Sunday, 6 June 2010
Gulf shares dropped, led by declines in Dubai and Abu Dhabi, as crude oil tumbled and lower-than- estimated U.S. jobs growth and a spreading debt crisis in Europe fueled concern the global economic recovery will slow.
Emaar Properties PJSC, the developer of the world’s tallest skyscraper, fell to the lowest level in three months, and Dubai Financial Market, the only Gulf Arab market to sell shares to the public, dropped for a second day. Aabar Investments PJSC slumped to the lowest since July 13. The DFM General Index retreated 1.8 percent to 1,513.49, the lowest since March 2009. The Bloomberg GCC 200 Index of 200 companies in the region slipped 1 percent at 3:20 p.m. in Dubai, and Egypt’s EGX 30 Index declined 2.2 percent.
“The global selloff, and the drop in the euro and oil prices are not helping investor sentiment,” said Saud Masud, a Dubai-based analyst at UBS AG.
Reliance Communications Ltd., controlled by billionaire Anil Ambani, said its board has “in principle” approved a plan to sell as much as a 26 percent stake to a strategic or private equity investor.
The company would sell the shares at an “appropriate premium to the prevailing market price” and “examine and pursue other appropriate strategic combination or consolidation opportunities,” the Mumbai-based company said in an e-mailed statement today. Reliance didn’t provide any names of potential buyers.
The nation’s second-largest mobile phone operator said June 2 it had received “various proposals” from overseas companies, commenting after the Times of India newspaper that day reported Emirates Telecommunications Corp., known as Etisalat, was in advanced talks to buy a 25 percent stake. Etisalat spokesman Ahmed Bin Ali said Indian operators were among companies being looked at for possible investment, though it didn’t specify Reliance Communications or a timeframe for any deals.
Saudi Arabian shares slumped on the week’s first day, led by insurance and petrochemicals companies, as global stock markets and oil declined after a report showed the U.S. added fewer jobs than expected last month.
Al-Ahlia Cooperative Insurance, Allied Cooperative Insurance Group (ACIG) and Saudi Basic Industries Corp., the world’s largest petrochemical maker, helped the Saudi Tadawul All Share Index to slide as much as 3.06 percent and fell 1.23 percent to 5927.45 at 3:30 p.m. local time.
“The sell-off is coupled with global market psychology,” said John Sfakianakis, chief economist at Banque Saudi Fransi. “Investors are selling off in anticipation of a further market decline which took a beating in the U.S. and Europe yesterday as sovereign concerns mounted and a weak U.S. employment market didn’t help sentiment.”
A leading investment group in Sharjah will take a 40 per cent stake in a joint venture it is setting up in Libya for aluminium and glass fittings, according to the Sharjah Chamber of Commerce and Industry (SCCI).
Hussain Mohammed Al Mahmoudi, SCCI Director- General, told Emirates Business that the joint venture between Sharjah's Al Sharif Investment Group and two Libyan partners – Libyan Social and Economic Development Fund and Libyan Investment Portfolio – was the result of an official visit organised by the chamber for businessmen to several north and central African countries, including Libya, at the end of April.
The two Libyan partners will hold 35 per cent and 25 per cent stakes respectively, Al Mahmoudi said. As per the agreement, the management of the project will be solely under the Emarati side, he added. The joint venture is for aluminium and glass production, manufactory and fitting. It will be based in Libya and any surplus will be exported to neighbouring Arab and African countries.
Dubai’s ambitious attempts to build an overseas investment empire to rival Europe’s biggest private equity firms could soon come to an embarrassing end.
Dubai International Capital (DIC), the international investment arm of the Dubai government that once tried to buy Liverpool football club, could be forced to wind itself up.
DIC has debts of $2.5 billion (£1.7 billion). A $1.2 billion loan is due this month but the fund has asked creditors to approve a three-month extension. Its lenders, which include HSBC, are expected to push for the fund to sell its assets to raise the money. The banks have appointed Deloitte, the accountancy firm, to advise on their options. DIC owns several big companies in Britain, including Travelodge, the budget hotel chain, and Doncasters, the engineering firm.