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Sunday, 8 November 2009

Qatar wealth fund awakens from its slumber

Recession, they might be wondering in Doha. What recession?

The country’s sovereign wealth fund, the Qatar Investment Authority (QIA) has been conspicuously active of late. In the past week alone, its fund subsidiaries Qatar Holdings and Diar have announced major development deals in Yemen and Sudan, plans to open an office in Beijing and the purchase of the US embassy building in London.

With a possible stake in the US$6 billion (Dh22.03bn) purchase of Areva, the world’s largest maker of nuclear reactors, in a bid led by General Electric, QIA is suddenly among the most active sovereign wealth funds (SWF) in the world.

Middle East Credit Reporting Association (MECRA)

Saudi Aramco’s Chief Executive Officer Khalid Al-Falih said the West Texas Intermediate benchmark pricing is “disconnected” from the markets to which the state oil company sells its crude. Al-Falih was speaking to reporters in Rabigh, near the Saudi Arabian coastal town of Jeddah.END

Middle East Credit Reporting Association formed

In a move to support the development of credit bureaus and enhance credit information sharing across the region, credit bureaus based in the UAE, Bahrain, Oman and Pakistan have come together to establish the Middle East Credit Reporting Association (MECRA), a non-profit association of credit information suppliers in the Middle East.

This announcement was made today by the founding members of the association and coincides with the workshop on Developing Credit Bureaus in the Arab World organised by the Arab Monetary Fund (AMF) and the International Finance Corporation (IFC), which will be held in Abu Dhabi on 9 November 2009.

MECRA has been established to create awareness and promote the credit reporting industry in the region.

Dubai Repays $1 Billion Civil Aviation Islamic Bond

Dubai’s government refinanced $1 billion worth of Islamic bonds issued by the Dubai Civil Aviation Authority after the emirate tapped the global debt market for the first time in more than a year.

The repayment of the bonds, which matured on Nov. 4., followed a “ successful” issuance of $1.93 billion dollar- and dirham-denominated Islamic bonds, or sukuk, that generated an order book with more than 300 investors placing bids in excess of $6.3 billion, the Department of Finance said in an e-mailed statement today.

Dubai and its state-controlled companies are raising funds after they amassed $80 billion of debt during a four-year real- estate boom that produced the world’s tallest building and largest man-made islands. The global credit crunch raised concern that the second-biggest sheikhdom in the United Arab Emirates may be unable to meet its debt obligations.

U.A.E. Central Bank Considers New Rules on Bad Loans

The United Arab Emirates central bank reviewed draft regulations for the classification of banks’ bad loans and allocation of provisions at its Nov. 4 board meeting.

The central bank “instructed further study and amendments to the regulations,” the Abu Dhabi-based regulator said in an e-mailed statement today. Governor Sultan Bin Nasser Al-Suwaidi also suggested new regulations for wholesale banks, mortgage loans and protection of consumers of financial services, it said.

The central bank has proposed reducing by half to 90 days the time it takes for a loan to be classified as non-performing, Sanjay Uppal, chief financial officer at Emirates NBD PJSC, the U.A.E.’s biggest bank, said Oct. 26. U.A.E. bank non-performing loans have risen as the economy has slowed and thousands of jobs were cut.

Dubai Should Get Rating After Markets Stabilize, DIFC Saidi Says

Dubai should wait for international credit markets to stabilize before getting a sovereign rating, the chief economist of the Dubai International Financial Centre said.

“Once the markets stabilize, once flows to emerging markets are stabilized, then I think this issue can be posed,” Nasser Saidi told reporters in Abu Dhabi today.END

Abu Dhabi Economy May Grow 4% in 2010, 3% This Year

Abu Dhabi’s economy may grow by about 4 percent in 2010, compared with 3 percent this year, Mohammed Omar Abdullah, the undersecretary of the emirate’s Economic Development Department, said today.

The largest of the seven sheikhdoms that make up the United Arab Emirates plans to create export and business centers next year to facilitate trade and promote small and medium-sized businesses, Abdullah told reporters in Abu Dhabi.

Federal legislation regulating corporations may be passed by the end of the year, which would ease laws governing foreign ownership of businesses, he said.

“The federal law doesn’t refer directly to 100 percent ownership,” he said.END

U.A.E. Shares Gain Most in Almost a Week, Led by Emaar, Arkan

United Arab Emirates’ shares are headed for their highest close in almost a week, led by Emaar Properties PJSC and Arkan Building Materials Co., as investors speculated last week’s drop was overdone given growth prospects.

Emaar, the U.A.E.’s biggest developer, rose to the highest since Nov. 2. Arkan advanced for the first time in four days. The Dubai Financial Market General Index gained 2 percent to 2,139.82, also the highest since Nov. 2, at 12:31 p.m. in the emirate, bouncing back from last week’s 4.6 percent drop. Abu Dhabi’s index added 0.9 percent, the most since Nov. 2.

“Our markets are doing better today, mainly due to the good performance of the international markets on Friday,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi. The MSCI Emerging Markets Index rose on Nov. 6, climbing for a third day.

Al Baraka says IPO of Syrian unit oversubscribed

Bahraini bank Al Baraka BARKA.BH said on Sunday it had received subscriptions worth 7.67 billion Syrian pounds ($167 million) for the initial public offer of shares in its Syrian unit, an oversubscription of 3.4 times.

Al Baraka's IPO is the second by a Gulf Arab bank after Qatar National Bank QNBK.QA (QNB) floated its Syrian unit in July. The bank had offered a 35 percent stake in the unit with a for 1.75 billion Syrian pounds ($38 million).

The Syrian government is trying to encourage IPOs after the launch of the Damascus Securities Exchange in March. There are 11 companies listed on the exchange, which was launched under government plans to gradually liberalise the economy.

Al Baraka, Bahrain's largest listed Islamic lender, said in a statement posted on the website of Nasdaq Dubai the unit would start operations early next year.END

KCIC to list in Kuwait and open China office

Kuwait China Investment Company (KCIC), which is engaged in providing advisory and asset management services to investors, is listing its shares on Kuwait Stock Exchange this month and waiting final date to kick start trading in the stock.

The company has decided to open its first overseas office in Shanghai in next six months.

"Kuwait China Investment Company will be listing on Kuwait Stock Exchange this month and we are awaiting final date. We continue to raise funds to support our business activity," Ahmad A Al Hamad, Managing Director, told Emirates Business.

UAE leads GCC debt market in 2009

The debt market in Gulf oil producers rebounded by a staggering 64 per cent in the first nine months of 2009 and the UAE emerged as the leader in the issuance of conventional bonds, according to a Saudi investment fund.

New issuances during the first nine months of this year touched $36.9 billion (Dh135.4bn), including nearly $32.1bn in conventional bonds, said NCB Capital, an offshoot of the National Commercial Bank, the largest Saudi bank.

"The gloom surrounding the GCC debt markets during the last quarter of 2008 and the first quarter of this year has made way to increased activity this year," NCB Capital said in its weekly bulletin.

ADX will wait for investors to buy into idea of ETFs

The Abu Dhabi Securities Exchange (ADX) is again delaying its first exchange-traded fund (ETF) until sufficient investor interest builds in the investment vehicle.

The infrastructure was in place to launch the product, with the exchange in discussions with a number of government-related entities and private companies interested in listing ETFs, said Rashed al Baloushi, the deputy chief executive and director of operations at the ADX.

Plans for ETFs have already been delayed by the ADX due to the global financial crisis, which pushed back the launch from the end of last year to this year. Mr al Baloushi declined to put a date on when the vehicle might be launched.

UAE says oil cuts should remain

The UAE has joined a growing OPEC contingent that has been calling for the group to stay the course on production cuts when it meets on December 22.

Raising output to put the brakes on rising crude prices “is not on the agenda”, said Mohammed al Hamli, the Minister of Energy.

Internationally, the oil market remained “a little bit oversupplied” due to stubbornly high global inventories of crude and refined oil products, he said.

Revealed: Sanea’s Cayman cash pile

Accountants investigating the affairs of Maan al Sanea, the Kuwait-born entrepreneur involved in the Middle East’s biggest corporate scandal, have unearthed more than US$6.2 billion (Dh22.77bn) of assets in his Cayman Islands holding company, The National can reveal.

The news will be welcomed by creditors of Mr al Sanea’s Saad Group, who are owed up to $10bn by the businessman based in Saudi Arabia.

However, liabilities against these assets, and other constraints on their disposal, mean the 50-plus international banks lining up for repayment are likely to receive only a small proportion of their money back.

Japanese contractors owed billions by Dubai firms

Japanese builders are owed billions of dollars on projects that include the Dubai Metro and Palm Island, according to a top diplomat and leading contractors from the country,
Japanese builders have played a pivotal role in Dubai’s construction boom, spearheading work on the Dh28 billion (US$7.6bn) Metro and helping to build Nakheel’s palm-shaped islands off the emirate’s coast.

But as the global financial crisis brought many projects to a standstill, an increasing number of foreign companies, especially builders, have reported payment problems mainly linked to Dubai developers.

“Some Japanese construction companies are facing very serious debt problems as Dubai can’t pay,” said Seiichi Otsuka, the Japanese consul general in Dubai. “Some companies engaged with the construction of the Metro are facing some payment issues.” He said companies were also owed money by Nakheel.

Banks in Oman - Looking for innovative sources of growth

Through the global financial crisis, Omani banks have proved remarkably resilient, due to adequate provisioning and low exposure to the toxic assets that caused such turmoil elsewhere. The banking sector has a largely domestic and regional focus, sparing most institutions from the effects of collapses in North America and Europe. The cautious policy of the Central Bank of Oman regarding asset/liability management and funding, as well as its quick fire-fighting work as the effects economic crisis began to be felt, has helped shore up the system. The banking sector's transparency has long been seen as one of the its strong suits, and Omani banks have set a regional example in their clarity about exposure to bad assets, David Murray Sims, CEO of The National Bank of Oman (NBO), told OBG.

Oman is not unscathed; some key projects, most notably in hydrocarbon extraction, were put on hold as liquidity dried up. The Duqm Refinery and Petrochemicals Complex, for example, has been frozen, though recent reports suggest that it may be restarted in the near future. Banks have also become somewhat more cautious.

"The global economic downturn has led a lot of institutions to review what they are doing," Sims said. "Institutions are indeed more careful about how they are lending and this is a worldwide phenomenon. Banks are going back to the basics where they do the proper due diligence before lending."