Thursday, 31 December 2009
ANALYSIS - After tough year, Dubai expats pack up, eye Asia
For lawyer Wilfred Goh, the sign it was time to leave Dubai came early in 2009, when the financial crisis took its toll, plunging the emirate's main stock index down roughly 70 percent in a matter of months.
After speaking to friends and government officials, Goh decided to return to Asia, with the thought that Hong Kong, China or Singapore offered better job opportunities. Goh, 47, eventually got a job back home in Singapore.
"We just felt Dubai's economic climate was not very good and they had started to retrench people," said Goh, who works at the Central Chambers Law Corp in Singapore.
After speaking to friends and government officials, Goh decided to return to Asia, with the thought that Hong Kong, China or Singapore offered better job opportunities. Goh, 47, eventually got a job back home in Singapore.
"We just felt Dubai's economic climate was not very good and they had started to retrench people," said Goh, who works at the Central Chambers Law Corp in Singapore.
Kuwait's Global seeks s/holder nod for debt plan
Shareholders of Kuwait's Global Investment House (GLOB.KW), which defaulted on most of its debt last year, will vote on a restructuring deal to transfer its main investments and real estate assets to two new units.
FINANCIALS
The vote will take place on Jan. 12, the company said on Thursday in a statement to the Kuwait bourse.
Global reached a deal with creditors this month to reschedule $1.7 billion in debt, and entered into new three-year facilities with each of its 53 lending banks. [ID:nGEE5B90V7]
FINANCIALS
The vote will take place on Jan. 12, the company said on Thursday in a statement to the Kuwait bourse.
Global reached a deal with creditors this month to reschedule $1.7 billion in debt, and entered into new three-year facilities with each of its 53 lending banks. [ID:nGEE5B90V7]
Qatar buys 5 pct stake in local banks
Qatar's sovereign wealth fund took a 5 percent stake in listed banks' capital, the second stage of a previously announced move aimed at boosting confidence.
Two weeks ago, Finance Minister Youssef Kamal said the Gulf Arab state will spend $900 million on buying the stakes by year-end as part of its measures to support the banking system.[ID:nWEA5559]
The Qatar Investment Authority (QIA) subscribed to the capital increase in national banks on Wednesday, Qatar's news agency said. It did not give financial details.
Two weeks ago, Finance Minister Youssef Kamal said the Gulf Arab state will spend $900 million on buying the stakes by year-end as part of its measures to support the banking system.[ID:nWEA5559]
The Qatar Investment Authority (QIA) subscribed to the capital increase in national banks on Wednesday, Qatar's news agency said. It did not give financial details.
Dubai sees 2010 budget deficit at 2 pct
Dubai may see a budget deficit of 2 percent of gross domestic product next year, but the proposal still needs to be approved, the head of the Gulf emirate's budget committee told Reuters on Thursday.
Dubai, a member of the United Arab Emirates federation, received a last-minute bailout from fellow emirate Abu Dhabi earlier this month to avoid a default on billions of dollars worth of debt of one of its flagship companies.
"The deficit in Dubai's budget is 2 percent of gross domestic product of 300 billion dirhams ($81.68 billion) projected for 2009," Dhahi Khalfan Tamim said in a telephone interview.
Dubai, a member of the United Arab Emirates federation, received a last-minute bailout from fellow emirate Abu Dhabi earlier this month to avoid a default on billions of dollars worth of debt of one of its flagship companies.
"The deficit in Dubai's budget is 2 percent of gross domestic product of 300 billion dirhams ($81.68 billion) projected for 2009," Dhahi Khalfan Tamim said in a telephone interview.
Happy New Year, 2010 will be a more positive year than 2008/9 have been!
This gentleman seems to be prepared for all eventualities in 2010!
ADX rose by 13% in 2009 outperforming most markets (Interview)
The global fiscal distress wreaked havoc in most markets in the last months of 2008 and its effects continued to reverberate through 2009. It was a hard year for most of them, including the Abu Dhabi Securities Exchange (ADX) although it ended 2009 higher by almost 13 per cent.
The growth has apparently tempted foreign investors, whose net purchase more than doubled in the second half, according to its Deputy Chief Executive and Director of Operations Rashed Al Baloushi.
In an interview with Emirates Business, Baloushi said ADX outperformed most other markets in 2009 and the process of its development would continue.
He supported the creation of a bond market in the UAE and said plans to introduce exchange trade funds (ETFs) to ADX could materialise in 2010. But derivatives could be delayed.
The growth has apparently tempted foreign investors, whose net purchase more than doubled in the second half, according to its Deputy Chief Executive and Director of Operations Rashed Al Baloushi.
In an interview with Emirates Business, Baloushi said ADX outperformed most other markets in 2009 and the process of its development would continue.
He supported the creation of a bond market in the UAE and said plans to introduce exchange trade funds (ETFs) to ADX could materialise in 2010. But derivatives could be delayed.
Bankers bracing for more bad loans
Banks are bracing for an escalation in bad loans in the new year as defaults spread throughout the financial system and attention shifts from retail to corporate customers in the wake of the Dubai World debt restructuring.
Non-performing loans were once considered a minor issue that would work its way through the system in a matter of months, but most analysts now expect the volume of bad loans at banks to crest next year before gradually receding as they are written off.
“We expect non-performing loans to peak by mid-next year,” said Janany Vamadeva, a banking analyst at HC Securities in Dubai. “A non-performing loan takes six months to be reflected in the books, even after things improve. Even in corporate loans, asset quality is deteriorating.”
Non-performing loans were once considered a minor issue that would work its way through the system in a matter of months, but most analysts now expect the volume of bad loans at banks to crest next year before gradually receding as they are written off.
“We expect non-performing loans to peak by mid-next year,” said Janany Vamadeva, a banking analyst at HC Securities in Dubai. “A non-performing loan takes six months to be reflected in the books, even after things improve. Even in corporate loans, asset quality is deteriorating.”
Analyst: MGM Mirage Still Has Capital Needs
A "reasonably successful" CityCenter phased opening in Las Vegas and a potential Macau initial public offering are good news for MGM Mirage, but the need for more capital weighs on the casino operator, an analyst said Wednesday.
David Katz of Oppenheimer said in a client note that MGM Mirage's management anticipates CityCenter will report 2010 margins in the low 20 percent range, compared with his previous 12 percent estimate. Katz said the company's margin forecast could be optimistic, but he raised his estimate for CityCenter's earnings before interest, taxes, depreciation and amortization to $196 million from $136 million and increased the casino operator's price target to $9 from $8.
While management is upbeat on CityCenter's prospects, Katz feels the stock price already reflects this potential. He maintained a "Perform" rating.
David Katz of Oppenheimer said in a client note that MGM Mirage's management anticipates CityCenter will report 2010 margins in the low 20 percent range, compared with his previous 12 percent estimate. Katz said the company's margin forecast could be optimistic, but he raised his estimate for CityCenter's earnings before interest, taxes, depreciation and amortization to $196 million from $136 million and increased the casino operator's price target to $9 from $8.
While management is upbeat on CityCenter's prospects, Katz feels the stock price already reflects this potential. He maintained a "Perform" rating.
Bahrain GFH takes $300 mln Dubai project provision
Bahrain's Gulf Finance House (GFH) said on Wednesday it had taken a provision of $300 million over its exposure to a Dubai development project.
"Gulf Finance House ... will take a $ 300 million (non-cash) charge against its proprietary Dubailand position and correspondingly reduce the liabilities on its balance sheet by $290 million," the company said in a statement.
"GFH has no remaining material exposure to Dubai."
"Gulf Finance House ... will take a $ 300 million (non-cash) charge against its proprietary Dubailand position and correspondingly reduce the liabilities on its balance sheet by $290 million," the company said in a statement.
"GFH has no remaining material exposure to Dubai."
Analysts bullish on Gulf companies
Research on Gulf companies and industries has ballooned in recent years, pushed by increasing international interest in the oil-rich region’s listed companies.
So what do research analysts think of the region’s corporate world? In spite of criticism from some quarters for their negativity, analysts are largely positive about the future for most Gulf companies.
Of 95 research notes in November covered by Markaz, a Kuwaiti investment bank, 55 per cent had a “buy” rating, 34 per cent said “hold” and less than 12 per cent urged investors to “sell” their shares. In October, when the bank started its coverage of research notes, 50 per cent had “buy” recommendations.
So what do research analysts think of the region’s corporate world? In spite of criticism from some quarters for their negativity, analysts are largely positive about the future for most Gulf companies.
Of 95 research notes in November covered by Markaz, a Kuwaiti investment bank, 55 per cent had a “buy” rating, 34 per cent said “hold” and less than 12 per cent urged investors to “sell” their shares. In October, when the bank started its coverage of research notes, 50 per cent had “buy” recommendations.
Investors warned against Dubai bail-out bets
Moody’s, the credit ratings agency, has cautioned investors against betting on further bail-outs of Dubai’s state-linked bonds by the emirate’s wealthier neighbour, Abu Dhabi.
State-owned Dubai World rattled global markets in late November by seeking to restructure about $26bn of its debts, but Abu Dhabi at the last minute stepped in with a $10bn loan. This allowed the settlement of a $4.1bn bond repayment due on December 14 at Nakheel, Dubai World’s developer.
Officials have publicly insisted that the bail-out should not be seen as a precedent, but Dubai is understood to be considering the full repayment of other bonds at Dubai World.
State-owned Dubai World rattled global markets in late November by seeking to restructure about $26bn of its debts, but Abu Dhabi at the last minute stepped in with a $10bn loan. This allowed the settlement of a $4.1bn bond repayment due on December 14 at Nakheel, Dubai World’s developer.
Officials have publicly insisted that the bail-out should not be seen as a precedent, but Dubai is understood to be considering the full repayment of other bonds at Dubai World.
Rare flicker of democracy
A throng of Abu Dhabi residents draped in the flags of the United Arab Emirates massed around the entrance to a sprawling conference centre this month, queuing for a rare taste of democracy in the emirate.
“Vote for Abu Dhabi First. We strengthen our economy,” said a hoarding bearing the images and numbers of the party’s candidates. Pamphlets were distributed, deals were made, hands shaken and campaign promises reiterated by candidates.
Rather than parliamentary elections – which remain rare and often symbolic affairs in the autocratic Gulf – the candidates were seeking to win board memberships to the Abu Dhabi Chamber of Commerce and Industry.
“Vote for Abu Dhabi First. We strengthen our economy,” said a hoarding bearing the images and numbers of the party’s candidates. Pamphlets were distributed, deals were made, hands shaken and campaign promises reiterated by candidates.
Rather than parliamentary elections – which remain rare and often symbolic affairs in the autocratic Gulf – the candidates were seeking to win board memberships to the Abu Dhabi Chamber of Commerce and Industry.
Dubai’s restructuring continues to reverberate
The relief was palpable when Abu Dhabi injected $10bn into Dubai’s Financial Support Fund, averting a possible default of the $4.1bn sukuk issued by construction firm Nakheel.
But while this appears to have calmed the turmoil triggered some weeks ago by the Dubai government’s announced restructuring of Nakheel’s parent, Dubai World, we would caution against complacency. Not only is the rebuilding of Dubai’s reputation as a reliable international borrower likely to be a drawn-out process, but the consequences of recent events for the corporate and macroeconomic landscape are also likely to remain profound.
Therefore, sharp reversals in credit ratings – or indeed in investors’ perceptions – should not be immediately assumed.
But while this appears to have calmed the turmoil triggered some weeks ago by the Dubai government’s announced restructuring of Nakheel’s parent, Dubai World, we would caution against complacency. Not only is the rebuilding of Dubai’s reputation as a reliable international borrower likely to be a drawn-out process, but the consequences of recent events for the corporate and macroeconomic landscape are also likely to remain profound.
Therefore, sharp reversals in credit ratings – or indeed in investors’ perceptions – should not be immediately assumed.