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Wednesday, 2 June 2010

Comment: Gulf can bridge gas shortages

One might imagine that the countries of the resource-rich Arabian peninsula, with 23 per cent of the world’s gas reserves, would have an adequate supply of the fuel to meet their needs.

Yet in 2009, more than 30 years after the United Arab Emirates began exporting liquefied natural gas to Japan, the Gulf Co-operation Council countries (Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE) began to become importers. Kuwait received its first shipment of LNG from Russia last August, with the emirate of Dubai expected to follow this year and other countries not far behind.

For these nations, this reversal of a decades-old status quo will mean greater integration with global gas markets, accompanied by changes in their relationships with companies in other regions. For the rest of the world, this could mean a significant shift in the way gas flows around the globe.

Reliance Communications Surges on Etisalat Investment Report -

Reliance Communications Ltd., controlled by billionaire Anil Ambani, rose the most in a year after the Times of India reported Emirates Telecommunications Corp. may buy a stake.

Reliance Communications, India’s second-largest mobile phone operator, said in a statement it received “various proposals” from overseas companies after the newspaper reported that Emirates Telecommunications, known as Etisalat, is in advanced stages of talks to buy a 25 percent stake.

Indian operators were among companies Etisalat was looking at for possible investment, Spokesman Ahmed Bin Ali said in a telephone interview today. He declined to give a timeline. “We normally announce any development in any market in due time,” he said in an e-mailed statement earlier.

Dubai Plans to Meet Fixed-Income Investors in Europe (Update1) -

The Dubai Department of Finance will hold meetings with fixed-income investors in Europe as it seeks to update potential investors on the emirate’s economy.

The meetings are “non-deal,” said a spokeswoman at the Department of Finance, who declined to be identified. HSBC Holdings Plc and Mitsubishi UFJ Financial Group Inc. were hired to help arrange the briefings, which are expected to start in Switzerland June 4, Paris June 7, Germany June 8 and London from June 9-10, said a person familiar with the plan who declined to be identified as details are private.

Dubai World, one of the emirate’s three main state-owned business groups, said on May 20 it reached an agreement with a group of creditors to restructure $23.5 billion of liabilities. The Dubai government and its state-owned companies have racked up $109.3 billion of debt and about $15.5 billion of that is due this year, according to International Monetary Fund estimates, as the emirate pursued a drive to transform itself into a tourism, trade and financial services hub.

Qatar Shares Lead Gulf Markets Lower on Oil, Global Stocks -

Qatar stocks dropped the most in a week, leading Gulf markets lower, as crude oil declined for a third day and global markets fell on investigations into BP Plc’s oil spill in the Gulf of Mexico.

Industries Qatar, the second-biggest petrochemicals maker in the Middle East, retreated for a third day. Abu Dhabi National Energy Co., the government-controlled utility known as Taqa, dropped to the lowest level since May 9. Qatar’s QE Index decreased 1.4 percent, the most since May 25, to 6,737.40. Abu Dhabi’s measure declined 0.1 percent and the MSCI World Index dropped for a fourth day, losing 0.6 percent.

“The market is trading on global risk aversion and global market direction,” said Matthew Wakeman, Dubai-based managing director of cash and equity linked trading at Egyptian investment bank EFG-Hermes Holding SAE. “Local news-flow is taking a back seat.”

Do GCC real estate prices have to fall further to make home finance work? « ArabianMoney

The youthful GCC mortgage sector is presently being held back by asking prices that simply make it too expensive for most would-be mortgage customers to own a home. Therefore, GCC house prices will have to fall even further if the local mortgage industry is to begin to finance the real estate sector properly, or so 120 delegates to the inaugural GCC Mortgage Summit 2010 heard in Bahrain today.

Central Bank of Bahrain Executive Director of Banking Supervision, Khalid Hamad said: ‘Current prices are not affordable or realistic, and further falls are necessary and then economic fundamentals will start rebuilding market confidence.

‘The fundamentals of the region are good, underpinned by growing global demand for oil. But since 2005 real estate prices have become inflated and bubbles have formed. Particularly in commercial real estate demand is weak and prices are unrealistically high. And for residential property the demand is in the low and middle income segment while the supply is in the luxury market’.

Dubai Islamic to Raise Tamweel Stake, Offers Debt Plan: Alrroya - BusinessWeek

Dubai Islamic Bank offered creditors of Tamweel, a shariah-compliant mortgage lender, a five-year moratorium on their debt with 4 percent annual return as part of a possible plan to raise its stake in the company, Alrroya Aleqtissadiya newspaper reported today.

The newspaper published a copy of a letter from Dubai Islamic Bank to lenders, in which it sought their official response to the plan before pressing ahead with a possible acquisition of the stake. The newspaper said a plan to merge Tamweel with rival mortgage lender Amlak has been dropped.

The debt plan offers payment of the principle amount in full after the five-year moratorium, the newspaper said.

Cagamas, Malaysia Airports, Qatar Islamic: Islamic Bond Alert - BusinessWeek

The following borrowers are expected to sell Islamic bonds, which use asset returns to pay investors to comply with the religion’s ban on interest.

Global sales of so-called sukuk increased to $20.2 billion last year from $14.1 billion in 2008, according to data compiled by Bloomberg. They climbed 10 percent to $6.1 billion so far this year.

(All listed at article.)

Crescent opens doors to region for Rosneft - Emirates Business 24|7

A joint oil project between Crescent Petroleum and Rosneft Oil Company will be signed and the first drilling operations will be started on June 5.

The joint venture represents the first entry of Russian oil to the region and the signing of the agreement and the first drilling operations will be in the presence of Sheikh Sultan bin Mohammed bin Sultan Al Qassimi, Crown Prince and Deputy Ruler of Sharjah, and a number of Emirati and Russian officials.

After the signing, the delegates will move to the project site to launch the first drilling operations after which details about the joint project and the partnership will be announced. This agreement constitutes the first joint activity between the two companies since the signing of the strategic partnership on May 10 in Moscow between Badr Jafar, Executive Director of Crescent Petroleum Group, and Sergey Bogdanchikov, President of Rosneft Oil Company.

Man behind Next to launch regional brand - The National Newspaper

George Davies, the man behind the major British-based retail brands Next and George at Asda, is set to make his regional debut with a new line of clothing tailored for the Middle East consumer.

The first of an initial 60 children’s clothing stores will begin to open in Saudi Arabia, Egypt and possibly Bahrain from October, in conjunction with the Saudi Arabian retail conglomerate Fawaz Alhokair, Mr Davies said. This marks his first partnership and the first chain he has launched entirely overseas.

The clothing will be geared towards the region’s specific needs, such as climate.

Sudden influx of capital can cause range of ailments

I don’t think there’s anything particularly “Dutch” in the idea that if you give somebody a stack of money, he or she might decide to give up the day job.

Nor can you call it a “disease” when somebody has enough wealth to do exactly what they want: put their feet up; take the world cruise; maybe dabble in watercolours.

But the economists, those hard-hearted automatons who know the price of everything and the value of nothing, have coined the phrase “Dutch disease” to describe a precise set of conditions prevailing in a national economy: a sudden influx of capital that leads to a decline in the productivity of the manufacturing sector.

Surviving Dubai's Real Estate Crash: Discussing Failures, Coping Strategies, and Moving Forward - Arabic Knowledge@Wharton

Measuring as long as a double-decker bus and twice as wide, a model landscape envisioning Abu Dhabi's future was on display at a recent real estate conference there. Surrounded by large screens and a second level for those seeking a birds-eye view, the plastic mega-miniature city, dubbed Abu Dhabi 2030, was a sprawling dream of modern urban design, complete with futuristic towers and bridges, geometric housing clusters and expansive greenways. Seemingly self-aware of what was on display, the landscape lit up specific structures on cue as a British-accented narrative and throbbing music enveloped the scene. Under dimmed lights, the soon to open Ferrari World theme park, shaped like a giant starfish, glowed an opaque blue. Conference attendees expressed their admiration.

But a short walk away, inside a sparsely populated conference room, the proposed skyline for Abu Dhabi, capital of the United Arab Emirates, was being debated by another set of attendees, many of them veteran real estate professionals. And there was little support for the scale or scope of the master plan. Instead, there was agreement such a skyline could not be completed in 20 years, and that the human and capital cost needed to achieve such a transformation would be enormous, even for the oil-rich Emirate. Kamil Homsi, president of New York-based investment firm Global Realty Capital, repeatedly demanded that his colleagues answer his questions about the plan: What was its purpose and where would all the people needed to populate such a city come from? "Is it all about towers?" Homsi asked. "Surely the current economic climate would give us a reality check -- but it seems no lessons have been learned in the last two years." Mustering one of the few defenses for the UAE's ambitious plan for its capital was Mohammed El-Hage, director of investment banking for Abu Dhabi-based Unifund Capital. "This vision is meant to inspire people," El-Hage said. "If we can land even halfway there, it will be one hell of a development."

The doubts expressed were a far cry from just two years ago, when price increases in the UAE's real estate market were on a six-year run, and real estate conferences like these sometimes had investors selling off-plan paper properties for tidy profits only minutes after purchase. But the unease is symptomatic of the current state of the UAE's real estate market, which has seen billions of dollars worth of projects put on hold or cancelled since the global economic downturn began, and real estate prices in Dubai dropping by as much as 50%. The city state is attempting to correct the issues that contributed to the real estate bubble, enacting laws that would reduce property speculation and, just recently, provide landlords the right to choose their own property management firms.

Prudential's hopes for Asia wrecked - Telegraph

Prudential's plans to become Asia's biggest insurer are in tatters after talks to cut the agreed $35.5bn (£24.2bn) price-tag of
AIA collapsed amid speculation that its owner, AIG, was instead pursuing a deal with sovereign wealth funds.

The sudden implosion of the deal early on Tuesday has converted the British insurer into a bid target itself and left its chief executive Tidjane Thiam vulnerable.

Investors who have been highly critical of the deal said the positions of all the management, including chairman Harvey McGrath, now had to be reviewed.

UAE's Etisalat in talks to buy 25% stake in Reliance Communications - India Business - Business - The Times of India

When the Ambani brothers announced the scrapping of their non-compete agreement, TOI had predicted that Anil Ambani's Reliance Communications was likely to get outside investment soon. Now, it is learnt that UAE-based telecom major Etisalat is in talks to buy a 25% stake in the company. According to market sources, negotiations are at an advanced stage for the deal, which would be worth around Rs 18,000 crore.

A banking source claimed that after acquiring 25% in Reliance Communications, Etisalat will make an open offer to acquire an additional 20% stake from the public.

Reliance Communications refused to comment on the news. Etisalat's official spokesperson also denied any such development. However, reliable sources close to the talks confirmed the news.

Bankers held in Bahrain allege libel

A London-based private investigator libellously accused three British executives of a $2bn scam in a bank collapse that has led to them being banned from leaving the Gulf state of Bahrain, according to a High Court claim. Hibis Europe wrongly alleged the trio had “systematically perpetrated a criminal fraud on a giant scale”, state the documents, which highlight the risks facing private detectives commissioned to probe suspected financial wrongdoing in corporations.

The alleged defamation – contested by Hibis – is the latest twist in a bitter legal dispute between two Saudi Arabian tycoons that has dragged in big financial institutions and executives from the surrounding region and beyond.

Court documents filed by the three bankers – Anthony James, Alistair McLeod and Cliff Giddings – say Hibis defamed them in a report to Bahrain’s public prosecutor on the demise last year of Awal Bank, where they were all senior managers.