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Thursday, 13 January 2011

WAM | AlDar unveils financial framework to place company on stable and sustainable pla

Aldar Properties PJSC, Abu Dhabi's leading property development, investment and management company, today unveiled a series of steps designed to solidify the company's position for long-term, sustainable growth. The measures are focused on addressing current market conditions and on boosting the company's capital structure. These include the: Recognition of an approximately AED 10.5 billion (US$2.86 billion) impairment charge relating to the value of assets; Reimbursement and sales totalling AED 10.9 billion (US$2.97 billion) for the transfer of certain infrastructure assets on Yas Island including the recently opened Ferrari World Abu Dhabi theme park, roads, bridges, marine infrastructure, and land. This deal is consistent with an element of Aldar's business model under which the company has supported the long-term objectives of the Emirate of Abu Dhabi by building and developing strategic assets and transferring them to the Government upon completion; Placement of a convertible bond worth AED 2.8 billion (US$760 million) with Mubadala Development Company. The issuance of the bond is subject to shareholder approval at an upcoming Extraordinary General Meeting; and, Sale of residential units and land for AED 5.5 billion (US$1.49 billion) to the Government of Abu Dhabi.

"The financial framework approved by the Board today, including the convertible bond issue, will strengthen our capital structure and provide us with a stable and sustainable platform from which we can continue to capture commercial opportunities to deliver value to shareholders." said Ahmed Al Sayegh, Chairman of Aldar. "The impairment recognition reflects the adverse conditions that have affected the real estate market, but is an important step in allowing Aldar to achieve long-term sustainable growth." Moving forward, Aldar will build on the experience gained as a strategic developer for Abu Dhabi and focus on the creation, ownership and operation of quality residential, commercial, retail, leisure and hospitality, and educational establishments. It will continue to adopt a measured approach to development, adapting to prevailing market conditions.

Aldar's diverse portfolio includes commercial developments such as Central Market, Al Raha Beach, Yas Island (including Yas Mall and Yas Hotel), HQ, and Al Bateen Park, and government projects such as the Al Falah Emirati housing project. In addition, the company continues to deliver major infrastructure works, as well as significant projects on behalf of Abu Dhabi companies such as Mubadala.

Saudi Arabia, Qatar Favored at Credit Suisse Among GCC Markets - Bloomberg

Credit Suisse Group AG recommends equities in Saudi Arabia because of the possibility of an easing of foreign ownership restrictions in the Persian Gulf’s biggest stock exchange. The bank also favors Qatar among the region’s markets.

“The Gulf Cooperation Council markets look set for a strong performance in 2011, possibly outperforming MSCI Emerging Markets,” London-based analysts Mohamad Hawa and Anton Rozanov wrote in a report to clients today. The region may benefit from improved global economic growth, attractive valuations, higher oil prices and stronger earnings momentum, the note said.

A possible upgrade of markets in Qatar and the United Arab Emirates to emerging markets status at MSCI Inc. will also help boost shares, it said.

FT Tilt - Mixed market reaction to Tunisia conflict(Registration) #sidibouzid

Fixed-income markets -- unlike their equity market cousins -- have largely shrugged off the wave of turbulence in Tunisia, despite the repricing of political risk in the North African economy.
However, the government’s ability to access international markets and the listing of the state-controlled Tunisie Télécom -- both moves previously pencilled in for the first quarter of the year -- are under threat.

In recent weeks, clashes between protesters and the Tunisian authorities have intensified with the government on Wednesday replacing the interior minister. Public agitation stems from unemployment, which is above 13 per cent, high food prices and income disparities.

Aldar disposal plan seen needing govt backing, UAE Industries - Maktoob News

The UAE's Aldar Properties is set to put its key assets on sale to tackle a cash crunch and analysts say oil-rich Abu Dhabi may step in to help the indebted developer in the absence of many buyers.

Aldar, which is seeking shareholder approval to sell assets and issue convertible bonds, may turn to government-owned entities to buy properties such as the Ferrari theme park, the world's first park based on the Italian sports car and racing teams, analysts say.

"The problem is that there is nobody in the market who would be interested in buying these assets. They have to go to the government," said a Dubai-based property analyst who did not want to be named.

FT Tilt - Investment grade on Turkish horizon(Registration)

Turkey is widely expected to reach investment grade in the latter half of 2011, and if recent history is anything to go by, Turkish asset prices will appreciate ahead of an upgrade.
A number of banks, including HSBC, Citigroup, Merrill Lynch and Turkey’s Akbank, have suggested that the country will be upgraded this year, with Citi predicting a 50 per cent likelihood (or 70 per cent when excluding inflation and current account variables).
Turkey’s CDS spreads trade tighter than would be expected by its ratings level, and the country has improved its relative performance in the credit markets, thanks to the perception of its fiscal position and ability to successfully meet large external financing needs. Both these factors point toward an upgrade, say Citi analysts.
Turkey’s Relative Performance in Credits Markets - Citi

But what difference will an upgrade make?

Initially very little. Citi says when Brazil made investment grade in 2008, the immediate market reaction was "fairly muted".

This is because the macroeconomic and structural improvements that warranted the upgrade were priced in to Brazilian assets in the months leading up to rating agency’s decision.
Brazil’s Experience - Citi
Recent “favorable developments” in Turkish assets can be viewed in the same context, Citi analysts say.
The ISE 100 Index gained 20 per cent in 2010, and hit 71,543 - its highest point in five years - in December. Yesterday the index closed at 67,923.

A word of warning

Beware of Turkey's current account gap, which could reach $46.5bn (over 6 per cent of GDP) in 2010 and $54bn (about 7 per cent of GDP) this year, and rising inflation, which could hit 7 per cent by the end of 2011, according to Citi.

Give the Market what it Wants! « Alpha Dinar- talking GCC finance

It feels like the market wants to see oil at $100 per barrel with Brent crude hovering around it already. Yesterday was the first time oil prices rise above $98 since October 2008, as the Brent touched $98.46 briefly in London before falling back to $97.77 while the light sweet crude (WTI) rose to $91.74 in New York.
We were expecting oil prices to test those levels but no so quickly, with $100 a barrel being only a matter of time. (Buy Oil Now?) The rally has been driven by the cold weather in Northeast US, drop in existing stockpiles, and the recent closure of the Alaska oil pipeline. Not to mention the rising speculation of slowing down production in the Gulf of Mexico by Obama’s administration by increasing the liability cap for damages when companies drill offshore. As for the long-term growth, the Energy Information Agency (EIA) states that global consumption of oil is expected to increase due to the resurgent demand driven by improving economies in both the developed and developing world. Forecasts also claims that oil demand is expected to reach 88.6m barrels a day during 2011 from 87.78m estimated last month. With the OPEC having no intention of increasing production and the fragile global growth, high oil prices can become a threat for the global recovery.
Naturally, the supply constraints and concerns of the leak sent a shiver down the oil markets pushing up prices of oil while holding down BP. BP stock took a beating as it owns a 46% stake in the Trans-Alaska pipeline and I believe the incident signals a buying opportunity for BP. Nonetheless, we aren’t exactly facing a major disaster similar to the Gulf oil spill as Alaska’s key pipeline has resume shipments and was pumping 400,000 barrels per day, almost two-thirds of its normal levels already.
Supply constraints are pushing up crude oil and increased global demand is expected to enable it to sustain elevated price levels; at the end of the day, BP will take part in the rally.

Tunisia Stocks Slump to Year-Low as Troops Deployed to Tunis Amid Curfew - Bloomberg

Tunisian stocks fell to the lowest level in almost a year after troops were deployed on the streets of Tunis and the interior minister was fired amid protests that left at least 21 people dead since last month.

The Tunindex lost 2.8 percent to 4,593.88, the lowest since Jan. 25 at 10:42 a.m. in the capital Tunis. That brought the four-day drop to 12 percent.

Another 10 people were killed in three cities in the North African nation, with several injured in clashes in the second- largest city, Sfax, al-Arabiya television reported yesterday after the demonstrations grew. Police fired tear gas to break up a crowd that gathered at a main intersection in Tunis. The curfew was due to end today at 6 a.m., the government said.

How rising oil prices should speed up economic recovery in the GCC « ArabianMoney

Oil prices are at a two-year high and heading back to $100 a barrel rather sooner than most forecasters penned just a couple of weeks ago. For the Gulf States still reeling from the impact of the financial crisis two years ago, which burst a real estate boom and left banks nursing huge debts, this is clearly good news.

However, much depends on how the oil money is spent on whether it actually speeds up recovery at home or even impedes it. For such liquidity will only boost local economies if it is invested locally.

gulfnews : Qatar on robust growth path

The $126.5 billion (Dh464.25 billion) Qatar economy with a real gross domestic product (GDP) growth of 13 per cent per cent is one of the world's fastest growing economies.

It also has a per capita income of $66,100, the sixth highest in the world.

With its vast hydrocarbon export surplus, the country has embarked on a mission to diversify its economy largely driving it with private sector investments in the non-hydrocarbon industries.

Fresh call for reform of bankruptcy and debt law - The National

The UAE's bankruptcy laws must be overhauled and issuing bounced cheques should no longer be a criminal offence, say senior government officials.

Fahad Saeed al Raqbani, the director general of the Abu Dhabi Council for Economic Development, says reforms are needed to attract overseas investment and prevent capital flight.

A rigorous framework for insolvencies is crucial to attracting overseas investors and preserving jobs in the Emirates, he told a conference in Abu Dhabi yesterday organised by the Council for Economic Development.

Fund lifts Qatar National Bank to multi-year high - The National

Qatar National Bank (QNB) rose yesterday to its highest since 2003 after the Qatar Investment Authority (QIA), the country's sovereign wealth fund, announced it would be taking an additional 10 per cent stake in its local banks during the first quarter.

"It is positive because it would allow banks to grow even faster by increasing their capital, strengthening their balance sheet and they would be able to lend more," said Tarik el Mejjad, an analyst at Nomura in London. QIA initially took a 10 per cent stake in Qatari banks in 2009 to replenish their capital after the global crisis.

QNB is expected to be among the main beneficiaries. The lender this week reported a 36 per cent increase in net profitto 5.7bn rials for the full year, above analyst estimates. Loan growth was up 40 per cent year on year, and deposit growth was 31.5 per cent higher. Non-performing loans remained under control, edging up slightly to 0.9 per cent last year from 0.7 per cent in 2009.

Saudi Petrochemical Exports Seen to Overcome Anti-Dumping Probes - Bloomberg

Saudi Arabia’s petrochemical exports will continue to grow in 2011, even as Turkey and Pakistan investigate some products for possible violations of antidumping rules, a Saudi industry official said.

Demand in Asia for Saudi petrochemicals exceeded the available supply in the fourth quarter of 2010 and will continue to do so in the first quarter of this year, Abdul-Rahman al- Zamil, the head of the country’s Export Development Center, said in a telephone interview yesterday. The Riyadh-based center promotes the country’s non-oil exports.

India imposed a 6.5 percent anti-dumping duty in November on polypropylene exported by Saudi Basic Industries Corp. and two other Saudi Arabian companies because it believes they benefit unfairly from government subsidies. China decided in November, after a yearlong investigation, not to impose antidumping duties on Saudi shipments of methanol.

Cukurova in talks for $7.89 bln Zain stake-CNBC | Reuters

Turkey's Cukurova Holding is in talks to buy 29.9 percent of Kuwaiti telecom Zain for $7.89 billion (ZAIN.KW), CNBC Arabiya reported, just days ahead of a deadline for Etisalat's [ETEL.AD] $12 billion bid.

Cukurova has offered 1.72 dinars per share, or 2.22 billion dinars, for the stake, CNBC said. The group controls Turkcell (TCELL.IS), which earlier in 2010 was reported to be interested in Zain, but later denied any interest.

The report follows a visit to Kuwait this week by Turkish Prime Minister Tayyip Erdogan. / Middle East - Egypt seeks $17bn in partnerships

Egypt is counting on public-private partnerships to fund an ambitious infrastructure programme to invest billions of dollars in roads, ports and utilities over the next five years.

Decades of underinvestment have left the country with poor infrastructure that hinders economic activity and adds to the hardships of its 80m people. Public transport is congested and inadequate, roads are unable to cope with the volume of traffic, untreated sewage pollutes waterways and power generation is stretched to capacity.

EFG-Hermes, the investment bank, estimates that overall Egypt needs $45bn worth of investment in transport, energy generation and utilities over the next five years.

FT Tilt- Lebanon stocks plummet as government collapses(Registration)

Political risk is back with a vengeance as far as Lebanon's benchmark stock index goes, falling by the largest margin since July as the the year-old unity government collapsed. The BLOM closed 3.22 per cent lower at 1488.

The development -- triggered by Hezbollah’s withdrawal from the administration on Wednesday -- came as Tunisia and Algeria were both rocked by widespread rioting amid protests over food price rises and unemployment.

Solidere SAL, as the largest publicly traded company in Lebanon, was the markets’ whipping boy, falling by 9 per cent -- the most since 2008. From Reuters:

Reuters chart of Solidere