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Sunday, 3 January 2010

FOCUS:Burj Dubai Opens As City's Reputation Hangs In Balance - WSJ.com

FOCUS:Burj Dubai Opens As City's Reputation Hangs In Balance - WSJ.com

The opening of the Burj Dubai, the world's tallest skyscraper, Monday could mark a turning point in the sheikdom's fortunes and those of its ruler after a year that saw both come under intense scrutiny.

Sheik Mohammed bin Rashid Al Maktoum, the city-state's 60-year-old hereditary leader, hopes the building and its surrounding $20 billion development will help enhance his reputation among international investors and restore the allure of Dubai as a business hub.

Dubai's shock confession in November that one of its largest government-owned conglomerates couldn't pay its debts triggered a slide in world markets and prompted many analysts to question the city's economic model of borrow and build. Burj Dubai, it's hoped will redress the growing international perception of the emirate as an economic delinquent instead of a role model for the Arab world.

Saud Masud, head of research at UBS AG in Dubai and a regular commentator on the emirate's real-estate industry, says Burj Dubai will help the city to "stay in the limelight as home to a global landmark." Still, Masud forecasts that Dubai real estate prices could drop a further 30% this year after falling 50% in 2009.

After struggling with an $80 billion mountain of debt, no expense will be spared in Dubai for the opening, which takes place under a shroud of tight security. The carefully choreographed ceremony, which includes 10,000 fireworks, coincides with Sheik Mohammed's four-year anniversary as ruler.

The sheik, a passionate racehorse owner and published poet, was forced last year to turn to his oil-rich cousins in Abu Dhabi for financial assistance. The call for help prompted many analysts to question whether Dubai would be forced embarrassingly to sell prized assets to Abu Dhabi and surrender elements of its autonomy in order to pay its debts.

But with Abu Dhabi's support, Sheik Mohammed has managed to avoid financial disaster and keep his dream of making Dubai a modern, international metropolis on a par with New York, London and Hong Kong alive. The opening of the Burj Dubai is intended to symbolize that dream, according to Jim Krane, author of City of Gold: Dubai and the Dream of Capitalism.

BUILDING KING

Sheik Mohammed rejected initial plans for the Burj Dubai presented to him by the building's developer Emaar Properties PJSC (EMAAR.DFM) and demanded a taller, more impressive structure, said Krane, who is an expert on the emirate and a former resident.

"He sees himself as a great Arab building king," said Krane in a telephone interview. "Dubai represents Sheik Mohammed's bid to trigger an Arab renaissance and this is the thinking behind the Burj Dubai. Whether he can succeed is an open question."

According to Krane, the tower and its surrounding real-estate will never pay for itself.

The building currently stands at just over 2,625 feet. Emaar won't disclose the tower's final height ahead of the opening, although most estimates put it at 2,684 feet, far taller than Taiwan's Taipei 101, which had been the world's tallest skyscraper at 1,670 feet.

Investors gave the project an encouraging vote of confidence Sunday, with shares in its mostly government-owned developer Emaar surging ahead of the opening. Leading analysts expect the project will boost Emaar's revenue by almost $1 billion in the first quarter as homes and offices in the skyscraper are delivered.

At the height of Dubai's property boom, one-bedroom apartments were selling for up to $2,776 a square foot on the secondary market, according to Betterhomes, one of Dubai's largest real-estate brokers. One of the most expensive apartments at the time sold for just over $3.5 million.

In today's economic climate, it's uncertain whether the finished skyscraper will help Sheik Mohammed realize his dreams for Dubai or add to the emirate's sizable economic challenges.END

Qatar has one of the Highest Sovereign Credit Ratings

Qatar has a sovereign rating from Moody's and Standard & Poor's, which are two of the world's leading international credit rating agencies. Qatar's rating is considered as amongst the highest in the Gulf Cooperation Council and compares favourably with other developed countries.
While both Fitch and Capital Intelligence do not have an official published sovereign rating for Qatar, they do have an internal sovereign rating as both rating agencies assign ratings to Qatari banks, and having a sovereign rating is a prior condition to assigning a rating on a financial institution.

Dubai's superscraper makes history in hard times | Reuters

Dubai's superscraper makes history in hard times
| Reuters

Dubai Shares Gain Most in Gulf as Burj Dubai Is Set to Open

Dubai’s benchmark index rose to the highest in two weeks, leading gains among Gulf markets, as investors speculated that the opening of the world’s tallest tower tomorrow will boost earnings at Emaar Properties PJSC.

Emaar, the United Arab Emirates’ biggest real-estate company and developer of the Burj Dubai, climbed to the highest since November. Arabtec Holding PJSC and Drake & Scull International PJSC, both contractors on the building, also advanced. Dubai’s DFM General Index increased 3.4 percent to 1,865.59 on the first trading day of the year in the emirate, the highest close since Dec. 17. Abu Dhabi’s ADX General Index rose 1.1 percent.

“The opening of the Burj means that first-quarter 2010 results will be very strong as Emaar accounts for revenue when they hand over” properties, said Fadi Al Said, head of equities at ING Investment Management (Dubai) Ltd. The opening of the tower is boosting sentiment among retail investors, Said said.

Kuwait forecast to record KD-5.3-bln budget surplus

Kuwait is predicted to achieve a surplus worth KD 5.3 billion in its state budget for the current fiscal year, with revenues and expenditures estimated at KD 17.4 and KD 12.1 billion respectively, according to a recent economic report.

With December elapsing, three quarters of the 2009-2010 FY have come to a close while oil prices are still firm, with Kuwaiti oil prices having plummeted by USD 2.7 to USD 74.4 per barrel in December compared to November's USD 77.1 per barrel, Al Shall economic report said.

The average Kuwaiti oil price for 2009 hit USD 60.3 per barrel against USD 91.6 per barrel for 2008, down 34.2 percent, it added.

Emirates is top US military customer - The National Newspaper

Emirates is top US military customer - The National Newspaper

Oman shuns GCC monetary union - The National Newspaper

Oman shuns GCC monetary union - The National Newspaper

A 70 per cent pay rise that’s a 100 per cent bad idea - The National Newspaper

A 70 per cent pay rise that’s a 100 per cent bad idea - The National Newspaper

Corruption high in Dubai state firms: police chief

Corruption at Dubai's state-linked companies is unusually high, the Gulf Arab emirate's police chief said on Thursday, but tough new penalties introduced this week could help curb fraud.

Dubai, which shocked global markets in November with a request to delay $26 billion in debts linked to flagship firm Dubai World DBWLD.UL, has ramped up an anti-corruption drive in recent weeks.

The emirate has seen a series of high-profile fraud cases since 2008 involving top executives at government-related firms like property developers Nakheel and Dubai Properties, as well as Dubai Islamic Bank DISB.DU

"Something is unusual. We have never had such a high number of people involved in corruption," Dhahi Khalfan Tamim, who also heads the Dubai government's budget committee, told Reuters.

A law issued on Tuesday has the power to impose prison terms of up to 20 years on offenders as the emirate tightens financial rules in the wake of its debt crisis.

Tamim said the law "comes at the right timing (because) for the first time there is a problem of a significant size."

Under the law -- which allows for offenders to be set free upon repayment of any stolen funds, or settlement agreements -- authorities can reclaim stolen public or private funds.

Tamim said police had drawn "a list of more than 60 people mainly from government-linked companies" who are under investigation, adding no-one on the list was from a government department.

"The chaos is all coming from the (government-linked) companies," he added.

"We never had this conduct in our government practices. But at government-linked companies, some thought there was a large scope for a lack of discipline."

The law is among a raft of measures introduced by Dubai, one of seven emirates in the United Arab Emirates, in the wake of its debt bombshell on November 25.

Earlier this month, Dubai issued a law requiring government departments to transfer their revenues to the treasury in a bid to regulate government departments' public spending and control government revenues.END

Saudi local banks haven't settled Saad debts

Saudi Arabia's central bank governor said local banks haven't settled the debts of the troubled conglomerate Saad Group, a deal which was widely reported and sparked controversy for leaving foreign lenders to fend for themselves in international courts, according to comments published Saturday in the Riyadh-based daily Al Eqtisadiah.

When asked to respond to criticism from foreign lenders over the 9.7 billion Saudi riyals ($2.59 billion) settlement of outstanding loans with local banks, Mohammed Al Jasser, governor of the Saudi Arabian Monetary Agency, or SAMA, said local lenders applied assets that were pledged by Saad Group to obtain the original loans, in a "setoff" transaction which is the legal right of the banks.

"The problem still is there for the rest of the loans for local and foreign banks, and there has been no settlement as far as we know," he said. Foreign banks used the same process to seize these types of assets, he added.

More workers troop in as Qatar builds

Some 52,000 people arrived in Qatar in November last year taking the country’s total population to slightly over 1.63 million on the last day of 2009 which was a Thursday.

Those keeping tabs on the country’s demographic figures say the influx of foreign workers could be due to a large number of small residential projects being launched across the country.

According to the Qatar Statistics Authority (QSA), the number of people present in the country on December 31, both citizens and expatriates, stood at 1,631,728.

Oman's finance minister sees 2010 growth at 6.1 pct

Oman's minister of finance forecast on Saturday GDP in real terms for 2010 at 6.1 percent, and inflation at 3.5 percent, without giving comparative figures for the previous year. Ahmad Mekki, who is also the minister of national economy, told reporters that Oman's total debt as of the end of 2009 stood at 722 million Omani riyals ($1.88 billion), with domestic debt accounting for 252 million riyals of the total figure.

He also said there were no plans to ditch Oman's currency peg to the dollar or to join the Gulf Co-Operation Council Monetary Union at any point in the future.

On Dec. 13 Mekki said he expected the country's economy to have grown by 1-2 percent in 2009, hit by lower oil prices in the second quarter. [ID:nLDE5BC01D]

THE RECOVERY IN RAIL FREIGHT CONTINUES (This remains my personal choice of indicator of global economic recovery. The true economy, not the theoretical!)

Rail traffic continues to improve dramatically on a year over year basis. Comps with 2008 remain very easy, but the trend in economic activity is clear nonetheless. Things are much better than they were at this time last year. Compared to 2007 the data remains depressed, however, we are seeing improvement in these figures as well. The AAR reports:

WASHINGTON, D.C. – Dec. 30, 2009 – Intermodal volume was up but both carload freight and total volume as measured in ton-miles slipped from year-ago levels during the week ended December 26, the Association of American Railroads reported today.

The AAR also reported that volume during the most recent week remained sharply below levels reported during the comparable 2007 week. In order to offer a complete picture of the progress in rail traffic, AAR will now be reporting 2009 weekly rail traffic with year over year comparisons for both 2008 and 2007. Comparison weeks from all three years included the Christmas holiday.

Intermodal traffic totaled 141,699 trailers and containers, up 14.2 percent from a year ago but down 10.7 percent from 2007. Compared with the same week in 2008, container volume rose 21.6 percent and trailer volume dropped 14.5 percent. Compared with the same week in 2007, container volume fell 4.5 percent and trailer volume dropped 34.4 percent.

Carload freight totaled 197,754 cars, down 1.1 percent from 2008 and 22.3 percent from 2007. In the Eastern U.S., carloads were up 1.3 percent compared with the same week last year, but off 25.2 percent compared with 2007. In the West, carloads were down 2.3 percent compared with 2008, and 20.7 percent compared with the same week in 2007.

Carload volume was down largely because of a more-than 21,000 carload (19.1 percent) drop in coal loadings. Seventeen of the other 18 carload freight commodity groups were up compared with the same week last year, with fourteen reporting double digit increases, including motor vehicles (52.1 percent); lumber and wood products (44.8 percent); grain (31.1 percent); metals (31.7 percent) and chemicals (18.7 percent).

Total volume was estimated at 22.1 billion ton-miles, down 0.9 percent from the comparable 2008 week, and down 17.5 percent from the comparable 2007 week.

For the first 51 weeks of 2009, U.S. railroads reported cumulative volume of 13,585,290 carloads, down 16.3 percent from 2008 and 18.2 percent from 2007; 9,731,474 trailers or containers, down 14.3 percent from 2008 and 17.8 percent from 2007, and total volume of an estimated 1.47 trillion ton-miles, down 15.4 percent from 2008 and 16.3 percent from 2007.