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Monday, 24 January 2011 - Dubai heads downmarket to lure visitors

It is peak tourist season in Dubai, and across the emirate – from luxurious beach resorts to modest city-centre properties – hoteliers are breathing a sigh of relief as their rooms fill up.

The global financial crisis has thrown up severe challenges to the emirate’s hotel managers and owners, who have had to cut staff, slow new projects and cope with a continuing wave of new openings. It has also changed the face of Dubai’s tourism industry, which has been forced to go down-market to keep hotels full.

“I guess 2011 will be a year for survivors. Others will falter by the wayside,” says Russel Sharpe of Mezze, a hospitality consultancy. “It’s the fight of the fittest.”

Abraaj plans $533m Saudi investment platform

Abraaj Capital, a leading private equity firm in the region, has announced plans to initiate a SR2 billion ($533.3 million) investment platform dedicated exclusively to investing in Saudi Arabia.

Abraaj and Saudi Arabian General Investment Authority (Sagia), which serves as the gateway to investment in Saudi Arabia, jointly announced this landmark initiative on the sidelines of the 5th Global Competitiveness Forum (GCF) being convened by Sagia.

The platform will be focused on making investments across a variety of asset classes including private equity, small-and-medium sized enterprises (SMEs), real estate, and public equities, said Amr bin Abdullah al-Dabbagh, the governor of Sagia and Arif Naqvi, the founder and group CEO of Abraaj Capital.

Saudi banks won't need state bailout, says CenBank governor -

Saudi Arabia has not bailed out any of its banks or financial institutions and has no plans to do so, the governor of Saudi Arabian Monetary Agency said on Monday.

"Saudi Arabia is one of the very few countries in the world that did not need at all to bail out our financial institutions or even try and go to clean up their portfolios," Mohammad Al Jasser said on the sidelines of an event in Riyadh.

"We didn't need to do any of that because we acted counter-cyclically before the crisis hit and I promise to keep it that way.”

Iraq central bank slams ruling placing it under cabinet - Maktoob News

Iraq's central bank on Monday warned that a court ruling placing it under the supervision of the cabinet, and not of parliament, could expose its international assets to seizure by Iraq's creditors.

"(The bank's) independence, as stated in the law, was and still is the only guarantee that the Central Bank of Iraq's financial resources outside Iraq are not subject to measures of confiscation and seizure by international creditors," the bank said in a statement.

Iraq's supreme court last week issued a ruling placing a number of key independent institutions under the supervision of Prime Minister Nuri al-Maliki's cabinet, rather than parliament. The central bank was one of them. The electoral commission and Iraq's chief anti-corruption watchdog were others.

MIDEAST STOCKS-Optimism lifts Kuwait banks; KFH at 2-yr high | Reuters

Kuwait Finance House (KFIN.KW) hit a two-year high on Monday as some traders bet the Islamic lender may announce a capital increase priced at a big discount to its current share price and other local banks also advanced.

KFH rose 1.6 percent to its highest close since Dec. 24, 2008.

"Many people expect KFH to make a capital increase and that this will be cheap," said Essa al-Hassawi, assistant manager at Zumorroda Investment Co in Kuwait.

Egypt: Are Investors Discounting the “Tunisia Factor”? « Alpha Dinar

After the disruption in Tunisia, Cairo’s financial market felt most of the pain. The Egyptian stock market fell by almost 8% and the cost of insuring against the Egyptian debt has gone to its 18 months highs. Also, the Egyptian pound fell to its seven year lows against the US Dollar.
Are investors pricing in a political risk, whereby Egypt will have the same fate as Tunisia?
Major houses and international investors have been hot on Egypt for a while, mostly because of its demographics and accessibility. A study done by Barclays Capital estimates that foreign investors own 15% of stock market cap and 20% of the outstanding bonds, investing around USD25 billion. Although this indicates that Egypt’s market is attractive, it also creates a potential risk that investors might take their money away thus creating massive selling.
“If alarm bells start ringing in Egypt, there’s potential for quite a lot of money to come out.” said Oliver Bell, senior investment officer at Pictet which has gone underweight Egyptian stocks.
Elections are coming soon and Hosni Mobarak, president for the past 30 years, will probably run again. Also, Egypt is facing high food inflation and high youth unemployment. Adding on the already existing political unrest and the events that happened in Tunisia, this will surly trigger a political risk.

Nomura sees UNB with $354mln Dubai World exposure - Maktoob News

UAE lender Union National Bank (UNB) may have up to 1.3 billion dirhams ($353.9 million) exposure to state-owned conglomerate Dubai World, Nomura said in a research report on Monday.

Abu Dhabi-based UNB may not have booked any specific provisions for its exposure to the troubled entity, the brokerage said, forecasting the lender could need to book provisions of 260 million dirhams, assuming a 20 percent impairment.

"Management has yet to announce the bank's exposure to Dubai World. We also believe that UNB has not yet booked any specific provisions related to this entity," Nomura analyst Tarik El Mejjad said in a research note.

AFP: OPEC could increase production in 2011: Saudi Arabia

OPEC members could increase their production to meet 2011 demand which could rise by two percent, while oil prices are expected to maintain last year's levels, Saudi's oil minister said on Monday.

As non-OPEC oil producers are expected to increase their production, OPEC countries too will have the opportunity "to boost their supplies to the global market to meet the rising global demand," said Petroleum and Mineral Resources Minister Ali al-Naimi.

"I expect prices to remain at the same level as last year," said Naimi, who speculated a "two percent" increase in demand this year.

gulfnews : Central Bank to upgrade risk assessment

Kuwait's central bank is expected to introduce an upgraded risk assessment system for off-site surveillance of banks as well as up-to-date stress tests and early warning systems in 2011, the regulator's top official said.

Central Bank of Kuwait Governor Shaikh Salem Abdul Aziz Al Sabah told Zawya Dow Jones in an e-mailed reply to questions that it was in the central bank's main interest this year "to improve the ability of the banks in terms of their managing various risks, specifically improvements to their internal risk management systems."

Kuwaiti lenders, like others in the region, were hit hard by the fallout from the world financial crisis, leading the country's central bank in 2008 to guarantee all local bank deposits.

Proposed MSCI upgrade set to lift Qatar utility - The National

Qatar Electricity and Water (QEWC) could get a jolt if as expected the country is upgraded to an emerging market from its current frontier market status.

Shares in the third-largest traded utility in the Middle East by revenue have increased 27.5 per cent in the past six months but traders expect another boost ahead of a widely anticipated upgrade to the MSCI Emerging Market Index.

Yesterday the stock was rated "buy" in new coverage at Deutsche Bank, with a price estimate of 165 Qatari rials for the company.

Original thinking a must for region's business future - The National

Gulf start-ups need to change a "copycat mentality" of trying to replicate successful businesses in the West, say experts and entrepreneurs.

Small and medium-sized enterprise (SME) business leaders, speaking at a networking event for young entrepreneurs in Abu Dhabi last week, stressed the need for new companies to build commercial entities that are uniquely Middle Eastern.

"The Arab world's priorities are not the same as Europe and North America," said Mohammed Johmani, the chief executive of O2 Network, a communications agency based in Dubai.

Dubai Sukuk Returns as Emaar Plans $2 Billion in Issuance: Islamic Finance - Bloomberg

Emaar Properties PJSC plans to sell as much as $2 billion of Islamic bonds, its first in more than six years, as the developer of the world’s tallest tower in Dubai taps appetite for higher-yielding assets.

The government-controlled company said Jan. 18 it will meet fixed-income investors in Europe, Asia and the Gulf for its bond program. The yield on Dubai’s 6.396 percent Islamic note due November 2014 fell to 6.32 percent, down 374 basis points from a record high of 10.06 percent on Feb. 15, according to Bloomberg data. Emaar’s sukuk will need to yield between 6.5 percent and 7 percent, said Silk Invest Ltd., a London-based fund that specializes in frontier markets.

Dubai World’s debt restructuring and a recovery in the emirate’s property market bodes well for growth, according to Silk Invest. Emirates Telecommunications Corp., the U.A.E.’s largest phone operator, and Dubai’s government also plan sukuk sales as near-zero interest rates in the U.S. and Japan drive investors to emerging markets. Net inflows into developing nation debt reached a record $53.1 billion in 2010, said Cambridge, Massachusetts-based research firm EPFR Global.