Tale of two SWFs

As the world moves closer to the end of the credit crisis, sovereign wealth funds around the world are experiencing mixed fortunes.

Good news comes from Singapore’s SWF Temasek, which springs back into gains with its portfolio climbing 32 percent between April to end-July after a 30 percent loss in the year to end-March.

Announcing its annual performance report (which should please the country’s taxidrivers), Temasek said it is open to investing in financials and resources in the long term and it has bought stakes in South Korea’s ENK, cylinder suppliers, and Brazil’s oilfield services firm San Antonio.

Dubai World Transfers Hotels, Property to Istithmar (Update2)

Dubai World, a state-owned holding company, said it transferred select hotel and real-estate assets, mainly in international markets, to its private equity company Istithmar World PJSC as part of a reorganization.

Hamza Mustafa will join Istithmar World from Nakheel PJSC, a property company within the same group, as managing director with responsibility for the hotels and buildings transferred to Istithmar, Dubai World said in an e-mailed statement today.

The restructuring is “positive because it means they realize the problems they have and they are working at solving them,” said Rami Sidani, who manages $250 million as head of Middle East and North Africa at Schroder Investment Management Ltd. in Dubai. “The restructuring is needed to cut costs, consolidate debt and make sure that obligations are monitored.”

FTSE Group promotes UAE, demotes Argentina

Global index provider FTSE Group said Thursday it will promote the United Arab Emirates to a so-called secondary emerging market status within the FTSE Global Equity Index Series starting in September 2010. FTSE will also downgrade Argentina to frontier status from secondary emerging, while Malta will be included as a frontier market. The index provider will also add the Czech Republic, Malaysia and Turkey to a watch list for possible future promotion to advanced emerging-market status. FTSE keeps a watch list of countries it's actively monitoring for possible promotion and demotion between developed, advanced emerging, secondary emerging and frontier status. Following the latest review, Iceland will be removed from the list, while China "A" shares, Colombia, Greece, Kazakhstan, Kuwait, Taiwan and Ukraine will remain on the list

Saad Group owner cuts stake in Samba-Saudi bourse

Maan al-Sanea, the owner of Saudi-based private conglomerate Saad Group, reduced his stake in Samba Financial Group 1090.SE by at least 2.8 percentage points on Wednesday, stock exchange data showed.

Before Wednesday's close Tadawul data showed that Sanea held a 7.8 percent stake in Samba, which is the country`s second biggest lender by market value. After Wednesday's close Sanea's name did not appear on the list of Samba shareholders holding stakes of 5 percent or more.

The reduction of Sanea's stake in Samba follows a report on Wednesday by Dubai-based al-Arabiya television channel which quoted unidentified sources as saying that he had reached a settlement over debt owed to Saudi lenders. [ID:nLG193930]

Qatar's five year surpluses hit $32.2 bln

Qatar has accumulated fiscal surpluses of 124.6 billion Qatari riyals ($34.2 billion) over the last five years due to rising oil and gas revenues and due to a growth in returns on its investments, Doha-based Al Arab daily reported on Thursday.

This coincided with massive spending on public projects and other projects at an annual growth rate of no less than 30 percent, the paper reported citing central bank data.

The world's largest exporter of liquefied natural gas has accumulated revenues of 460.9 billion riyals over the last five years while it spent 336.3 billion riyals over the same period, Al Arab added.

Most of the country's surpluses are invested overseas through its sovereign wealth fund, the Qatar Investment Authority, the daily said.END

UPDATE 1-Dubai World shuffles management at Istithmar World

Government conglomerate Dubai World shook up the management ranks at its Istithmar World unit on Thursday, shifting executives from developer Nakheel as part of its restructuring.

The changes come amid speculation that Istithmar World, the investment arm of the Dubai government and owner of U.S. luxury retailer Barneys New York [DBWLDB.UL], may be facing difficulties.

A media report last week said Istithmar World is freezing investments as part of a restructuring that may result in the sale of the fund or its assets. [ID:nBNG437413]

GCC Market Review –September 2009 (PDF)

With the exception of Saudi Arabia, all GCC markets remained buoyant during August-09 on the back of surge in crude oil prices and positive indicators from world markets. Oman, Qatar and Kuwait in particular witnessed significant gains with these markets increasing by 8.5%, 7.0% and 6.4% respectively.

The investor’s sentiment continued to be positive from last month in line with better than expected corporate results announced for the first half ending in June 30, 2009. As per the UAE’s economy minister, the UAE economy has overcome the worst of the crisis and will see more growth by the end of the year. Economic activity will move gradually upwards in the fourth quarter of this year and the first quarter of 2010. Oil prices sustaining its levels too helped the market to continue to remain buoyant. Price of OPEC Basket crude consistently remained around US$70 a barrel to average US$71.35 a barrel for August, an increase of 10% over July average. Going forward, we expect the market to still be impacted by oil prices and movements in international markets. However, trading activity is expected to be low on account of the holy month of Ramadan and subsequent Eid holidays.

Saudi Stock Market Weekly Report - 16-September-2009

Discern signal from noise

What makes stock markets go up? A simple answer would be that there are more buyers than sellers.

A more textbook response is that “efficient” markets rise when the perceived net present value of future cash flows of index constituents increases. By considering the shifting balance between the longer-term trades that work on this basis and actually move markets – the so-called “signal” – and reactive trades around this volume – the “noise” – we can gain insight into how markets such as the Middle East evolve.

With institutions owning the majority of shares in developed markets, one would imagine that most of the volume would be signal – nice long-term flows based on fundamental analysis of how the world’s largest companies are handling today’s conditions.

Arab market asset management rebounds

Data from Lipper, the fund data collator, show the scale of the hit taken by funds domiciled in the Arab world since the collapse of Lehman Brothers – but also a tentative recovery.

At the end of July last year, total assets under management in funds domiciled in the eight Arab markets monitored by Lipper, were $64bn; by the end of the year, in the middle of the worldwide financial meltdown, that figure had fallen 21 per cent to $50.4bn. But by the end of July this year assets under management had rebounded to $56.9bn. Unsurprisingly, equity funds have been particularly badly affected.

“There has been a shift in appetite towards more conservative products. I think equity products are a hard sell. But that is not necessarily the case for fixed income or products which have better liquidity,” says Giyas Gokkent, economist at National Bank of Abu Dhabi.

Wheels come off car sales

T he Gulf region has been a goldmine for car manufacturers and dealers in recent years. Public transport is often negligible and roads are full of expensive four-wheel drives, luxury convertibles and cheaper Japanese cars.

For many white-collar immigrants, an upmarket car they could never afford in their home countries has become an integral part of the expatriate lifestyle. A luxury vehicle is perhaps even more important to local people, who often have the wealth and secure jobs to buy top-of-the-range models.

Combined with cheap fuel, banks’ willingness to lend and the fact that cars rarely last long in the humid, dusty environment of the Gulf, this has made the region a lucrative one for car dealers and manufacturers.

Saudi, foreign banks agree to reschedule Saad debt

A group of Saudi Arabian and foreign banks has reached an agreement with the Saad Group on refinancing the company’s debt reported Bloomberg, citing two people familiar with the situation.

The Saudi government set up a committee to look into the debt of Saad Group and Ahmad Hamad Algosaibi & Bros Co.

Saad Group said on 2 June it will restructure its debt after events in the Bahraini banking sector led to a “short-term liquidity squeeze.”

Iran plans $1.4 bln gas bond offering

Iran plans to offer a 1 billion euro ($1.40 billion) bond by December to help finance development of its largest natural gas field, the Oil Ministry website SHANA on Wednesday quoted a senior official as saying.

Iran plans to invest around $40 billion to develop the South Pars field through 2015.

The field is part of the huge formation shared with Qatar that makes up the world's largest pure gas reserve.

Dubai builds, but they don’t come

There is something surreal about the financial crisis that has engulfed Dubai.

A small desert emirate, without significant hydrocarbon reserves, Dubai finds itself geared to the eyebrows in the midst of a global downturn. Deutsche Bank estimates its external debts at about $74.3 billion. That, for the record, is 107 percent of the emirate’s expected 2009 GDP, or more than 14 times its government revenues for 2006 (the latest year for which data is available).

But it isn’t just the extreme leverage that is surreal. Dubai has long borrowed heavily to invest. The real twist comes from the wacky way that Dubai has chosen to invest its borrowed cash.

Unconventional Wisdom on Dubai

Most progressives view the Dubai Ports World uproar as one of the only times the Bush Administration bent to the will of the people, backing down from allowing the Emirate-owned business to take over management of several major ports along the U.S. eastern seaboard.

A new book, City of Gold: Dubai and the Dream of Capitalism paints a very different picture of the events and politics leading up to the nixing of the Dubai deal, and most squarely lays blame for anti-Arab hysteria surrounding the deal at the feet of two Democrats: Sen. Charles Schumer and Secretary of State Hillary Clinton (both were New York Senators at the time).

While this argument is likely to draw fire from HuffPost readers, this unconventional wisdom is worth a read, particularly as the U.S. seems poised to begin talks with Iran, and to repair relations with Arabs and Muslims after the Bush debacle in Iraq. It appears the United States could learn much from the way Dubai is able to have strong, symbiotic relationships with the U.S, Iran and even Israel, through a diplomacy of tolerance (both public and private) and a belief that business can sometimes achieve what politics cannot.