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Wednesday, 30 June 2010

Dubai’s ambitions unbowed as world’s biggest airport gets flying | Beyond Brics |

Don’t let Dubai’s debt pile fool you. The Gulf emirate still has the ambition to shock the world with its mammoth projects. Al Maktoum International airport, a huge $32bn development - nearer the border with Abu Dhabi than Dubai city itself - opened its first runway and cargo terminal to 12 freighter operators this week ahead of next March’s opening of a new passenger terminal - but the plan is to develop the world’s busiest airport.

Al Maktoum may be a legacy of Dubai’s boom years, which have now turned into a $110bn debt mountain and gaping real estate overhang. But the government shows no signs of slowing down aggressive expansion of both passenger and cargo flights, as the emirate seeks to exploit its strategic position and healthy track record in the industry.

The two terminal’s at Dubai’s existing airport, located near the city’s original business district, last year handled just shy of 50m passengers, but with y-on-y growth of almost 18 per cent in the January-May period, Paul Griffiths, chief executive of Dubai Airports, says the “signs are looking good” and this year could see an additional 5-6m people passing through the city. Cargo over the same period has risen 27 per cent. And that growth is coming as the global industry faces serious challenges.
“The Middle East is breaking the mould and Dubai is leading that charge,” he tells the Financial Times.
Since Dubai received its first passenger flight in 1937, aviation has proved a cornerstone of the city’s rapid growth, complementing the traditional entrepot trade around the creek.

Dubai: yet another shock for the sheikh | Beyond Brics |

The blows to Dubai just keep on coming. Moody’s downgraded government-linked Dubai Holding Commercial Operations Group (DHCOG) yet again today, and warned that more downgrades could come.

DHCOG, the non-financial arm of Dubai Holding – an entity owned personally by Dubai’s ruler Sheikh Mohammed bin Rashid al Maktoum – is often said to be one of the healthier parts of the conglomerate, thanks to its ownership of companies such as the Jumeirah Group.

However, like a multitude of other Dubai-linked vehicles, it too got heavily involved in property development in the ritzy emirate, and is now paying the price.

Dubai Shares Fall a Fifth Day on Global Economy; Shuaa Retreats - BusinessWeek

Dubai shares declined, leading the drop in the Gulf, after a slump in U.S. consumer confidence fueled concern about the global economic recovery. Shuaa Capital PSC fell as the head of its brokerage division resigned.

The DFM General Index lost 1.4 percent to 1,461.8, the lowest since February 2009. The measure tumbled 21 percent this quarter, the most since the fourth quarter of 2008. Investment bank Shuaa slid the most in a week and Emirates NBD PJSC, the United Arab Emirates’ biggest bank by assets, also declined. The Bloomberg GCC 200 Index retreated 0.5 percent at 2:07 p.m. in Dubai. Crude oil has fallen 8.2 percent this quarter.

Declines are “in line with the global backdrop,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “Focus is returning to the euro zone, disappointing data in the U.S. and weaker oil.”

Dubai's Nakheel Starts Payment to Creditors in $10.5 Billion Restructuring - Bloomberg

Nakheel PJSC started cash payments to trade creditors as the Dubai World-owned property company seeks to restructure $10.5 billion of liabilities after real- estate prices slumped in the emirate.

Nakheel started making “40 percent cash payment to our trade creditors,” according to a company statement today. “The announcement marks significant progress in our recapitalization plan following on from the initial payments to trade creditors of 500,000 dirhams or less which commenced in March.”

Nakheel, the builder of palm-shaped islands off Dubai’s coast, said in March that trade creditors would be offered 100 percent recovery of their claims -- 40 percent through a cash payment and 60 percent through a publicly tradable Islamic bond, paying 10 percent return annually. The Dubai government in March pledged to pump $8 billion into Nakheel, and will take over its ownership from Dubai World after the restructuring is complete.

UAE banks face Dubai World losses of 10%-20%, says Moody's - Business Intelligence Middle East - - News, analysis, reports

UAE banks may need to set aside as much as 20% of their loans to state- owned Dubai World to cover losses after it announced a US$23.5 billion debt restructuring, reported Bloomberg, citing Moody’s Investors Service.

Losses as a result of the new debt terms “will be manageable and within a range of 10%-20% on average for the exposed banks,” John Tofarides, a bank analyst at Moody’s told Blooombeg in a phone interview from Dubai Tuesday.

Moody’s estimates the Dubai World restructuring will wipe out between 6%-12% of the banks’ regulatory capital, he said.

Investment firms on road back - The National Newspaper

The Gulf’s investment companies have come a long way since cracking last year under the weight of too much borrowing and too little cash, but analysts say a return to financial health may still be some way off.

Several investment companies based in Kuwait and Bahrain started to default on financial obligations and restructure debt last year.

Global Investment House (GIH), one of Kuwait’s largest investment firms, missed a payment on a US$200 million (Dh734.6m) loan in December 2008.

Merger of Dubai stock exchanges too vital to ignore

It’s that time of year when projects are shelved in this part of the world. The summer is with us in full intensity, people are leaving for holidays and the holy month of Ramadan approaches. All are disincentives for implementing ambitious strategies.

We’ve seen it in a number of areas recently. The great wave of initial public offerings (IPOs) forecast for the first half of the year has not materialised and, if it does happen at all, will have to wait until the autumn.

That is as much to do with the state of global stock markets as it is local climatic considerations, but it’s part of a trend: don’t rush into it now; take a break and think again later in the year.

CBB wins court backing on Awal Bank decision

A Bahrain court ruling yesterday supported the decision of the Central Bank of Bahrain (CBB) to place Awal Bank into administration.

The CBB said the ruling in its favour came following an appeal launched by the former chairman of Awal Bank against the decision made by the central bank on July 30 last year to place Awal Bank into administration.

The ruling supports the CBB's decision to place Awal Bank into administration due to Awal Bank's defaults on certain of its obligations in June last year, under Article 136 of the Central Bank of Bahrain and Financial Institutions Law (Decree No 64 of 2006).

Qatari fund eyes stake in Greek lender

The Qatar Investment Authority is considering taking a strategic stake in National Bank of Greece, the country's biggest lender, according to people familiar with the talks.

The Gulf state's sovereign wealth fund, via its unit Qatar Holding, was examining taking about 5-7 per cent of NBG, equivalent to about €250m ($305m), in line with an investment policy of buying stakes below 10 per cent in financial institutions, they said.

The acquisition, if it goes ahead, would help to boost confidence in the Greek banking system, which is under pressure as a result of the country's ongoing sovereign debt crisis.

HSBC Takes Top Spot From CIMB in Sukuk Sales: Islamic Finance - BusinessWeek

HSBC Holdings Plc is overtaking CIMB Group Holdings Bhd. as the top underwriter of Islamic bonds as sales from the Gulf pick up and corporate issuance from Malaysia, the biggest market for the debt, declines.

HSBC, Europe’s biggest lender by market value, arranged $1.6 billion of global sukuk so far in 2010, about 25 percent of the total, led by Saudi Electricity Co.’s issuance in May, according to data compiled by Bloomberg. CIMB Group, Malaysia’s second-largest banking group, led $1.4 billion of sales of debt that complies with the religion’s ban on interest. Last year, CIMB was the top underwriter, managing $4.4 billion of offerings.

“The origin of the issuer may have an impact on the decision to hire which underwriter,” Azrul Azwar Ahmad Tajudin, chief economist at Bank Islam Malaysia Bhd., the country’s oldest Shariah-compliant bank, said in an interview in Kuala Lumpur yesterday. “If the issuance amount is huge, issuers may have some level of comfort with a foreign bank.”

Tuesday, 29 June 2010

LNG Storage Off Fujairah Is Equivalent to 3 Months China Demand - BusinessWeek

Liquefied natural gas tankers parked off Fujairah in the United Arab Emirates are storing the equivalent to about three months of China’s average purchases, signaling an oversupply in the market.

About 43 percent of the total capacity of tankers in the Gulf of Oman are holding LNG, Pan EurAsian Enterprises Inc. said in an e-mail yesterday, citing data from Odysseus tracking service. That’s equivalent to about 1.4 million metric tons of the cleaner-burning fuel. China imported 7.63 billion cubic meters, or 5.6 million tons, last year, according to BP Plc’s Statistical Review of World Energy 2010.

An oversupply of gas and weak demand have sent spot charter rates to the cheapest in five years, prompting producers and traders to take advantage of the low charges to store the fuel. Qatar, the world’s biggest producer of LNG, was idling at least eight tankers in the Gulf of Oman as of June 3, according to ship-tracking data from AIS Live Ltd. The vessels have a combined capacity of 1.8 million cubic meters, enough to supply the U.K. for more than a month.

Dubai May Defer, Cancel $29 Billion of Airbus, Boeing Jet Orders, WSJ Says - Bloomberg

Dubai Aerospace Enterprise may defer or cancel $29 billion of orders for 200 aircraft, divided equally between Airbus SAS and Boeing Co., the Wall Street Journal reported, citing unidentified people familiar with the matter.

As an alternative, the state-controlled Dubai aircraft-leasing company may try to switch the orders to Emirates Airline and FlyDubai, the newspaper said.

The cancelation threat stems from Dubai’s parlous financial state, the Journal said, adding that Dubai Aerospace, Airbus and Boeing all declined to comment.

GCC Markets in the Past Year « Alpha Dinar- talking GCC finance

In the past year some GCC markets showed some growth and others showed large declines. The Tadawul index increased the most (15%), followed by the Qatari index (11%). The Kuwait SE was the largest decliner, where it decreased 18% in the past year. Both UAE’s markets, DFM and ADX, where very volatile this year due to Dubai Wolrd debt issues, however the ADX managed to maintain its value while the DFM lost 15%.

Dubai, Abu Dhabi Exchange Merger Talks Is at Advanced Stage, Alrroya Says - Bloomberg

The Dubai Financial Market and the Abu Dhabi Securities Exchange’s talks to combine the bourses are in an “advanced” stage, Alrroya Aleqtissadiya reported, citing people it didn’t identify.

The Dubai Financial Market has been valued at 9.5 billion dirhams ($2.6 billion), the newspaper reported. The combined entity will be called Emirates Financial Market, it said.

The U.A.E. is home to three stock exchanges, one in Abu Dhabi and two in Dubai. The Abu Dhabi Securities Market and the Dubai Financial Market are regulated by the Securities and Commodities Authority, while Nasdaq Dubai is regulated by the Dubai Financial Services Authority. Dubai Financial Market had market value of 12 billion dirhams at yesterday’s closing price.

Qatar seeks integrated Gulf stock exchange

The Qatar Exchange said yesterday that an integrated regional stock market would promote cross-border investment, adding that it was gearing up for a proposed consolidation of Gulf bourses.

“We have everything in the plan,” said Minister for International Cooperation and Qatar Exchange chairman HE Khalid bin Mohamed al-Attiyah on the sidelines of a function to mark the inauguration of a new website for the Qatar Exchange.

Proposals for integration were first raised in the United Arab Emirates which oversees exchanges in Abu Dhabi and Dubai.

gulfnews : China Construction Bank prepares to set up shop in Dubai

Shaikh Maktoum Bin Mohammad Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Monday received Guo Shuqing, Chairman of China Construction Bank (CCB).

Shaikh Maktoum welcomed Guo Shuqing and an accompanying delegation, pointing out that the visit will usher in a new era of relations between the banking sectors of both countries.

Shaikh Maktoum commended China's rise on the global economic scene, stressing that the UAE in general, and Dubai in particular, look forward to furthering economic and financial cooperation with China, which is the UAE's second largest trading partner.

U.A.E. Plans Shariah Money Market Entry After Law Change: Islamic Finance - Bloomberg

The United Arab Emirates, the second-largest Gulf economy, may follow Malaysia, Bahrain and Indonesia in selling Islamic securities with maturities of less than 12 months as legislators consider establishing a local debt market, according to Royal Capital PJSC.

Islamic bills would give Shariah-compliant banks more investment options, said Ahmed Talhaoui, Abu Dhabi-based head of portfolio management at Royal Capital, which is 44 percent-owned by United Gulf Bank BSC, an investment bank in Bahrain. The nation’s eight Islamic banks held $49.8 billion of deposits at the end of 2009, or about 19 percent of the total, central bank Governor Sultan bin Nasser al-Suwaidi said at an Islamic banking conference in Singapore on June 14.

Banks that adhere to Shariah principles “are facing a maturity mismatch,” Talhaoui said in an interview this week. “They are keeping a lot of deposits but their options are limited. Some banks are playing a dangerous game, which is essentially to match short-term liabilities with investments in sukuk,” or Islamic bonds, which have longer maturities.

Qatar aims for food goal in radical desert farming plan

Qatar could never be accused of being a shrinking violet. The Gulf nation may have failed in its bid to bring the 2016 Olympics to the Arabian Desert, but the country is embarking on a project that appears at least as audacious - an attempt to make the desert bloom and achieve food security.

The aim of the Qatar National Food Security Programme is to bring the country as close as possible to food self-sufficiency by 2023. There is even the prospect of farms rising skywards in the form of skyscrapers as Qatar considers introducing hydroponics - soilless agriculture - and "vertical farming".

Like other Gulf countries made rich by hydrocarbon reserves, Qatar was spurred into action two years ago when rising food prices caused producing countries to restrict their exports, raising the possibility of food deficits even for wealthy Arab states.

Monday, 28 June 2010

Comment: Long-term test of unity for UAE

Seven months after Dubai shocked the world with a sudden restructuring of one of its flagship companies, the sense of relief is palpable in the city as well as in Abu Dhabi, the better-off neighbour that came to the rescue.

Although the crisis provoked serious tensions between the United Arab Emirates’ two leading centres, Dubai was thankful to be part of an oil-rich federation. Sheikh Mohammad bin Rashed al-Maktoum, the ruler, renamed the just-completed Burj Khalifa, the world’s tallest tower, after the UAE president.

Yet, in spite of the relief – Dubai World looks set to reach a consensual agreement with its creditors – a new kind of anxiety seems to have developed among at least some nationals in the emirate.

Dubai Shares Fall to Week-Low on Global Economic Growth Concern - BusinessWeek

Dubai stocks fell to the lowest in more than a week as a meeting of Group of 20 leaders failed to reassure investors about the strength of the global economic recovery and on concern banking earnings may disappoint.

Dubai’s DFM General Index lost 1.2 percent to 1,515.39, the lowest since June 17. Emaar Properties PJSC, the developer of the world’s tallest skyscraper, led the drop and Commercial Bank of Dubai, which has a 4.4 percent weighting in the emirate’s benchmark index, slid to the lowest in more than a year. Oman’s MSM 30 Index declined 0.5 percent.

“The main focus for markets has been the G-20 meeting, as there is a lot of speculation on the banking sector” globally and locally, said Paul Cooper, managing director at Sarasin- Alpen & Partners Ltd. in Dubai, which oversees more than $500 million in the Middle East. Gulf investors “are waiting for the earnings season to kick off” and find out about the banks’ provisioning, he said. Companies will start announcing second- quarter earnings next month.

TAKING STOCK: Time For A Gulf Stock Market -

Maybe it's time for the petrodollar-rich Gulf Cooperation Council states to move on from just paying lip-service to a common market and a single currency to the more practical near-term objective of a broader regional stock exchange.

Calls for a single stock market have been growing louder by the day as volumes plunge and regional exchanges face the risk of falling off international investors' screens. The six-state GCC--with already existing political and economic relations--looks like the best place to start this unification process.

Stock markets in the GCC countries, led by Saudi Arabia, have a combined market capitalization of about $700 billion and recorded a daily average turnover of just about $1.5 billion in the last two years, according to While the GCC markets don't compete directly in terms of listed stocks, they must still attract broadly the same investors and also themselves invest in expensive technology and infrastructure.

Analysts reckon a merger is unlikely, given the politics involved, but say greater cooperation would make sense as operating-cost efficiencies would improve, and the combined market capitalization would help attract more foreign investors.

Recently, a senior Abu Dhabi Securities Exchange official said that operational consolidation between the region's stock exchanges could be the best answer to the fragmentation issue. The creation of investable products with common themes makes sense. So does the creation of a single central depository and the synchronization of account-handling and collateral-management systems.

Furthermore, linking all the markets would allow investors to trade on all the exchanges freely; resulting in less volatility, deeper markets, and the increased likelihood of attracting foreign and regional institutional investors. Obviously, greater integration can only be achieved gradually but it could also lay the foundations for a derivatives market, which has a better chance of succeeding if done collectively.

The GCC states launched a common market in early 2008, paving the way for the free movement of labor and capital among the six member states and removing barriers to inter-GCC trade, but the real impact of this is yet to be seen. And designs for a single GCC currency may remain on the drawing board for some more time, given that its inspiration--the euro-zone--is itself struggling.

So Arab lawmakers may find integrating the region's stock markets a more achievable goal and one that could also, eventually, play a key role in boosting their common-market agenda, even though that may still be some way off.

Kuwait faces up to a “massive destruction of wealth” | Beyond Brics |

Kuwait may be one of the richest countries in the world, but a large swathe of its financial sector is a basket case that would rival the worst of Wall Street.

Encouraged by cheap debt, petrodollars and an insatiable appetite for sometimes bizarre investments, Kuwait’s 100 investment companies swelled their assets to more than $50bn in 2007, but the sector imploded spectacularly after the Lehman Brothers bankruptcy.

In a report published today, Markaz - one of the few well-run investment companies - estimated the scale of the resulting “massive destruction of wealth”:

DP World Limited - Statement Regarding London Stock Exchange Listing

The Board of DP World remains committed to listing the Company's shares on the London Stock Exchange. However, the Board has decided to postpone the listing process until an acceptable system that supports the dual listing is available.

Given that this will take time, the next practical window of opportunity to seek admission for listing would be following the publication of Audited Financials for the year ending 31st December 2010.

Dubai Aerospace Seeks to Renegotiate Airbus, Boeing Orders, Echos Reports - Bloomberg

Dubai Aerospace Enterprise is seeking to renegotiate plane orders with Airbus SAS and Boeing Co. as it attempts to reduce its debt levels, French daily Les Echos reported, citing unidentified people.

DAE has ordered around 220 planes from the two companies and for several weeks has stopped taking plane deliveries and making payments, according to the newspaper. DAE has so far taken only four of the 118 planes which it ordered from Boeing in 2007, and none of the 100 Airbus planes, Les Echos said.

DAE declined to comment, while an unidentified person at Airbus said only that the orders were still in the order book, Les Echos said.

A makeover for the DIFC - The National Newspaper

The Dubai International Financial Centre (DIFC) is on the verge of a strategic shift that its senior management hopes will maintain its lead as the premier financial market in the Gulf region.

“We will be communicating soon the priorities of the organisation as part of the growth strategy for the centre, and how the internal set-up will support it,” said Abdullah al Awar, the DIFC chief executive.

“One thing to note, though, is that the strategic review was based on the fact that the centre needs to build on the competencies and achievements of the past five years. The centre grew in global recognition and, going forward, we need to adjust the priorities to further enhance the growth potential and enable clients to scale up from here and utilise the full structure.”

Indian companies urged to invest in UAE-Foreign Trade-Economy-News-The Economic Times

The United Arab Emirates (UAE) has asked Indian companies to invest in the Gulf region, while lauding the Indian community for being a major contributor to the comprehensive development of the UAE.

UAE Minister of Economy Sultan Al Mansouri met India's new ambassador to the region, Lokesh Mysore Kapanaiah, and discussed investment opportunities in the UAE for Indian companies.

Al Mansouri called on Indian companies to seize opportunities in the UAE in the infrastructure and clean energy sectors and asked businessmen from both regions to exchange visits to develop trade relations.

Malaysia Leads in Filling Holes in Shariah Bank Services: Islamic Finance - Bloomberg

The Islamic finance industry is catching up with Malaysia in offering a full range of services, supporting growth in an industry with $1 trillion in assets, said the chief executive officer of CIMB Islamic Bank Bhd.

Malaysia has a Shariah-law compliant alternative for every conventional product available because of its early start, Badlisyah Abdul Ghani said in a June 25 interview in Kuala Lumpur. Automobile financing complying with the religion’s ban on interest accounted for 80 percent of new loans last year, said Badlisyah. There’s no industry “handicap” or lack of demand, only the need for appropriate regulations, he said.

“We don’t have much difficulty in introducing new Islamic financial products in Malaysia as there is an effective product- development approval process,” said Badlisyah. CIMB Islamic is a unit of Malaysia’s second-biggest banking group CIMB Holdings Bhd. “In most other markets the process is not that clear, and most of the time you have to go through a cumbersome process of getting clearance from different regulators.”

Crisis hits property prices in Bahrain

Property prices have fallen in Bahrain and rental rates of commercial property are also down though residential rates have remained largely stable, according to a report. Manama has not been immune to the recent downturn in the global property market with an oversupply of high-end real estate and prime office space, according to Knight Frank Middle East's Bahrain Property Highlights report.

"There is significant pent-up demand for affordable housing which is not being met and there is already an oversupply of high-end apartments with Bahrain's stock due to increase by 37 per cent over the next few years, with 5,000 units in the development pipeline," the report said.

"High-end residential rental rates have yet to drop to reflect increasing vacancy rates, whereas sales rates for freehold properties have declined by 20pc since 2009."

Sunday, 27 June 2010

MIDEAST STOCKS-Abu Dhabi's Aabar falls on delisting plan | Markets | Reuters

Abu Dhabi's Aabar Investments (AABAR.AD: Quote) tumbled on Sunday after setting the date for a shareholder meeting to discuss de-listing the firm.

Middle East markets fell as an end-of-week surge in oil prices failed to outweigh gloom over declines in world equities following fresh doubts about a global economic recovery.

Aabar lost 7.1 percent. The world's only listed sovereign wealth fund has called a July 26 shareholder meeting to debate plans to convert into a joint stock company.

Kuwait Stocks Lead Middle East Drop on Global Growth Concern - BusinessWeek

Kuwait stocks lost the most in two weeks, leading a decline in Middle East markets, on concern Europe’s debt crisis will slow the global economic recovery and speculation Gulf earnings may disappoint. Israel shares fell. The Kuwait SE Price Index slid 0.8 percent, the most since June 14, to 6,571. Agility led the drop, slumping to the lowest since 2003, after U.S. federal prosecutors said the logistics company may still be overbilling the American government. Saudi Arabia’s benchmark lost 0.6 percent. The TA-25 Index declined 0.7 percent to 1,086.49, the lowest close since June 8, as Israel’s largest communications company, Bezeq Israeli Telecommunication Corp., retreated.

Global sentiment worsened last week as disappointing U.S. housing data and a surge in the cost to protect from a Greek default reignited concern about the economic recovery. The Stoxx Europe 600 Index had its first weekly drop in more than a month and the Standard & Poor’s 500 Index fell 3.7 percent. Crude rose the most in two weeks, while gold gained on speculation a weakening dollar will boost its appeal as an alternative asset.

“Europe’s problems appear to be ongoing and investors are losing interest, turning to commodities such as gold and petrol,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi. In the Gulf, “there is some concern over second-quarter earnings.” Companies will start announcing second-quarter earnings next month.

No Saudi plan to buy European sovereign debt - banker | Reuters

Saudi Arabia does not plan to buy European government bonds, the Gulf oil producer's central bank governor Muhammad al-Jasser was quoted as saying on Sunday.

"There are no plans to buy European sovereign debt," Jasser was quoted as saying by Saudi al-Watan daily on the sidelines of the G20 summit in Toronto.

Leaders of the world's 20 leading nations meeting in Toronto this weekend are seeking ways for countries to cut public debt without undermining a fragile global economic recovery.

Egypt, Kuwait Lead Drop in Mideast Stocks on Concern With Global Recovery - Bloomberg

Egypt and Kuwait stocks retreated, leading a drop in Middle East markets, on concern Europe’s debt crisis will slow the global economic recovery and on speculation second-quarter earnings in the Gulf may disappoint.

Egypt’s EGX 30 Index lost 0.8 percent to 6,255.46, the lowest intraday level since June 15, as of 12:18 p.m. in Cairo, as Commercial International Bank Egypt SAE declined. Kuwait’s gauge slid 1.2 percent, the most in almost two weeks, and Israel’s TA-25 Index declined 0.8 percent. Gulf Bank KSC lost 5.6 percent as Al-Qabas said the Kuwaiti lender may allot 35 million dinars ($120 million) for second-quarter provisions.

Global sentiment worsened last week as disappointing U.S. housing data and a surge in the cost to protect from a Greek default reignited concern about the economic recovery. The Stoxx Europe 600 Index had its first weekly drop in more than a month and the Standard & Poor’s 500 Index fell 3.7 percent. Crude rose the most in two weeks and gold gained on speculation a weakening dollar will boost its appeal as an alternative asset.

Half of Dubai offices will be empty next year, UAE Sales, Real Estate - Maktoob Business

Dubai house prices are not seen recovering before 2011 at the earliest while oversupply in commercial property will boost vacancy rates to more than 50 percent next year Jones Lang LaSalle said on Sunday.

A total of 26,000 homes are expected to be completed in 2010 and 25,000 in 2011, bringing total residential stock to 320,000 homes by the end of 2011, up from 287,000 at the end of the second quarter, the property consultancy said in a report.

"Despite the recent stabilisation in pricing levels, Dubai's residential market will experience a situation of oversupply and prices are not expected to recover before 2011 at the earliest," the report said.

Gulf Investors to Increasingly Look Abroad, Credit Suisse Says - BusinessWeek

Gulf Arab investors will increasingly look for opportunities outside the region, with deals in emerging markets and real estate helping to diversify holdings, an official at Credit Suisse Group AG said.

After 2001, Middle East investors began looking at their home markets, including Saudi Arabia and the United Arab Emirates, “and as a result outbound investments went from about 65 percent to less than 40 percent today,” Bassam Yammine, a managing director and joint chief executive officer for the Middle East at Credit Suisse, said in an interview in Dubai. That ratio “will eventually balance out,” he said.

Investors in the region “need to diversify” and are also more interested now in some emerging markets of Asia and Latin America, where growth and wealth creation has been “robust” and investors “want to participate in that shift,” Yammine said.

Arbitrage Opportunity: Triple Your Money « Alpha Dinar- talking GCC finance

In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit at zero cost.Wikipedia.

In our GCC markets we have some arbitrage opportunities in some stocks with dual listings. Some might have a marginal profit opportunity; others might almost make you double your investment. Global Investment House, which is listed both in the KSE and the DFM is traded at KD0.058 and KD0.103 respectively, indicating an arbitrage opportunity of almost 77% whereby you can buy Global stock in the KSE and sell it in the DFM. GFH, which is listed in the KSE, DFM and BSE can also provide you with a risk-free return. The difference between GFH’s price in KSE (KD0.039) and DFM (KD 0.040) is 2%, however, in the BSE it’s priced at KD0.108, thus potentially tripling your money.

The graph below shows the mispricing in Global’s stock in the KSE and DFM.

Zain of Kuwait Is in Talks With Etisalat to Sell Stake, Seyassah Reports - Bloomberg

Mobile Telecommunications Co., the Kuwaiti phone company known as Zain, is in talks with Emirates Telecommunications Corp. to sell a majority stake in Zain Group, Al-Seyassah reported, without saying where it got the information.

A Zain delegation met last week with officials at the United Arab Emirates phone company, according to the newspaper.

Zain Chief Executive Officer Nabil bin Salama said June 8 the company completed a $9 billion sale of most of its African operations to Bharti Airtel Ltd. Zain is not in talks to sell a stake, bin Salama told a news conference at the time.

UAE Offset-Denel deal set to attract capital - Emirates Business 24|7

The UAE Offset group said yesterday it had signed an agreement with arms producer Denel to attract capital from the South African company into the country's economy under weapons offset transactions.

The Offset Programme Bureau (OPB) said it inked the deal after its "successful" participation in Eurosatory 2010, the world's largest gathering of land and air defences, which was held in Paris during June 14-18.

Matar Ali Al Romaithi, Director of the Offset Unit at the OPB, and Talib Sadik, the Group Chief Executive Officer of Denel, signed the agreement, the first of its kind between the UAE's Offset group and a major South African arms maker.

Gulf funds may rescue the West - The National Newspaper

The deep pockets of Gulf sovereign wealth funds (SWFs) could be an increasingly important source of funding for western economies facing spending cuts in the new era of austerity.

Projects in Europe may become more financially attractive for the region’s government investment vehicles as austerity measures by EU governments depress market valuations, said Dr Alexander Mirtchev, the founder and chairman of the US economic consultancy Krull.

“These SWFs are starting to look increasingly as the premier source of available financing for a cash-starved international financial system,” said Dr Mirtchev, who is also an independent director of the Kazakhstan SWF Samruk-Kazyna.

Al Gosaibi prepared to sell assets to pay debt - The National Newspaper

The al Gosaibi family of Saudi Arabia is prepared to sell much of its 70-year-old business empire to help pay its creditors, informed sources say.

The family behind Ahmad Hamad Al Gosaibi and Brothers is offering creditors 20 cents on the dollar on US$9 billion (Dh33.05bn) of liabilities, funded by a disposal of assets, plus any proceeds of the family’s lawsuits against Maan al Sanea, a businessman and relative by marriage whom they accuse of defrauding the Al Gosaibi business. Mr al Sanea, the head of the Saad Group, has denied the allegations.

The Al Gosaibi conglomerate has extensive interests in construction and property, shipping, paint manufacture and beverage bottling.

UK architecture firm sues Dubai Properties over fees - The National Newspaper

A top British architecture company is suing Dubai Properties Group for more than Dh27 million (US$7.3m) of allegedly unpaid fees and costs over a stalled pair of towers in Dubai’s financial centre.

Hopkins Architects, an architectural and engineering company, has lodged its claim in the Dubai International Financial Centre (DIFC) Courts. Disputes between developers and contractors have arisen across the Emirates after the sudden decline of the property market in late 2008 began to affect sales of units in new projects. More disputes have also arisen between developers and buyers.

Central Park 08 was to be twin buildings, of about 50 storeys each, close to the Gate building in the DIFC. Hopkins was hired in May 2005 by Dubai Properties with a contract worth Dh50.8m.Hopkins also designed the Gate Village next to the DIFC, a set of buildings that includes offices and the Capital Club. Hopkins alleges it is owed Dh27m, including overtime, loss of profit, costs incurred from changes to plans and other expenses.

Dubai's Arabtec sees Nakheel 40 pct cash payment soon | Reuters

Dubai builder Arabtec expects payment in cash from troubled developer Nakheel to be made soon while payment in the form of a bond will take a few months, it chief financial officer said on Saturday.

The largest builder in the United Arab Emirates by market value has bid for enough work to achieve 7.4 billion dirhams ($2.02 billion) worth of orders in 2010, Ziad Makhzoumi told Dubai One TV in an interview on Saturday.

"We're still hopeful that we will get that soon, as they have announced that it will be some time in June," he said, referring to the outstanding cash owed by Nakheel, a unit of state-owned conglomerate Dubai World which agreed with its core creditor banks on a proposal to restructure $23.5 billion in debt.

Nakheel makes more job cuts - The National Newspaper

Nakheel has embarked on a fresh round of job cuts as the Palm islands developer seeks to reduce costs and nears a deal with hundreds of creditors after a cash injection of US$8 billion (Dh29.38bn).

Just over 1,000 employees now work for the Dubai World-owned property developer after a series of redundancies that began at the end of 2008, a senior official said.

At least 50 people across all functions of the company have been laid off in recent weeks, bringing the company’s total workforce down to less than a third of its 2008 peak, he said.

Mumtalakat of Bahrain Full-Year Loss More Than Doubles to $485 Million - Bloomberg

Bahrain Mumtalakat Holding Co., the Persian Gulf country’s sovereign wealth fund, said its loss for 2009 more than doubled from a year earlier due to “the truly global effects of the economic crisis.”

The net loss widened to 183 million dinars ($485 million) from 69 million dinars in 2008. Revenue fell 28 percent to 1.04 billion dinars from 1.45 billion dinars a year earlier, the company said in an e-mailed statement today.

“I would characterise 2009 as a year in which we took an inward looking approach to prepare for the future,” Talal al Zain, chief executive officer of Mumtalakat, said in the statement. The company sees an opportunity to this year “potentially start the process of rebalancing our portfolio through measured steps which fit in with our role of investing for Bahrain,” he added.

Saturday, 26 June 2010

Saudi Shares Gain, Recouping Earlier Losses, as Oil Prices Rise - BusinessWeek

Petrochemical and retail companies lifted Saudi Arabian stocks from an earlier loss on the week’s first day, as oil prices advanced to a seven-week high.

Saudi Basic Industries Corp., the world’s largest petrochemical maker, Savola, a Saudi food producer, and Arab National Bank helped the Saudi Tadawul All Share Index to rise 0.2 percent to 6,352.89. The gauge had earlier slid as much as 0.6 percent, led by declines in real-estate companies.

“It was a buying opportunity for petrochemicals on the back of strong oil prices as well as the retail sector,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh. “Global markets were jittery over the Saudi weekend and it is translated in the Saudi stock market today.”

Dar Al Arkan Real Estate, Taiba Holding, Qassim Cement: Saudi Stock Movers - Bloomberg

The Saudi Tadawul All Share Index declined as much as 0.6 percent to 6,306.2, the lowest intraday level since June 23. The following stocks rose or fell in the Saudi stock market. Symbols are in parentheses.

Dar Al Arkan Real Estate Development Co. (ALARKAN AB) dropped as much as 1.6 percent to 12.6 riyals, the lowest intraday level since March 2009. Saudi Arabia’s biggest property company by market value swapped $225 million of its fixed-rate Islamic bonds into floating-rate notes to cut borrowing costs.

Taiba Holding Co. (TIRECO AB) decreased as much as 2.4 percent, its steepest intraday drop in a month, to 16.15 riyals. The Saudi real-estate developer in Medina said it won’t pay a second-quarter dividend because of a payment delay from the kingdom’s Ministry of Finance.

Shore investment - Construction & Industry -

With AED 1 billion in completed projects, Hamriyah Free Zone hopes to revitalise Sharjah's economy. Carlin Gerbich reports.

Kick-starting an economy isn't something that can be achieved overnight. Even with the best planning, support from the government and dedicated contractors on board, infrastructure changes take years to complete. Attracting the necessary long-term investors, business partners and new ventures takes a considerable amount of time.

So, the fact that the Hamriyah Free Zone Authority in Sharjah has been able to complete five major projects within the past two years, on time and within budget, is nothing short of sensational.

Total-Saudi joint venture gets $8.5B in financing - BusinessWeek

A joint venture between French oil company Total SA and Saudi Aramco said Friday it secured $8.5 billion in financing for an oil refinery in Jubail, Saudi Arabia.

Saudi Aramco Total Refining and Petrochemical Co. said it secured $4.49 billion in financing from commercial financial institutions, and $4.01 billion from the Public Investment Fund and Export Credit Agencies. The joint venture said it has commitments for about 413.5 billion in financing for the refinery, which is expected to go online in 2013 and produce 400,000 barrels of oil per day.

Saudi Aramco owns 62.5 percent of the joint venture, and Total owns the other 37.5 percent.

U.S.-traded shares of Total dipped 49 cents to $46.75 in afternoon trading.

Sukuk Gain to Six-Month High on Global Growth: Islamic Finance - BusinessWeek

Islamic bonds are trading at their highest level in more than six months as companies reach agreements with creditors to restructure debt and the global economy recovers.

The Dow Jones Citigroup Sukuk Index, which measures the performance of Islamic bonds globally, closed at 120.53 yesterday, the highest since Nov. 30 and leaving it 3.8 percent short of the record set Nov. 25. The index has climbed 6.3 percent from its low in December, helped by Dubai World’s May 20 agreement to restructure part of its $23.5 billion of debt.

“That was a big boost for the global sukuk market,” said Zeid Ayer, who helps manage $1.6 billion of Shariah-compliant equities and bonds in Kuala Lumpur for Principal Global Investors and Malaysia’s CIMB Group Holdings Bhd., which have an asset management joint venture. “Restructuring deals help to bring a lot more clarity to the situation.”

Business 360: Get to grips with the A Race to Rebuild Confidence « - Blogs

Ascot is literally a festival of colors – especially under clear skies as we enjoyed during the start of the racing fixture. Women want to outsmart their counterparts by balancing style with uniqueness as they unveil their latest hats. Men sport their top hat and tails and add their creative touches with bright neck wear.

Ahead of the first race, we pause on the recommendation of one polite usher. Queen Elizabeth II and Prince Philip pass by in their carriage, and the latter acknowledges the person I am with a tip of his hat accompanied by a warm smile.

I am walking to the winner’s paddock as a guest of H.H. Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and Prime Minister of the UAE, and his wife Princess Haya. Both are avid equestrians and had 27 horses running at Royal Ascot under the Godolphin stable. His son Crown Prince Hamdan’s Philly Rainfall won the Jersey Stakes setting a course record. The family is together to collect the first trophy of the week.

Agility Evidence Points to Continued Fraud, U.S. Tells Judge in Atlanta - Bloomberg

Agility may still be overbilling the U.S. on military supplies, federal prosecutors said in a pretrial hearing in a criminal case against the Middle East’s largest storage and logistics company.

“We feel very strongly and have evidence that the fraud has continued,” Assistant U.S. Attorney Barbara Nelan told U.S. Magistrate Judge Alan Baverman today in Atlanta. Agility is accused of overcharging the U.S. government on a multibillion- dollar contract to supply food for troops in Kuwait and Iraq. The Kuwaiti company is “war-profiting,” she said.

The U.S.’s contract with Agility, formerly known as Public Warehousing Co., runs until December, Nelan said.

UAE's Aabar sets July shareholder meet on delisting | Energy & Oil | Reuters

Abu Dhabi's Aabar Investments (AABAR.AD: Quote), the largest stakeholder in Daimler (DAIGn.DE: Quote), called a July 26 shareholder meeting to discuss delisting the company to boost flexibility.

Aabar said its board decided on Thursday to seek regulatory approval for the extraordinary general assembly to convert the world's only listed sovereign wealth fund into a joint stock company and delist it from the Abu Dhabi bourse.

Aabar made investors nervous this week with plans to go private.

Friday, 25 June 2010

CPC Group Wins Chelsea Barracks Trial That Featured Prince Charles E-Mails - Bloomberg

U.K. developer CPC Group Ltd. won a trial in which it sought 81 million pounds ($120.5 million) from the real-estate investment arm of Qatar’s sovereign-wealth fund over a botched deal to build luxury apartments in London.

Qatari Diar Real Estate Investment Co. must pay CPC, controlled by real-estate entrepreneur Christian Candy, for breaching an agreement to develop the landmark Chelsea Barracks site, Judge Geoffrey Vos ruled today in London. The court will award damages or costs at a later hearing, he said.

Vos backed CPC’s claim that the site plan application was wrongfully withdrawn in June 2009 because the emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani, wanted to avoid upsetting Prince Charles, who complained about the site’s modern design. The judge disagreed that Qatari Diar acted in bad faith.

Financial crisis clips wings of Bahrain investment houses - Arab News

Bahrain needs to reinvent itself as a financial center if it wants to return to growth and remain a destination for the region's oil wealth after the financial crisis clipped the wings of its investment houses.

Analysts say the only opportunity for Bahrain lies in funding the large infrastructure projects planned in the Gulf region, but building up expertise will be a long, hard grind with uncertain outcome.

Bahrain shelled out new banking licenses in particular to Islamic investment houses during a five-year regional oil and property boom that ended in 2008, with banks living on upfront fees on money raised for property and private equity projects.

UK property attracts Mideast funds

The Middle East has tripled its share of investment in UK commercial property in the past five years, with the oil-rich Gulf seeking to take advantage of sharp falls in British real estate prices.

Last year, investors from the Arab world spent £1.48bn ($2.2bn, €1.79bn) on UK commercial property – 16 per cent of all foreign investment in the sector, compared with 5 per cent in 2004, according to Trowers & Hamlins, an international law firm. The firm, which has offices in Britain and the Middle East, said the region’s investors had increased their exposure to take advantage of the fall in property prices, with the UK looking particularly attractive because of sterling’s devaluation against the US dollar.

With the exception of Kuwait, all Arab Gulf states peg their currencies to the dollar. The region’s wealthier governments were also able to build up significant financial reserves during the 2003-08 oil boom, making them cash-rich during the UK property downturn. / Middle East / Finance - FT interview: Ahmed al-Tayer

Ahmed al-Tayer, a former finance minister, became governor at the Dubai International Financial Centre last year. The close adviser to Dubai’s ruler is tasked with maintaining the centre as the region’s financial services hub. Mr Tayer also plays a major role in dealing with the emirate’s usd100bn debt mountain. He was interviewed in Dubai on June 22.

Financial Times: The DIFC has been going through a process of review and restructuring following the global financial crisis. Are you planning a change of focus?

Ahmed al-Tayer: The DIFC is five years-old and as a centre in the Middle East, between Singapore and Hong Kong, and international centres like London or Frankfurt – this is a region rich in financial resources and in the past these resources were being invested abroad. There was a need to have a centre in order to create an environment, an ideal environment, of low taxes, to attract international companies, financial companies, and to attract companies that serve them, like law firms, accounting firms, Islamic businesses and asset management firms.

Dubai pins hopes on return to basics

Dubai’s financial centre is to refocus on its core business of attracting financial institutions as the indebted emirate seeks to shrug off past excesses, according to its governor.

Ahmad al-Tayer, a former finance minister who has gained influence as Dubai seeks to revive its economy, said the tax-free Dubai International Financial Centre was to restructure to boost competitiveness.

This process, moulded by a report from McKinsey, the consultants, has included dozens of redundancies as the DIFC tries to keep costs down. But it will be complemented by attempts to attract financial institutions by pledges of a more competitive leasing structure.

Thursday, 24 June 2010

Abu Dhabi buys €1.8bn stake in UniCredit

Aabar Investments, the Abu Dhabi state-linked investment vehicle, has become the largest voting shareholder in UniCredit after buying a stake worth €1.8bn in Europe’s third-largest bank by market value.

The acquisition of the 4.99 per cent stake by one of oil-rich Abu Dhabi’s newest and most active state-linked investment vehicles, is the latest stage in the diversification of Unicredit’s shareholder base as the bank has grown from its Italian roots across Europe over the past decade.

“UniCredit warmly welcomes the investment made by Aabar, which enlarges the stable shareholderbase of the Group,“ said UniCredit chairman Dieter Rampl. “We see it as a signal of trust in our company and its strategy by an important international institutional investor.”

Abu Dhabi buys €1.8bn stake in UniCredit

Aabar Investments, the Abu Dhabi state-linked investment vehicle, has become the largest voting shareholder in UniCredit after buying a stake worth €1.8bn in Europe’s third-largest bank by market value.

The acquisition of the 4.99 per cent stake by one of oil-rich Abu Dhabi’s newest and most active state-linked investment vehicles, is the latest stage in the diversification of Unicredit’s shareholder base as the bank has grown from its Italian roots across Europe over the past decade.

“UniCredit warmly welcomes the investment made by Aabar, which enlarges the stable shareholderbase of the Group,“ said UniCredit chairman Dieter Rampl. “We see it as a signal of trust in our company and its strategy by an important international institutional investor.”

Dubai World creditors await meeting details: sources | Reuters

Creditors of Dubai World are still awaiting details of a meeting to present the final terms of its massive debt restructuring plan, sources said, causing unease among some bankers hoping for a timely resolution.

Dubai World DBWLD.UL reached an agreement in May with the seven banks which together hold 60 percent of the $14.4 billion in bank debt the company owes. A meeting with other bank creditors was supposed to follow by the end of June.

Sources familiar with the talks told Reuters an all-bank meeting was still planned, now likely in July although it could be called earlier. Dubai World declined to comment.

FACTBOX-Arguments for and against Gulf monetary union | Reuters

Four Arab Gulf oil producers led by Saudi Arabia plan to launch a monetary union, a project that has been in the works for more than a decade.

The following are some arguments for and against the project, which is also being pursued by Kuwait, Qatar and Bahrain.

Dubai Bonds to Rally as Default Risk Wanes, Deutsche Bank Says - BusinessWeek

Dubai sovereign and corporate bonds will extend gains over the next six months as the risk of a default by the emirate wanes, according to Deutsche Bank AG.

Germany’s biggest bank recommends investors buy Dubai Holding Commercial Operations Group LLC’s 6 percent notes maturing in February 2017 and dollar bonds sold by DP World Ltd., said Jamil Hallak, head of credit trading for the Middle East and North Africa at Frankfurt-based Deutsche Bank. Dubai World, the state-owned holding company, said on May 20 it reached an agreement with a group of creditors to restructure $23.5 billion of liabilities.

“Dubai bonds offer value especially after the Dubai World debt restructuring, which has provided investors with more confidence and removed a default scenario,” Hallak said in an interview in Dubai. “I see potential for their outperformance.”

First Gulf Bank suing Al Gosaibi for Dh58.7m - The National Newspaper

First Gulf Bank, the UAE’s fourth-largest bank by assets, is suing the troubled Saudi conglomerate Ahmad Hamad Al Gosaibi and Brothers over an alleged default on Dh58.7 million (US$15.98m) of loans.

The lawsuit, lodged in the Abu Dhabi Court of First Instance last year, seeks recovery of the value of the loans plus lawyers’ fees and interest, court documents obtained by The National show.

The lawsuit names Al Gosaibi’s trading business in Dubai and its parent company in Saudi Arabia as defendants.

Call for corporate takeover code - The National Newspaper

The UAE lags its regional peers in developing a corporate takeover code to promote merger and acquisition (M&A) activity in the country, a senior banker said.

Guidelines for private companies taking over publicly-listed businesses are needed after the global downturn, said Peter Fort, the executive director at the investment bank Morgan Stanley in Dubai.

“In the UAE there’s almost a complete lack of M&A regulatory framework, which makes M&A transactions that involve public companies very difficult,” Mr Fort said.

3 Reasons To Consider Frontier Market ETFs | Daily Markets

Frontier market ETFs have been gaining investor attention as many seek to diversify portfolios and gain exposure to nations and regions that are up and coming and for good reason.

The actual definition of a frontier market is somewhat ambiguous, but they do offer investors the ability to access parts of the world that are likely to witness rapid economic growth in terms of GDP. Another reason to consider frontier markets is due to their low, to no, correlation with emerging and developed markets. This lack of correlation shelters these markets from the wrath that has been brought on by the sovereign debt crisis seen in developed markets throughout Europe as well as the socioeconomic climates of both the developed and developing markets.

Lastly, frontier markets are worth a look due to their vast supply of natural resources and commodities, such as oil and gold, which are likely to be highly sought after in the coming future.

Abu Dhabi Seeks Potential Partners for $10 Billion Shah Gas Development - Bloomberg

Abu Dhabi, the largest sheikhdom in the United Arab Emirates and holder of most of the country’s oil reserves, is seeking a partner to help develop the $10 billion Shah gas project after ConocoPhillips pulled out of the venture.

“The initial strategy was to have a partner,” said Saif Ahmed Al-Ghafli, chief executive officer of Abu Dhabi Gas Development Co., the state company working on the Shah project. “The same strategy is in place,” he said today at a conference in Abu Dhabi.

Abu Dhabi Gas, wholly owned by state-run Abu Dhabi National Oil Co., is pressing ahead with the Shah development after ConocoPhillips withdrew in April. The emirate of Abu Dhabi needs to develop its reserves of sour, or high-sulfur, natural gas to help satisfy soaring domestic power consumption.

Wednesday, 23 June 2010

A Mecca for high-rise projects

Grand Mosque, Mecca

The world’s tallest clock tower, a hybrid of Big Ben and the Empire State Building, hovers above Muslim pilgrims as they walk around the Kaaba in Mecca, Islam’s most sacred site.

The Mecca Royal Clock Tower is the centrepiece of Abraj Al Bait, a $2bn complex of seven towers, being built by the Bin Laden Group on the site of a destroyed Ottoman fortress. The complex, due to be completed next year, features hotels, shopping malls and residential apartments to be managed by Fairmont, Raffles and Movenpick.

Saudi Arabia is capitalising on the world’s growing Muslim population by developing massive tracts in and around its holy sites and has identified religious tourism as a way of diversifying its economy.

Barclays Prefers Qatar Debt, Cautious on Dubai Bonds (Update1) - BusinessWeek

Qatar’s long-term bonds are the best bet for investors because the gas-rich state’s strong finances will likely contain any spillover from the euro debt crisis, Barclays Capital said.

“We see more upside potential for Qatar here and would recommend overweighting Qatar versus Abu Dhabi,” analysts Andreas Kolbe and Alia Moubayed said in a note sent by e-mail today. “We continue to see Qatar as the fundamentally strongest credit in the region and see value in the longer-dated bonds in particular.”

Qatar is the world’s largest producer of liquefied natural gas. The yield on Qatar’s 6.55 percent, fixed-rate bond maturing in 2019 has fallen 112 basis points to 4.643 percent this year, according to Bloomberg bond trader composite prices.

Gulf left waiting for IPO resurgence

Agricultural Bank of China’s planned $23bn-plus initial public offering is being helped by multi-billion-dollar commitments from Qatar and Kuwait’s sovereign wealth funds, but share sales in the Gulf are facing a far more torrid time.

An IPO renaissance in the Gulf has long been said to be imminent. Last month Sameer al-Ansari, head of Shuaa Capital, said the investment bank was aiming to manage a Dh1bn ($272m) share offering in Abu Dhabi early this summer, and predicted that it could reopen the regional IPO market.

However, so far facts have failed to support bullish rhetoric – particularly as the region grapples with the economic downturn. Gulf companies managed to raise only $1.9bn last year, down from $11.7bn in 2008, says Zawya, a regional data provider, and the lull has continued into this year.

UPDATE 1-Logistics firm Agility is a fugitive-US prosecutor | Reuters

U.S. prosecutors said Kuwait logistics company Agility (AGLT.KW) is a fugitive from justice that has defrauded the U.S. military and does not deserve the right to bring a motion in federal court.

The prosecutors asked a federal court in Atlanta not even to consider the pretrial motion the company brought in April to dismiss the case against it on the grounds that it was not served in the correct legal manner.

The company accused prosecutors of substituting "rhetoric for legal analysis" in its own statement and described as "excellent" its performance on behalf of the U.S. government over the contracts.

Saudi, Oman Shares Drop as Global Markets Fall; Dubai Advances - BusinessWeek

Saudi Arabia and Oman shares retreated for a second day as an unexpected decline in U.S. home sales raised concern about the stability of the global economic recovery. Deyaar Development PJSC pushed Dubai stocks higher.

The Tadawul All Share Index dropped 0.3 percent to 6,343.47, the lowest level in more than a week, as Samba Financial Group, the country’s second largest bank, fell. Bank Muscat SAOG, Oman’s biggest bank by assets, retreated the most in almost three weeks, pushing the country’s MSM30 Index down 0.6 percent. The Bloomberg GCC 200 Index slid 0.3 percent.

“Correlation is running high with what’s happening globally,” said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai. “Investors are trying to reduce risk ahead of a long summer.”

Bahrain Mumtalakat Completes $750M Bond Debut; Offers Top $3B -

Bahrain Mumtalakat Holding Co., a sovereign wealth entity owned by the Kingdom of Bahrain, has priced its debut bond issuance--raising $750 million--with a spread of 300 basis points over midswaps, in line with price guidance.

The lead underwriters on the sale were Deutsche Bank, HSBC, J.P. Morgan and Standard Chartered, and orders were in the range of $3.1 billion by Wednesday, according to a source familiar with the sale.

Proceeds will be used for general corporate purposes, including to refinance existing indebtedness. Terms were as follows:

Amount: $750 million Maturity: June 30, 2015 Coupon: 5.5% Issue Price: 99.077 Yield: 5.212% Spread: 300 basis points over Midswaps Covenants: Change of control put at par Ratings: A (Standard & Poor's) A (Fitch Ratings)
Mumtalakat's assets are in domestic real estate, telecommunications, aviation, banking and manufacturing. Bahrain owns a separate holding company for oil and gas assets, the National Oil and Gas Authority.

Saudi Dar Swaps $225 Million of Debt to Floating Rate - BusinessWeek

Dar Al Arkan Real Estate Development Co., Saudi Arabia’s biggest property company by market value, exchanged half of its $450 million fixed-rate Islamic bond as it seeks to cut borrowing costs.

The company swapped $225 million into floating-rate notes, reducing the profit it pays on the five-year sukuk to 7.95 percent more than the three-month Saudi interbank offered rate, according to a statement to the Dubai bourse today. The notes paid a coupon of 10.75 percent when they were sold in February.

“This transaction comes in line with the company’s strategy to reduce its cost of financing by benefiting from the current available lower variable rates,” the company said.

Citadel Resources May Boost Stake in Saudi Project, CEO Says - BusinessWeek

Citadel Resources Ltd., developer of Saudi Arabia’s biggest copper deposit, said it’s interested in the future in boosting its stake in the Jabal Sayid deposit beyond 70 percent.

”It’s a great project, so if we can do it as an accretive deal we would obviously do so,” Ines Scotland, chief executive officer of Melbourne-based Citadel, said today in an interview, adding the company had no immediate plans to boost its stake. “We’re constantly chatting with our joint venture partners about that, about the right point in time.”

Citadel plans to start production at the A$280 million ($244 million) copper-gold development by the fourth quarter next year. The company said today it sold A$251 million shares to institutional investors to help fund the project.

Is there a glimpse of the future in Aabar’s decision?

Aabar Investments’s proposal to consider delisting its shares to go private surprised market analysts on Monday, but it is part of a growing trend away from the traditional public limited company model, especially in the fast-growing economies of Asia and the Middle East.

It is too early to call the death of the “plc” conclusively. The tried and trusted methods of corporate organisation may remain the preferred form in Europe and the US for many years. But whether they will still be appropriate for Chinese or Indian or Gulf corporations in the future is increasingly open to debate.

If Aabar’s plan comes off – it is still just under consideration – it will be a significant straw in the wind.

Beyond An Oil-Based Economy -

Tim Ferguson: Like others in the Gulf, you're trying to position your economy for a future in which energy resources are not so much the central element of the wealth production in the Gulf. You call your program Economic Vision 2030. What's the essence of that?

Shaikh Mohammed Bin Essa Al-Khalifa: Well, the vision is to transform Bahrain's economy from an economy based on oil wealth to an economy that is globally competitive, sustainable and provides a higher standard of living for the people of Bahrain.

Ferguson: The distinction of Bahrain in the Gulf, one distinction, is that it's considered the freest economy in the Middle East and has a history of that. Could you explain that a bit?

Al-Khalifa: Well, absolutely. What many people don't realize is Bahrain has been a trading nation for 4,000 years. And because we have been a trading nation and relied on global trade, you know, we are, what I would like to say, one of the first participants in globalization. As a small country, we have benefited from it. So we've always treated people who come to Bahrain from the outside with open arms. For example, in Bahrain, we treat an investor equally, whether he comes from the U.S., Europe or Bahrain. Investment is investment. And it is this philosophy that is ingrained across all we do in Bahrain, because it doesn't matter in essence where the money comes from.

Emirates Growth Splurge Rattles Long-Haul Rivals - Bloomberg

Emirates, the biggest international airline, is rattling rivals in Europe and Asia with a growth splurge that may be as game-changing for long-haul carriers as the expansion of Ryanair Holdings Plc and Southwest Airlines Co.

The 25-year-old company is building up a fleet of 90 Airbus SAS A380 aircraft with 45,000 seats and operating costs the manufacturer says are 12 percent lower than Boeing Co.’s latest 747. That poses a threat to European carriers that specialize in the same long-distance transfer traffic, British Airways Plc Chief Executive Office Willie Walsh said in an interview.

Emirates’ latest order for 32 A380s worth $11 billion, announced this month, will give it 70 more superjumbos than any other airline, funneling price-sensitive passengers through its Dubai hub in a challenge to network carriers including Deutsche Lufthansa AG, Air France-KLM Group and Singapore Airlines Ltd. Competitors say the company is benefiting from government ownership and that they can’t compete with its purchasing power.

What’s going on in Kuwait Finance House?

Kuwait Finance House (M) Bhd (KFH) has been under the radar quite a bit, recently.

Last week, it discontinued the rating services by RAM Ratings Sdn Bhd.

Last month, its chief executive officer Jamelah Jamaluddin, who was appointed in February, had requested several of its staff to go on leave pending internal investigations into transactions and contractual arrangements undertaken over the years.

Dubai's Sheikh Mohammed: It's not a recession, it's a challenge -

The worst is over and Dubai is looking for new opportunities for growth, according to Dubai's ruler, Sheikh Mohammed.

In an exclusive interview with CNN, Sheikh Mohammed Bin Rashid Al Maktoum said that he views the global recession as a challenge and that companies there are restructuring in response.

"I don't call it a recession, I call it challenge," said Sheikh Mohammed, who is also prime minister of the United Arab Emirates. "The companies are restructuring because it's a new world. You have to stop and restructure."

Tuesday, 22 June 2010

U.A.E.’s NBAD Sells $156 Million Sukuk in Malaysia (Update1) - BusinessWeek

National Bank of Abu Dhabi PJSC, the United Arab Emirates’ second-largest lender by assets, sold 500 million ringgit ($156 million) of Islamic bonds in its first offering of debt in Malaysia.

The five-year sukuk will pay a coupon rate of 4.75 percent, Mustafa Aziz, director of Global Capital Markets at HSBC Holdings Plc in Dubai, said in an e-mailed response to questions. HSBC and Kuala Lumpur-based Malayan Banking Bhd. are managing the sale.

Malaysia, the world’s largest market for Islamic bonds, has eased foreign ownership rules and encouraged new Shariah- compliant products as part of efforts to become a hub for Islamic financial services. National Bank of Abu Dhabi received a commercial banking license to operate in the Southeast Asian nation, its central bank said on June 17.

Dubai Shares Retreat as MSCI Keeps U.A.E. as Frontier Market - BusinessWeek

Dubai shares declined for the first time in four days, leading a drop in the Gulf, as index provider MSCI Inc. kept the United Arab Emirates and Qatar as frontier markets, citing the countries’ dual account structures.

The DFM General Index lost 1.4 percent, the most since June 6, to 1,542.07, led by Emaar Properties PJSC, builder of the world’s tallest skyscraper. Air Arabia PJSC retreated 1.6 percent. Dubai’s measure had gained 5.1 percent in the previous three days. Abu Dhabi’s gauge dropped 0.4 percent and the Bloomberg GCC 200 Index slid 1 percent.

The MSCI decision not to upgrade the U.A.E. and Qatar to emerging markets “was reflected negatively as most foreign buying over the previous three days was in anticipation of the announcement,” said Mohammed Ali Yasin, chief executive officer at Shuaa Securities in Abu Dhabi.

Mumtalakat Bonds May Yield 300 Points Over Midswaps (Update1) - BusinessWeek

Bahrain Mumtalakat Holding Co., the Persian Gulf country’s sovereign wealth fund, may price its bonds to yield about 300 basis points above benchmark midswaps, three people familiar with the pricing range said.

The banker and two investors declined to be identified because terms of the deal aren’t set. The fund may sell $500 million of bonds maturing in five years as soon as this week in its first sale of debt overseas, a person familiar with the plan said last week.

Bahrain in March sold $1.25 billion bonds maturing in 2020 to yield 200 basis points more than similar maturity U.S. Treasuries. A basis point is 0.01 percentage point. The yield has declined 11 basis points this month to 5.552 percent as of 4:50 p.m. in Dubai, according to Bloomberg bond trader composite prices.

Aabar Investments takes a new turn with plan to de-list from securities exchange | Beyond Brics |

The transformation of Aabar Investments has been swift and spectacular.

It started life in 2005 as a small energy company, but over the past two years it sold its core oil and gas assets, was taken over by a government investment vehicle and has emerged as one of the more active of Abu Dhabi’s diverse stable of investment funds – notably hitting the headlines last year when it splashed out €1.95bn for a 9.1 per cent stake in Daimler.

Now it looks set to be heading for another transformational shift, with the announcement that its board plans to meet on Thursday to discuss the possibility of de-listing from the Abu Dhabi Securities Exchange.
As one shareholder told your correspondent it may offer some relief for those who bought into the original energy story only to see the company turn into an altogether different beast and watch as its share price has plummeted.

Middle East Aviation Industry Moving from Luxury to Low Cost

Since the introduction of Air Arabia seven years ago, economical airlines are taking flight in the Persian Gulf.

When the first flight of the newly established Air Arabia took off, in October 2003, from its home base in Sharjah, one of the seven Emirates making up the United Arab Emirates, not many predicted it would lead to the emergence of a novel and budding phenomenon in the Middle Eastern aviation industry.

Up until the establishment of Air Arabia, which today flies to over 70 destinations and operates secondary hubs in Morocco and as of June 2010 in Egypt as well, Middle Eastern airlines, especially those from the Gulf region, had been almost synonymous with luxury and elegance. But over the last few years, a new type of airline has taken off in the region, the low cost carrier.

Is Saudi Arabia also stocking up on silver as well as gold? « ArabianMoney

News that Saudi Arabia has secretly doubled its official gold reserves over the past few years should come as no surprise to readers of ArabianMoney. But then it was just speculation. Now this is fact. Will it be the same story for silver?

We can only draw on the evidence and gossip that comes to our attention in Dubai. There has certainly been a big jump in interest in silver on the website over the past six months.

FOCUS Syria Looks To Old Foe Turkey As Economy Grows -

Syria is boosting relations with its former enemy Turkey to build on a decade of reform initiatives that have transformed the Arab state's economy.

After years of mistrust, overshadowed by the legacy of Ottoman rule and Turkey's military ties with Israel and Syria's support for the Kurdish PKK rebels, the two neighbors now seek an economic and political alliance.

Last year, the former foes agreed on lifting mutual visa requirements, boosting cross-border trade. Several joint initiatives in agriculture and tourism have been announced. Earlier this month, Turkey and Syria signed a free trade zone agreement with Jordan and Lebanon.

Saudi firms fined for stock market disclosure, Saudi Arabia Equity, Markets - Maktoob Business

The Saudi regulator, CMA, has imposed fines of up to $27,000 on three firms for breaching disclosure rules, as it tries to polish the image of an opaque bourse gradually opening up to foreign investors.

It brought to 13 the number of companies fined for violating disclosure regulations since May 16.

Al Baha Investment and Development Co was fined 100,000 riyals ($27,000) for disclosing acquisition plans to the Capital Market Authority after they were leaked to a website, the CMA said.

Dubai's DIC seeks cash for Alliance Medical- paper | Reuters

Dubai International Capital (DIC) is in talks with lenders over an urgent cash injection for Alliance Medical to stop the business breaching its banking covenants, the Times reported in its Tuesday edition.

DIC, an investment unit of conglomerate Dubai Holding, is holding negotiations with its lending syndicate to inject up to 150 million pounds ($222.5 million) into the MRI and CT scan services provider, the paper said.

The private equity group has until a deadline next month to stump up the cash to stop Alliance Medical's banks potentially taking control of the business, which is at risk of breaching its banking covenants, the paper said.

Dubai CDS down 30%; Nakheel sukuk up 113% - Emirates Business 24|7

Dubai credit default swaps (CDS), the cost to insure sovereign debt default, have declined by 30 per cent in the past four months, data shows.

Dubai CDS were trading around 458 basis points yesterday, according to CMA DataVision's Sov?ereign Risk Monitor, down 29.7 per cent from the 652bps in mid-February.

CDS are benchmarks for protecting debt against default and traders use them to speculate on credit quality. Despite the recent steady decline in the Dubai CDS rate, analysts believe the rate remains high in comparison with some of the other global sovereigns.

DP World set fairly after price correction - The National Newspaper

Since a correction last month when concerns over the euro zone were at their peak in the region, shares have risen in the ports operator DP World have risen 19 per cent.

Analysts say the stock is attractively valued and still could rise another 30 per cent.

Even in a difficult economic climate, the company generated US$1 billion in earnings for the year to the end of March.

UAE seeks new controls on inflow of hot money - The National Newspaper

The Central Bank Governor has called for new restrictions to manage flows of so-called hot money into Arab economies.

Greater supervision of the financial system could help to avoid the build up of such short-term speculative capital, said Sultan al Suwaidi.

“Such money is harmful to our economies and we should put mitigants in its way to stop it,” Mr al Suwaidi said during a speech in Abu Dhabi yesterday.

Bourses’ buoyant mood is punctured

Just when local markets were rebounding after a dismal few weeks, Aabar Investments comes along and knocks them right back to the turf.

The company’s announcement that it is considering going private – and therefore de-listing from the Abu Dhabi Securities Exchange (ADX) – was posted to the bourse website after the close of trade yesterday. The news deflated the buoyant mood that pervaded the Abu Dhabi and Dubai exchanges the first two days of the week, when both markets moved higher in a sharp reversal of the recent trend.

There were conflicting theories about what sparked the surprising buying frenzy: some traders said it was related to climbing oil prices and China’s move to strengthen the yuan; others whispered about rumours that the long-delayed Dubai World debt restructuring was close to a final resolution.

Retailers' New Frontier Goes Beyond BRIC Countries -

Alongside the promise of the so-called BRIC countries to the U.S. and other global retailers, smaller emerging markets, including Kuwait and Dubai, are rising as the new crop of global expansion opportunities.

About 80% of retailers still consider Brazil, Russia, India and China as key to their short-term international growth plan, according to a survey of 60 global retail executives in the ninth annual Global Retail Development Index study by management consulting firm A.T. Kearney. The study uses 25 macroeconomic and retail-specific variables, including country risk and market saturation, to rank the top 30 emerging countries attractive for retail expansion.

However, the BRIC countries tell only part of the story.

Kuwait emerged as No. 2 on the list, while Chile, Saudi Arabia, United Arab Emirates, Uruguay and Peru also surfaced in the top 10 along with their BRIC counterparts. The top 10 list represents the most diverse mix of large and small markets in the index's nine-year history. Other countries including Albania and Macedonia, which weren't placed in last year's top 30 rankings, also surfaced on the chart.

UPDATE 1-S.Korea, Taiwan remain emerging markets - MSCI | Reuters

South Korea and Taiwan are still not ready to join the ranks of developed countries in MSCI's equity indexes, the firm said on Monday.

The widely-followed index provider said both countries, currently part of its emerging markets index .MSCIEF, will remain under review for a possible upgrade in June 2011.

MSCI also decided to maintain Qatar and the United Arab Emirates in its frontier markets index. They also remain under review for a possible upgrade next year.

Agility Is ‘Fugitive’ in Overbilling Case, U.S. Says (Update1) - BusinessWeek

Agility, the Middle East’s largest storage and logistics company, is a “fugitive from American justice” that is trying to evade trial on charges of overbilling on military supplies, U.S. prosecutors said.

Agility, formerly known as Public Warehousing Co., was indicted in November on allegations it overcharged the U.S. government on a multibillion dollar contract to supply food for troops in Kuwait and Iraq. The Kuwait-based company said April 28 it was negotiating with the U.S. Justice Department on a possible settlement of the case.

Prosecutors said in a filing today in Atlanta federal court that Agility has “retreated to the safe haven of Kuwait” and contends it isn’t subject to U.S. laws or courts. They urged the judge not to even consider Agility’s motion to nullify the indictment on the grounds that it wasn’t properly served.

Turkey focuses on Gulf for two-way ties

A Turk cannot live without an Arab,” Recep Tayyip Erdogan, Turkish prime minister, proclaimed this month at a regional summit, where ministers unveiled ambitions for a Middle East customs union stretching from the Black Sea to Morocco.

No one expects that vision to be realised overnight in spite of early steps to lower trade barriers with Lebanon, Syria and Jordan. But as Ankara’s stock rises in the Arab world, it is also seeking immediate economic benefits, in the form of Gulf capital.

Mehmet Simsek, finance minister, told the Financial Times of “concerted efforts” to boost ties with Gulf countries in particular, with the Arab world accounting for a growing share of foreign direct investment in Turkey.

Monday, 21 June 2010

Gulf States Could Gain by Ending Peg to Dollar, DIFC Economist Saidi Says - Bloomberg

Gulf states could gain by ending their peg to the dollar in favor of a basket of currencies, said the chief economist of the Dubai International Financial Centre.

“It would be advantageous for the GCC countries, given the center of their trade is particularly with Asia and with Europe, to have a currency basket,” Nasser Saidi told Bloomberg Television in Abu Dhabi today.

He said such a move could not be easily implemented at a time of global financial uncertainty, “so I think the countries of the region are going to wisely wait until you have much less volatility in money markets and financial markets before taking any decisions with respect to the exchange rate regime.”

Saudi Arabian Regulator Approves Falcom Petrochemical Exchange-Traded Fund - Bloomberg

Saudi Arabia approved its second exchange-traded fund this year as the kingdom seeks to expand investment opportunities in the Middle East’s largest bourse.

Falcom Financial Services will offer an exchange-traded fund for petrochemical companies on the bourse, the Riyadh-based Capital Market Authority said in a statement on the exchange’s website today. The market regulator approved in March its first ETF, offered by Falcom.

Saudi Arabia, the world’s largest oil supplier, is opening its stock market to more direct international investment. Previously, non-resident foreigners were only permitted to trade through share-swap transactions.

FACTBOX-Recent investments by Qatar's sovereign wealth fund | Reuters

Qatar's sovereign wealth plans to invest $2.8 billion in Agricultural Bank of China's initial public offering, sources confirmed on Monday. [ID:nTOE65K06U]

Qatar Investment Authority (QIA) was one of the most active sovereign funds in 2009 with 14 publicly reported investments valued at over $32 billion. The fund was established in 2005 and is believed to have assets under management around $70 billion.

The Gulf country is expected to be the largest source of global real estate capital during 2010, real estate consultancy Jones Lang LaSalle said in a recent report.

UAE's Aabar mulls stock exchange delisting, UAE Investment Companies, Banking & Investment - Maktoob Business

Abu Dhabi-based Aabar Investments will meet on June 24 to discuss a date for an extraordinary general meeting as it considers converting to a private joint stock company and delisting from the bourse.

International Petroleum Investment Co (IPIC), wholly-owned by the government of Abu Dhabi, is the majority shareholder in Abu Dhabi-listed Aabar, which has stakes in Daimler and Virgin Galactic.

The statement on the bourse website said Aabar's board of directors will meet on June 24 to discuss and resolve:

"...converting the company into a private joint stock company, cancelling the listing of the company and its shares from the Abu Dhabi Securities Market."

Oman, Abu Dhabi Shares Rally as Oil Gains; China Signals Yuan Flexibility - Bloomberg

Oman and Abu Dhabi shares advanced, helping lead Gulf Arab markets higher, after China signaled it will relax the yuan’s peg to the dollar, boosting confidence in the global economic recovery. Oil rose to a six-week high.

Oman Cables Industry SAOG surged to the highest intraday level since June 3 after the company was raised to “overweight” at Taib Bank. National Bank of Abu Dhabi, the United Arab Emirates’ second-biggest lender, gained 4.3 percent. Oman’s benchmark gauge jumped 2 percent, the most in more than six months, to 6,257.8 as of 1:22 p.m. in Muscat. Abu Dhabi’s ADX General Index climbed 0.9 percent to 2,559.81, the highest level in two weeks. The Bloomberg GCC 200 Index gained for a third day, rising 1.8 percent.

“Positive movements in global markets have a direct impact on local markets,” said Ziad Dabbas, a financial analyst at the National Bank of Abu Dhabi. “The U.A.E. markets are oversold and prices appear attractive.”

Gulf Arab financial firm pays back $500M in debt

An investment company owned by six Gulf Arab nations says it has fully paid back $500 million worth of debt that was due this week.

Monday's announcement by the Gulf Investment Corporation comes amid intense scrutiny over the region's ability to pay back lenders. Companies still able to cover their debts are eager to distinguish themselves from less healthy borrowers in the wake of credit problems in Dubai and elsewhere in the oil-rich region.

Kuwait-based Gulf Investment says it paid off the loans using cash it had saved up to manage its debt pile.