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Wednesday, 12 August 2009

Gulf Remains Between Dubai and Its Neighbors

They say a rising tide lifts all ships, but the oil-rich economies of the Persian Gulf are likely to rise further and faster than most. With oil prices back around $70 a barrel and new hopes of a stronger-than-expected U.S. economic recovery, confidence is returning to the region after the somber reality check of the past year.

Six months ago, the region's economic planners were coming to terms with the prospect of their first budget deficits in almost a decade as crude hovered as low as $34 a barrel. But the possibility of stronger demand from the world's biggest economy could see a drastic turnaround in sentiment across the Middle East. Saudi Arabia, the region's economic powerhouse, is now predicted to post a "small" budget surplus this year, with only Oman and Bahrain, the minnows of the Gulf Cooperation Council, expected to slip into negative territory.

Higher oil prices will hurt developed economies. But resurgent growth in the Gulf could benefit U.S. and European exporters. Saudi Arabia, for example, has already committed to spend $400 billion over the next five years to build infrastructure and stimulate growth. Much of that work will be done by Western companies.

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Dubai Ruler Appoints Chairman and Members of the Board of the Dubai Financial Support Fund

His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE,has issued, in his capacity as Ruler of Dubai, the Decree 41 -2009 appointing the Chairman and Members of the Board of the Dubai Financial Support Fund.

The Dubai Financial Support Fund (‘Support Fund’) was established by Decree 24-2009 as an independent legal entity to manage the proceeds of the Dubai Government’s $20 billion bond programme, or any other bond issues.

Abdulrahman Al Saleh, Director General of Dubai’s Department of Finance was appointed as Chairman of the Board of the Support Fund. The Support Fund is accountable to Dubai’s Supreme Fiscal Committee (‘SFC’) and is supported by the Department of Finance of the Emirate of Dubai.

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Shuaa CEO Duwaji resigns after 20 years

The chief executive of Shuaa Capital has resigned, days after the company announced a jump in quarterly earnings suggesting better times ahead for the Dubai-based investment bank that has struggled during the economic downturn.

"My decision to leave is a personal one," Iwad Duwaji , who stepped down after 20 years of service, said in a company statement. He added that he planned to return to the buy-side and set up an independent private equity platform.

Earlier this month, Duwaji, who was instrumental in transforming Shuaa from a small investment company in 1995 to one of the region’s leading investment bank, said in an interview that the worst was over for the company and there was a light at the end of the tunnel.

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GCC rich list facing new scrutiny from UK taxman

Thousands of the GCC’s wealthiest nationals with money in the UK on Wednesday came under renewed scrutiny in the British government’s fight against tax evasion.

All banks or financial institutions with branches in the UK, including Arab and Swiss companies, will be affected by the crackdown and legal experts predict the move will affect "huge numbers" of Arabs who currently hold money in the UK.

From Wednesday, the UK’s HM Revenue and Customs (HMRC) can force hundreds of banks and financial services providers to disclose information about clients with UK addresses who have offshore interests.

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GCC Market Review –August 2009 (PDF)

UAE revenues carry TNT Express

The UAE remains the sole bright spot among global logistics hubs, according to The Netherlands-based TNT Express.

Revenues are still marginally positive for TNT’s transshipment business out of the Emirates, said Bryan Moulds, the manager of TNT Express in the UAE. Revenue grew 2 per cent compared with the same period last year, making the Emirates the only country to record an increase for the global logistics and freight forwarder.

The increase suggests that even as the global economic crisis has spread across the region, leading to curtailed consumer spending, delayed infrastructure projects and a projected falling population in some parts of the GCC, the Middle East is still emerging as one of the better-off regions worldwide.

Paid-up investors take on Dubai Properties over Business Bay

Dubai Properties has become embroiled in a row with investors surrounding a Dh3 billion (US$817 million) development, after demanding final payment before the project was ready to hand over.

The dispute involves the Executive Towers development at Business Bay, a collection of 11 high-rise buildings containing more than 2,200 luxury apartments.

The investors said they received demands for final payments from Dubai Properties, which is owned by the Dubai Government, and assurances that the project had been completed. But after making their final payments, the owners were told the handover would be delayed.

Ratings watch on Dubai banks

The cost of insuring against the default of debt issued by Emirates Bank International and Mashreqbank rose Tuesday following a decision by Moody’s Investors Service to place four Dubai-based banks on watch for a possible ratings downgrade.

Credit default swaps linked to Emirates Bank and Mashreqbank climbed 32 basis points to 455 and 482.5 respectively, according to CMA DataVision. Those figures measure the price investors must pay to protect against default; an increase indicates a lower perception of credit quality.

A spate of credit rating downgrades of financial firms in the region and a perceived rise in the risk of default on their debt has stoked renewed concern over the soundness of the Gulf’s financial system as governments plant the seeds of a recovery from the financial crisis.

Developer says 30% of investors are struggling to pay

Around one in three Al Fara’a Properties investors are behind with payments, the developer has said.

Natasha Gangaramani, director of Al Fara’a Properties, told Arabian Business: “Anywhere between 25 percent and 30 percent of people are coming in saying ‘I can’t pay right now, can I extend, or do something about it, or consolidate my portfolio’.”

“We are seeing cases of defaults, and sometimes they are customers who come from a very good background,” she added.

Sunland drags Dubai developer to court

Gold Coast property company Sunland has filed a claim against a Melbourne developer and his old school friend from Geelong Grammar for the alleged common law tort of deceit.

The property group filed the claim with the Federal Court of Australia, at the Queensland registry yesterday.

The documents detail a case involving Matt Joyce and Marcus Lee, who were employed in 2007 on the Dubai Waterfront project, and Melbourne-based property developer Angus Reed, who went to school with Joyce.

UAE may face deflation, says Deutsche Bank

The inflation rate in the UAE may turn negative in the second half of the year, pulled down by housing and food prices, Bloomberg reported citing a Deutsche Bank note to clients.

“Headline inflation has declined sharply year-to-date and looks set to slip into negative territory,” Caroline Grady, a London-based economist for the bank, wrote in the note. “Our expectation of further declines in real estate prices would drag the housing component lower and a widening output gap will keep price pressures subdued more generally.”

“A rebound in global trade should help Dubai but the pullback in construction and infrastructure spending suggests a return to previous high growth rates is unlikely,” the report said. “Abu Dhabi should fare better.”

Zain Saudi Arabia gets $2.5 bln Islamic loan

Zain Saudi Arabia, part of Kuwait's Mobile Telecommunications Co., said Tuesday it secured a 9.37 billion Saudi riyal ($2.5 billion) Sharia-compliant loan to help cover its debts and expand.

The financing was provided by a syndicate of Saudi and international banks including Al Rajhi, Calyon and SABB, the company said in a statement on the Saudi bourse Web site.

The telecom operator incurred a net loss of 857 million riyals in the second quarter of 2009, almost three times the loss in the same quarter a year earlier, mainly due to capital expenditure, marketing, and consulting expenses to expand its network in the kingdom.

Zain, the kingdom's third mobile operator, was established and floated last year.END

HSBC UAE lays off 90 workers

British-headquartered HSBC UAE fired 90 middle management and junior workers, Emirates Business 24/7 reported on Wednesday.

Those terminated will receive six months' salary in a severance package, the news site said, citing sources.

Bank human resources chief Joel M Farnworth, blamed the "challenging" economic environment of Gulf banks for the job cuts among its 4,000 regional employees.

"A strong, well capitalised and profitable bank like HSBC can stay open for business, respond to the changing needs of its customers and continue to serve them even when times are tough," he told Emirates Business.

"There are difficult decisions that have to be made as we adapt to a new environment, and ensure we are positioned for the future," he added. "We deeply regret that these have led to a relatively small number of redundancies."END