Thursday, 13 January 2011
"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.
“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.
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, 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.
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".
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.
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.
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.
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.
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.
"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.
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 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.
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.
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: