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Wednesday, 22 September 2010

Credit slows as economy hits Dh1tn milestone - The National Newspaper

Dubai is moving from being the driving force behind credit growth in the Gulf to becoming the regional laggard as projects that previously attracted investment dry up, says the chairman of the Union of Arab Banks.

But despite the slowdown in lending growth in the emirate, the wider UAE economy is set to pass Dh1 trillion mark for the first time, Ahmed Humaid al Tayer, the governor of the Dubai International Financial Centre, said at banking conference in Dubai yesterday.

Lending expansion in the emirate was likely to reach 8 per cent next year, behind credit growth of up to 10 per cent across the GCC, said Adnan Yousif, who is also the chief executive of Al Baraka Banking Group in Bahrain." - Bellwether shares take toll in Egypt

Given the state of Middle Eastern markets, a return of over 7 per cent in the year to date is not bad. Only Qatar and Morocco have performed better.

Yet despite a recovery in shares from the lows of July, the mood among investors in the Cairo stock exchange is subdued.

Angus Blair, head of research at Beltone Financial, says that with real gross domestic product growth of more than 5 per cent and earnings growth of 18 per cent in core companies, the stock market should do better. “It’s pedestrian,” he says.

Nakheel to restart all 'short-term projects'

Dubai developer Nakheel has restarted work at its Al Furjan residential project and expects to start building again on all short-term projects by the end of next month, it said on Wednesday.

'Al Shafar Transport and Contracting Co is the first contractor to recommence construction work on Al Furjan, one of our-short term projects,' Nakheel said in a statement.

'We expect that all short-term projects will be fully mobilised by October 2010,' it added." - Supply stymies UAE property recovery

Like many residents of the United Arab Emirates, Richard Bath, a structural engineer for Aecom, a US contracting group, works in Abu Dhabi but lives in Dubai, where rents are cheaper and there are more lifestyle options.

After a property crash last year, rental declines have slowed in Dubai, but accommodation costs in Abu Dhabi have dropped more than 25 per cent this year, says CB Richard Ellis, the consultancy. This is tempting Mr Bath to move to the UAE capital, where he is working on the Cleveland Clinic project on Sowwa Island.

“It’s still not as cheap as Dubai, but a lot of property is coming on to the market, which has brought prices down,” he says. “And it would be nice not to have to do the commute.”

Dubai Shares Drop Most in 3 Months on Concern Gains Overdone; Emaar Falls - Bloomberg

Dubai shares declined the most in almost three months on speculation recent gains may be overdone and after U.S. and European stocks retreated on concern the global economic recovery is faltering. Abu Dhabi shares fell.

Emaar Properties PJSC, builder of the world’s tallest tower, decreased the most since July and Dubai Investments PJSC dropped 3.5 percent. The DFM General Index lost 1.6 percent, the most since June 29, to 1,673.69 at the 2 p.m. close in Dubai. Abu Dhabi’s gauge slipped 0.3 percent. Dubai’s index has surged 13 percent this month and Abu Dhabi’s has jumped 5.3 percent.

“It’s inevitable that we would see some profit-taking after the recent gains,” said Paul Cooper, managing director at Sarasin-Alpen & Partners Ltd. in Dubai, which oversees more than $500 million in the Middle East. “Dubai had a strong run on the back of the Dubai Worldannouncement and the FTSE Group inclusion.”

M&A in Kuwait: Minority who? � Alpha Dinar- talking GCC finance

KIPCO announced earlier this week that they are selling 39.2% of Gulf Insurance Company to Fairfax Financial Holdings for KD 0.900 per share, or a total of KD 59.89 million. The price of the stock before the proposed acquisition was announced was at KD 0.570. Now the stock is trading at KD 0.620, a 45% discount to the offering price. Why hasn’t the stock price surged to match the acquisition price? Simply, our stock market doesn’t protect minority holders, and allows majority owners to sell their stake at a huge premium without benefiting other shareholders. This issue isn’t unique and occurs everytime an acquisition is announced on the Kuwait Stock Exchange.

To better understand the issue, I offer cases around the world:

- In the US, IBM announced on Monday the acquisition of Netezza, a data warehouse company, for $27.00 per share. The stock was trading at $24.60, and closed the at $28.48 the day the announcement was made, surpassing the acquisition price after gaining 15%. In this case every shareholder benefits.

- In India, Vedenta (a Britsh metals company) offered to buy a 60% stake of Cairn India (an oil company) from its parent company. The price of the stock up to almost match the offering price as soon as the announcement was made even though Vedenta is not acquiring the whole company. Also, to please regulators, Vedenta offered to buy at most 20% from minority shareholders and the remainder will be bought from the parent company.

I hope that the recently created Capital Market Authority puts a stop to this disparity.

Burgan Bank bond price guidance set at 8.25 pct - lead | Reuters

The price guidance for Kuwaiti lender Burgan Bank's (BURG.KW) 10-year bond issue is seen at 8.25 percent, a lead manager said on Wednesday.

Burgan Bank is the commercial banking arm of Kuwait Projects Co (KIPCO) (KPRO.KW), the country's largest investment company by assets, which priced a $500 million 10-year bond in July at 9.5 percent. [ID:nWEA8973]

The size of the issue is still undetermined but a senior executive at KIPCO said earlier this week that Burgan Bank is looking to raise at least $300 million through the sale."

FACTBOX-UAE oil and gas concessions | Reuters

Multinational companies hold large stakes in concessions that pump most of the oil and gas in the United Arab Emirates, the world's third-largest oil exporter.

The UAE has said it aims to increase its oil production capacity to 3.5 million barrels per day (bpd) from 2.7 million bpd now and it will be reliant on these concessions for the increase. [ID:nLDE6740HT]

The UAE's concessions system allows oil and gas producers to acquire their own equity hydrocarbons from an OPEC country but in return they have to provide much of the investment for new production and agree margins analysts say are very tight by international standards." - Axiom Telecom plans Dubai IPO

Axiom Telecom, a UAE-based mobile phone retailer, plans to launch an initial public offering that could raise Dh200-300m ($54-$82m) for troubled conglomerate Dubai Holding, one of the retailer’s main shareholders.

Bankers say that the Dubai-based distributor could offer a 30 per cent stake on Nasdaq Dubai, the emirate’s international exchange, in the fourth quarter in what would be the country’s first IPO in more than two years.

The sale would provide cash for TECOM, Dubai Holding’s business parks unit, which owns 40 per cent of Axiom.

Persian Gulf Sukuk May Reach $5 Billion in Fourth Quarter: Islamic Finance - Bloomberg

Banks and companies in the Persian Gulf may issue the most Islamic debt in three years in the fourth quarter as economic growth accelerates and Dubai’s companies reach agreements to restructure debt.

The Islamic Development Bank, a Jeddah-based multilateral lender, said on Aug. 24 it would raise $1 billion selling debt that complies with Shariah law’s ban on interest, taking planned offerings for the remainder of the year to $5.5 billion. That would be the most since the third quarter of 2007, when Gulf sukuk issuance totaled $5.7 billion, according to data compiled by Bloomberg. Sales from the region have declined 24 percent to $2.5 billion so far in 2010, as three companies sold Islamic debt, Bloomberg data show.

“Investors are hungry for supply,” Naji Nabaa, a Dubai- based associate director of fixed-income sales for the Middle East and North Africa at Exotix Ltd., an investment bank specializing in illiquid assets, said in a telephone interview yesterday. “There’s a cash pile that has built up. Now that we’re seeing an early settlement between Dubai World and banks, it has given the credit markets some impetus to rally.”

Almatis and DIC make up after US judge’s ruling - The National Newspaper

A US judge has paved the way for Almatis, owned by Dubai International Capital (DIC), to emerge from bankruptcy and formally end a five-month struggle between the private equity giant and the German alumina company’s creditors.

Under the plan approved late on Monday by judge Martin Glenn of the US bankruptcy court in New York, DIC is to hand over a 40 per cent stake in Almatis to the company’s junior creditors, while senior debt is to be repaid in full. DIC would inject US$100 million (Dh367m) of new equity and secure about $550m of new financing underwritten by banks and asset managers. Those would include Bank of America, Merrill Lynch International and “several units” of JPMorgan Chase. It would retain a 60 per cent stake as the company exits Chapter 11 bankruptcy protection.

“Today’s final court approval of the plan of reorganisation is an excellent outcome for all parties and we expect Almatis to exit Chapter 11 very shortly,” said Anand Krishnan, the chief executive of DIC. “We are grateful for the support and partnership of our new and existing lenders who share our confidence in a bright future for Almatis.”"

What now for Gulf stakes in the London Stock Exchange?

It’s a little over three years since Dubai stunned the financial world by grabbing a big share stake in the London Stock Exchange (LSE), beating rivals in Qatar and elsewhere to the investment and sparking speculation of a merger between the financial centres in the emirate and London.

Much of that speculation was probably over-egged at the time but there was a consensus that Dubai, via the LSE stake, would be at the cutting-edge of rationalisation and consolidation of the world’s stock exchanges. Its 20 per cent holding, then worth some �750 million (Dh4.27 billion), had bought it a seat at the big table of global bourses.

Three years and one financial crisis later, it seems fair to ask: what benefit has the LSE stake brought – for Dubai or London?"

SHUAA joins FTSE Global Equity Index Series - Business Intelligence Middle East - - News, analysis, reports

SHUAA Capital, the leading GCC financial services institution, said today that it is among the UAE companies to be included in the FTSE Global Equity Index Series effective yesterday.

FTSE announced last week that it has classified the UAE as a Secondary Emerging Market. Companies that have met FTSE’s screening criteria, including SHUAA Capital, will be included in FTSE’s Global Equity Index Series from 20 September 2010.

This decision will directly impact ‘passive’ emerging markets investors tracking the FTSE Emerging Markets indices who will now seek exposure to the UAE. In addition, many ‘active’ global emerging markets investors and discretionary portfolio managers will now be allowed to place UAE stocks in their investment universe.