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Thursday, 3 June 2010

Dubai: it’s a ‘frontier market’ for a reason

Kudos to Zawya Dow Jones for keeping an eye on an evolving legal dispute between Dubai Islamic Bank (DIB) and four businessmen.

Proponents and practitioners of Sharia-compliant finance are fond of trumpeting the safety, reliability and relative simplicity of their offerings. But as the Nakheel debacle demonstrated, the reality is these products are far from bulletproof (or risk-free). Crucially, Islamic finance is as vulnerable to the vagaries of human nature as its secular cousins.

Case in point: the $651m tit-for-tat involving the Dubai’s part state-owned and largest Shariah-compliant bank.

Dubai Ruler’s DHCOG Not to Restructure Debt, JPM Says (Update1) - BusinessWeek

Dubai Holding Commercial Operations Group LLC is unlikely to restructure debt after posting a $6.2 billion loss as it benefits from hotels, rental and telecommunications businesses, JPMorgan Chase & Co. said.

The U.S. bank is maintaining an “overweight” rating on Dubai Holding Commercial’s bonds, Zafar Nazim, a London-based analyst at the bank, wrote in an e-mailed report today. The loss attributable to shareholders comes after a year-earlier profit of 10 billion dirhams ($2.7 billion), the company said June 1.

“Cash generation from hotels and rental portfolio, value associated with Jumeirah and telecom stakes,” should enable the company to refinance near-term debt, Nazim wrote. “We do not expect DHCOG to restructure its debt, unlike its sister entities, Dubai International Capital and Dubai Group.”

Abu Dhabi Shares Rise, Ending 9-Day Drop on Oil, Global Markets -

Abu Dhabi shares rose, ending a nine- day losing streak and helping lead Gulf markets higher, as oil gained and global markets advanced on optimism the economic recovery will accelerate.

Emirates Telecommunications Corp., the company known as Etisalat, gained the most in more than three months as it said yesterday Indian operators were among companies it was looking at for possible investment. National Bank of Abu Dhabi PJSC climbed the most in two weeks after it bought back some bonds. Qatar Telcom QSC rose the most in almost a month. The ADX General Index rose for the first time in 10 days, increasing 0.8 percent to 2,571.06. Qatar’s QE Index gained 1 percent.

“There is no regional news at the moment” to drive the market, said Julian Bruce, director of equity sales at EFG- Hermes Holding SAE. The rise in the Gulf markets is “due to external influences.”

Dubai Property Prices to Drop Another 20%, Credit Suisse Says -

Dubai house prices, which halved since mid-2008, may drop another 15 percent to 20 percent this year on an increase in supply as more real estate projects are completed, Credit Suisse Group AG said.

“We expect residential prices to decline by another 15-20 percent in Dubai as the oversupply gap peaks in 2011,” Dubai- based analyst Ahmed Badr wrote in a report. “We expect Abu Dhabi’s residential prices to come under pressure as new supply comes online, thus narrowing the price gap with Dubai despite the continued supply shortage and the strong replacement demand.”

Bahrain: notes from a small island « ArabianMoney

This week ArabianMoney has been reporting live from Bahrain, once the undisputed Gulf regional financial centre, a crown it largely lost to Dubai during the boom years. But Bahrain has not stood still.

The soaring new World Trade Centre and 51-storey twin towers of the Bahrain Financial Harbour are testament to that. Then again if you look at the three half-built towers within the BFH it is clear that Bahrain has also suffered from the same economic sudden stop that hit Dubai 20 months ago.

The official story is that Bahrain is surviving the crisis better than its rival. Yet the financial centre has been rocked by the financial crisis enveloping two Saudi groups and one of the founders of the BFH has just sold its stake, presumably to raise cash.

DIFC registers 40 new firms in Q1 - Emirates Business 24|7

The Dubai International Financial Centre (DIFC) registered 40 new companies in the first quarter, a "significant" increase from the same period last year, a top official said.

This brings the current number of DIFC-registered companies to 899, five per cent higher than the 2009 total of 859. Last year's tally was 15 per cent higher than the 744 recorded in 2008.

"The first quarter saw somewhere around 40 new companies in the DIFC," Abdulla Mohammed Al Awar, Chief Executive Officer of the DIFC Authority, told Emirates Business. "We have seen that most institutions are now in the recovery, rather than survival, mode." He did not reveal how many companies had been registered in Q1 2009.

FTSE picks regional stocks - The National Newspaper

A basket of diverse stocks from the UAE will soon be on the radars of more global fund managers thanks to the country’s new classification as an emerging market.

The 13 stocks will be included in the FTSE Global Equity Index Series from late September, said Jonathan Cooper, the FTSE regional managing director. They include seven companies from Dubai and six from Abu Dhabi, representing industries including energy, property, banking and telecommunications.

Being added to the index should give UAE stocks a higher profile among institutional investors and potentially attract more foreign investment.

Saudi Arabia to Allow Foreign Ownership in Brussels-Sized City - BusinessWeek

King Abdullah Economic City, one of four metropolitan areas under construction in Saudi Arabia, will be the first place where foreigners are allowed to own property as the kingdom seeks new sources of investment.

The city, known as KAEC and named after the head of state, is being built by Emaar Economic City, a company controlled by the Saudi Arabian government and Dubai’s biggest property developer. When completed in 2025, the $27 billion project will cover about the same area as Brussels.

“This is the first freehold city in Saudi Arabia,” Fahd Al-Rasheed, Emaar Economic City’s chief executive officer, said in an interview. “A lot of people want to invest in the Saudi market and see it as a frontier for real estate investment because of the population explosion here.”

Qatar Idles LNG Ships as Year-end Gas 20% More: Energy Markets - BusinessWeek

Qatar, the world’s biggest producer of liquefied natural gas, is idling at least eight tankers in the Gulf of Oman, as prices for year-end delivery exceed those for next month by 20 percent, the widest margin since October.

The Qatari Liquefied Gas Co. vessels have a combined capacity of 1.8 million cubic meters, enough to supply the U.K. for more than a month. The ships are off the United Arab Emirates, and their depth in the water signals they have full or partial cargoes, ship-tracking data from AIS Live Ltd. compiled by Bloomberg show.

Natural-gas has lost 20 percent this year and the contract for July delivery was trading at $4.445 per million British thermal units, up 0.5 percent, on the New York Mercantile Exchange at 7:46 a.m. in Singapore. December futures were at $5.312, meaning producers can earn more by selling later in the year, when cold weather spurs demand for heating fuel.