Sunday, 26 September 2010
Both Gulf Arab emirates have been testing investor interest in potential debt issues during recent months, with sources indicating debt-crisis hit Dubai may be first to tap the market.
Last week, two sources told Reuters that Dubai was readying to issue up to $1 billion in bonds as early as this week, the first sovereign placement from the emirate since its debt crisis rattled the markets in November 2009.
Here's a summary table which provides a 5-day outlook based on the price projections for each GCC index:
The price projections on the charts below extend for twenty trading days into the future. However, in the table above we're only looking at what the price projections are telling us about the next five days.
For each index there are three 5-day price projections based on the three best historical price matches. For example, the best historical match for the DFM General Index was higher five trading days later (Best Match 1 = "Up"), as was the second best match. However, the thrid best match was lower five trading days later (Best Match 3 = "Down").
The "5-Day Outlook" column provides the average 5-day price change of the three best historical matches. For the DFM General Index the average 5-day outlook is 0.65%.
As you can see, the price projection based outlooks broadly confirm what we're seeing in the other weekly analysis reports (Trend Analysis, Index Analysis & Market Breadth). That is, most projections are pointing to higher index levels this week.
Shehab Gargash's Sheikh Zayed Road office hasn't changed much since he last invited Arabian Business in to talk, two years ago. The tan leather sofas are as comfortable as ever, the overstuffed bookshelves still look fit to buckle, and Gargash's lifelong passion for art is reflected in the striking pieces that adorn his walls.
Outside, of course, everything is different. Gulf bourses are down an average of 50 percent since their 2008 peaks, and Dubai's bubble has burst to reveal a $25bn debt pile."
“The NASDAQ Dubai was a failed experiment. I would have liked to see it succeed and we invested effort in helping it to succeed, but that didn’t happen,” Gargash, who is also a director of the Dubai Chamber of Commerce and Industry, told Arabian Business in an interview.
The Nasdaq Dubai, which is down 3.5 percent year-to-date but 46 percent since September 2008, announced in July that trading of its listed securities would be routed through the DFM trading platform.
Emaar Properties PJSC, the developer of the world’s tallest skyscraper, increased 1.6 percent and Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest Islamic lender, advanced the most since Sept. 21. The DFM General Index gained as much as 1.8 percent to 1,719.72, the highest intraday level since May 18. The index was at 1,709.37 at 11:46 a.m. in Dubai. The Bloomberg GCC 200 Index added 0.2 percent and Egypt’s EGX 30 Index rose for a sixth day, climbing 0.9 percent.
“The strong performance of U.S. and European markets last week helped boost investor sentiment in the region,” said Ziad Dabbas, a financial analyst at National Bank of Abu Dhabi PJSC, the U.A.E.’s second-largest lender by assets. “We expect foreign investments to increase as the overall situation improves.”
To find out exactly how bullish each individual GCC market has performed during positive market breadth periods please see this previous post.
Dubai Islamic Bank received approval from the government to increase its stake in the mortgage lender to 57.33 percent from 21 percent. Tamweel’s shareholders include Dubai World Group and HSBC Holdings Plc, according to Bloomberg data.
“The move will give new momentum to the local mortgage market which has entered a recovery phase after a series of decisive measures taken by the government in the wake of the recent global financial crisis,” the Dubai government’s Media Office said today in an e-mailed statement. It didn’t give financial terms of the transaction.
Google stock dropped more than 90 per cent in a spectacular mini ‘flash crash’ on Friday that may just turn out to be a technical error or something far more significant. The video below tells the story (which we cannot confirm as true although it looks solid).
The May 6th ‘flash crash’ when the Dow lost almost 1,000 points in a matter of minutes comes instantly to mind (graph above). The US stock market has staged a long rally from its March 2009 low but the head-and-shoulders pattern over the summer is consistent with a major top and trend reversal.
Market observers have been looking for a signal since the May ‘flash crash’ that the market is rolling over. We have had warnings from financial astrologers and three confirmations of the Hindenburg Omen in the charts.
Perhaps the Google ‘flash crash’ is that final warning. Something probably caused it, and that something probably had to do with market makers repositioning for a correction. Conspiracy theorists will love this but it might just be too late already to short the market if this warning is validated.
It also expects inflation in the Kingdom to decline moderately to 5.5 percent at the end of the year from the current 6 percent.
The report noted that robust economic growth from the developing markets is expected to continue, albeit at “slightly moderating levels in the months ahead.”
It underscored that with the strong economic fundamentals in Saudi Arabia, the impact of a global slowdown is likely to be limited."
A working paper from the International Monetary Fund released last week reported that Islamic financial institutions were more stable than their counterparts in the West. "Islamic banks performed better, given the large losses incurred by conventional banks in Europe and the US as a result of the crisis," researchers wrote. Both bankers and students are keen to know why: at branches of business schools in Dubai and in the West, classes on the subject are oversubscribed.
The Islamic finance industry already has nearly $1 trillion under management. Demand for Islamic financial products and institutions is expected to grow to $2.8 trillion by 2015, according to the Islamic Financial Services Board based in Malaysia, the country that is the global hub for Islamic banking. The growth in the industry presents an opportunity for this region, and for Dubai in particular.