9bn, £4.3bn). He acquired about 3 per cent of HSBC two years ago.

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