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Monday, 17 August 2009

Dubai shares tumble 5.8%, most in seven weeks

Dubai shares fell the most in seven weeks, leading the Gulf lower, as oil fell for a second day.

The Dubai Financial Market General Index slid 5.8%, its biggest decline since 28 June. The measure is at its lowest level since 23 July. Abu Dhabi’s index lost 2.4% and Qatar’s DSM 20 Index fell 2.2%.

Dubai Holding, a state owned diversified group said it plans to focus on four businesses, including property and hospitality, as part of a reorganisation aimed at weathering the global credit crunch.

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Dragon Oil to miss output goal; Enoc talks continue

Dragon Oil (DGO.L) said it would likely undershoot its production growth target in 2009 due to technical problems, and continues to talk to majority shareholder Emirates National Oil Company (Enoc) about a possible takeover bid.

Dubai-based Dragon said gross output growth for the full year is likely to be below the 15 percent level which the company is aiming for, annually, over 2009-11, as it unveiled a 37 percent drop in net profit to $105 million in the first half of 2009, due to lower oil prices.

"The results today are disappointing in regard to the group's statement that it will undershoot its production growth target," Ed Woolfitt, Head of Trading at Galvan Research, said.

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Moody's downgrades Bahrain's banking system

The outlook for Bahrain's banking system is negative and credit conditions will remain tough, but lenders probably don't have to raise new capital, ratings agency Moody's Investor Services said on Monday.

Banks in Bahrain have seen profits decline as they take provision against a rise in loan defaults, with private Saudi groups Saad and Ahmad Hamad Al-Gosaibi and Bros Co (AHAB) the most prominent companies to undergo debt restructuring.

Moody's negative outlook comes one month after the Bahrain central bank seized two banks belonging to Saad and Al-Gosaibi in a bid to manage the fallout of the financial trouble at the two Saudi firms.

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Kuwait posts $9.54 bln budget surplus

These traditionally-designed water towers are ...Image via Wikipedia

Kuwait posted a budget surplus of 2.74 billion dinars ($9.54 billion) for the fiscal year ended March 2009 on higher than forecast oil revenues, official data showed.

Revenues in the world's fourth-largest oil exporter were a little over 21 billion dinars in the year to March 31, while expenditure was 18.26 billion dinars, Finance Ministry data showed.

Revenues were substantially above a budget forecast of 12.68 billion dinars.

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Mubadala bids for Iran gas as Crescent deal stalls

The UAE-based Mubadala Petroleum Services Company has offered a bid to import Iranian gas as the National Iranian Oil Company-Crescent National Gas Corporation deal has hit a standstill, the Mehr News Agency reported on Sunday.

NIOC and Mubadala have reached a preliminary agreement, the report says, adding Iran will start to deliver up to 10 million cubic meters of gas per day to the Emirati company some three years after finalizing the agreement.

This volume of gas will be transferred for a period of 25 years through a subsea pipeline.

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Saudi groups’ dispute sparks lending fears

The financial travails of two prominent Saudi companies locked in a bitter dispute has caused banks in Saudi Arabia to clamp down on lending to private sector companies, setting back the economic recovery in the world’s top oil producer, according to a Saudi investment house.

Brad Bourland, chief economist at Jadwa Investment, estimates that the problems of Ahmad Hamad Algosaibi & Brothers Co (AHAB) and Saad Group, which is owned by Maan Al-Sanea, the Saudi billionaire, have knocked about 500 points off the Saudi stock market index and forecasts will shave 0.5 per cent off the kingdom’s growth this year.

The Algosaibi/Saad incident was Saudi Arabia’s Lehman in the sense that it set back a credit recovery and has raised serious questions about exposure of the banking system here,” Mr Bourland told the Financial Times.

Tide is changing for GCC's sovereign wealth funds

The GCC's sovereign wealth funds (SWFs) hold more than one-third of the assets held by SWFs globally, research reveals.

According to data compiled by the SWF Institute, the world's largest SWFs hold $3.76 trillion (Dh13.81trn)?in assets under management (AUM), of which the GCC's SWFs account for $1.47trn, or 39 per cent.

According to analysts, the fact that SWFs from the GCC have been actively supporting the bailouts and stimulus activities of some of the western companies is a significant development, something that is bound to put them in positive light.

UAE SWFs dominate global M&A in 2009

UAE sovereign wealth funds dominated the M&A market this year by accounting for more than 50 per cent of the total value of deals this year, research reveals.

Globally, SWFs have entered into deals worth $17.5 billion (Dh64.2bn) in 2009 so far (until August 7, 2009), and SWFs from the UAE dominate the listings, accounting for more than $9.3bn, or 53.4 per cent, of the total deals, according to data compiled
by M&A intelligence provider Mergermarket. The UAE's International Petroleum Investment Company was responsible for $6.5bn worth of deals, while Aabar Investment and Mubadala Development Company were responsible for the remainder.

The dominance of UAE-based SWFs is in fact greater as some of the recent deals stuck by Aabar Investment, including a €100m (Dh521m) contribution to ABAG Aktiengesellschaft, a joint venture with the Austria-based Berndorf, are not strictly viewed as M&A by Mergermarket, and are therefore not part of the numbers.

Clock ticking on Nakheel debt

Investors are watching intently as time runs down on the developer’s US$3.52 billion sukuk, and a $300 million instalment on another loan. They await some clue as to how their investments in Dubai-government backed firms will fare in the global financial crisis.

Nakheel, the developer behind Dubai’s palm-shaped islands, is quickly running out of time and options to handle a US$3.52 billion (Dh12.92bn) debt that comes due in December.

The Islamic bond, or sukuk, must be repaid on December 14. But Nakheel, which has fallen on hard times since property prices in Dubai dropped at the end of last year, so far has not arranged a refinancing or restructuring of the bond.

Dubai Holding regroups for revival

Dubai Holding, one of the emirate’s three major holding companies, said it was reorganising its business in preparation for an end to the economic downturn.

The announcement represents the latest move towards consolidation among Dubai conglomerates as they streamline and cut costs in times of slowing activity and declining asset values.

Under the plan, Dubai Holding will reorganise its companies into property, business park, hospitality and investment units.

Zain opens door to investors

Shareholders of Zain, the regional mobile operator, will vote at the end of the month on a proposal that would open the door to the sale of a stake in the company.

A special shareholder meeting, announced yesterday, will consider the removal of a clause in the company’s regulations prohibiting a single shareholder from acquiring more than 2 per cent of the company.

The move is intended to allow a strategic investor, most likely a telecommunications company, to buy a substantial stake in the company from its existing institutional investors, analysts said. Zain’s largest investor is the Kuwait Investment Authority (KIA), a sovereign wealth fund, and its second largest is the family-owned Kharafi Group of Kuwait.

Dubai's DBG eyes majority stake in Shuaa

State-owned Dubai Banking Group (DBG) wants to take majority control of Shuaa Capital as it looks to capitalise on the options it won following its dispute with the investment bank, an industry source has told Maktoob Business.

The move is likely to be accompanied by the appointment of Sameer al-Ansari as CEO of Shuaa after the resignation of Iyad Duwaji last week, the source said.

Ansari is currently CEO of Dubai International Capital (DIC). DBG and DIC are both part of Dubai Holding, owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.

Iran hordes oil for sanctions

Iran's oil minister on Sunday shrugged off the impact of any Western sanctions targeting the country's gasoline imports, saying all necessary measures had been taken to meet its needs for the fuel.

Iran is the world's fifth-largest crude exporter but its refineries lack the capacity to meet domestic fuel demand so it imports up to 40 percent of its gasoline supplies. The U.S. and its allies may target those imports if Tehran refuses to enter talks over its nuclear programme.

The West suspects Iran aims to make nuclear bombs, while Tehran insists it needs fuel for power plants.

What's better - Dubai or Abu Dhabi?

Much like the rivalry between Auckland and Wellington, there has always been a hint of competition between Dubai and Abu Dhabi, two of the biggest and most important of the seven emirates making up the United Arab Emirates.

They're a bit like Serena and Venus Williams. Everyone thinks they want to knife each other in the back - especially during Wimbledon - but we'll never know for sure. Who will win the trophy in the competition between Dubai and Abu Dhabi? Time will tell.

Malls still bustle but spending sprees have ended

When the Dubai Mall opened it was touted as one of the world’s largest shopping centres: equal to the size of 200 football pitches with more steel used in its construction than that in the Eiffel Tower.

It epitomised the extravagance and consumerism that had been one of the most conspicuous characteristics of the wealth generated in the Gulf by years of petrodollar-fuelled boom.

But the mall opened in November just as the full impact of the global economic crisis on the region was emerging. Dubai, the Gulf’s shopping hotspot, became one of the hardest- hit regions from the downturn.

Dubai’s property market crumbles in crisis

Dubai famously used to boast the highest concentration of construction cranes in the world.

Now, its property sector has investors fighting for the return of down-payments on buildings that might never be built and state-linked developers continuing to fall behind on contracting invoices despite having received billions of dollars in bail-out cash.

Firesales saw drastic reductions at previously desirable locations such as the Palm Jumeirah, Dubai’s first completed manmade island development, and at the Old Town district surrounding Burj Dubai, the world’s tallest tower that is planned to open later this year.