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Sunday, 19 September 2010

Damas Extends Debt Standstill Accord With Bank Creditors to November 30 - Bloomberg

Damas International Ltd., a Dubai- based jewelry retailer, extended a standstill agreement with its creditors to Nov. 30.

The standstill has been extended because of holidays and the company’s steering committee of bank lenders has in principle approved the extension, Damas said in a statement to Nasdaq Dubai today. The company is in the final stages of negotiating a so-called cascade agreement with its founder Abdullah Brothers, Damas Real Estate LLC and Damas Investments Ltd., and the bank creditors of the Abdullah Brothers Group, it said.

RBS to Manage Up to $10 Billion in Mideast Bonds Next Quarter, Penney Says - Bloomberg

Royal Bank of Scotland Group Plc expects to manage $7 billion to $10 billion of Gulf Arab bond sales next quarter, which will be the best three months for debt offerings this year for the region, a bank official said.

The bonds will be sold by governments, state-related companies, financial institutions and companies from “across the region, but dominated by the United Arab Emirates,” Simon Penney, chief executive officer for the Middle East and Africa at RBS, the U.K’s biggest government-owned bank, said in an interview in Dubai Sept. 16. The offerings will be from Abu Dhabi, Dubai and some of the country’s other emirates, he said.

Middle East debt capital market issues have been hurt this year because of the uncertainty surrounding global economic recovery and state-owned Dubai World’s $24.9 billion debt restructuring. The six Gulf Arab countries, comprising Saudi Arabia, the U.A.E., Qatar, Kuwait, Bahrain and Oman, raised $16 billion so far from 30 bond issues this year compared with $22.2 billion from 34 deals in the same period a year ago, according to data compiled by Bloomberg.

Dubai Shares Lead Mideast Gains After U.A.E. Joins FTSE Index; Emaar Rises - Bloomberg

Dubai’s benchmark index advanced to the highest in almost four months, leading gains in the Middle East, after the United Arab Emirates joined the FTSE Group as an emerging market, spurring demand for local assets.

Emaar Properties PJSC climbed a third day after the board of the developer of the world’s tallest skyscraper in Dubai approved a proposal to sell 200,000 treasury shares. Dubai Islamic Bank PJSC, the biggest Islamic lender in the U.A.E., rose to the highest intraday level since May. The DFM General Index increased 1.8 percent to 1,676.78, the highest since May 24, at 12:19 p.m. in Dubai. Abu Dhabi’s benchmark stock index gained almost 1 percent.

“The stocks joining the FTSE secondary emerging markets index are now exposed to all the funds that track that index,” said Saad al-Chalabi, institutional trader at Al Ramz Securities in Abu Dhabi. “This injects foreign money into the market.”

Islamic derivatives struggle for traction

Islamic derivatives are still struggling to gain traction in the Gulf, six months after the launch of a much-touted over-the-counter contract aimed at creating a standard legal framework for hedging products.

Experts said the contract, known as the Tahawwut Master Agreement, in theory provides Islamic institutions with a simpler template for risk management that has been approved by sharia scholars.

But the contract has been slow to catch on among Islamic institutions in the region as many are put off by the dense language of the document and still question the sharia compliance of hedging products, which are often associated with speculation."

Meetings Held for 10% Stake Sale in National Bank of Kuwait, Al-Qabas Says - Bloomberg

Financial adviser Amanda Staveley held meetings with shareholders of National Bank of Kuwait for a possible purchase of a 10 percent stake in the Kuwaiti lender, Al-Qabas reported, citing unidentified people familiar with the matter.

An offer price of 1.7 dinars ($5.9) per share is “tempting” to some shareholders and letters requesting approval for the stake sale may be sent to the Central Bank of Kuwait in the next couple of days, according to the newspaper. It didn’t give details of the buyers or say whom Staveley is representing.

National Bank of Kuwait doesn’t have any knowledge that shareholders of the bank received offers for a 10 percent stake and there are no negotiations with the bank regarding this, the lender said in a statement to the Kuwait Stock Exchange on Aug. 19. National Bank of Kuwait shares closed unchanged at 1.46 dinars on Sept. 16.

Emaar Properties Board Approves Proposal to Sell 200,000 Treasury Shares - Bloomberg

Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai, said its board approved a proposal to sell 200,000 treasury shares the company bought in 2008. Emaar made the announcement in a statement to the Dubai bourse today, without giving further details.

Dubai World exposure to cost UAE banks 3-4 months' profit

UAE banks' exposure to Dubai World is estimated at around Dh37 billion and this could cost them an average three-four month profit before provision allocations, an expert at Moody's Investor Service was quoted on Sunday as saying.

John Tofarides, Financial Institutions Group analyst at Moody's Middle East, said he believed the UAE's 51 banks should allocate between Dh3.6 billion and Dh7.3 billion for provisions as a result of their exposure to DW.

In comments published by the semi official daily Alittihad, Tofarides said the banks' exposure could cost them 10-20 per cent."

GCC Market Analytics: Weekly GCC Index Analysis (Week 39)

No notable changes from last week. Aside from the Muscat 30 Index all other indices are now trading above their 20, 50 and 100-day moving averages.


FT Alphaville � Can an ETF collapse?

Like many innovations in finance that emerge from nowhere to explode in popularity with unknown consequences, exchange-traded funds (ETFs) have gone from obscurity when they were first invented in 1993 to making up more than half of all the daily trading volume on American stock exchanges today. They also made up 70% of all the canceled trades during the Flash Crash on May 6, despite representing just 11% of listed securities in the United States, suggesting that ETFs remain poorly understood by both investors and regulators.

The extraordinary popularity of exchange-traded funds, open-ended mutual funds that trade like stocks on an exchange, is undeniable. However, the source of this popularity would seem to have two very different origins. ETFs are bought by many retail and institutional investors looking for low cost and highly liquid vehicles with which to buy whole indices in a single trade, and ETFs serve that noble function well. But, they are also extremely popular with and widely used by hedge funds and other traders looking for a simple way to mitigate broad-market risks, or neutralize beta, with a single trade. The appeal to a hedge fund manager of being able to short an entire market index or a whole sector with one transaction, instead of say 500 separate stock shorts to span the S&P 500 Index, makes ETFs very widely used as hedging vehicles by short-sellers. It increasingly looks like many new ETFs are now being designed for the purpose of marketing them to short-sellers.

These seemingly opposite interests in ETFs make for a large and lucrative market not just for the ETF operators like BlackRock’s iShares and State Street Global Advisors SPDRs, but also for the authorized participants–institutions that can create or redeem large blocks of new shares in an ETF (called creation units) for sale, and countless brokers that profit by trading ETF shares.

Hammerson, Oman May Sell London Site to JPMorgan for $860 Million, FT Says - Bloomberg

Hammerson Plc and Oman may try to sell its office and retail site at Bishop’s Square in London for about 550 million pounds ($860 million), the Financial Times reported, without saying where it got the information.

JPMorgan Asset Management may be interested in acquiring the entire site, the FT said. Hammerson declined to comment and JPMorgan was not available for comment, the newspaper said.

Standard Chartered weighs Dubai HQ move - The National Newspaper

Standard Chartered would consider relocating to Dubai if tightening tax and financial regulations force the bank to abandon its London headquarters.

The emirate, along with Singapore and Hong Kong, were the most likely to be top of the list of possible alternative bases under contingency plans being drawn up by the company, according to a senior source at the bank.

Shareholders are concerned possible tax and regulatory reforms by the UK could hamper the bank’s business performance internationally.