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Wednesday, 24 February 2010

Kuwaiti Investment Companies: Survival of the Fittest

The Financial Times published an article a few days ago about investment companies in Kuwait. In that article Mr. Jassim Al Sadoun of Al Shall Research and Consulting was quoted saying that in 2011 we won’t see half of the more than 100 investment firms in Kuwait. He basis his conclusion on the fact that most of the investment firms are highly leveraged and lack sufficient assets.

In my opinion, the crisis sent a wake-up call to us here in Kuwait, and it revealed some “dirty laundry”. It separated the men from the boys. What will happen is a healthy dose of survival of the fittest, and apparently according to Mr. Al Sadoun, the fittest are a lowly bunch of less than 50% of investment firms in Kuwait. I hope that what has happened will teach people that there is no such thing as easy money, and leverage is coupled with high risks. People should learn to always manage their risk, and never get too overly exposed.

For your reference, the link of the article discussed:

Dubai Index Leads Drop in Gulf Markets on Global Growth Concern

Dubai’s benchmark index dropped for a fifth day, leading a decline among Gulf markets, after a fall in U.S. consumer confidence to a 10-month low spurred concern that the global economic recovery will slow.

Shuaa Capital PSC, the United Arab Emirates’ biggest investment bank, fell to the lowest level since May in intraday trading and Emirates NBD PJSC, the nation’s largest bank, retreated to the lowest in three weeks. The Dubai Financial Market General Index declined 1.2 percent to 1,567.02 at 1:09 p.m. in the emirate, the lowest intraday level since Jan. 28. Qatar’s gauge dropped 1.2 percent and Saudi Arabia’s Tadawul All Share Index slid 0.4 percent.

“Dubai is more externally focused than some of the other countries in the Gulf,” said Paul Cooper, managing director at Sarasin-Alpen & Partners LTD. The worry is that “the strong economic recovery we have seen in the past six to nine months” globally is coming to an end.

Qatar’s RasGas Starts Producing LNG From Train 7

Qatar’s Ras Laffan Liquefied Natural Gas Co., a venture between state-controlled Qatar Petroleum and Exxon Mobil Corp., started output from its last production unit, Chief Executive Officer Hamad Rashid al-Mohannadi said.

“We are currently producing from” train 7, al-Mohannadi said at a press conference in Doha today. “We will ramp up production” and LNG trains typically take two to three months to reach full output capacity, he said.

Ras Laffan Liquefied Natural Gas, or RasGas, and Qatar Liquefied Gas Co. are scheduled to start three of the world’s largest LNG units this year, raising the Gulf emirate’s production capacity to 77 million tons from 54 million tons. Qatar is the world’s biggest producer of LNG, gas that’s been cooled to a liquid for transport by tanker to markets not connected by pipeline.

Revolving door: Fare thee well, Manal Shaheen

Nakheel+Launches+Trump+International+Hotel+kMtm89_JtEUl.jpgPhoto captionManal Shaheen (right) with Chris O'Donnell, Naomi Watts, Donald Trump and Melania Trump at the New York launch of the Trump International Hotel & Tower.
I first came across Manal Shaheen at Nakheel's multi-million dollar launch of the Trump International Hotel & Tower in New York City. She was an affable lady, with a penchant for standing next to celebrities like Heidi Klum and Demi Moore while a couple dozen photographers snapped away.
Today, the Financial Times reports that Ms Shaheen, who was serving as the chief commercial officer at Nakheel, has left the company. In an interview with the FT, she said she left for "personal reasons".

Her leaving Nakheel is a sign of an institutional change underway at Nakheel. Many of the top executives of the company - who were known for their brash and bold sales approach - have either been laid off or, in a few cases, arrested as part of Dubai's corruption probe. It was frequenly said behind closed doors that Nakheel was more of a marketing company than a developer (although it has built some pretty solid projects like Palm Jumeirah).

Ms Shaheen's departure is the most concrete sign yet that things are changing at Nakheel in a substantive way.END

Financial crisis a salutary lesson

Remember the halcyon days of August 2008, before the collapse of Lehman Brothers and the onset of the financial crisis?

Although there were already rumblings of problems ahead in global credit markets, it looked as though the world financial system was facing a gentle correction, rather than the vast destruction of value that occurred between September of that year and the following February.

In the Gulf, the buzzword as I remember was “insulated”. Even as signs of the growing crisis loomed ever larger, government and central banks across the region repeated that word like a lucky charm: because of its energy revenue and financial liquidity, the Gulf would be “insulated” from the global problems.

Profile: Prince Alwaleed bin Talal

Billionaire Prince Alwaleed bin Talal has long stood out from other Saudi princes, both in his social views and his investment philosophy.
In the conservative kingdom, where showing a woman’s face in a newspaper still causes a stir, he ignores such restrictions, receiving dignitaries accompanied by his unveiled wife, Princess Ameera, and instructs papers to publish their pictures. In his office in the sleek glass and steel 311-m Kingdom Tower, he flaunts the fact that women work alongside men without wearing the obligatory black cloak or abaya.
While Saudi clerics issue veiled threats against owners of satellite televisions and cinemas are outlawed, the prince, a nephew of Saudi Arabia’s King Abdullah, built Rotana entertainment group, which on Tuesday agreed to welcome Rupert Murdoch’s News Corp as a shareholder.

Saudi Arabia is fully committed to G20 initiatives: Al-Jasser

The creation of the G20 reflects the fact that the composition of world economic power is changing, according to the governor of the Saudi Arabian Monetary Agency (SAMA).

Muhammed Al-Jasser added that Asian nations and other developing countries now needed to be integrated into the world's financial and economic architecture.

He was addressing a special conference organized by the global association for leading financial services firms, the Institute of International Finance (IIF).

Islamic Debt to Stay ‘Weaker’ Amid Failings, Deutsche Bank Says

Sales of bonds that comply with Islamic laws will remain “weaker” this year as investors shun riskier, higher-yielding assets on concern governments will struggle to repay debt.

Sales of the bonds known as sukuk have totalled $564 million so far this year, compared with $2.5 billion for the first quarter last year, according to data compiled by Bloomberg.

“Until we see risk sentiment improve globally it’s very difficult to see that the sukuk market will be as vibrant as it used to be,” Hussein Hassan, head of structuring for Middle East and Africa at Deutsche Bank AG, said at a conference in London today. “The industry failed to rise up to the occasion when looking for solutions. When Islamic finance was in the public eye, we were unable to provide solutions.”