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Sunday, 9 August 2009

Global Reports A Loss In First Half But Continuing Profitability In Its Core Fee-Based Businesses Of Asset Management And Brokerage (Press Release)

Key points of the results:

Results comprise net operating income from fee-based businesses (asset management, investment banking and brokerage) impacted by losses on investments and losses from share of results of associates resulting in an overall loss

Global reported a profit of KD8.1 million from asset management and brokerage lines of business and an overall net loss for the first half of KD98.6million (KD0.080 loss per share); Q2 2009 overall net loss reduced by 58% to KD29.0 million compared to Q1 2009 net loss. The loss is mainly attributable to:

· Realised and unrealised losses and impairment from principal investments and real estate of KD44.0 million

· Losses from share of results of associates of KD29.4 million; losses from share of results of associates for Q2 2009 reduced to KD1.5million compared to Q1 2009 losses of KD27.9 million.

Fee, interest and dividend income contributed KD18.2 million to the operating income during first half of 2009 (H1 2009).

Despite the reported net loss in H1 2009 Global's total assets amounted to KD1,011.3 million and net assets of KD213.0 million.

Total AUM as at 30 June 2009 amounted to KD2,074.7 million. Our asset management business remained resilient with several of the funds outperforming their respective performance benchmarks. Global MENA Ijarah Real Estate Fund decided to reward its unit holders with a 6.5% cash dividend for the second quarter of 2009. This was the Fund's third distribution since its final closing in September 2008. Global Buyout Fund distributed 3% cash dividend whereas Global Opportunistic Fund II distributed US$15.3 million to the unit holders after realizing gains from an investment. All these funds are managed by Global's Alternative Investment Management group.

Cost cutting measures

· Global continues to work towards reducing its operating cost base. H1 2009 personnel expenses of KD4.6 million were 53% lower than the first half of 2008. Other operating costs of KD9.6million were however higher than H1 2008 on account of one-off costs associated with the restructuring process and increases in costs arising from acquisitions made in H2 2008. Staff costs declined by 14.6% during the second quarter and other operating costs declined by 11.2% as compared to Q1 2009 as a result of continued cost rationalization efforts.

Debt default and progress on restructuring process

· Global has continued to meet all its debt service payments as they fall due and remains confident that by working cooperatively with its stakeholders, a sustainable, long-term financing solution for the Company is likely to be achieved in the near future.

Commenting on the results, Maha Al-Ghunaim, Chairperson and Managing Director of Global, said: "Our first half results continued to be impacted by market turbulence and decline. Reassuringly the pace of decline slowed during the second quarter, which gives us confidence going forwards. Strengthening fee generating lines of business, namely asset management, investment banking and brokerage is integral to our future profitability.

Although we have not yet concluded the restructuring of our debt obligations, I am convinced that we are up to the challenge and will emerge from this period of market dislocation as a stronger Company, able to serve our clients even more effectively and deliver value for our shareholders."- Ends -

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Finance Ministry approves TCCIM economic package

TehranImage via Wikipedia

The chairman of the Tehran Chamber of Commerce, Industries, and Mines has announced that the Ministry of Economic Affairs and Finance has approved the TCCIM support package of economic measures to counter the effects of the global economic crisis.

"We sent this package to the president, and then the package was sent to the Ministry of Economic Affairs and Finance. The ministry held a meeting, and in this meeting all the clauses were studied and everyone approved them," TCCIM Chairman Yahya Al-e Es'haq told the ISNA news agency in Tehran on Saturday.

He said the package, which is separate from the Fifth Five-Year Economic Development Plan (2010-2015), has 18 clauses meant to counter the economic effects of the global economic meltdown and will support manufacturers as well as various economic sectors.

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External execs to control Saad's Awal, TIBC

Saad Group company logoImage via Wikipedia

Bahrain's central bank, which last week took control of two lenders owned by troubled Saudi conglomerates Saad Group and Al-Gosaibi, has appointed law firms to administer the banks.

Trowers and Hamlins will lead the administration of The International Banking Corp (TIBC) while Charles Russell LLP will administer Awal Bank, the central bank said in two separate statements on its website on Sunday.

Officials at both banks were unreachable for comment as were representatives for both conglomerates.

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Qatar SWF's overseas assets put at $65bn

Qatar's sovereign wealth fund (SWF) controls about $65 billion (Dh239bn) in overseas assets and this will ally with soaring gas exports to maintain the country's fiscal strength, a key Saudi bank said yesterday.

Despite an expected plunge in its nominal gross domestic product this year, Qatar will be among a few countries that will record high real GDP growth in 2009 despite the repercussions of the global financial distress, the Saudi American Bank Group (Samba) said in a study on Qatar.

While a steep decline in crude prices and the country's oil output will sharply depress exports this year, Qatar will still record a large current account surplus of about 12.1 per cent of the GDP when most other regional oil producers are expected to revert to a deficit.

More UAE medium-term upside

Generally, when looking at market trends we can assume that a minimum retracement (counter trend rally) that can be anticipated is 33-38 per cent, especially when looking at the larger trends. So far, neither the Dubai Financial Market General Index (DFMGI) nor the Abu Dhabi Securities Exchange General Index (ADI) has retraced that much.

The DFMGI has retraced approximately 16 per cent when looking at the mid-June 2009 high and only 10 per cent when using Thursday's closing price, of the down trend start in January 2008. A 38 per cent retracement would bring the index to around 3,296.87.

For the ADI a 38 per cent retracement would be around 3,287. To date it has retraced only 27.4 per cent of the down trend started in June 2008, when looking at the high hit in mid-June 2009. The close on Thursday was 23.5 per cent retracement of that down trend.

GGICO's Dh198m profit a result of diversification

Gulf General Investment Company (GGICO) on Saturday reported net profits of Dh198 million for the first half of 2009, with revenues touching Dh3.1 billion.

The second quarter 2009 recorded a profit of Dh154 million, in comparison to Dh44 million for the first quarter.

Revenue for the second quarter was Dh1.5 billion, compared to Dh1.6 billion in the first quarter.

Turkey backs Russia pipeline, too

Turkey has given its support to a Kremlin-backed pipeline that could undermine the EU’s plan to cut European dependence on Russian gas, less than a month after it signed an intergovernmental agreement on a competing project that has EU support.

Ankara’s willingness to back two different projects in the race to establish new gas supply routes to Europe appears as its latest move in a diplomatic chess game that could establish Turkey as a major regional energy hub.

“Turkey comes out of these deals in a stronger position, clearly successful in leveraging its strategic location and showing it is willing to play on all sides in the energy game despite possible objections from western partners,” said Wolfango Piccoli, an analyst with Eurasia Group.

A name is no longer enough to bank on

The fallout from the troubles of two prominent Saudi family businesses, the Saad Group and Ahmad Hamad Al Gosaibi and Brothers, brings nearer the demise of the long-established practice of doing things based on a family name and a handshake.

Gulf families have long prided themselves on the value of their names. But in today’s world, it will take more than a name and a handshake to secure funding, especially for family businesses with global interests.

The old ways might still work for some family businesses that are cash rich, domestically focused and which deal with like-minded family businesses. But the Al Gosaibi and Saad saga has made both banks and family businesses nervous in the Gulf. The implications for such groups is that bank borrowing will get tougher; and the quality of information that family businesses provide will rise. In a perverse way, the higher the profile and business interests of a Gulf family group, the more stringent will be the banking relation terms and the more intrusive the required information.

Qatari bank earnings edge higher

The year so far has been one to forget for most of the region’s banks. But Qatari lenders have managed to emerge from the quarter in positive territory, thanks to continuing economic growth and plenty of government help.

While profits this year at most banks sagged as bad loans soared and deposit growth slowed during the global financial crisis, Qatari banks had a relatively prosperous time.

Combined profits at publicly listed Qatari banks for the three months to June came to about 2.5 billion rials (Dh2.52bn), up by almost 1 per cent on a year earlier.

Damascus proves a draw for Gulf investors

Saudi Arabia has an ambassador to Syria for first time in 18 months. After a stormy period during which Riyadh and Damascus repeatedly clashed over their mutual interest in Lebanon, the appointment of Abdullah al Eifan signals new warmth in a key regional relationship.

It also fosters a welcoming climate for new Gulf investment in Syria as regional players beat a path to to the country in an effort to penetrate one of the last untapped markets in the region.

They have been encouraged by a dismantling of barriers to investment, which has seen foreign direct investment inflows to Syria more than double to $1.28 billion (Dh4.7bn) last year from $583 million in 2005.