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Thursday, 23 June 2011

Dubai shares decline to month-low on Fed growth forecast, MSCI

Dubai’s shares fell to the lowest this month after the Federal Reserve cut its growth forecast for the US economy and MSCI Inc delayed a decision to reclassify the UAEto emerging-market status.

Emaar Properties, the developer of the world’s tallest tower, lost 1.3 percent and Arabtec Holding Co, the UAE’s biggest construction company by market value, slumped to the lowest in almost a month.

The DFM General Index slipped 0.8 percent to 1,537.48, the lowest since May 30, at the 2 pm close in the emirate, bringing the loss for the week to 4 percent. Abu Dhabi’s ADX General Index dropped 0.6 percent, while Qatar’s QE Index retreated less than 0.1 percent.

MENA stock markets close - June 23, 2011

 ExchangeStatus IndexChange  
 TASI (Saudi Stock Market)
 DFM (Dubai Financial Market)
 ADX (Abudhabi Securities Exchange)
 KSE (Kuwait Stock Exchange)
 BSE (Bahrain Stock Exchange)
 MSM (Muscat Securities Market)
 QE (Qatar Exchange)
 LSE (Beirut Stock Exchange)
 EGX 30 (Egypt Exchange)
 ASE (Amman Stock Exchange)
 TUNINDEX (Tunisia Stock Exchange)
 CB (Casablanca Stock Exchange)
 PSE (Palestine Securities Exchange)

Dubai Holding says sold Axiom stake in Mannai deal

Dubai Holding, the conglomerate owned by the ruler of Dubai, sold a 14 percent stake in Axiom Telecom as part of Qatar Mannai Corp's stake buy in the Dubai-based mobile phone retailer, it said on Thursday.

Axiom sold a 35 percent stake to Mannai Corp last week after aborting an initial public offering in 2010, when it planned to list on the Nasdaq Dubai exchange by selling up to one-third of its shares.

Dubai Holding's unit, Emirates International Telecommunications LLC (EIT), will retain a 26 percent stake in Axiom after the sale, it said, but did not provide a value for the deal. It said the return on the sale was "attractive".

Abu Dhabi bank sues Credit Suisse, S&P over deal

Abu Dhabi Commercial Bank said Thursday it is suing Credit Suisse and credit rating agency Standard & Poor’s, alleging it was misled over a 2007 investment that went sour.

The case is the second filed by the Abu Dhabi government-controlled bank in New York involving complex financial instruments known as structured investment vehicles that fell prey to the credit squeeze brought on by the subprime mortgage crisis in the US.

ADCB alleges that Credit Suisse failed to disclose conflicts of interest and provided misleading information when packaging and selling the investment vehicle, which went by the name Farmington.

UAE's Majid Al Futtaim eyes 5-yr benchmark bond

UAE's Majid Al Futtaim Holding, is keeping a close eye on Europe's debt crisis as it assesses investors' appetite for a five-year benchmark-sized bond.

The sole franchisee of French hypermarket chain Carrefour in the Gulf is meeting investors after it set up a $2 billion global bond programme earlier this month.

"Investors prefer a five-year bond and this works for us too, Daniele Vecchi, senior vice president for treasury at MAF Group said on Thursday.

Moody's downgrades Aldar to B2 from Ba3; outlook changed to negative

Moody's Investors Service has downgraded the corporate family rating (CFR) and the probability of default rating (PDR) of Aldar Properties PJSC ("Aldar") by two notches to B2 from Ba3. Concurrently, Moody's has also implemented a two-notch downgrade to B3 from B1 of the ratings for Aldar's $1.25bn (EUR0.87bn) bond (due in 2014 and issued by Atlantic Finance Limited) as well as for its Dhs3.75bn (EUR0.71bn) sukuk (due in 2013 and issued by Sukuk Funding (No. 2) Limited).

The receipt of substantial and extraordinary financial support from the government of Abu Dhabi and Mubadala -- comprised of the anticipated reimbursement and proceeds from the transfer of certain assets to the government of Abu Dhabi totaling Dhs10.9bn; the sale of residential units and land to the government of Abu Dhabi for Dhs5.5bn; and the placement of a convertible bond worth Dhs2.8bn with Mubadala -- has reduced Moody's concerns with regards to the company's ability to meet maturing debt obligations during 2011 and the first half of 2012.

Whilst this support has alleviated short-term refinancing challenges, further extraordinary government support over the medium to long-term is in Moody's view less certain following public guidance provided by the government of Abu Dhabi in January 2011 in which it reiterated its position that it views Aldar as a private company. As a result Moody's is declassifying Aldar as a government-related issuer (GRI) and is now assessing Aldar's rating on its standalone basis while also incorporating the potential for shareholder support from Mubadala which results in a one-notch uplift to the final B2 rating.

Abu Dhabi mulls '11 bond issue,eyes debt ceiling-adviser

Abu Dhabi is likely to issue an international bond in the next 6-12 months and is considering a debt ceiling for the emirate and major government-related borrowers, a debt official said on Wednesday.

"I would expect we would come to the market within the next 6 to 12 months to refresh our benchmarks in the dollar market...5 or 10-year would be the natural thing to do for us," Lars Boman, senior adviser at Abu Dhabi's Debt Management Office, told a Euromoney conference.

The likely size would be "at least a billion" dollars, he later told reporters on the sidelines of the conference.

Millionaires' row shortens in the UAE

The number of dollar millionaires in the UAE has fallen for a second year as Dubai's property downturn and falling stock markets hit investors' wealth, a study shows.

The World Wealth Report from Merrill Lynch and Capgemini found numbers of high net-worth individuals (HNIs), classified as people with more than US$1 million (Dh3.67m) in liquid assets, fell 3.5 per cent to 52,600 last year - even though elsewhere in the world personal wealth has recovered to levels last seen before the global financial crisis.

"The impact here is that real estate plays a big role in the decline," said Tamer Rashad, the head of the Middle East at Merrill Lynch Wealth Management.

Qatar bourse plays down impact of MSCI decision

The Qatar Exchange (QE) yesterday said an MSCI upgrade would not have made much of an impact on the underlying economic strength of the county. But the bourse said it is working with regulators and other stakeholders to improve the market infrastructure.

Financial experts find a ray of hope as they feel the main issue of foreign ownership will be sorted out to the best interests of the country and its corporate sector, especially in view of the renewed buoyancy in the domestic economy.

“A future upgrade to emerging market status will confirm the progress on the market infrastructure front, but does not impact the underlying economic strength of Qatar,” a spokesman for the Qatari bourse, in which NYSE Euronext holds a 20% stake, said in response to MSCI’s decision to extend the review period for potential reclassification.

UAE is the global centre for Islamic finance: Al Awadi

Industry experts highlighted key challenges, business prospects and export opportunities in various key markets in the Islamic finance sector at a forum hosted by Dubai Exports.

The forum, held in partnership with Zawya, a leading provider of financial information in the MENA region, brought together leading local and international scholars and practitioners from the sector. It also showcased presentations about Islamic finance opportunities in Germany, Africa, Indonesia and the Arab World as well as the Takaful sector.

Dubai has shown that it can be innovative through the development of new Shariah-compliant products to meet the needs of an ever increasing and sophisticated investor. Ensuring that the UAE is the global centre for Islamic finance, Engineer Saed Al Awadi, Chief Executive Officer, Dubai Exports, stated, “Two years ago we decided to start promoting UAE’s capabilities and expertise in Islamic or Shariah compliant financial services to major markets abroad. We were not surprised by the overwhelmingly positive response to the mission and the successful outcomes that have been achieved to date. I strongly believe that as the leaders and pioneers in the sector our firms have the necessary expertise to channel this sector in international markets."

UAE, Qatar stock markets remain on the frontier

Efforts by the UAE and Qatar to become leading world financial centers took a step back on Tuesday after MSCI Inc. — whose indices are used by international investors to decide how to allocate their capital — put off a decision on whether to upgrade the two Gulf countries’ status.

MSCI said it would wait until December to decide if the countries’ stock markets met the criteria to be considered “emerging markets,” a rise in status from their current designation as “frontier markets.”

The decision to wait six months and reconsider is unusual, as MSCI announces such changes once a year.

Key takaful industry booming in Bahrain

The takaful industry in Bahrain is booming as people are favouring Sharia-compliant insurance.

Takaful total contributions grew by 16.5 per cent to reach BD13.4 million ($35.6m) in the first quarter of the year compared with BD11.5m for the same period last year, according to the Central Bank of Bahrain (CBB).

But traditional insurance still took the largest share of the market, down slightly at BD43.3m in the first quarter compared to BD44.1m last time.

UAE acts to bridge northern divide

A man drives his bicycle in a street of Ras al-Khaimah
Low-rise: much of Ras Al-Kheimah is a world away from the wealth of Abu Dhabi and Dubai
Less than 300km separates Ras Al-Kheimah from the United Arab Emirates’ capital territory of Abu Dhabi, but its neighbourhoods of low cement buildings and dusty cars feel as if they are in a different country.  

While Dubai has its glitz and Abu Dhabi its oil and cultural ambitions, Ras Al-Kheimah – known locally as RAK – churns out the cement and glass that helped turn its southern neighbouring emirates into internationally known cities.  

Those contrasting images have taken on new significance as uprisings across the Arab world have highlighted the potentially damaging impact of economic divisions being ignored by governments. - Middle East: Companies struggling to find top talent

Governments from Morocco to the Gulf are rushing to create jobs for their millions of young people in the wake of violent unrest in a succession of Arab countries. At the same time, multinational and local businesses are struggling to find skilled labour.

Nearly two-thirds of Egyptians, in a recent poll, cited lack of jobs and poverty as the primary reason they supported the revolution.

But at the top, companies fight for the region’s highly skilled workers, those equipped with both the technical and the soft skills needed to compete on international markets.