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Monday, 27 July 2009

Western investors fear Dubai’s Wild East reputation

Glitzy Dubai’s property market is in trouble, there’s no doubt about that. Just take a look at the hundreds of motionless cranes, unfinished projects and the expats who are leaving in droves as they lose their jobs.

And prices and rents which soared during a six-year boom have crashed since late last year. According to one resident who recently moved in the City, it now costs 150,000 dirhams to rent a three-bedroom flat on the Palm, a man-made island off the coast of the emirate, around the same it would have cost to rent a one-bedroom appartment there a year ago.

It’s not just the global downturn thats the concern for Dubai’s once-booming property market, but also the lack of transparency and need for greater regulation. And that’s what’s going to keep the western investor from splashing the cash.

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Emirates NBD Q2 profit plunges 42 pct

Emirates NBD, the region's biggest listed bank by assets on Monday posted a second-quarter net profit of 842 million dirhams ($229.4 million), down 42 percent from 1.45 billion dirhams a year ago.

The second quarter effort fell well short of most analysts expectations. EFG-Hermes expected the lender to post earnings of 1.058 billion dirhams.

Emirates NBD's first-half net profit stood at 2.1 billion dirhams, down 20 percent from 2.65 billion dirhams in the same period a year ago, the lender said in a statement on the Dubai bourse website.

Emirates NBD shares closed trading Sunday 4.5 percent higher at 3.24 dirhams.END

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Seven non-bank brokerage firms set to finalise merger

Seven financial brokerage companies that are not affiliated to Abu Dhabi or Dubai banks are about to finalise the first-of-its-kind merger in the country.

It is estimated that the merged entity will have a capital of Dh1 billion. An official announcement is expected before the end of the year.

The Securities and Commodities Authority (SCA)?has been encouraging mergers, saying mergers would strengthen market competitiveness and create bigger entities with larger capital.

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Unicorn seeks opportunities to acquire stakes in regional banks (Interview)

Referring to the global challenging environment for financial institutions, Majid Al Sayed Bader Al Refai, Founder, Managing Director and CEO, Unicorn Investment Bank, said: "Islamic banks have been somewhat insulated by their lack of direct exposure to the toxic assets that precipitated the financial crisis."

He said financial expansion cannot be decoupled from real economic growth in Islamic finance and urged Shariah-compliant banks to work with their conventional counterparts to build a more robust financial system.

With more than 20 years of experience in the banking industry, Al Refai has a wealth of experience in Islamic product development and has established several Islamic finance institutions throughout his career.

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Higher court overturns ruling to acquit former UAE minister

The highest court in Dubai on Sunday overturned the acquittal of an ex-minister and two managers of defrauding a Lebanese businesswoman and ordered a new judges' panel to hold a retrial soon.

The Dubai Court of Cassation scrapped the acquittal of an Emirati former state minister, K.B., American general manager, S.A., and Indian financial manager, P.M., and ordered a new panel of appeal judges to hold a retrial before the Dubai Appeals Court.

However, the court rejected the appeal submitted by the Dubai Public Prosecution and M.J, the Lebanese businesswoman, to overturn the acquittal of the former minister charged with breach of trust.

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Dolphin completes refinancing

Dolphin Energy, a natural gas company based in Abu Dhabi, has finished refinancing its Dh12.66 billion (US$3.45bn) overall debt after selling $1.25bn in bonds to investors.

The project, majority-owned by Mubadala with Occidental and Total as partners, produces gas in Qatar and imports it to the UAE and Oman by pipeline.

The bond, which bankers said was almost four times oversubscribed, is the latest in a series of debt sales aimed at tapping into rising investor appetite for government-related issuances.

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UAE bank loans to private firms drop almost 2%

Bank loans to the private sector fell by almost 2 per cent between January and March, suggesting that the global credit crunch is still affecting the UAE’s lenders despite government efforts to prop up the banking system.

Outstanding loans to the private sector fell from Dh635 billion (US$173.12bn) in January to Dh623bn in March, the Central Bank said yesterday in its first-quarter statistical bulletin.

Private sector deposits at local banks also dropped, by about 6 per cent during the three months, from Dh336bn to Dh316bn.

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Gulf ratings agency would challenge ‘big three’

Peter Barker-Homek is not happy with the way ratings agencies are running the rule over government-related agencies such as his.

The chief executive of the Abu Dhabi National Energy Company (Taqa), the Government-backed energy investor, says now may be the time for a home-grown agency to challenge the dominance of the big three: Standard & Poor’s Ratings Services (S&P), Moody’s Investors Service and Fitch Ratings.

“Do we need a regional rating agency? The answer is yes,” Mr Barker-Homek says. “It’s a brilliant idea. There are examples of Japan, India and Canada having country-specific rating agencies. Our region can benefit with one of its own.”

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Dubai stocks show biggest gains for five months

Stocks listed in Dubai rose 5.23 per cent yesterday, their best one-day gain since February as investors piled back into battered financial and property shares.

Leading the way with a 12.1 per cent rise was the Dubai Financial Market (DFM), the company that manages the exchange. It announced a 48 per cent decline in second-quarter profits two weeks ago compared with the same quarter last year, but its Dh128.3 million (US$34.9m) in earnings still beat analysts’ expectations.

DFM’s share price has surged 29 per cent since July 13.

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Deyaar trial postponed after chief investigator fails to appear in court

DeyaarImage via Wikipedia

The trial of a former Deyaar chief executive, ZS, and a former federal minister, MK, was postponed yesterday after the main prosecution witness failed to appear at court.

No explanation was given for the absence of Mohammed Mustafa Hussain, the director of the Financial Audit Department at the Ruler’s Office, who was assigned to investigate corruption at the developer. The National attempted to contact his office, but there was no response.

MK, who is currently on bail, was in court. ZS was not present but is in police custody. He had posted Dh2 million (US$540,000) bail in this case but is being held in custody on different charges.

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‘Goldilocks’ and the fantasy about the ‘fair price’ of oil

In 1969, the Shah of Iran, visiting Washington for Eisenhower’s funeral, offered to sell the United States a million barrels of oil per day for 10 years at US$1 per barrel. The Americans found the price too high, and turned the offer down. By 1974, with the first oil shock underway, oil was selling for $12. Arguments about a “fair oil price” have continued ever since.

But is this idea of fairness even meaningful? What is a “fair” price for oil, acceptable to both buyers and sellers? Could the world agree on such a price?

This concept of fairness is an interesting one. We do not often talk about the fair price of a Porsche, a mobile phone or a Starbucks coffee. It is accepted that these items are priced in a competitive market, and we are free to buy, or not, as we choose.

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Saudi investment funds' total assets rise 14.7% in second quarter

The total assets of Saudi investment funds managed by commercial banks rose 14.7 percent in the second quarter from the previous three months, the kingdom’s central bank said on its Web site today.

Assets increased to SAR88.6 billion ($23.6 billion) after falling to SAR74.8 billion in the fourth quarter, the lowest level since the start of the global financial crisis.

The global financial crisis has led to US$1.5 trillion of losses and writedowns at financial institutions since it began in 2007.

Foreign assets of the 247 investment funds rose 5.2% to SAR13.4 billion in the second quarter after falling to SAR12.7 billion in the previous three months, according to the central bank.END

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UAE nuke energy push may start deal bonanza

The UAE’ $41bn nuclear programme, aimed at resolving an impending shortage of electrical generating capacity, is gaining support from Western nations, suggesting a major shift in focus in the oil-rich region from security to business opportunities.

The rise in global energy demand, coupled with concern about greenhouse gas emissions, requires not just more renewable energy but a revival of nuclear power generation as well, said Giacomo Luciani, Geneva-based director of think tank Gulf Research Center.

“American companies and other nuclear power contractors haven’t built a nuclear plant for a long time, so this is a great opportunity,” Luciani said.
Since the 1980s, the nuclear industry, dominated by the US, France, Germany, Russia and Japan, has undergone immense restructuring and consolidation as contracts dried up after the Chernobyl disaster.

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Brash Kuwait trader was boastful dealmaker

His phone calls could come at any time - during trading hours, close to midnight or on weekends - but they always had the same message: "Hi, Hazem here. I have a major scoop for you."

And after the third call or so, news agency Reuters reporter Ulf Laessing managed to track down the mystery Kuwaiti who spoke perfect English and always bragged about his work.

Hazem Khaled al-Braikan, who died from a single gunshot wound to the head on Sunday in what police said was an apparent suicide, was at the centre of a lawsuit the U.S. Securities and Exchange Commission (SEC) launched against him and other Gulf Arab finance firms. He was 37.

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Tragedy: Kuwaiti Financier Hazem Al-Braikan Found Dead (Re-post)

We, at Alpha Dinar, were shocked with the death of the young Kuwaiti financier Hazem Al-Braikan (36 yrs old). We send all of our thoughts and condolences to his family and friends.

According to various confirmed reports, Mr. Al-Braikan was found shot dead at his house in Roudha, Kuwait. An employee at Al-Raya said Al-Braikan had not come to work on Sunday. The employee continues, ”We are shocked. Everybody is shocked. We called his brother, and he confirmed the news. Hazem was at the office yesterday until 7 or 8 at night.” Shiny Rajan, a secretary at Al-Raya elaborated, “Everybody is shocked. We can’t accept it. We celebrated his 36th birthday last week.” Various media and police allegations suggest it was suicide. However, we will not comment/discuss such allegations out of respect for the deceased, his family, and his loved ones.

Kuwait’s Interior Ministry said it was investigating the death of Al-Raya Investment Company’s CEO, Hazem Khaled Al-Buraikan, who passed away in his house in area of Roudha on Sunday. A ministry statement said it would not release any information or statement over the cause of Al-Buraikan’s death until investigators gather all necessary information and completion of investigation. The Directorate General of Criminal Evidence and other specialized bodies are examining the scene of the incident, said the statement.

Mr. Al-Braikan was the Vice Chairman and CEO of Al-Raya Investment Co. (10% owned by Citigroup). Last week, the SEC charged Mr. Al-Braikan, United Gulf Bank, KAMCO, and Al-Raya over false news trading (click here for details). The day before his death, Mr. Al-Braikan declined to comment on the case stating, “I have nothing to say. It is in the hands of the lawyers now.” After several hours, he announced the appointment of a lawyer saying: “I would like to confirm on the soundness of my legal situation.” Also, Al-Raya Investment Co. denied the fraud allegations and reinstated its full confidence in Mr. Al-Braikan.

What happened will remain a mystery that will take time to unfold. More importantly, what happened is a tragedy. We at Alpha Dinar will refrain from commenting on the possibility of suicide and other inconsiderate details of Mr. Al-Braikan’s death. We will only say God bless him and send our deepest condolences to his loved ones.

P.S. Any offensive/inconsiderate comment will be deleted.END

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Dubai expatriates unable to meet liabilities

Up to one quarter of all the cheques written in Dubai may be bouncing as expatriate residents in the Gulf state struggle as the economy slows.

Blank cheques are used to underwrite financial arrangements, such as credit cards, in Dubai, guaranteeing future payments such as a rental agreement or bank loan.

This system arose in the United Arab Emirates (UAE), which includes Dubai, because of the difficulty of doing credit checks on foreign workers. As many of these workers have now lost their jobs in the recession, the number of bounced cheques has risen.

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