#GCC and #MiddleEast Finance News: 29 Jul 2009

Wednesday 29 July 2009

Dubai's Mashreqbank Q2 net profit falls 38 pct

DUBAI, July 29 (Reuters) - Mashreqbank MASB.DU on Wednesday reported a 38-percent drop in quarterly net profit, citing increased provisions against bad loans.

Mashreqbank, the largest lender by market value in Dubai, said net profit fell to 435 million dirhams ($118.4 million) from 706.86 million dirhams in the same period in 2008.

Mashreqbank booked provisions of 319 million dirhams in the quarter. Total provisions stood at 551.4 million dirhams in the first half of 2009, compared with 200.3 million dirhams in the same period last year, it said.

A slew of Gulf lenders have been forced to boost provisions as they face an economic downturn, and against their exposure to a pair of troubled Saudi firms.

The provisions "are key to ensuring that the bank operates in a sustainable manner while the ups and downs of the current crisis play out," Chief Executive Abdul Aziz Al Ghurair said.

Mashreqbank last week confirmed it was suing Ahmad Hamad Algosaibi & Bros, one of the two Saudi companies at the heart of a large financial dispute. [ID:nLL566732]

Mashreq's Tier 1 ratio - a measure of financial strength - now stands at 14.8 percent, a level it achieved following help from the government and by reducing risk-weighed assets. ($1=3.673 Uae Dirham) (Reporting by Nicolas Parasie; editing by Simon Jessop)END

'Get back to basics,' Dubai urged

With the global economy going through one of the most challenging periods of economic stress in generations, Dubai’s future domestic economy must focus heavily on continuing to attract expatriates and foreign companies, says a leading property developer.

“I believe we will soon see the bottom of the current crisis but if we are to avoid a recovery like the boom and bust cycle of the recent past, Dubai must return to the basics which first put it on the map,” said Mohammed Nimer, CEO of mid-market development company MAG Group Properties.

“Dubai was hugely successful before the real estate bubble,” said the boss of a company with AED3 billion worth of construction projects in the United Arab Emirates. “As the Arabian Gulf’s most globalised economy, Dubai’s existence has been driven by its power to attract foreign direct investment and the resources necessary to make it work.

Creditors near deal with Global

Global Investment House, a struggling Kuwaiti investment company, is close to an agreement with its creditors on a possible restructuring of its debt, according to a banker familiar with the negotiations.

The restructuring will mean that Global, which defaulted on a $200m syndicated loan mostly from international banks in December, will pay back its creditors in full in return for which it is seeking to extend the maturity of the loans.

"Global has taken a very co-operative approach to the restructuring process," the banker told the Financial Times. "Unlike many institutions in the region, Global has continued to service its debts and intends to fully repay its loans."

When is an SWF not an SWF?

Image via Wikipedia

For a secretive kind of outfit, Temasek is certainly generating a lot of publicity these days. Following the storm of media interest last week over news of the sudden departure of its chief executive-designate Chip Goodyear, the Singaporean state investment agency is again in the news.

This time, the Temasek newsmaker is none other than Ho Ching, the SWF’s low-profile chief executive, wife of Singapore’s prime minister and a renowned shunner of media interviews.

In a rare public appearance on Wednesday, Ho in a speech in Singapore acknowledged that the value of Temasek’s assets may have slumped by more than S$40bn ($27.7bn) in the year through March. The fund had predicted last year a 16 per cent probability that the value of its assets may drop by more than S$40bn in the year through March, she said.

Federation of Euro-Asian Stock Exchanges Newsletter July 2009 (PDF)

Here are some headlines from this issue:

ABU DHABI SECURITIES EXCHANGE
Non-GCC investors were net buyers on ADX in the first half of 2009 announced Tom Healy, Chief Executive of Abu Dhabi Securities Exchange. Giving details of first half performance and trading statistics, Mr Healy also said that the ADX Index, market capitalisation and volumes were all up in the first half of 2009.

BAKU INTERBANK CURRENCY EXCHANGE
The General Manager of the Baku Interbank Currency Exchange (BBVB) F.F.Amirbekov has taken part on the 2nd July of 2009 on general meeting of the International association of exchanges-CIS countries (IAEx of CIS), passed in St.-Petersburg (Russia).

BELARUS
The Executive Board of the International Monetary Fund (IMF) today completed the first review of Belarus’s performance under a program supported by a Stand-By Arrangement (SBA) and increased the financial support to SDR 2.27 billion (about US$3.52 billion), equivalent to 587 percent of Belarus’s quota or 7 percent of its GDP.

BOSNIA AND HERZIGOVINIA
The Executive Board of the International Monetary Fund (IMF) today approved a 36-month SDR 1.01 billion (about US$1.57 billion) Stand-By Arrangement for Bosnia and Herzegovina to support an economic program designed by the authorities to mitigate the effects of the global financial crisis.

EGYPT
Egyptian President Mohamed Hosni Mubarak issued Presidential Decree No. 192/2009 concerning the principle system of the General Authority for Financial Supervision.

TEHRAN STOCK EXCHANGE
Tehran Stock Exchange appointed Dr. Abulfazl Sharabadi as Director of its newly established Public Relations & International Department. "We will be able to introduce and release our high volume of activities and performance to the public by a dynamic Public Relations & International Department" said Dr Ghalibaf Asl, managing director of TSE, in an introduction meeting.

Emaar merger to reshape Dubai property market

Image by Getty Images via Daylife

The recently proposed merger between Dubai real estate developers, Emaar Properties and units of Dubai Holding Commercial Operations Group (DHCOG), will have big ramifications for the local market, ratings agency Moody's Investors Service said in a report on Tuesday.

"Moody's recognises that consolidating Emaar and DHCOG's real estate interests into one entity will create a new giant in Dubai's market, with unrivaled access to a sizable land bank," said Martin Kohlhase, an associate analyst in Moody's Corporate Finance Group based in Dubai.

"Furthermore, several drivers - such as the opening of Dubai's Metro (public transportation system), the inauguration of Burj Dubai (the world's tallest skyscraper) and the end of the school year/beginning of the summer period - will shape Dubai's residential property market in the near term and lead to greater differentiation within Dubai's residential areas, from which Emaar and DHCOG's real estate divisions may benefit," he added.

UAE projects worth over $300 billion on hold

Over 400 projects worth more than $300 billion have been placed on hold or cancelled in the United Arab Emirates due to the global financial crisis, Dubai-based research firm Proleads Global said on Tuesday.

The construction sector in the UAE will stabilise this year and is expected to show signs of recovery in 2010, the firm said, adding multiple projects in several sectors are scheduled for completion up to 2011, with most in 2010, it said.

'The study identifies a slowdown in new projects in the commercial and retail; education and healthcare projects being placed on hold more often than in the past; a slowdown in leisure and entertainment and an increasing rate of cancellations in the residential sector,' the report added.

Love ‘em or hate ‘em, they still have to rate ‘em

The ratings agencies have had a bad crisis. Many have blamed them – and by “them” I mean mainly the big three of Moody’s, Standard & Poor’s and Fitch – directly for the subprime crisis that lit the fuse on the global credit crunch.

The US authorities are in the process of a thorough reform of the raters to pre-empt the possibility that such a fiasco could recur.

Gulf corporations have had a love-hate relationship with the raters for some time now. Before the crisis hit the region last year, corporate treasurers were falling over themselves to get that elusive “AAA” star prize that meant they could get the best possible terms in international capital markets.

Laid off Kuwaitis start to fight back

Khaled al Duwaisan was in hospital for two days when he checked his phone’s inbox expecting to see supportive messages from family and friends. Instead, it was a message from his boss, and the news was not good: he had been fired.

“Why didn’t they talk to me, I am a human being,” Mr al Duwaisan said. “There was no clear reason. They only mentioned the economic problem.”

Mr al Duwaisan said he had been working for the Islamic financial institution Investment Dar for a year and a half before his job was terminated this May when he took a week off to seek treatment in hospital.

UAE stocks are positive July 28th (Re-post)

The important stocks, and you should know what they are if you read this blog, look very strong, whether they lost some or gained more today.

Abu Dhabi’s stocks gained some more relative to Dubai’s, and that is just the ADX DFM General Index Ratio readjusting the ratio after the extreme moves of the past several trading sessions.

Even if stocks lose a few more percentage points in this last week of July, the bounce has been powerful for most liquid stocks. The great thing for traders who use charts is that the dramatic early to middle July plunge helped explore where important support levels lie. Some stocks revealed dangerous weakness, like Emaar Properties, and Al Dar and Sorouh. Other stocks reaffirmed their strength and their leadership, like ARMX, ARTC and AABAR. AABAR is probably the weakest of the three as seen in the recent panic attack.

In Teetering Dubai, A New Metro And World’s Tallest Building Are About To Debut (Photo Tour) [Re-post]

Oh, Dubai. Sometimes we wish you success, because you’re so funny. Other times we can’t wait till you run out of oil and just turn back into a desert wasteland, because you’re so gross.

Of late, the Gulf city-state has been trending somewhere between those two courses. They’ve shut down all kinds of massive half-baked construction projects, but are pushing ahead on a select few. Most notable in the “pushing ahead” category are the world’s tallest building and the city’s new metro system (exempted on the “half-baked” count). The powers that be in Dubai have been planning a grand simultaneous unveiling of the two in September, in fact — seeing it as a perfect opportunity to get massive amounts of media attention and declare to the world, “We’re still actin’ all rich!”

Sadly, there’s a hitch. Construction on the Burj Dubai, the 206-story luxury residential and office tower–space will supposedly go for $3,500/square foot and up–is running behind schedule, and will not be complete by September. So the metro–which features a “Gold class” section for “VIPs”–will debut alone and therefor won’t get anywhere close to as much media attention.

Abu Dhabi group backs Branson’s space tourism push

An Abu Dhabi state-linked investment company is planning to buy a 32 per cent stake in Virgin Galactic, the commercial space venture of British entrepreneur Sir Richard Branson, in the latest sign of the oil-rich emirate’s rising ambitions.

Aabar Investments will pay $280m for the holding in the company, which was launched in 2004 and aims to start flying private passengers to space within two years at a cost of $200,000 per ticket.

The Abu Dhabi group also plans to invest an extra $100m to help pay for research that would give Virgin Galactic the option of launching small satellites from unmanned rockets.