Nasdaq Dubai -Stock Market News and reviews

Dubai International Jewellery Week - Millions of dirhams in sales reported during the show

2011-11-23T21:48:00.001-08:00

The 16th edition of Dubai International Jewellery Weekwhich ran from 10-13 November at the Dubai International Convention andExhibition Centre dazzled visitors with its extensive display ofrare gemstones, stunning jewellery collections, and lavish luxury lifestyleaccessories from the world’s leading brands.

The region’s largest and most influential jewellery show demonstratedits international standing with more than 270 exhibitors from over 25 countriesshowcasing the latest designs and trends to a discerning targeted audience ofjewellery lovers and trade professionals. Millions of dirhams in sales,confirmed orders and key business opportunities were reported during the fourday show.

Many exhibitors showcased show-stopping luxury lifestyle accessories andunique objets d’art, including a AED6.4 million precious CAIJOU healinggemstone bathtub, two of which sold on the opening day of the show and anothertwo which booked later the same day, a dazzling AED14 million ‘Mouawad’s 1001Nights diamond purse’ created by Mouawad Jewellers as well as the USD10,000gold sheesha from MSL Gold, who sold numerous pieces during the show.

“Dubai International Jewellery Week has consistently been a pivotalevent for the jewellery and precious metals market in the Middle East,” saidTrixee Loh, Senior Vice President of Dubai World Trade Centre, organiser of theevent. “The high calibre suppliers combined with the high net worth buyersprovides excellent return on investment for the exhibitors, and with localconsumer confidence at an all-time high, Dubai International Jewellery Week hasonce again provided the best opportunities for both companies and consumers.”

Hammer Group, the largest multi-national German jewellery group in theworld conducted sales with customers from all over the MENAregion. Marketing Manager, Ghassan Oueini, said: “This year’s showhas been even more successful than last year. We are thrilled to have achieveda number of sales and enquiries and were impressed by the quality and quantityof visitors from around the world. We received customers from Lebanon, Egypt,Jordan and Russia at our stand, highlighting the international reputation thatthe show holds.”

Commenting on the business opportunities enjoyed by exhibitor DhamaniJewellers, who sold tens of millions of dirhams worth of jewellery during theshow, Rohit Dhamani, Director said: “We have witnessed unprecedented levels ofbusiness at the show this year and are grateful for the support received fromthe show organisers from top to bottom. We have seen a big jump in visitornumbers across all segments - wholesale and private. Overall a number of dealshave been signed and contacts have been made with our target customers, so weare very happy.”

The importance of Dubai International Jewellery Week as a platform topresent the latest trends and designs to the region and the world was furtherdemonstrated at the third Dubai International Jewellery Design Awards. A much anticipated annual feature at the show,this year saw an exceptionally high standard of entrants across all segments.The designs of the top finalists in each themed category were crafted by theNational Institute for Vocational Education and were on display at the show.The winners also won an online jewellery design course relevant to their level,run by the Gemological Institute of America (GIA).

GCC Petrochemical Sector Quarterly - 2Q11

2011-08-11T04:11:00.001-07:00

· QoQ growth witnessed in benchmark crude oil prices in 2Q11.

· QoQ growth of 6.5% in 2Q11 profits; indicating satisfactory financial performance.

· Western economies unrest continue to threaten prices & regional sector in 3Q11.

· ‘Neutral’ stance on the sector.

Regional unrest & European economic worries lead upward movement in 2Q11 prices

During the quarter under review, international oil market and regional petrochemical sector mainly remained under the influence of two factors (i) ongoing turbulence in Libya, Yemen & Syria, which raised the average prices of benchmark oil to higher levels and (ii) economic fears in the European economies, which led minimal QoQ volumetric growth in regional petrochemical production. The average prices of OPEC, WTI and UK Brent indicated QoQ growth of 6.5%, 9.1% and 13.5%, respectively, in 2Q11. On the other hand, the average prices of ethylene, propylene, ammonia, urea and DAP registered QoQ increase of 3.5%, 6.8%, 11%, 8.3% and 6.8%, respectively, in 2Q11.

Financial performance

In 2Q11, the regional sales revenue (based on our GCC petrochemical coverage) registered QoQ growth of 9.8%, whereas the bottom line witnessed QoQ gain of 6.4% and recorded at USD3.3bn. We believe, the growth in the regional sector in 2Q11 was mainly associated with QoQ increase in the average prices of related products (as per our estimations for 2Q11). However, during 1H11, the regional petrochemical sector’s sales and net profitability registered YoY growth of 31.8% and 52.1%, respectively. In addition, the remarkable YoY growth during 1H11 was mainly associated with notable increase in the average prices of related products and production growth. Growth in production was mainly based on the improvement in capacity utilization and start of production from new expansions.

European debt crisis & aftermath of US debt-ceiling lead decline in 3Q11 prices

Global research believes the signing of US debt-ceiling negotiation to avert US from default is portraying additional challenges to oil market in 3Q11, including the potential cut in (i) government spending and (ii) the US ratings downgraded to AA+ from AAA by S&P. On the other hand, the ongoing European crisis will further deteriorate EUR from current levels in 3Q11. Hence, we believe the combined impact of these expected events will lead the prices of all benchmark oil to retreat from current levels; where the average prices of OPEC crude oil is expected to remain in a range of USD98/bbl - USD102/bbl in 3Q11. In addition, we are not expecting any notable impact of ongoing regional political unrest on crude oil prices in international market, during 3Q11.

Outlook for 3Q11

We expect the sector’s sales and net profitability will show limited QoQ growth of 0.2% & 1.1% in 3Q11, respectively. The limited QoQ growth in sector, despite of expected decline in prices of crude, is mainly associated with the expected commencement of QAFCO-V plant of IQ. Furthermore, we are expecting the sector will be able to show gross, operating and net profitability margins at 37.9%, 30.8% and 22.2%, respectively, in 3Q11.

Recommendation - Neutral

We reiterate our Neutral stance on the sector with SIPCHEM & IQ as our top pick for the sector in 3Q11.

Arabtec Holding (ARTC) - 2Q11 Results

2011-08-07T22:56:00.000-07:00

· Net profit down by 74% YoY to AED29.0mn.

· Results offer negative surprise against our expectations of AED48.4mn on lower margins and higher than anticipated SGA costs.

· Total backlog stood at AED13.9bn and is down by AED1.2bn QoQ.

· Total revenues down 5% YoY to AED1,217mn.

· Gross profit down by 25% to AED136mn.

· Gross margin stood at 11.2% compared with 14.0% in 2Q10.

· SG&A up by 91% YoY to AED94.1mn

· Minority interest share at 35% vs. 16% in 2Q10 (1Q11 minority share at 50.7%)

· Total trade receivables down 3.5% QoQ and 7.4% YTD to AED4.6bn

Analyst comments:

Arabtec posted a weak bottom-line and missed our forecast on lower margins and higher than anticipated SGA costs. Although gross revenues came down by 5% YoY, gross profit was hit hard and was down 24.6% YoY. Consequently, gross margins came down to 11.2% from 14.0% in 2Q10. SGA expenses too jumped 94% YoY, although QoQ are down by 23%. Backlog stood at AED13.9bn and is down 8% QoQ. Pace of project execution regionally remained slow and has impacted revenues while margins have been suppressed on account of higher fixed costs in Dubai and lower margins elsewhere.

Union National Bank (UNB) - 2Q11 Results

2011-08-01T02:42:00.000-07:00

· Net profit reported at AED415mn exhibits growth of 23%YoY on improvement in top-line

· Results are in line with our expectations of AED426mn (variance < 3%)

· Net interest income surges 27%YoY; Total income grew 10%YoY

· Fees & commission income was weak and declined 18%YoY; leads to drop in non-interest income

· Provisions remained high, up by 21%YoY, doubled QoQ

· NPL ratio increased by 10bps from previous quarter to 1.5% (excluding DW); coverage increased to 153%

· Net loans were down 0.6%YTD, deposits also remain stagnant (up 0.9%YTD)

· Capital adequacy is at 21.8%

Analyst comments:

UNB’s results were in line with our expectations while performance was good overall. Net interest income jumped significantly, catalyzed by improvement in NIM. UNB was expected to show an improvement in NIM due to a decline in cost of funds which in turn was an effect of a decline in benchmark interbank rates. NPL ratio increased slightly but remained within expectations while coverage increased to over 150%, ex-DW. Provisions increased as well, which seem to driven largely by general provisions – we believe that AED90 – 110mn of the AED150mn taken as provisions could be portfolio provisions. Resultantly, the ratio of portfolio provisions to CRWA increased from 0.78% in 1Q11 to 0.95% in 2Q11. Fee income and therefore total non-interest income was weak due to the new retail regulations; investment gains were higher but not high enough to offset the decline in fee income. We remain satisfied with the bank’s performance for the quarter though continuation of similar provisions and weak loan growth could lead us to revise our estimates for the full year

Dubai Financial Market - 2Q11 Results

2011-08-01T02:40:00.000-07:00

· DFM announced a net profit of AED14.7mn in 2Q11

· Net profit for 1H-11 witnessed a y-o-y decrease of 79.1%

· Expenses increased 17.6% in 2Q11 to reach AED29.2mn

· Investment income declined by 16.8% y-o-y in 2Q11

Analyst comments:

Dubai Financial Market (DFM) reported a net profit of AED16.9mn during 1H11, decreasing by 79.1% on a y-o-y basis. Net profit for 2Q11 stood at AED14.7mn compared to a net profit of AED27.2mn in 2Q10, and increased by 572% q-o-q from a net profit of AED2.1mn in 1Q11.

In 2Q11, trading commission fees (TCF) witnessed a 38% decrease in 2Q11 as compared to the same period a year ago, reaching AED26.9mn. During 1H11, TCF decreased 50.4% to reach AED52.4mn. Noticeably, Ownership transfer & mortgage fees witnessed a 620% increase during the 2Q11 as compared to the same quarter a year ago reaching AED16.3mn. This have proved that DFM is on course to diversify revenue streams away from TCF which enjoyed its share of revenue down to 53% in 2Q11 as compared to 75.1% in 1Q11 and 84.4% in 2Q10. According to the company, new flows of revenue are driven by listing fees, sale of market data and online advertising.

Raysut Cement Company – 1H11 Results

2011-07-24T05:19:00.000-07:00

· Net income reported during 1H11 was down by 34.8% at OMR8.89mn

· Revenue increased by 20.7% YoY during 1H11 aided by Pioneer Cement

· Gross margins during 1H11 declined to 26.8% as compared to 40.0% in 1H10

· Sales volume (clinker and cement) during 1H11 were down by 5.4% YoY

Analyst comments:Raysut cement company recorded net profit of OMR8.89mn in 1H11 as compared to OMR13.6mn in the same period last year. The decline in profit is attributable mainly to severe competitions faced by the Company both in the domestic and the export markets which impacted both volume and the realization prices. Numbers of 1H11 are consolidated, if we take the profits of Raysut alone the net income dropped by 44.4%. Global Research estimates for 2Q10 deviated by 8.2%. Competition drove the consolidated gross margins down to 26.8% in 1H11 as compared to 40.0% in the same period last year. Despite addition of Pioneer Cement, sales volume of clinker were down by 30% YoY while that of cement were marginally up by 0.6% during 1H11.

Saudi International Petrochemical Company (SIPCHEM) - 2Q11 Results

2011-07-17T02:12:00.000-07:00

Saudi InternationalPetrochemical Company (SIPCHEM) - 2Q11 Results - Snapshot

· Net profitability wasregistered at SAR165.4mn which indicated YoY growth of 88.6%.

· YoY gross profitregistered a growth of 67.4%, during the quarter under review.

· Operating profit stoodat SAR288mn in 2Q11 as compared to SAR172.3mn in corresponding quarterlast year.

Analyst comments:

The notable growth in Saudi InternationalPetrochemical Company (SIPCHEM) net profitability, during the quarter underreview, was associated with the improvement in the volumetric production fromnewly built Acetyl Complex. It is worth mentioning that the YoY volumetricgrowth was mainly based on increase in production from VAM plant which startedits commercial production from 3Q10. However, on quarterly basis, the company’sprofitability registered a growth of 36.8% over 1Q11, which was mainly due toQoQ increase in the average prices of related products and volumetricproduction. We will come up with updated investment recommendation once thecompany will publish its detailed financial statement for the period.

Saudi Electricity Company (SEC) - 2Q11 Results

2011-07-17T02:11:00.000-07:00

SaudiElectricity Company (SEC) - 2Q11 Results - Snapshot

· Net profit increase by25.0% YoY to SAR1,335mn, and rose by 96.2% YoY in 1H11

· Gross income increasedby 23.8% YoY (reaching SAR1,395mn)

· Operating incomeexpanded to SAR1,237mn, an increase of 26.9% YoY

· Earnings per shareincreased from SAR0.07 to SAR0.13 in June 2011

Analystcomments:

SEC’s recordedencouraging results in 2Q11 posting net profit increase of 25.0% (fromSAR1,068mn in 2Q10 to SAR1,335mn in 2Q11). The company’s 2Q11 results were nottoo different from our expectations, as actual results turned out to be higherby 12.4% from our estimates. The improved overall financial performance of thecompany in 2Q11 is largely attributed to higher subscriber tariffs and increasein the volume of energy sold. As we await detailed financials for moreelaborate analysis, Global Research estimates the company to record net incomeand asset growth of 13.2% and 10.2% YoY, respectively, in 2011. The companyusually generates higher revenues during the summer weather and this season thecompany was able to better capitalize on this, along with keeping tightercontrol over its operating costs. The company’s net profit recorded semi-annualincrease of 96.2% YoY (from SAR286mn in1H10 to SAR561mn in 1H11). The grossincome posted an increase 23.8% YoY (from SR1,127mn in 2Q10 to SR1,395mn in2Q11). The company’s improved top-line performance was translated well intohigher operating results that rose by 26.7% YoY, leading to semi-annualoperating income of SR354mn in 1H11 (as compared to SAR90mn in 1H10).

Saudi Real Estate Company (Akaria) - 2Q11 Results

2011-07-17T02:10:00.000-07:00

Saudi Real Estate Company (Akaria) - 2Q11 Results – Snapshot

· Gross profit grows 60%to SAR39.5 mn in 2Q11 compared to SAR24.8 mn in 2Q10

· Operating profit rises63% to SAR34.1 mn compared to SAR20.9 mn in 2Q10

· Net income at SAR25.1 mnup 904% from SAR2.5 mn in the comparable period

· Net income for 1H11grows 66% to SAR55.2 mn (EPS: SAR0.46) compared to SAR33.2 mn in 1H10 (EPS0.27)

Analyst comments:

Although full financials are not yet available, we believethat rental income came in line with 1Q10 at SAR58 mn and yielded a grossprofit of SAR39.5 mn with an associated margin of 68%. 2Q11 net income missedour expectations by 18% to the downside on the absence of any land sales duringthe period compared to SAR11.5 mn in 1Q11. Net income came in at SAR25.1 withan estimated margin of 43% in line with 1Q11 but up from the 5.7% registered in2Q10, which was pressured downward by provisions created during 2Q10 againstlosses in financial investments. The aggregate 1H11 net income growth of 66% isattributable to the absence of any sales of land plots during 1H10 and higheroccupancy rates across Akaria’s properties.

National Bank of Kuwait (NBK) - 2Q11 Results

2011-07-17T02:09:00.000-07:00

National Bank of Kuwait (NBK) - 2Q11 Results - Snapshot

· Netincome declines by 4.5%YoY to KWD65.9mn against estimates of KWD82.2mn

· Top-lineexhibits refreshing growth of 6.2%YoY

· Non-interestincome grows by 6.5%YoY on higher investment income

· Highprovisions marred profit growth; up by over 170%YoY

· Specificprovisions recorded at KWD17.8mn against KWD3.8 in 2Q10

· NPL ratiodeclines to 1.61%, coverage at 221.6%

· Net loansbarely inch forward; up 0.2%YTD, deposits rise 1.7%YTD

· Net loansand deposits dropped by 0.6%QoQ and 9.3%QoQ respectively

Analyst comments:

NBK posted a negative surprise in 2Q11 missingour KWD82.2mn expectations on account of high provisions. Since NPL ratiodeclined (by 8bps), coverage increased (by 188bps) and loans declined(by 60bps) in 2Q11 from the previous quarter, it is safe to assume thatabsolute NPLs saw reduction during the quarter over 1Q11. Thisleads us to the next conclusion that provisions taken are voluntaryin nature. This was confirmed by our short discussion with the management whichstated that these provisions were mostly from the corporate segment andbelonged to accounts that had shown certain weakness but werestill performing. Our doubts whether these provisions belonged to Egyptoperations were assuaged when segmental NOI and profits from InternationalOperations did not show any supporting evidence. Noteworthy, profits fromcorporate banking and Group Centre (treasury, investments and associates inKuwait) dropped by KWD5mn and KWD12mn respectively as compared to 1Q11, whichcould hint at where the excessive provisions emanate from. The bank managed tomaintain net interest income growth by further reducing its cost of funds,while overall pre-provision performance (total income) remained healthydriven by higher investment income. NBK seems to have shed-off (customerwithdrawal is another possibility) a large portion of the deposits that werecollated in 1Q11 (12%YTD growth on account of the Amiri grant) which has toneddown deposit growth to just 1.7%YTD. We await further management discussion toshed some light on what to expect in upcoming quarters.

Saudi Arabian Fertilizers Company (SAFCO) - 2Q11 Results

2011-07-17T02:08:00.000-07:00

Saudi Arabian Fertilizers Company (SAFCO) - 2Q11 Results - Snapshot

· After tax profitregistered YoY decline of 13% and recorded at SAR790mn in 2Q11

· Gross profitregistered YoY increase of 36.3% to SAR778mn.

· Operating profitindicated YoY growth of 35.7% and recorded at SAR757mn.

Analyst comments:

SAFCO’s YoY decline in the profitability wasmainly associated with the lower other income, during the quarter under review.In addition, YoY decline in other income was mainly associated with therecognition of sales of land amounting SAR302.5mn in corresponding quarter lastyear. On the other hand, according to the company’s press release, QoQ declinein company’s bottom line was mainly associated with the decreased in volumetricsales of ammonia and urea due to low seasonal demand. We will update our investmentrecommendation once the company will publish its detailed financial statement.

Syed Taimure Akhtar

Senior Financial Analyst

Research & Publications – KSA

25% of UAE residents have debt of Dh250k each

2011-07-04T04:53:00.000-07:00

Over 25 per cent of UAE residents reel under a debt of Dh250,000 each, revealed the new debt survey conducted by Arabian Business.

The debt, ranging from personal loan and credit cards to car loans, gives a grim picture of consumerism in the country, where a person buys way beyond what he affords.

The survey shows that at least 20 per cent of the residents have no idea how much debt they are in and who they owe.

While nearly 40% of residents have personal loans of between Dh100,000 and Dh200,000, around 12% of residents in the country own more than six credit cards, whereas 15% still have outstanding balances of more than Dh100,000.

Not surprisingly for a country mad about cars, around a quarter of all UAE residents owe more than Dh100,000 in car loans.

The new survey builds up on a report last year by the Lafferty Group that at 199.4 cards per 100 people the UAE has one of the highest take ups of credit cards anywhere on the planet.

The report had also said that the total consumer debt across the GCC was $139bn,.
Arabian Business questioned 342 UAE residents for the debt survey.

AHLI UNITED BANK REPORTS AN 18% RISE IN Q1/2011 PROFIT TO US$ 77.3 MILLION

2011-04-18T04:34:00.000-07:00

Manama, Bahrain, 18 April 2011: Ahli United Bank B.S.C. (AUB) reported a net profit attributable to its equity shareholders of US$ 77.3 million for the quarter ended 31 March 2011, a 17.7% increase over the same period in 2010 ( Q1/2010: US$ 65.7 million). The resultant Earnings per Share were US 1.6 cents, compared to US 1.3 cents achieved in Q1/2010. The result also represents a 20.0% improvement over the Q/4-2010 trailing quarter reported profit of US$64.4 million.

These results were primarily delivered on the back of AUB’s success in sustaining core earnings through maintenance of net interest margins with selective asset growth and a continued tight focus on its risk exposures and operating costs. This resulted in a 16.3% increase in Net Interest Income from US$ 117.5 million to US$ 136.7 million. The Bank’s results were further enhanced by continuing strong performances by its major associate banks in Qatar & Oman with share of profits from associates increasing to US$ 15.9 million. Effective remedial asset management measures resulted in asset provisioning requirements reducing by 34.4% from US$54.7 million in Q1/2010 to US$35.9 million in Q1/2011.

The Group’s Return on Average Equity for Q1/2011 stood at 12.9%, compared to 11.9% achieved in the first quarter of 2010. Return on Average Assets also improved to 1.3% for Q1/2011(Q1/2010: 1.2%).

Group’s total assets grew by 5.9% to US$ 28.0 billion from US$ 26.5 billion at 31 December 2010 attributable mainly from additional liquidity mobilizations while adopting a cautious lending stance in a challenging regional business environment.

AUB concluded on 31 March 2011 landmark capital raising agreements with the IFC Capitalization (Equity) Fund L.P. and IFC Capitalization (Subordinated Debt) Fund L.P. (jointly launched by International Finance Corporation (IFC) and the Japan Bank for International Cooperation) to provide AUB with Tier I qualifying US$ 125 million in new equity and Tier II qualifying US$165 million in new sub-debt facilities. An agreement was also executed with IFC to extend the maturity date of its existing Tier II US$ 200 million subordinated debt from 15 December 2016 to 15 December 2018, thereby increasing its capital effectiveness for AUB. The impact of these agreements will be reflected starting Q2/2011 after their drawdown.

“The signing of these agreements with IFC/IFC Capitalization Funds is a clear testament to AUB’s underlying strong fundamentals and credentials as a major regional banking institution and represents a very significant long term capital commitment, undertaken by a premier World Bank Group member institution, consummated in the midst of very challenging times for regional markets” said Fahad Al-Rajaan, Chairman, AUB.

“AUB’s first quarter results are very positive against the backdrop of testing times. While these results are very encouraging, we remain cautious amidst the current regional developments and are confident that the bank is well positioned to meet any emerging challenges”, added Mr. Al-Rajaan.

Monthly Oil Report – March 2011

2011-03-23T22:38:00.000-07:00

• Political turmoil in Middle East leads to soaring oil prices.

• Delay in Japan recovery could apply downward pressure on oil prices.

• WTI prices jumped 17.3% during the review period (Feb. 18th to Mar. 18th 2011).

• World oil demand expected to grow 0.7% in 1Q11 compared to 2010 average.

Anti-government protests in Libya escalate oil prices

The month witnessed crude oil prices reach the highest levels since September 2008, mainly due to the political unrest in the MENA region. Despite Libya producing less than 2% of the world’s oil output, the political crisis there has driven prices up as fears of the turmoil in the region spreading to other oil-producing countries increased. Particularly, the political situation in Bahrain is being monitored as anti-government protests could leak into Eastern Saudi Arabia. Meanwhile, positive news emanating out of the world’s largest economy further supported oil prices. In the beginning of March, manufacturing figures for February 2011 were released which showed the manufacturing activity in the US reaching its highest level in almost seven years.

World oil demand is expected to grow by 1.7% y-o-y to average 87.8mn b/d in 2011

A large portion of the world oil demand growth is expected to come from China, North America, and the Middle East. The increase in China’s oil demand is expected to account for 35% of the total oil demand growth in 2011. The forecasted world oil demand figures are subject to the pace of economic recovery in the United States, the world’s largest oil consumer, and the rapid economic growth in China. Unemployment rate dropped in the US to reach 8.9%, its lowest level since April 2009, as the economy gained 192,000 jobs in February 2011. Furthermore, ISM’s service industries index rose to a better-than-expected 59.7 points for February 2011 (any reading over 50 indicates expansion in the sector).

SICO’S EQUITY FUNDS DELIVER STRONG PERFORMANCE IN 2010

2011-03-15T01:41:00.000-07:00

Manama, Kingdom of Bahrain, March 13th , 2011 Securities & Investment Company (SICO) released performance results for its regional equity funds for 2010.

Despite substantial volatility during the year, the funds continued performing strongly. Significantly, the high ratings (‘AA’ and ‘A’) assigned to the SICO’s funds by Standard & Poor’s, were re-affirmed by the leading international rating agency.

SICO’s flagship, the Khaleej Equity Fund - rated ‘AA” by S&P, and which invests in equities listed on the six GCC stock markets - achieved a return of 14.1% for the year, against a 12.8% appreciation in its benchmark, the S&P GCC Composite Index. The fund achieved one of the best risk-adjusted returns among its peer group over the medium-to-long term. Since the fund’s inception in March 2004, the fund’s annualized return is 12.2% against a 4.6% return for the benchmark. This has been achieved despite having a significantly lower volatility than that of the S&P GCC Composite Index. The Khaleej Equity Fund was also ranked ‘First’ in the GCC Equity Fund category by Zawya Funds Ranking during their latest quarterly review.

The SICO Gulf Equity Fund - also rated “AA” by S&P, invests in GCC listed equities although it excludes Saudi Arabia - delivered a return of 11.6% for 2010. The fund has one of the best risk-adjusted returns since its inception in March 2006, with an annualised return of 2.2% against a negative 10% return for its benchmark, the S&P GCC ex Saudi Index. SICO Gulf Equity Fund ranked ‘Second’ in the GCC Equity Fund category by Zawya Funds Ranking during its latest quarterly review.

The SICO Arab Financial Fund, rated “A” by S&P, invests primarily in MENA region financial sector equities, appreciated by 25.2% in 2010 compared to 9.6% increase in its benchmark, S&P GCC Financial Sector Index. The fund completed its third year in 2010. Since its inception in Aug 2007, the fund’s annualized return is 5.9% against a negative 10.2% benchmark return. At the MENA Fund Managers Awards 2010, the fund was rated the best MENA Equity Fund of the year and was also recognized as the Best Specialist Fund of the Year.

The SICO Selected Securities Fund, also rated “A” by S&P, and investing principally in Bahrain Bourse listed equities, delivered a return of 4.8% compared to a negative 1.8% return for its benchmark, BSE All Share Index. The fund’s annualised return since inception (May 1998) is 6.2% versus 1.0% for the benchmark.

SICO credits this strong performance to its active asset allocation and stock picking capabilities. The firm in parallel adopts a top down approach to risk management by closely monitoring company, country and sector exposures. The buy side research team, along with the portfolio managers, focus on identifying companies that are undervalued and fundamentally strong.

All funds’ have independent administrators and custodians, ensuring that their records are accurate, adding credibility to the overall fund structure.

Commenting on these results, Anthony Mallis, Securities & Investment Company’s CEO, said: “SICO’s prudent investment approach, characterised by superior stock picking and asset allocation, has enabled the Firm to deliver another strong performance for our clients in 2010, despite significant market volatility.

“We believe the recent declines in the GCC and MENA markets offer a good entry point for long terms investors. The regional markets currently are significantly undervalued and offer attractive returns to long term investors, as we forecast in our recent GCC Market Overview research report. The combination of our regional insight and the quality of our research are key factors in enabling SICO to provide consistent and stable long term returns to our investors.In addition to this, our asset allocation and disciplined investment and risk management process has enabled us to preserve capital during downturns and periods of volatility. Our strong performance during downturns of 2006 and 2008 and periods of volatility has been one of the main contributors to our overall outperformance of market and other competing regional funds, he added.

Etisalat Participates in the National Career Exhibition 2011 at Expo Centre Sharjah

2011-02-23T03:01:00.000-08:00

Sharjah, UAE, 23rd February 2011: Etisalat, the region’s leading telecommunications corporation, is participating in the National Career Exhibition, taking place until 25th February at the Expo Centre Sharjah.

Etisalat’s participation in this show is a part of the corporation’s ongoing strategy to attract and qualify national staff, which supports the Emiratisation policy of the UAE government to enable young Emiratis to participate in the country’s development and to provide ways to refine their expertise and creativity.

Through its participation, Etisalat aims to identify potential job opportunities for new national graduates and showcase the benefits and incentives offered to them. The corporation is welcoming visitors to its stand at the exhibition, in order to introduce individuals to the working culture at and employment benefits at Etisalat.

“Etisalat is the leading corporation in the UAE when it comes to adopting the government’s Emiratisation strategy, and maintains its ongoing efforts to provide recruitment opportunities to UAE Nationals. Since its inception, the organisation has developed a multitude of programmes that assist in attracting and qualifying the best candidates and competencies to support its Emiratisation strategy and to provide job opportunities for highly qualified Emiratis,” said Abdulaziz Al Sawaleh, Group Chief Human Resources Officer, Etisalat.

“We are at the forefront of national institutions in terms of Emiratisation rates. Our UAE National employees currently consist of 35% of the organisation’s total work force (more than 3,200 employees), while Nationals in executive management positions reaches 95%,” he continued.

Al Sawaleh emphasised that Etisalat is unique in its continuous efforts in rehabilitation and development of the nation and goes beyond simply recruiting Nationals, as it develops employees’ skills and provides them with the necessary training in line with the highest international standards through Etisalat Academy and other local and international institutions.

He added: “We are proud of our achievements in contributing to promote UAE society in all sectors through our investment in training and rehabilitating more than 76,000 of the country’s national citizens, and offering them more than 16,000 training courses to date, some of whom work within Etisalat, while others joined different business sectors in UAE. These efforts reflect the size of Etisalat’s contributions to its community through Emiratisation.”

He also mentioned that Etisalat offers suitable training programmes to nationals applying for different jobs in the organisation. The programmes aim to prepare Nationals to work in the organisation at their full potential and capacity, as the corporation believes in and harnesses the creative home-grown talent of UAE Nationals.

Al Sawaleh concluded by stating that national competencies within Etisalat have proved their effectiveness and capability according to international practices and such achievements of individuals have attracted the attention of large companies. Etisalat is proud to have more than 70 Emirati nationals managing its operations in 18 countries around the world and to provide the latest services for 135 million customers.

Eastern Province Cement Company – Result Update 4Q10

2011-02-22T01:10:00.000-08:00

• Net profit decreased by 2.2%YoY in 2010

• Realization prices decline by 8.7%YoY in 2010

• Dividend payout of SAR3.5 per share

• Capacity constraints restraining growth

4Q10 brightens up a gloomy year

Eastern Province Cement Company net profit increased by 65.8%YoY in 4Q10 to SAR82.9mn which was 12.2% higher than our estimate of SAR74.0mn. The company has managed to increase its sales volume by 12.5%YoY to 0.9mn tons in 4Q10 by lowering its price as indicated by the decline in realization price by 4.7%YoY to SAR228.4 per ton. The company also managed to reduce its inventory by 50.0%YoY to 0.34mn tons.

Sales decline in 2010

The company witnessed a decline in sales of 2.0%YoY in 2010 to SAR803.2mn despite an increase in total cement and clinker dispatches by 15.3%YoY to 3.68mn tons. The sales volume were boosted by 0.5mn tons of clinker dispatches. However, the increase in volume sold was accompanied by decrease in realization prices by 8.7%YoY to SAR222.7 per ton which is understandable due to the impact of clinker sales which carry a lower price tag.

Meanwhile, net profits decreased by 2.2%YoY to SAR342.9mn. The gross margins declined to 47.3% in 2010 from 51.6% in 2009 largely due to the decline in average realization prices as the cost of sales per ton remained stable at around SAR117 per ton.

Dividends payout of SAR3.5 per share

The company announced a dividend of SAR3.5 per share for the year 2010, translating into a dividend yield of 7.7% compared to a dividend of SAR3.0 per share. We expect the company to maintain the dividend payout at SAR3.5 per share during our forecast period despite the expected decline in profitability during 2012-2014 due to lack of good re-investment opportunities in an overcapacity scenario.

Revision in estimates

We have increased our sales revenue forecast by 3.4% to SAR803mn for 2011 in light of better than expected performance in 4Q10. We have also increased our 2011 estimate of net profit by 3.9%. Going forward, the theme of Eastern Province Cement will revolve around possible lifting of export ban. Though, the company faces capacity limitations, the lifting of export ban will help support cement realization prices and thus profitability. We have not incorporated this scenario in the model which can lead to further upward revision in fair value.

Valuation update

We have upgraded our fair value by 7.9% to SAR41.4. The stock has risen by 11.4% since Qatar won the 2022 World Cup bid which we believe is unwarranted considering the limited ability of the company to take advantage of any possible increase in exports due to capacity constraints. The stock at its current price of SAR46.6 provides a downside of 11.2%. Thus, we maintain our SELL recommendation on the stock.

Banque Saudi Fransi – Result Update 4Q10

2011-02-22T01:06:00.000-08:00

• Encouraging performance in challenging conditions

• Lower provisions main cause of improved results

• Spreads move upwards; result of controlled interest expense

• Building retail presence alongside strong corporate franchise

Profitability increase driven by reduced provisioning

BSF was able to manage the challenging market conditions and posted encouraging financial results in 2010. It recorded annual profitability increase of 13.5% with net income of SAR2.8bn. The overall improved performance was mainly attributed to decline in impairment charges by 47.1% in 2010. BSF’s 4Q10 results turned out to be much stronger than expected, posting rise of 118.7% (our estimate of 33.2%) as compared to 4Q09. The 4Q10 performance was also driven by provisions decline YoY of 88.9%. Global Research believes that BSF’s net income will grow by 11.4% in 2011.

Non-commission income dominates operating income

The bank’s non-commission income posting an annual increase of 6.8% in 2010, remained dominated by fees & commission income that constituted 67% of the total. Despite the decline in income from share trading, brokerage & fund management, it was higher income generation from trade finance, project finance & advisory and other banking services that led to overall YoY increase of 5.6% in fees and commission income.

Banking spreads inching higher, marginal NII growth

BSF’s yield on earning assets recorded a decrease of 40bps during the year. This drop was however compensated by a larger decline of 53bps in the cost of funds. Consequently, the bank spreads inched higher reaching 3.0% in 2010. The bank’s net interest income recorded marginal growth of 0.5% in 2010. Global Research expects lending activity to revive (mainly linked to roll out of various infrastructure projects) that could lead to NII rise of 8.4% in 2011 and CAGR (2010-14) of 12.3%.

Credit quality not immediate concern

BSF continued to maintain comfortable cushion with NPL coverage rising to 147.0% in 2010. The bank’s NPLs posted marginal rise of 0.8%, while NPL ratio improved to 1.2% in 2010. BSF’s capital adequacy position also improved with CAR reaching 14.7% in 2010. Although we project impairment charges to reduce by 23.3% in 2011, the decline is expected to be relatively slower.

Asset base records cautious expansion

The bank’s total assets (overshadowed by corporate) posted marginal rise of 2.2% in 2010. In early 2010, the bank also issued five year debt securities amounting SAR2.4bn. The deposits and loans posted rise of 2.5% & 3.6%, respectively, in 2010. Global Research expects assets, loans, and deposits to record annual growth of 5.6%, 7.1% & 8.5%, respectively, in 2011.

Valuation update

Global Research has upgraded its fair value from SAR43.3 to SAR48.2 per share, which offers potential upside of 3.1% over the current market price. However, at the current price levels, our equity rating remains unchanged and we reiterate our HOLD recommendation on the stock.

Middle Eastern Mobile Operators remain committed to global expansion but face headwind in the years ahead

2011-02-21T04:26:00.000-08:00

Dubai, United Arab Emirates—Feb. 21, 2011— A new study by global management consultancy PRTM shows that Middle Eastern mobile operators remain committed to international expansion as they have the opportunity to become global leaders but face some challenges in the next few years.

The report states that, while the past 10 years have demonstrated the power of innovation, market-making and entrepreneurship in developing markets, the next 10 will highlight the importance of national and regional scale, cost and capital management and in-market consolidation. Last year’s study showed that Egypt’s Orascom Telecom had become the eighth largest mobile network in the world by customer numbers, overtaking some of the well-established international operators. Five Middle Eastern companies, Orascom/WIND, Zain, STC, QTel, and Etisalat, have entered the global stage, but last year global expansion began to slow.

“The past several years have witnessed a tremendous rise in demand for mobile services in emerging markets. A number of entrepreneurial operators capitalized on that opportunity, and they quickly became global leaders. They have the opportunity to play at the top table, but slowing growth and intensifying competition will pose daunting challenges,” said Anil Khurana, lead director of PRTM’s Middle East Region and co-author of the report. Ameet Shah, head of PRTM’s mobile services practice, and Dan Hays, senior member of PRTM’s telecom practice, served as lead authors of the report.

According to PRTM’s study, “The Future of Telecommunications: New Strategies for a New World,” customers will gravitate toward service providers with the best in-market broadband networks, due to an increasingly data-centric world—leading network operators to revisit their models of the past five years, where every spare dollar went overseas. Operators will likely leverage M&A and capital spending to improve competitive positions in their countries/regions rather than investing in global empire building.

The report also states that the developing world will be the stage for intensifying competition, further price wars, lower average amount of revenue per users and continued rapid growth in operational costs. Subscriber numbers will continue to grow, but revenues will rise more slowly and profitability and cash-flows may flatten or decline.

“Until recently, companies like Telenor, Orascom, Zain and STC were investing for their own international footprint. Going forward, they will likely sell off small peripheral operations in weak positions, focus on building in-market depth or ally with larger groups. The rise of operators from emerging markets is testament to two factors: the rapid growth in their domestic markets, and their drive to play in multiple markets. But, as their existing markets start to mature, it is not yet clear that these companies will be able to revamp their operating models and sustain continued growth based on innovation, cost management, outsourcing, and the like,” added Khurana.

PRTM expects the global telecommunications leader boards to change dramatically in the years ahead, driven by consolidators rather than by new entrants. Consolidators—who are combining fixed and mobile assets, building regional scale and tightly controlling costs—have the financial clout and experience to lead the next wave of consolidation.

Saudia Dairy & Foodstuff Company – Result Update 3Q10/11

2011-02-10T01:54:00.000-08:00

• Non operational income lead 14.3% growth in 9M10/11 net profitability.

• Gain in market share & new product launches; the key growth drivers.

• Focusing on product deepening & strengthening of brand image.

• Core-operational activities continue to show improvement.

Other income inflates profitability growth

Saudia Dairy & Foodstuff Company (SADAFCO) posted overall net profit of SAR97.2mn (EPS: SAR2.9) in 9M10/11, an increase of 14.3%YoY. Higher income from investments and other non-operating income to SAR13.8mn as compared to SAR9.6mn recorded in 9M09/10 and reduction in loss from discontinuing operation to SAR0.9mn in 9M10/11 compared to SAR2.2mn recorded in corresponding period last year. It is worth mentioning that the big chunk of the company’s investment income amounting SAR10mn was recognized in 3Q10/11, which led the company’s profitability to record at SAR41.5mn (EPS: SAR1.3) from PAT of SAR35.5mn (EPS: SAR1.1) in corresponding quarter last year and our estimates of SAR35.4mn (EPS: SAR1.1) for the quarter under review.

Enhancing market coverage & introducing new products in 9M10/11

Improvement in the company’s market share and introduction of new products along with higher average prices, during 9M10/11, were the major reason which has led the company’s sales revenue to register the growth of 8.4% over revenues of SAR775.4mn recorded in similar period last year. However, despite of increase in cost of sales, the company has successfully implemented cost control program, which resulted in the growth of 8.2% in operating profit to SAR94.7mn in 9M10/11.

Strengthening foothold - Key to growth

Over the period of time, the company has become more focused to improve its market share through existing product line without making expansions. Hence, the company has adopted the strategy (i) product deepening of the existing product line to new products like triangular cheese; (ii) expand target market with new products, derived from existing product line and (iii) nurturing brand image through strategic alliance with electronic media. Global Research, therefore, expects the positive outcome of these actions will lead the company’s overall production to increase at a CAGR of 3.4%, during 2009/10-13/14 to 113.1mn liters in 2013/14, which will lead the company’s sales revenues to increase at a CAGR of 7.9%, during 2009/10-13/14.

Effective cost control measures leads to steady core-operational growth

Based on the successful outcome of cost control measures in 9M2010/11, Global research expects the company will be able to manage the rise in operating expenses, going forward, on account of executing growth strategies. Based on instability in the company’s bottom-line due to high influence of non-operating income in bottom line, investor should focus on the performance of operating profit, which is expected to increase at a CAGR of 12.5% during 2009/10-2013/14. However, based on the lower investment income, going forward, the company’s profitability is expected to remain lower, during 2010/11-13/14, as compared to net income of SAR203mn (EPS: SAR6.2) in 2009/10.

Valuation update

Global Research has made upward revision in the company’s DCF based fair value to SAR46.8/share from SAR44.8/share, which offers potential upside of 12.7% over market price of SAR41.5 (as on 07th Feb 2011). We, therefore, upgrade our recommendation for the stock to BUY from HOLD.

Saudi Arabian Mining Company – Result Update 4Q10

2011-02-10T01:50:00.000-08:00

• Lower non-operating income hammered 2010 operational growth.

• Commencement of operation at phosphate complex postponed to 4Q11.

• Operational diversification to stabilize top line growth, going forward.

• Upcoming projects to strengthen operational integration.

Non-recurring activities overshadowed operational growth

Saudi Arabian Mining Company (Ma’aden) recorded after tax loss of SAR12.8mn (LPS: SAR0.01) in 2010 as compared to the net income of SAR390.1mn (EPS: 0.4) recorded in 2009. The decline in bottom line was mainly due to massive decline in investment to SAR168.3mn in 2010 from SAR314.4 recorded in 2009. However, the company has witnessed a growth of 20.1% and 1.9% in gross and operating profit to SAR394mn and SAR89.6mn, respectively, in 2010 as compared to Global Research full year estimate of SAR393mn and SAR84mn for similar profitability indicator.

Quarterly performance

On a quarterly basis, the company’s bottom line suffered most in 4Q10 on the back of unexpected decline in other income to loss, which led the company to record net loss of SAR64.4mn (LPS: SAR0.1) as compared to our estimate of SAR28.4mn (EPS: SAR0.03) and after tax profit of SAR333.8mn (EPS: SAR0.4) recorded in corresponding quarter last year.

Gold business overview

The company’s revenue from gold business was recorded at SAR706.5mn in 2010, a growth of 11.3% over 2009, despite lower volumetric sales recorded in 2010. Hence, Global Research believes, the growth was mainly associated with the improvement in the average prices of gold in 2010 to USD1,228.5/oz as compared to the average of USD984.9/oz recorded in 2009. In addition, the company has not disclosed any particular reason of decline in volumetric sales in 2010, however, the possibility of depletion had an impact on old fields which declined overall production volumes.

Phosphate & aluminum complexes key growth drivers

We believe, the company’s upcoming phosphate and aluminum complexes will play vital role in order to (i) bring core-operational diversification from gold to phosphate and aluminum related products, (ii) strengthen operational integration (since the given operational of these two projects are well integrated in their respective complexes) (iii) expand the company’s overall production range to other industrial minerals and (iv) sustain the corporate growth during the phase of replacing new gold field with the older one.

Robust financial growth expected

Based on Global Research expectations, the commencement of commercial operation from phosphate complex in 4Q10 will lead the company’s sales revenue and net profit to show a mammoth growth in 2011 & 2012 with better profitability margins. Moreover, the expected inauguration of aluminum in 2014 will be another milestone for the company, which will increase company’s sales revenue to grow at a CAGR of 106.6%, during 2010-14. In addition, the company’s gross and net profitability margins will reach at 66.4% and 30.1% in 2014 as compared to 55.8% and -0.1% recorded in 2010, respectively.

Valuation update

Based on adjusting the discounted impact of phosphate project on company’s cash flow, Global Research has come up with updated consolidated fair value of SAR25.3/share from the previous fair value of SAR21.6/share, which offers potential upside of 5.7% over market price of SAR24.0 (as on 07th Feb 2011). Global Research, therefore, maintain HOLD for the stock.

Almarai Company – Result Update 4Q10

2011-01-19T00:28:00.000-08:00

• Profitability to grow at a CAGR of 11.8% during 2010-14.

• Operational integration & expansion to manage rising production & processing costs.

• Seasonal impact lead QoQ decline in profitability in 4Q10.

• Product deepening & expansion and re-branding in 2010.

Financial performance 2010

Almarai Company (Almarai) has announced its financial result and posted after tax profit of SAR1.3bn (EPS: SAR5.6) in 2010 as compared to SAR1.1bn (EPS: SAR4.9) in 2009. The company’s growth is mainly attributed to increased in sales, product diversification (upon the acquisition of HADCO) and continuous improvement in quality & services. However, on quarterly basis, the company has post net income of SAR283.8mn (EPS: SAR1.2) in 4Q10, which is lower than our expectations of SAR420.8mn (EPS: SAR1.8) and 33.2% from the profitability of SAR425.5mn (EPS: SAR1.9) in 3Q10. The company has recorded YoY growth of 14% over the profitability of SAR248.8mn (EPS: SAR1.1) in corresponding quarter last year. Global Research believes that the QoQ decline in the company’s profitability was mainly due to seasonal impact, when the demand of related products usually remained on lower side.

Balance sheet growth

The company’s balance sheet has registered the growth of 14.4% to SAR12.5bn in 2010 with the slight decline in current ratio to 1.2x from 1.5x recorded in 2009. Based on Global Research understanding, the decline in current ratio was mainly attributed to the decline of in cash reserves to SAR240.7mn in 2010 from SAR507.7mn in 2009 with the rise of 30.4% in current liabilities to SAR1.8bn during the year under review. It is worth mentioning that decline in cash reserves was mainly due to the addition of SAR1.9bn in gross plant, property & equipment (PP&E), which was mainly on account of acquisition of HADCO, establishing new infant plants, other expansions and other routine CAPEX.

Key achievements 2010

According to the company’s 2010 financial result presentation, Almarai has successfully (i) deepen its product line with the launch of Vetal Digest Probiotic (a supplementary dietary), (ii) expand its operational network with the opening of new bakery factory in Al-Kharaj, (iii) expand its product mix through JV agreement with Mead Johnson for International Pediatric Nutrition Company (IPNC) & launched first ever infant formula product in KSA, and (iv) improve operational integrity through re-branding its poultry products under ‘ALYOUM’ brand.

Diversification & integration - Key to continue future growth

Global Research believes that the successful product diversification along with the strong prices of related product will remain the leading factors, which will direct the company’s sales revenue to increase at a CAGR of 9.2% during 2010-14. The improvement in operational integration is expected to provide cushion to the company against expected increase in feed costs and open room for more expansions. Consequently, the company is expected to maintain its gross margin at the average of 39.4% during 2011-14, which will lead the company’s net profitability to increase at a CAGR of 11.8%, during 2010-14.

Valuation Update

Global Research has updated the new fair value for Almarai at SAR112.6, which indicates potential upside of 1% from current market price of SAR111.5 (as on 17th Jan 2011). Global Research believes the current market price has already been incorporated all the upcoming growth factor, hence, we maintain our HOLD recommendation for the stock.

Dubai Stock Exchange: The Dubai Government expects to generate Dh29.9 bi...

2011-01-12T22:39:00.000-08:00

Dubai Stock Exchange: The Dubai Government expects to generate Dh29.9 bi...: "The Dubai Government expects to generate Dh29.9 billion in revenue against expenditure of Dh33.6 billion this year, leaving it with a Dh3.77..."The Dubai Government expects to generate Dh29.9 billion in revenue against expenditure of Dh33.6 billion this year, leaving it with a Dh3.77 billion deficit, said the Department of Finance (DoF).
His Highness Shaikh Mohammad bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, approved the budget for 2011 Wednesday.This expenditure for 2011 is slightly lower than the Dh35.4 billion in spending announced last year — which was six per cent lower than the 2009 budget. The revenue for this year is slightly higher than the Dh29.4 billion projected in January last year.
Spending plans
"About 43 per cent of total expenditure was allocated to the economy, which includes several of Dubai's vital segments such as roads and transport, airports and civil aviation, as well as tourism, among others," a government spokesperson said.
"The budget deficit has been kept within the targeted bracket of three per cent of Dubai's GDP," the spokesperson added.
As directed by Shaikh Mohammad, the budget aims to generate the revenue needed to stimulate economic growth and financial sustainability in Dubai."Ensuring the efficiency of government expenditure and the optimization of the economic and social returns are among key principles to be realised in the local government's budget," a statement said.
Social development, which includes health and education services, will receive 24 per cent of the total public expenditure in the 2011 budget.
The General Services and Government Excellence sector, including but not limited to the Ruler's Court, Department of Finance and the Land Department, has been allocated 11 per cent of total expenditure, while 22 per cent of the expenditure has been earmarked for the security, safety, and justice sectors.
Fiscal tightening
The budget reflects a belt-tightening policy that will help the government overcome hurdles.Abdul Rahman Al Saleh, Director-General of the Department of Finance, said: "Various government entities have succeeded in guaranteeing a possible current account surplus of Dh1.9 billion estimated as an immediate result of the efforts to direct spending and improving efficiency.
"Increased awareness among government officials to optimise their departments' financial efficiency also contributed towards enabling this surplus."
A significant 23 per cent of public expenditure, valued at Dh7.5 billion, has been allocated to developing and completing pre-approved infrastructure projects that promote economic growth and stimulate the flow of local and foreign investments.
Macro-economy

Al Saleh affirmed that the 2011 budget reflects Shaikh Mohammad's directive to continue the development of Dubai's infrastructure and to support of the emirate's macro-economy.
It also reflected an increase in efforts to elevate economic and social welfare in Dubai. The budget was drafted within the framework set by the Supreme Fiscal Committee chaired by Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group.
economists and business leaders have welcomed the budget, saying a conservative fiscal approach is crucial to turning around the emirate's economy.
"This demonstrates a fiscally responsible approach," said Omar Hijazi, Managing Partner of Digital Daya, a Dubai-based social media organisation.
"This is a very positive development for Brand Dubai, reflecting a fiscally responsible governance that will be well received by the international community," Hijazi added.
Economic growth
Zyad Aldabbas, economist at the National Bank of Abu Dhabi, said: "Despite Dubai's debts, the government is trying to spend more, according to the budget.
"Public expenditure is a vital clue that reflects the Dubai government's determination to stimulate economic growth and financial sustainability

Dubai Stock Exchange: UAE entering 2011 with signs of recovery from the ...

2011-01-02T04:22:00.000-08:00

Dubai Stock Exchange: UAE entering 2011 with signs of recovery from the ...: "By Nadim KawachThe UAE is entering 2011 with signs of full recovery from the clutches of the 2008 global fiscal distress, with its economy g..."

Dubai Visa Rules and Procedures: Canadians to stay outside the country for one mont...

2010-12-29T22:41:00.000-08:00

Dubai Visa Rules and Procedures: Canadians to stay outside the country for one mont...: "Canadians need to stay outside the country for one month before they can apply for new visit visas in a stipulation similar to one set out f..."

No six-month work ban from January 1, 2011 in UAE

2010-12-18T21:19:00.000-08:00

Expatriate workers can move to new employment without no-objection certificate if they have served out two-year contract.The Ministry of Labour has issued regulations allowing workers who finish their contracts to obtain new work permits without undergoing the six-month work ban, and allowing them to move to other firms without the employer's approval from January 1, 2011.

A worker with an expired contract can obtain a new work permit and shift to another employer without the passing of the currently legitimate six-month period and consent of his sponsor, according to the new resolution issued by the Minister of Labour Saqr Gobash.

The new regulations on conditions and criteria of issuing new work permit for a worker after the expiry of his service contract and transfer of sponsorship will take effect as of January 1, 2011 in implementation of the cabinet resolution No 25 of 2010 regarding internal work permit at the Ministry of Labour.

Once operational, the new regulations will replace the current formalities of transfer of sponsorship for expatriate workers.

The resolution says that the new employment permit will only be granted to the worker after the end of his work relationship with his employer without consideration of the legitimate six month period which is usually calculated after the cancellation of the worker's labour card.

But it stipulates two must-do conditions. firstly, the two contracting parties must have ended their work relationship cordially and secondly, the worker should have worked with his employer for two years at least- the duration of the new labour card which will be issued by early January.

The resolution defines two cases where the worker can obtain the new work permit after the end of the contractual relationship without the agreement of the two contracting parties.

First, when the employer fails to honour his legally or contractual obligations. Second, in the condition of expiry of work relationship where the worker takes no responsibility such a complaint filed by the worker against his firm.

In this case, an inspection report should prove that the firm is out of business for more than two months and that the worker should have reported to the ministry.

The labour dispute should have been referred by the ministry to the court provided that the court hands out a final verdict ordering the employer to pay to the worker salaries of two months at least, compensation for the arbitrary sacking or terminating the contract prematurely, or any other rights.

The resolution also defines three cases where the worker shall have the right to get a work permit without fulfilling the condition of working two years at least with the employer.

Firstly, when joining his new job, the worker should be classified in the first, second or third professional class and that his new salary should not be less than Dh12,000, Dh7,000 and Dh5000 in the first, second and third class respectively.Secondly, non-compliance of the employer with legal, labour obligations towards the worker or in the case where the worker has no role in terminating the work relationship.

Thirdly, shifting of the worker to another firm the employer owns it or has stakes in it.Minister of Labour Saqr Gobash said the new measures aim to infuse broader flexibility in the labour market and strike a balance in the contractual relationship between the employer and worker.

"The Ministry will only interfere in the employer-worker contractual relationship if it detects infringement in obligations stated in the labour contract," he explained, affirming the ministry's determination to guarantee rights of both parties legally as we live in the State of law and institutions.

"Giving the private sector more freedom of movement will have automatic impact on employers by the way of preserving their interests through creating many options for recruiting skillful workers as per the supply-demand equation.

He indicated the new measures were subject to dialogue and consultation with local stakeholders in implementation of directives of the wise leadership for crafting policies and legislations that fit well into the developments in labour market and curb any malpractices.

"The new regulations constitutes key elements of labour reforms which part of them have already executed and the other parts will be in place in the near future," he said.

These measures, he said, were expected to play a major role in advancing efforts towards creating an efficient labour market and sharpening competitiveness and transformation towards a knowledge-drive economy.

The financial results of listed companies in UAE continued to decline in Q 3rd 2010

2010-12-16T00:36:00.000-08:00

The economic scene in UAE did not change much over the past year. Banks continued to suffer scarcity of liquidity, and real estate sector, especially residential properties, did not fully recover to their pre-crisis values. Those factors combined with Dubai’s debt refinancing challenges affected UAE corporate results for the nine months ending September 2010. With the exception of few companies, the financial results of listed companies in UAE continued to decline, as their combined profitability for the 9M2010 stood at AED25.13bn compared to AED30.25bn recorded in the same period the previous year, representing a 16.92 percent decline. In our analysis, we have excluded non-UAE companies. Sector wise, all six sectors of the market reported declined profitability for the 9M2010.

The Real Estate Sector reported the biggest decline of 91.50 percent, as its aggregate 9M2010 profits stood at AED190.23mn as compared to AED2.24bn recorded in 9M2009.

The sector’s results could have been worse if it had not been for the huge surge in Emaar Properties’ quarterly results, which was the only company within the sector that managed to report improved results. In the first nine months of the year 2010, Emaar posted AED2.17bn in net profits, as opposed to a loss in the amount of AED392.8mn for the corresponding period of last year. Those profits are mostly driven by strong recurring revenue from the company’s hospitality and malls businesses, as per a statement issued by the company. Emaar also added that approximately 45 percent of the total units in Burj Khalifa have been handed at the end of the 3Q2010.

Meanwhile, Aldar Properties posted a loss of AED1.52bn, as compared to gains of AED1.41bn a year earlier. Two more real estate companies performed poorly. Deyaar Development Company turned its profits into losses, as it posted AED488.8mn in losses in 9M2010, compared to a profit of AED49.4mn in 9M2009. In the meantime, Union Properties, reported a greater loss in 9M2010 compared to 9M2009, as it posted an AED750.91mn in losses in 9M2010, compared to a loss in the amount of AED350.11mn

in 9M2009. The remaining companies within the sector saw their profitability slashed compared to a year earlier.

The Banking & Financial Sector registered a 10.47 percent drop in aggregate profits for 9M2010. The sector contributed the most to overall earnings with 59.73 percent of total market profits. The sector’s aggregate profits stood at AED15.01bn in 9M2010 compared with AED16.76bn recorded in the same period last year. Banks in Abu Dhabi had a better performance than their counterparts in Dubai. Out of 14 listed banks on ADX, only 3 banks reported a decline in their seasonal profits, whereas in Dubai, only 2 banks out of 7 listed banks managed to enhance their profitability. Among them, Emirates Investment

Bank had the largest increase of 474.85 percent with 9M2010 aggregate profits standing at AED15.13mn compared with AED2.63mn recorded in the same period last year.

In a bid to improve transparency in the banking sector, UAE Central Bank recently released guidelines directing banks to take provisions for bad loans on a quarterly basis instead of year-end, in an effort to bring the banking system in line with international standards. The Central Bank has also directed local banks with exposure to Dubai World to book appropriate provisions in consultation with their auditors, brining the onus on the banks to determine how much provisions to book based on their exposure.

During the 9M2010, the Insurance sector saw a marginal drop of 4.01 percent in profits compared to 9M2009, with aggregate profits amounting to AED901.82mn. Out of the 27 insurance companies listed on both ADX & DFM, only Ras Al Khaimah National Insurance Company did not release its 9M2010 figures until this report was published.

The remaining 26 companies had a mixed performance. On the positive side, Abu Dhabi National Insurance Company had a 522.93 percent jump in its 9M2010 net profits. The company received for the second consecutive year "Middle East Insurance Company of the Year 2010" award from World Finance Magazine at the London Stock Exchange, recognizing the company’s financial stability, coherent development strategy, product innovation, and enhanced quality service. On the other side of the spectrum, Al Khazna Insurance and Methaq Islamic Insurance Company both had negative results, as they reported losses for 9M2010 compared to gains reported in the corresponding period of last year. As for the sector as a whole, insurance premiums in the UAE market are expected to increase to AED22bn in 2010 from AED20bn last year, as per Minister of Economy and Chairman of the Board of Directors for Insurance Authority Sultan Bin Saeed Al Mansouri, who also stressed on the fact that the Insurance Authority since its inception has been making every possible effort to re-organize the local insurance market and anchor it on the best technical, financial and legal principles and standards.

The Telecommunications Sector has witnessed a 14.31 percent decline in profits for the 9M2010 with aggregate profits standing at AED6bn. Emirates Integrated Telecommunication Company (DU) aided the sector because it posted a profit of AED397.58mn for the nine months as opposed to AED159.56mn, which translates to an increase of 149.16 percent YOY. Meanwhile, Emirates Telecommunications Corporation

(Etisalat) posted an 18.12 percent decline in its net profits for the same period. Etisalat, the sole telecom service provider in the UAE from 1976 until the arrival of DU in February 2007, has acknowledged that competition with DU was hurting the company's revenues in the UAE. The introduction of DU in 2007 led to significant changes in Etisalat's mobile tariff structure, including segment-targeted promotions and tariffs. In addition, the significant number of new promotional offers introduced by DU and Etisalat during the period from 2007 to 2009 and through September 30, 2010 led to adecline in effective tariffs. The company acknowledged in a bond prospectus filed on the London Stock Exchange.

Finally, despite the poor financial results of most listed securities, it is expected that UAE's economy would be one of the first in the region to recover from the global financial crisis, as it is one of the few countries that managed to adopt remarkable flexibility in dealing with the crisis, thanks to its vibrant and dynamic economy and the bold measures its government put into place to mitigate the effect of global downturn.

Landmark Properties Witnesses 50% Increase in Valuations for Immigration Purposes During 2010

2010-11-09T03:25:00.000-08:00

Dubai, UAE – November 09, 2010 – Landmark Valuations, a division of Landmark Properties which works closely with Landmark Advisory analysts, today announced that it has witnessed an increase in the number of UAE residents requesting valuations for immigration and divorce proceedings during 2010.

Landmark Valuations has seen a significant increase of 50% in valuation requests for immigration purposes, particularly to Canada, over the past 6 months. “The country that the individual is migrating to often requires the person to hold a certain net worth and state their net worth of assets in the application. In most cases, the largest asset individuals hold in their ‘balance sheet’ is property,” explained Saeed Hashmi, Head of Valuations at Landmark Properties.

According to Hashmi, valuations for divorce purposes are also common at present: “During divorce proceedings the court usually requires the divorcee’s assets to be valued to determine the appropriate split. We have also seen a number of valuation requests for estate purposes this year, which in addition to divorce procedures are quite personal and can lead to life changing decisions.”

Many companies have been carrying out valuations for year-end auditing and corporate strategy purposes during their financial year as property prices have changed significantly throughout 2010.

“Traditionally, the majority of valuations undertaken are for bank lending purposes, however this trend has changed as bank lending volumes have been low and particularly selective during the past year,” said Hashmi. “In addition to bank lending purposes, many valuations are requested for auditing and accounting purposes as companies look to re-value their balance sheets, something that is extremely important in the current climate as values have changed drastically over the past two years.”

The Property Valuations team carries out valuations and inspections for clients for a number of reasons including: bank loans; balance sheets and company accounts; inheritance; purchases; stock market flotation; investment portfolio valuations; corporate strategy; and receiverships.

For further information on Landmark Valuations and the full list of services offered by the Landmark Properties divisions, please visit: http://www.landmark-dubai.com/ or follow Landmark on Twitter @LandmarkDubai.

GCC Real Estate Sector Quarterly - 3Q2010

2010-11-09T03:21:00.000-08:00

Increased demand for middle and low income housing in Bahrain

• Kuwait’s Cabinet approves KD30bn Development Plan

• A strong economy will help speed up the recovery of Oman’ real estate sector

• Qatar bid for 2022 FIFA World Cup

• Further Corrections in UAE market

• Increased housing demand in Saudi Arabia

Kuwait approves development plan…

Kuwait’s cabinet has agreed on the KD30bn support package to finance the development plan projects, with the funding to be supervised by the Central Bank. The plan will have a positive impact on Kuwait’s real estate sector as it will attract more investment to Kuwait and will boost private sector involvement in government projects which will drive economic and real estate activity.

Qatar bidding for 2022 FIFA World Cup…

Qatar is bidding to host the FIFA World Cup. Qatar national bank (QNB) has been named the Official Bank of the Qatar 2022 bid to host the FIFA World Cup. If Qatar were to win the bid, this would have ripple effects on the real estate and infrastructure sector. The country would be recognized as a tourist destination which would boost the hospitality segment as well. Qatar successfully hosted the Asian games back in 2006 and is now preparing to host the Asian Cup in 2011.

Further corrections in UAE market…

The UAE market witnessed mixed performance in 3Q 2010, popular developments with proper amenities and infrastructure fared better than others. However, with the new supply entering the market, we do not expect a market recovery in the near term. In Dubai, a total of 26,000 units are expected to hit the market by the end of 2010, followed by 25,000 units in 2011. With the new supply of residential units coming on stream, we do not expect a market recovery before 2011. In Abu Dhabi, new deliveries in 2010 from projects such as Marina Square, Sun &Sky Tower, and Al Bandar are expected to further push down rents and prices.

2010-06-21T05:15:00.000-07:00

The value of Dubai trade has seen a significant growth of 14 per cent in the first four months of 2010 as compared to the same period in 2009,  Khaleej Times has learnt.

The rise in all key trade activities including exports, imports and re-exports hit Dh180.7 billion from January to April 2010 as compared to Dh159.1 billion last year, according to recent statistics issued on Sunday by the Statistics Department of Dubai Customs.

Ahmed Butti Ahmed, Executive Chairman of Ports, Customs and Free Zone Corporation said Dubai trade exchange maintained a significant growth rate of 16.7 per cent for the past five years; and that "is a positive indicator for the upcoming periods.

Meanwhile, the compound imports value increased by 9 per cent in the first four months of 2010 standing at Dh115.6 billion as opposed to Dh105.6 billion over the same period in 2009.

"India had the biggest share of imports worth Dh17.1 billion, representing 14.8 per cent of Dubai compound imports. China came second with imports valued at Dh10.1 billion, followed by the USA with a Dh7.8 billion,â€ Butti said.

"Likewise, Dubai direct exports recorded a high value of Dh20.4 billion with 36 per cent increase, as compared to Dh15 billion in 2009.Butti then said India, Switzerland and Saudi Arabia topped the list of exported-to countries. "India alone had over 40 per cent of the total exports in Dubai valued at Dh8.2 billion whereas exports to Switzerland reached Dh913.7 million and Dh650 million to Saudi Arabia.

The figures released also show a growth of 16 per cent in re-exporting process and a share of Dh44.6 billion over the first four months of 2010 in comparison to Dh38.4 billion in 2009. "India again as well as Iran and Iraq topped the Dubai re-export countries list with 25.4 per cent, 12.7 per cent and 4.3 per cent respectively

UAE Investor Confidence Index records massive gain - GCC Index up 15.2 points

2010-04-21T04:26:00.000-07:00

Dubai, 20 April 2010: SHUAA Capital today issued its GCC Investor Sentiment Report, the only report of its kind for the Gulf markets. The SHUAA GCC Investor Confidence Index and its country sub-indices have a range between 0 and 200. A number greater than 100 represents positive sentiment while a number lower than 100 represents negative sentiment.

The GCC Investor Sentiment Index gained a massive 15.2 points, its second biggest ever gain on record. The results of the Index were almost entirely driven by a dramatic, positive change in investor sentiment towards the UAE. Following the Dubai World restructuring proposal that was announced on 25 March 2010, the UAE Investor Confidence Index recoded a significant jump of 36 points to a massive 120.4 points. The rest of the region also benefited from an improvement in investor confidence with all GCC Indices now above the 100 point threshold.

Mr. Sameer Al Ansari, Chief Executive Officer of SHUAA Capital commented on the results:

“The increase in investor confidence towards the UAE clearly indicates that the cloud of uncertainty hanging over the investment community has now been removed. The outcome of Dubai World’s restructuring proposal has had a very positive impact on the investment community, both regionally and internationally. At SHUAA, we are confident that we can benefit from improved investor sentiment as our fee generating business lines - investment banking, brokerage, asset management, and private equity - are very well positioned for a sustained market recovery. ”

Mr. Oliver Schutzmann, Author of the Investor Sentiment Report and Chief Communications Officer of SHUAA Capital, said:

“The UAE has clearly been a driver of sentiment across the region for a number of months now and March has been no exception. The positive news coming out of the UAE has had a knock on effect across GCC markets and now all indices are up on February with Saudi Arabia remaining the highest index in the region at 136.3 points. Qatar, not far behind the Kingdom, gained 6.5 points as it rose to 131.5 points. Also, for the first time since October 2009, the Kuwait Index is in positive territory at 104.5 points, its highest ever on record. Similarly, Bahrain sentiment has crossed the 100 point mark for the first time since November 2009.”

When SHUAA asked investors on their views on the six month outlook for regional stock markets, there was again a significant turnaround in sentiment, with the UAE markets leading the way. The Dubai Financial Market jumped a massive 62.3% on balance as it moved to 30% on balance for the month of March. The NASDAQ Dubai (March: 21%) and Abu Dhabi Stock Exchange (March: 45%) also recorded strong gains as they moved 48.9% and 35.2% upwards respectively.

Other GCC markets also recorded strong gains; the Bahrain Stock Exchange rose to 19% on balance this month from 5% in February; The Oman Stock Exchange gained 18.5% as it moved to 31% on balance and the Kuwait Stock Exchange moved out of neutral territory and rose to 13.1% on balance in March. The Saudi Stock Exchange and Doha Stock Market remained relatively unchanged on last month, with on balance figures of 48% and 36% respectively – still seen as significantly undervalued.

However, despite this new bullish investor outlook on the market, survey respondents still remain cautious. When asked if they would be investing over the next six months, only the UAE saw its on balance figure rise this month, by 27.1% to 7% on balance. Sentiment towards all other regional markets lost ground and moved into negative territory. Saudi Arabia (March: -10%), Qatar (March: -25%), Oman (March: -43%), Kuwait (March: -46%) and Bahrain (March -51%) all made significant losses of between 10% and 37% on balance respectively. However, this could have more to do with the global climate, as opposed to the regional situation, as both Global Emerging Markets (March: 5%) and BRIC countries (-15%) also lost ground, slipping by 10% and 25% on balance respectively.

IMF Survey welcomed recent initiatives improving policy coordination at the federal level, including the establishment Fiscal Coordination Committee in U.AE

2010-02-17T22:21:00.000-08:00

On February 3, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with United Arab Emirates.1

Background

The United Arab Emirates (U.A.E.) was adversely affected by a series of external and domestic shocks in 2009, including the global economic slowdown, the shutdown of international capital markets, and the impact of the bursting Dubai property bubble in mid-2008. Oil receipts plummeted, global trade and logistics contracted, as did property/construction activities.

A second bout of disruption arose when Dubai World (DW) announced in late November 2009 that it would seek a debt standstill through May 2010, including on bonded debt owed by its Nakheel property subsidiary. Market tensions calmed down after DW paid off the Nakheel bond on time in December with financial support from Abu Dhabi, but uncertainties remain. In particular, discussions on the modalities of Dubai’s debt restructuring are still ongoing, access to financial markets by Dubai entities has become more difficult, and it will take some time for the Government of Dubai (GD) to design and implement a strategy on the operational restructuring of its government-related entities (GREs).

Overall real GDP is estimated to have contracted by about ½ percent in 2009. Hydrocarbon GDP declined by 6¼ percent, while nonhydrocarbon growth, which had averaged 8 percent in the three previous years, is estimated to have slowed to about 1 percent. This figure masks the diverging fortunes of Abu Dhabi (where growth was sustained by public sector investment spending) and the northern emirates (in particular Dubai and Sharjah), where economic activity dropped owing to the bursting property bubble and the contraction in world trade.

After peaking at about 12 percent in 2008, annual consumer inflation declined to about 1 percent in 2009, reflecting lower import prices and a reduction in rents arising from an increased supply of buildings as well as the renewal of contracts at deflated market prices.

The external current account balance is estimated to have shifted to a deficit of 2.7 percent of GDP in 2009, the first deficit in decades. As a result of OPEC-mandated production cuts and lower prices, hydrocarbon export revenues dropped by about 45 percent in 2009, while imports fell by 22 percent owing to a sharp contraction in consumer goods imports and despite the large public infrastructure projects in Abu Dhabi. The reopening of capital markets in the second quarter of 2009 and external borrowing particularly by Abu Dhabi entities helped stabilize the international reserves position by the end of 2009.

The consolidated fiscal position is estimated at a virtual balance in 2009, following a surplus of 21 percent of GDP in 2008. Both oil and non-oil revenues fell owing to the decline in oil prices and the slowdown in economic activity, while spending increased by about 14 percent—a continuation of the expansionary fiscal stance adopted in 2008. The nonhydrocarbon deficit widened by about 7 percentage points to 34 percent of non-oil GDP in 2009, owing mainly to higher outlays by Abu Dhabi on strategic projects.

Broad money growth slowed from 19 percent in 2008 to 10 percent in 2009. Real credit to the private sector was flat in 2009 as demand weakened and commercial banks adopted a much more cautious approach in response to the riskier conditions. Credit was redirected towards public sector enterprises, and banks increased their holding of central bank CDs.

As the global crisis intensified, the authorities implemented measures to maintain confidence in the banking system, including recapitalization. As a result, the capital adequacy ratio of national banks increased from 13 percent to 18 percent in half a year. The authorities are currently working on tightening the regulatory framework by introducing a general provision for unclassified loans, standardizing loan classification, and enforcing provisioning standards uniformly.

Executive Board Assessment

Executive Directors commended the U.A.E. authorities for their decisive response to shocks from the global financial crisis, lower oil prices, and the bursting of the Dubai bubble. Directors noted, however, that these shocks, together with the recent announcement that DW would seek a six-month debt standstill, have raised important challenges for the U.A.E. economy.

Directors agreed that the prospects for the U.A.E. economy, given its underlying strengths, remain favorable. It will be important, however, to embark on a more balanced and sustainable growth path over the medium term.

Directors welcomed the ongoing engagement with DW’s creditors and stressed the importance of a speedy, orderly, cooperative, and predictable approach to debt restructuring. They underscored that the process should seek to enhance transparency and information disclosure and ensure comparability of treatment among creditors. They also emphasized that debt restructuring should be accompanied by a vigorous effort to undertake an operational restructuring of GREs, including formulating exit strategies for nonviable corporations, a process that will likely take time.

Directors welcomed the steps taken by the authorities to strengthen confidence in the banking system, but noted that the DW event had highlighted the need for additional contingency planning measures. In this context, Directors stressed the need to articulate a plan for dealing with the potential increase in loan losses. They also emphasized the importance of pressing ahead with introducing general loan provisions, enforcing more uniform provisioning and loan classification standards, and further strengthening capital buffers. Directors agreed that macroprudential policies should play an increasingly important role over the medium term, and noted that countercyclical solvency and liquidity measures, as well as closer monitoring of systemically important banks, could complement other regulatory policies. Directors also recommended an assessment of corporate governance, as well as development of a federal insolvency law.

Directors welcomed recent initiatives aimed at improving policy coordination at the federal level, including the establishment of a Fiscal Coordination Committee, the development of multi-year expenditure plans, and the introduction of debt management units. Looking ahead, they encouraged the authorities to rationalize investment decisions at the federal level, and to respond flexibly to the uncertainties surrounding the global outlook. Directors underscored that, given the limitations of monetary policy, fiscal policy should continue to play an important role in supporting economic activity. Most Directors agreed that the exchange rate peg to the U.S. dollar has provided a credible anchor and contributed to macroeconomic stability.

Directors stressed the need for increased transparency of economic and financial data, including financial accounts and business strategies for GREs. Together with improved corporate governance, Directors concluded that these steps would contribute to facilitating access of viable GREs to capital markets.

Directors viewed the adoption of the Federal Statistics Law and the establishment of the National Bureau of Statistics as important steps toward developing capacity at the federal level. They stressed the need to develop an action plan including the issuance of implementing regulations and a strengthening of the Board’s operational independence. Directors also welcomed the authorities’ efforts to compile consolidated fiscal statistics and encouraged them to pursue plans to develop leading indicators and the U.A.E’s international investment position, in line with initiatives under the General Data Dissemination System.

Mashreq reports net profit of Dh1 billion for 2009

2010-02-09T00:26:00.000-08:00

Mashreq, one of the UAE's leading financial institutions, reported net profits of AED 1 billion for the year ended 31 December on operating income of AED 4.9 billion. Prudent financial management has seen Mashreq increase its provisioning and strengthen its liquidity position. The growth in Mashreq's operating income has been largely driven by increases in Fee, Commission and other income recording 30% year on year growth. This growth has been complemented by a significant growth in investment income.

Mashreq very prudently managed its assets and liabilities to ensure high liquidity at all times which resulted to strengthening its cash position in 2009, with cash and balances with central banks standing at Dh20 billion, a 221% increase year on year. This high liquidity was achieved by keeping advances under control which declined by 13% to reach 47 billion whereas deposits were increased by 4% to reach 53.6 Billion. Thus Advances to Customer Deposits ratio improved from 107% in December 2008 to 89% in 2009. The liquid assets to total assets ratio which indicates bank's healthy liquidity position improved from 16% in 2008 to 30% in 2009. Following aggressive risk recognition and provisioning policy bank made allowances for impairment of Dh2.1 billion for the year 2009.

Mashreq enters the current financial year in a strong position with total assets standing at Dh94.6 billion and a total capital adequacy ratio of 20.2%. Tier 1 ratio to Risk weighted assets also improved from 11.5% to 14.02%. Further to this, effective cost management has allowed the bank to increase its operational efficiency with a year on year operating cost reduction of 5.5% and expenses to income ratio improving from 47% in 2008 to 36% in 2009. Bank's board has recommended a cash dividend of 15% and stock dividend of 5% subject to Central Bank clearance.

Commenting on Mashreq's financial performance for the twelve months to 31st December 2009, Abdul Aziz Al Ghurair, CEO of Mashreq said:"Mashreq continues to operate profitably at both an operational and net level. 2009 was in many ways a challenging year for the financial services industry, and I am pleased to enter 2010 with our growth plans intact.

"Our customers and shareholders interests are paramount to us and as a result in 2009 we ensured that we took a proactive approach to maintaining our strong financial position. Our operational efficiency has increased year on year, in addition to significantly raising our cash balances with central banks improving liquidity. We have had to take a long term view with regards to allowances for impairment, and whilst this has had an impact on our net profits for the year, we believe that it is of paramount importance to prepare against all eventualities.

"Operationally 2009 has been a successful year for Mashreq, with regional expansion underway, new products and partnerships that will lay the foundations for the year ahead." In 2009 Mashreq expanded its regional footprint, opening offices and branches in Cairo and Kuwait, in addition to opening four new branches in Abu Dhabi and Al Ain taking the total number of branches in the UAE to 59 branches along with three Mashreq Gold Centers and two Mashreq SME Centers. As part of its UAE expansion plans, Mashreq entered into strategic partnerships with Tourism Development and Investment Company (TDIC), Aldar and Surouh to increase access to home financing for customers wishing to invest in Abu Dhabi real estate.

Mashreq this year expanded its credit card offering by teaming up with Air Arabia to offer a unique combination of premium banking services and Air Arabia's wide range of travel services. Continuing this theme, Mashreq unveiled its Business Platinum debit card aimed at small to medium sized enterprises - the first of its kind in the UAE.

Also in April last year, Mashreq managed to strengthen the UAE's relationship with China by signing up with China UnionPay (CUP) offering their 1.8 billion UnionPay Card Holders acceptance in Mashreq ATM's and POS as they came together to build a new business model of cooperation, uniting the two leading financial institutions and strengthening the economic ties between the People's Republic of China and the United Arab Emirates.

In response to the growing demand for Shariah compliant financial products, Mashreq Capital DIFC ltd, which is regulated by Dubai Financial Services Authority (DFSA), launched the Badr Al-Islami Income Fund, in partnership with Badr Al-Islami the Islamic banking division of Mashreq. The division won the award for sukuk deal of the year 2008 at the Islamic Finance News Awards for its role as Joint Lead Manager and Bookrunner in the Dh 1.1 billion Tamweel sukuk.

At a corporate level Mashreq Capital continues to be a strong player in the regional bond and sukuk markets, having recently been one of the ten savings banks working alongside Qatar National Bank as part of the Vodafone Qatar IPO. â€“ Emirates News Agency, WAM

Emirates NBD launches Jersey Offshore Deposits

2010-02-09T00:24:00.000-08:00

Emirates NBD, announced yesterday the launch of Jersey Offshore Deposits, an attractive and flexible multi-currency fixed-deposit product, offering easy international access, potential tax efficiencies and total confidentiality.

The offering is targeted at affluent and high net worth customers in the UAE, and currently offers very attractive special promotional rates to provide customers with added value.

Jersey Offshore Deposits from Emirates NBD provides investors the ideal opportunity to grow their deposit portfolios at attractive returns while enjoying the peace of mind that comes with banking with the largest banking group in the region.

"Meeting the needs of our clients here in the UAE and across the world remains our highest priority at Emirates NBD," said Suvo Sarkar, Executive Vice President and General Manager, Retail Banking, Emirates NBD. "We are therefore extremely pleased to extend our deposit offerings through the introduction of Jersey Offshore Deposits, offering our customers attractive returns, peace of mind, flexibility and convenience."

Available in a range of international currencies, including the US dollar, UK pound, euro and the UAE dirham, the product is available in tenors ranging from one month to three years. The minimum deposit is US$25,000, GBP25,000, EURO25,000 or Dh100,000. - Emirates News Agency, WAM

Don't mix up between government and companies debts, urges Dhahi Khalfan

2009-11-30T23:25:00.000-08:00

Commander General '&' Head of the Dubai Government's Budget Committee has urged media not to confuse between the debts of local public companies and debts of the Dubai government, saying the latter's debts are almost non-existent. "There are tens of Dubai-based national firms which are making huge successes worldwide," he said. Dhahi Khalfan noted that in the whole region, real estate continue to be the top earning sector and that reality investors were still safe from the global slowdown. "Only speculative real estate investors have been affected by the slowdown in the sector," he added. "Banking sector is considered the backbone of any economy. The UAE local banks possess enough assets, adequacy, liquidity and reserves to continue fuelling the development process." Dhahi Khalfan said the new draft government budget for 2010 did not conflict with either the existing or planned infrastructure projects, necessary for sustainable development. "The department heads showed remarkable efficiency in setting financial and administrative strategies that will ensure Dubai's continuous excellence," he said. Dhahi Khalfan pointed out that Dubai has more than a single landmark to be proud of. "Usually, each of the world's countries has an icon to be proud of. Dubai has many, such as Burj Dubai, Burj Al Arab, Dubai Mall, as well as Dubai International Airport and the Emirates Airlines which are seen as major drivers for tourism." Dhahi Khalfan, who also heads Dubai's Crisis management Team, stated that Dubai government had no debts issue. "Dubai has rather an issue of unfair competition by some circles which seek to undermine the successful emirates and to unseat it as a global centre for finance and business and a magnet for foreign investments that thrived and succeeded in Dubai." "I noticed that Gulf and foreign media, as well as a large segment of general public, confuse between debts of Dubai government, which are almost non-existent, and the debts of local companies. This confusion should be corrected and the public should be made aware that to separate between the two types of debts." As for the real estate sector, Dhahi Khalfan said it should be referred to as a "recovering sector" for the investors who are in the market for medium and long term gains. "Those investors are not affected and their properties remain of a considerable value. They are still making profits from the rents which are very high, compared to other GCC countries." He called for differentiating between property investors and property speculators, adding that the latter were severely affected. "One has to be certain that the speculation market has its ups and downs. Therefore, speculators must know the risks involved," he concluded. â€“ Emirates News Agency, WAM

Dubai stock exchange merger a possibility

2009-09-13T02:10:00.000-07:00

A merger between Dubai's top stock exchanges, Dubai Financial Market and Nasdaq Dubai, is a possibility, a leading official said, according to newspaper Emirates Business.
"Under a consolidated approach, because Borse Dubai owns both DFM and Nasdaq Dubai, the merger can be looked into," Abdulla al-Awar, chief executive of the DIFC Authority, was quoted as saying in the newspaper.
The two exchanges are already in the process of combining some back office operations like clearing and trading, a move last year that sparked speculation that they were moving closer to a formal merger.
Any consolidation would signal a long-awaited restructuring of Dubai's financial architecture in the wake of the global economic crisis. Dubai is home to the regional offices to dozens of major international banks the financial hub for the region.
"There isn't, to the best of my knowledge, any official talks. But one thing is for sure, when we develop strategies we will be in close contact with Borse Dubai, Nasdaq Dubai and our regulators, Dubai Financial Services Authority, to make sure that the proposition of the UAE is a good one," Awar said.
The DIFC Authority is the body that develops policies and oversees the strategic development and administration of the Dubai International Financial Center, or DIFC. Borse Dubai is the holding company for the two exchanges, DFM and Nasdaq Dubai.
A spokesman for Borse Dubai and Nasdaq Dubai declined to comment. A DFM spokesman was not immediately available to comment.
Nasdaq OMX acquired a one third stake in Nasdaq Dubai, where shares can list in UAE dirhams and in dollars and according to international protocols, in 2008. The exchange has suffered from the perception that it lacks liquidity. Shares on the DFM are listed in UAE dirhams and follow local rules. (Reuters)

Equity funds registered for sale in the GCC record a 30% increase in Q2

2009-08-24T02:23:00.000-07:00

The latest GCC Fund Market Insight Report from Lipper, published today (Sunday, 23rd August 2009), has revealed that equity funds registered for sale in GCC markets moved into positive territory for the first half of 2009 (YTD 30th June) recording an increase of 21.14%.

Compared with the 12.55% loss in the corresponding period in 2008, almost all Lipper equity categories finished H1 2009 in positive fashion, with emerging markets such as Russia, Indonesia and utility funds gaining 70.77%, 60.16% and 58.97% respectively. In contrast, funds invested in Germany weighted-down overall performance – decreasing 2.32%.

Rebounding strongly in line with improving market conditions, bond funds were up 10.39% over the second quarter and registered a 6.70% rise year to date, which compared favourably with the first quarter of 2009, which witnessed a negative performance of 3.37%.

GCC-domiciled funds revealed similar results, with funds invested in emerging markets and sector-based funds, such as information technology and natural resources, leading the way.

Islamic funds registered for sale in the GCC underperformed their conventional peers during the first half of 2009, gaining only 4.68% some 11.35% behind conventional funds, which returned 16.03%. Equity was the best performing asset class gaining almost 10% due mainly to the robust results from Emerging Markets Global and Emerging Markets Asia, which both increased by over 40%. Real estate funds and money market funds both lost 6.62% and 1.69% respectively, while Kuwaiti money market funds suffered an average 11.11% decline mainly due to the depreciation of the Kuwaiti Dinar against the US Dollar.

The five Lipper Islamic Indices confirmed these trends, with the Islamic Equity Funds Index headlining with an improved return of 11.40% to the end of the first half.

Dunny Moonesawmy, Lipper’s Head of Research for the Middle East, commented: “GCC markets outperformed developed markets but underperformed other emerging markets. News at corporate level (the disclosures of payment defaults by Saad Group and Ahmad Hamad Algosaibi & Bros) and at macro-economic level (confirmation of a lighter GCC monetary council) contributed to accrued uncertainties in the market. However, the market should stabilise itself with the acceleration of government spending programmes which should benefit the whole region.”

UBS Saudi Arabia receives commencement letter from the Capital Market Authority of the Kingdom of Saudi Arabia

2009-07-14T03:38:00.000-07:00

Riyadh/London - UBS AG today announces that UBS Saudi Arabia has received approval from the Capital Market Authority (CMA) to commence securities business activities in the Kingdom of Saudi Arabia. This enables the firm to expand its presence in the Middle East and marks a further step towards the firm’s goal of becoming one of the region’s leading financial services providers.

UBS Saudi Arabia is based in Riyadh and will provide the firm’s comprehensive range of services to government, corporate and individual clients covering wealth management, investment banking, fixed income sales and execution, and institutional asset management.

In establishing UBS Saudi Arabia, UBS has partnered with local interests including Mohammed Al Dhoheyan, previously CEO of the Development and Management House for Investments, and MerchantBridge, an equity house investing in the Middle East.

John Fraser, Chairman and CEO of UBS Global Asset Management, UBS AG Group Executive Board member and Chairman of UBS Saudi Arabia said: “We are delighted with the approval to commence business in Saudi Arabia and look forward to providing top quality financial and securities business services to our clients in the Kingdom.”

“With over 40 years’ experience in the region, our decision to establish UBS Saudi Arabia in the Kingdom is further affirmation of UBS’s long-standing commitment to the Middle East and marks yet another important milestone in this very critical and substantial market.” Fraser added

Mohamed Sammakia, CEO of UBS Saudi Arabia also commented: “Saudi Arabia is the dominant market in the Gulf region and, as such, we are very determined to make this business a success. In particular we are very proud of the excellent team already on the ground that will support our local clients and capitalise on the myriad of opportunities within the Kingdom”.

Mohamed Al Dhoheyan, Vice Chairman of UBS Saudi Arabia also commented: “UBS has a deep-rooted relationship with the Kingdom dating back to the early 1950s. We have a great opportunity to capitalize on our strengths by now being on the ground.”

Mercer's 2009 Quality of Living survey highlights Dubai has climbed 32 places to reach 20th

2009-07-08T04:44:00.000-07:00

Tokyo has knocked Moscow off the top spot to become the world’s most expensive city for expatriates, according to the latest Cost of Living Survey from Mercer. Osaka is in second position, up nine places since last year, whereas Moscow is now in third place. Geneva climbs four places to fourth position and Hong Kong moves up one to reach fifth. Johannesburg has replaced Asunción in Paraguay as the least expensive city in the ranking.

In Mercer’s survey, New York is used as the base city for the index and scores 100 points, all cities are compared against New York and currency movements are measured against the US dollar. Tokyo scores 143.7 points and is nearly three times as costly as Johannesburg with an index score of 49.6.

The survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowance for their expatriate employees. See top 50 cost of living ranking below.

A significant reshuffle of cities can be observed in this year’s ranking, mainly due to considerable currency fluctuations worldwide. The majority of European cities moved down in the ranking with Warsaw experiencing the most dramatic change, plummeting 78 places from 35th to 113th. London and Oslo, both previously in the top 10, have dropped 13 and 10 places respectively. The same trend can be seen in Australia, New Zealand and India. Sydney has dropped 51 places from 15th to 66th and Mumbai has slipped down to 66th from 48th place.

Cities in the US, China, Japan and the Middle East have surged in the ranking. New York is a new entry in the top 10, jumping from 22nd to 8th place, and so is Beijing, now in 9th place, up from 20th in 2008. Japan now has two cities in the top 10 and Dubai has climbed 32 places to reach 20th.

Nathalie Constantin-Métral, a senior researcher at Mercer, commented: “As a direct impact of the economic downturn over the last year we have observed significant fluctuations in most of the world’s currencies, which have had a profound impact on this year’s ranking. Many currencies, including the Euro and British pound, have weakened considerably against a strong US dollar causing a number of European cities to plummet in the rankings.”

She added: “With significant exposure to multiple economies and currencies, multinational companies continue to be greatly affected by the financial crisis. The cost of expatriate programmes is heavily influenced by currency fluctuations and inflation rates. Now that cost containment and reduction is at the top of most company agendas, keeping track of the change in factors that dictate expatriate cost of living and housing allowances is essential.

“It is important for multinational companies to continuously benchmark against their peers to ensure compensation packages are fair and in line with the rest of the market.”
Europe, Middle East and AfricaIn third place and with an index score of 115.4, Moscow remains the most expensive city in Europe for expatriates. However, a dramatic depreciation of the rouble against the US dollar has led to a sharp fall in the city’s index score compared to 2008 (142.4). Accommodation costs also started to decrease at the end of last year after a sharp increase in the first part of 2008. The next European cities in the ranking are Geneva and Zurich in fourth and sixth place, up from eight and ninth respectively. Copenhagen remains in seventh, and both Milan and Paris drop one place to 11th and 13th.

European cities have experienced some of this year’s steepest falls in the ranking, with Warsaw plummeting from 35th to 113th and Glasgow (129th place) and Birmingham (125th place) in the UK falling 60 and 59 places respectively. German and Spanish cities all fell between eight and 11 places, whereas cities in Sweden, Ukraine, Czech Republic, Romania and Hungary all fell between 36 and 48 places.

“As most European currencies have weakened against the dollar it has become more costly for companies based in this region to send expatriates and their families to US cities,” said Ms Constantin-Métral.

Oslo and London, both previously in the top 10, are now in 14th and 16th place respectively. “The decline of rental prices both in Oslo and London, coupled with the fall in the value of British pound and Norwegian krone against the US dollar, have caused these cities to plummet in the ranking,” said Ms Constantin-Métral.

While the vast majority of European cities have fallen in the ranking, most Middle Eastern cities have experienced a reverse trend. Both Dubai and Abu Dhabi have risen significantly in the ranking, moving from 52nd to 20th and 65th to 26th respectively. This is mainly due to the UAE dirham being fixed to the US dollar. Tel Aviv remains the most expensive city in the Middle East, although it is the only one in the region to move down in the ranking, from 14th to 17th.

Most African cities moved up in this year’s ranking, although their index scores have decreased. Cairo jumps a substantial 44 places to 57th as the Egyptian pound fared well against the US dollar. The sharp decrease of the South African rand against the US dollar has caused Johannesburg to slip to bottom position

The World Bank said on Monday that the global recession this year will be deeper than it predicted in March world bank

2009-06-23T05:20:00.001-07:00

The world economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington-based lender said in its latest report. Growth will be 2 percent next year, down from a 2.3 percent prediction, the bank said.
Regionally, the bank said that while the Middle East and North Africa region has been less directly affected by the credit crunch than other regions, local equity and property markets have come under intense pressure, and developing countries in the region have suffered from much weaker conditions in the high-income countries in the region.
Consequently, remittances, services exports and FDI flows from these countries and high-income Europe are expected to fall in 2009 - cutting into incomes. Growth is projected to halve to 3.1 percent in 2009, then edge up to 3.8 percent in 2010 and 4.6 percent in 2011.
Global GDP growth is expected to rebound to 2% in 2010 and 3.2% by 2011. In developing countries growth is expected to be higher, at 4.4 % in 2010 and 5.7 % in 2011, albeit subdued relative to the robust performance prior to the current crisis.
"The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction," said Justin Lin, World Bank Chief Economist and Senior Vice President, Development Economics,
'''Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit."
While the authors note that extraordinary policy responses by a number of big economies have prevented systemic collapse, they stress the importance of concerted global action while the crisis is still underway.

Man Industries(India)Limited - Man Industries bags order of Rs. 1340 crores from Middle East

2009-04-29T04:43:00.000-07:00

Mumbai, April 29, 2009: MAN Industries (India) Limited, one of the leading Large Diameter Pipe manufacturing companies in the country, today announced securing a prestigious order worth Rs 1340 crores from middle east during the current year.

The latest international order has been allotted to the Indian company amidst stiff international bidding.

The order has to be executed in the current financial year.

The U.A.E. has been adversely affected by the turmoil in global financial markets IMF

2009-04-14T01:18:00.000-07:00

The U.A.E. has been adversely affected by the turmoil in global financial markets, as evident in a widening of sovereign risk spreads and a sharp downturn in stock markets—most pronounced for real estate companies. Capital inflows driven by expectations of a revaluation of the dirham vis-à-vis the U.S. dollar largely reversed over the summer of 2008; currency futures indicate that markets no longer doubt the peg. Anecdotal evidence suggests that foreign financing for corporates has tightened, and a slowdown in real estate and construction seems underway.

NASDAQ Dubai listed Dubai Gold Securities (DGS)

2009-04-09T00:56:00.000-07:00

NASDAQ Dubai welcomed the listing today of Dubai Gold Securities (DGS), a unique Shariah-compliant product that gives investors a straightforward route to gain exposure to the price of gold.
DGS can be bought and sold on NASDAQ Dubai just like shares, through one of the exchange's 29 regional and international trading Members, or through a broker that has a relationship with a NASDAQ Dubai trading Member.
DGS are an initiative of the World Gold Council (WGC) and the Dubai Multi Commodities Centre. Similar gold securities have been listed through WGC initiatives on 12 other international exchanges, with gold in trust exceeding 1,200 tonnes. DGS are the only ones listed in the Middle East to have been declared Shariah-compliant by a Shariah Supervisory Board.
Jeff Singer, Chief Executive of NASDAQ Dubai, said: "NASDAQ Dubai is already an established platform for Shariah products and is delighted to welcome today its first Shariah-compliant gold securities.
"As a traditional trading hub for gold in the Middle East, Dubai is a natural venue for listing innovative Shariah-compliant gold products. DGS offer investors an alternative to physical gold and gold futures."
NASDAQ Dubai has a higher value of listed Sukuk (Shariah-compliant bonds) than any other exchange, at $16.4 billion.

The world economy is set to shrink by between 0.5% and 1.0% in 2009, the first global contraction in 60 years

2009-03-22T02:56:00.000-07:00

In its gloomiest forecast yet, the International Monetary Fund (IMF) says that developed countries will suffer a "deep recession". The global economic body says "the prolonged financial crisis has battered global economic activity beyond what was previously anticipated". Just two months ago, the IMF predicted world output would increase by 0.5%. But in its report drawn up for the G20 group of finance ministers, the IMF now says that the whole world economy will shrink, and predicts that the advanced economies will suffer a decline in output of between 3% and 3.5% in 2009, and barely grow in 2010, with growth of between 0% and 0.5%.
The IMF says this will happen despite a big fiscal stimulus from many G20 countries designed to boost growth. It says that the G20 as a whole is adding 1.8% of GDP ($780bn) to boost growth this year - but that the EU is lagging behind with only 1%. And it warns that the UK is building up the biggest fiscal deficit amongst all the G20 countries, which will amount to 11% of GDP by 2010.
Financial crisis unresolved
The IMF warns that the economic conditions could still deteriorate further if the banking crisis was not tackled head on by governments around the world. "In the event of further delays in implementing comprehensive policies to stabilise financial conditions, the recession will be deeper and more prolonged," the report says. The global slowdown has affected exporters such as Bangladesh
The IMF says its revised projections reflect "unrelenting financial turmoil, negative incoming data, sinking confidence, and the limited effect to date of policy responses with respect to the restoration of financial system health." Japan is forecast to decline the most, by 5.8% this year, while the eurozone will contract by 3.2% and the US by 2.6%. The most urgent problem in restoring the banking system to health is in the United States, where the Obama administration has yet to reveal details of its plan for private-public partnership to buy up to $1tn in toxic assets. At the G20 finance ministers meeting at the weekend, restoring lending by tackling problems in the financial system was cited as the "key priority" - a message reinforced by G20 business leaders who met in London on Wednesday

Company Disclosure

2009-02-25T05:44:00.000-08:00

25/02/2009
DRC: Announces its BOD meeting to be held on 01/03/2009
25/02/2009
DIB: Press release regarding the results of its BOD meeting held on 24/02/2009
25/02/2009
UPP: Announces its preliminary financial results for 2008
25/02/2009
UPP: Announces the results of its BOD meeting held on 24/02/2009 including the proposed distributions
24/02/2009
NCC: Discloses its yearly audited financial statements for the period ended 31/12/2008
24/02/2009
DEYAAR: Announces its 3rd BOD meeting to be held on 26/02/2009 including its agenda
24/02/2009
NGI: Announces the results of its BOD meeting held on 23/02/2009 including its AGM meeting to be held on 22/03/2009 and the proposed dividends
24/02/2009
EIB: Agenda of its AGM being held on 17/03/2009
24/02/2009
GULFA: Discloses its annual audited financial statements for the year ended 31/12/2008
23/02/2009
JEEMA: Signing of asset sale agreement for sale of Aquafina plant

Investors reassured by Dubai bond sale to U.A.E.

2009-02-24T02:26:00.000-08:00

A decision by the central bank of the United Arab Emirates to buy $10 billion in bonds from Dubai eased worries that the emirate could default as it grappled with the global economic downturn.
Dubai stocks jumped almost 8 percent on Monday, and the cost of insuring its debt fell sharply from peaks this month when credit default swaps for some Dubai-linked companies soared.
"The U.A.E. is making clear it is able and willing to provide support as and when it is needed," said Simon Williams, a regional economist at HSBC. "Dubai's economy will still slow sharply this year. Credit markets will remain tight and export markets are weak, but this is a crucial step to put a floor under the near-term downturn."
Facing a real estate slump that has led to thousands of job cuts, the cancellation of hundreds of billions of dollars in construction projects, and heightened concern about the quality of bank assets, Dubai needed quick access to funds to refinance $15 billion to $20 billion in debt this year.
But global banks have been reluctant to lend a hand. Borse Dubai, which operates the local stock exchange, struggled last week to refinance $3.4 billion from banks, pushing the emirate to turn to a state-owned investment company for most of fundsIn a clear signal that the government of the United Arab Emirates would not leave Dubai to struggle with the crisis alone, Dubai initiated a $20 billion bond program and said it would sell at least half to the central bank of the seven-member federation. "We took out the uncertainty that was weighing on Dubai," said Raed Safadi, chief economist for the Dubai government. "Businesses can now get on with their operations."
Analysts were reluctant to term the move a bailout, since the plan involved giving debt to the central bank - though at a subsidized rate of 4 percent annually - rather than equity. They were also skeptical about how much appetite there would be on the public market for the remaining bonds, given the low yields. But credit and equity markets reacted positively to the news.
The cost of insuring Dubai sovereign debt with credit default swaps fell to about $750,000 per $10 million of five-year debt, down from $920,000 to $950,000 on Sunday.
Dubai's benchmark stock index, which suffered a 72 percent plunge last year, advanced 7.91 percent.Emaar Properties, a bellwether stock, soared 13.2 percent on news of the bond issue and a statement that it did not expect any further significant effect on its first-quarter results from the bankruptcy of its U.S. unit, John Laing Homes.
"The market was pricing in a Dubai bankruptcy, which was never the case," said Rami Sidani, head of investment for the Middle East and North Africa at Schroders Middle East. "Dubai is getting proper support from the federation, as it has a vital economic presence in the U.A.E. The U.A.E. has the reserves and oil surplus to be used in a rainy day, which is what we are going through today."
But analysts said $20 billion was not enough to meet the economic challenges facing Dubai, which threw itself onto the global stage by building the world's tallest tower, as well as islands shaped like palm fronds and the world map.
Property prices in Dubai have fallen at least a quarter from a peak in 2008, and banks have taken heavy provisions for bad loans and written down investment losses.
"We probably will see more response to help the economy," said Marios Maratheftis, regional head of research at Standard Chartered Bank. "I think what the economy needs is to provide it with liquidity so we can start seeing credit growth and so we can see the economy stand back on its feet."
The purchase of the Dubai debt adds to the array of tools the U.A.E. central bank can use to control monetary policy in a country that pegs its currency to the U.S. dollar, constraining its ability to intervene with the markets.
"The central bank can now buy and sell government securities to the banking system to control liquidity," said Nasser Saidi, chief economist at the Dubai International Financial Center

Nasdaq Dubai Signs Agreement with OIC

2009-02-04T05:59:00.000-08:00

Nasdaq Dubai and The Options Industry Council (OIC), a world leader in equity options education, have signed a licensing agreement to develop an equity options education programme for Middle East investors and financial advisors. Nasdaq Dubai, the international stock exchange serving the Middle East, will tailor content provided by Chicago-based OIC to deliver a comprehensive education programme. This will include seminars run by Nasdaq Dubai Academy explaining equity options for institutional and individual investors, as well as brokers. Options are derivatives that are used around the world to hedge risk. In 2008, US$3.58 billion options contracts were traded on exchanges in the US. Nasdaq Dubai is working to list equity options in 2009 (subject to regulatory approval), following the launch of its equity futures market in November 2008. "Supported by the internationally recognised expertise and training materials of the OIC, Nasdaq Dubai aims to play a key role in delivering information about the opportunities offered by equity options trading. Options traded on-exchange have the potential to become a major asset class in the region as investors seek to insure against risk," Nasdaq Dubai, Chief Executive, Jeff Singer said. "OIC has experienced continued worldwide investor interest in the US equity options markets, and the use of this versatile investment tool, generally,", OIC President, Gina McFadden said. "Working with Nasdaq Dubai to bring options education to the Middle East is a natural extension of OIC's mission to inform investors and their financial advisors about the benefits and risks of equity options," he added. Nasdaq Dubai (formerly called the DIFX) is the international financial exchange serving the region between Western Europe and East Asia. It welcomes regional as well as global issuers that seek regional and international investment. The exchange currently lists shares, derivatives, structured products, Sukuk (Islamic bonds) and conventional bonds. OIC is an industry cooperative funded by the Boston Options Exchange, Chicago Board Options Exchange, International Securities Exchange, Nasdaq Options Market, Nasdaq OMX PHLX, NYSE Amex Options, NYSE Arca, and The Options Clearing Corporation.

World Faces Deepening Crisis in 2009, IMF Chief Warns

2009-01-22T02:19:00.000-08:00

The world faces a deepening economic crisis in 2009, with the slowdown in advanced economies now spreading to major emerging markets such as China, India, and Brazil, Dominique Strauss-Kahn, IMF Managing Director, warned.
He said the IMF would significantly adjust downward its forecast for world growth for 2009 when the 185-member international institution announces a revised assessment of the global economy on January 29. In an update released last November, the IMF had said that advanced economies would see a contraction in output in 2009—the first since World War II—but that growth in major emerging markets would still enable the global economy to advance by 2.2 percent in 2009.
Deteriorating outlook
But Strauss-Kahn said in an interview with the BBC's Hardtalk program, broadcast on January 21, that economic prospects had worsened over the past few months and the IMF would announce lower numbers at the January 29 press conference in Washington DC.
"So 2009 will not be a good year for the world economy, even if we see recovery at the beginning of 2010," he said.
Prospects were worse than expected not just in the United States and Europe but also in major emerging market economies such as China, India, and Brazil, which would experience very low growth compared with recent historical trends.

Stimulus key to recovery

The IMF has recommended a combination of measures to get the world back on track, including
• action already taken by many governments to stabilize financial markets and get credit flowing again;
• fiscal stimulus through a combination of increased government spending and tax cuts to revive consumer demand;
• liquidity support for emerging market countries to reduce the adverse effects of the widespread capital outflows triggered by the financial crisis; and
• help for low-income countries harmed by fallout from the crisis and the lingering impact of last year's spike in food and fuel prices.

The IMF has proposed that governments in a position to do so should act together to inject a global fiscal stimulus equivalent to about 2 percent of world GDP—$1.2 trillion.

More on spending side

A number of governments around the world have announced stimulus plans, including in the United States, Japan, Europe, China, and India. But Strauss-Kahn said he did not think enough had been done so far. "In Europe especially, they are still behind the curve," he said. "There needs to be more done on the spending side, especially because the reaction of the economy to more spending is quicker than the reaction to a decrease in taxes."
The European Commission said on January 19 it expected that the 16 countries using the euro would see their economies shrink by 1.9 percent in 2009.
Strauss-Kahn warned of the risk of social upheaval and unrest in some countries worst affected by the downturn and said he expected additional countries to seek IMF help, not just in Eastern Europe, but elsewhere in the world, including Latin America where some countries were "just on the edge."
The IMF has so far committed $47.9 billion in lending to a number of economies affected by the crisis, including Belarus, Hungary, Iceland, Latvia, Pakistan, Serbia, and Ukraine. It announced a precautionary loan for El Salvador this month and an IMF team is also in negotiations with Turkey.

Meltdown avoided

Strauss-Kahn said the world had avoided a total meltdown of the financial system as a result of coordinated intervention by major central banks last October. "We were very close in September to a total collapse of the world economy," the former French finance minister revealed.
He defended the IMF's different prescriptions for different economies, arguing that while major advanced economies could afford to boost spending and run up larger deficits to help get out of the recession, other crisis-hit countries, particularly the emerging markets of eastern Europe, do not have the same budgetary room to maneuver because inflows of capital had dried up and their currencies were under pressure.
Strength of the dollar
Strauss-Kahn said that even though the financial crisis had started in the United States, the recent strength of the dollar showed that people around the world still had confidence in the U.S. economy.
As long as that confidence remained, the United States would be able to finance its large deficit. Even though the Chinese economy was on the rise, the United States would still remain formidable. Through globalization, both economies would remain dependent on the rest of the world.
A longer-term issue was to fix the serious imbalances in the global economy.
IMF funding
Asked if the IMF has sufficient resources to cope with the crisis, Strauss-Kahn said that the Fund had enough money for the immediate future. "If the crisis goes on, which is most probable, then down the road—say six months from now—we will need more money."
Before the crisis erupted, the IMF had around $200 billion in available resources and access to a further $50 billion. Since then, Japan has offered to lend the IMF an additional $100 billion. Strauss-Kahn has said that the IMF may need an extra $150 billion to help emerging markets and low-income countries get through the crisis.
Better regulation
Strauss-Kahn said that the crisis highlighted the need for better regulation and supervision of the banking sector, especially in countries such as the United States.
Member governments expect the Group of 20 industrialized and emerging market economies to make significant progress in boosting transparency and tightening supervision in the financial sector when they meet in London in April. The London meeting follows the meeting in Washington last November when leaders agreed an action plan to combat the growing crisis.

The most important issue President Obama will face will be the Economy

2009-01-19T22:17:00.000-08:00

U.S. President-elect Barack Obama will be sworn in on Tuesday as president of the United States. Candidate Obama said much about what he would do as president; now we will see what President Obama actually does. The most important issue Obama will face will be the economy, something he did not anticipate through most of his campaign. The first hundred days of his presidency thus will revolve around getting a stimulus package passed. But Obama also is now in the great game of global competition — and in that game, presidents rarely get to set the agenda.The major challenge he faces is not Gaza; the Israeli-Palestinian dispute is not one any U.S. president intervenes in unless he wants to experience pain. As we have explained, that is an intractable conflict to which there is no real solution. Certainly, Obama will fight being drawn into mediating the Israeli-Palestinian conflict during his first hundred days in office. He undoubtedly will send the obligatory Middle East envoy, who will spend time with all the parties, make suitable speeches and extract meaningless concessions from all sides. This envoy will establish some sort of process to which everyone will cynically commit, knowing it will go nowhere. Such a mission is not involvement — it is the alternative to involvement, and the reason presidents appoint Middle East envoys. Obama can avoid the Gaza crisis, and he will do so.
Obama’s Two Unavoidable Crises
The two crises that cannot be avoided are Afghanistan and Russia. First, the situation in Afghanistan is tenuous for a number of reasons, and it is not a crisis that Obama can avoid decisions on. Obama has said publicly that he will decrease his commitments in Iraq and increase them in Afghanistan. He thus will have more troops fighting in Afghanistan. The second crisis emerged from a decision by Russia to cut off natural gas to Ukraine, and the resulting decline in natural gas deliveries to Europe. This one obviously does not affect the United States directly, but even after flows are restored, it affects the Europeans greatly. Obama therefo re comes into office with three interlocking issues: Afghanistan, Russia and Europe. In one sense, this is a single issue — and it is not one that will wait. Obama clearly intends to follow Gen. David Petraeus’ lead in Afghanistan. The intention is to increase the number of troops in Afghanistan, thereby intensifying pressure on the Taliban and opening the door for negotiations with the militant group or one of its factions. Ultimately, this would see the inclusion of the Taliban or Taliban elements in a coalition government. Petraeus pursued this strategy in Iraq with Sunni insurgents, and it is the likely strategy in Afghanistan. But the situation in Afghanistan has been complicated by the situation in Pakistan. Roughly three-quarters of U.S. and NATO supplies bound for Afghanistan are delivered to the Pakistani port of Karachi and trucked over the border to Afghanistan. Most fuel used by Western forces in Afghanistan is refined in Pakistan and delivered via the same route. There are two crossing points, one near Afghanistan’s Kandahar province at Chaman, Pakistan, and the other through the Khyber Pass. The Taliban have attacked Western supply depots and convoys, and Pakistan itself closed the routes for several days, citing government operations a gainst radical Islamist forces. Meanwhile, the situation in Pakistan has been complicated by tensions with India. The Indians have said that the individuals who carried out the Nov. 26 Mumbai attack were Pakistanis supported by elements in the Pakistani government. After Mumbai, India made demands of the Pakistanis. While the situation appears to have calmed, the future of Indo-Pakistani relations remains far from clear; anything from a change of policy in New Delhi to new terrorist attacks could see the situation escalate. The Pakistanis have made it clear that a heightened threat from India requires them to shift troops away from the Afghan border and toward the east; a small number of troops already has been shifted. Apart from the direct impact this kind of Pakistani troop withdrawal would have on cross-border operations by the Taliban, such a move also would dramatically increase the vulnerability of NATO supply lines through Pakistan. Some supplies could be shipped in by aircraft, but the vast bulk of supplies — petroleum, ammunition, etc. — must come in via surface transit, either by truck, rail or ship. Western operations in Afghanistan simply cannot be supplied from the air alone. A cutoff of the supply lines across Pakistan would thus leave U.S. troops in Afghanistan in crisis. Because Washington can’t predict or control the future actions of Pakistan, of India or of terrorists, the United States must find an alternative to the routes through Pakistan.When we look at a map, the two routes through Pakistan from Karachi are clearly the most logical to use. If those were closed — or even meaningfully degraded — the only other viable routes would be through the former Soviet Union.• One route, along which a light load of fuel is currently transported, crosses the Caspian Sea. Fuel refined in Armenia is ferried across the Caspian to Turkmenistan (where a small amount of fuel is also refined), then shipped across Turkmenistan directly to Afghanistan and through a small spit of land in Uzbekistan. This route could be expanded to reach either the Black Sea through Georgia or the Mediterranean through Georgia and Turkey (though the additional use of Turkey would require a rail gauge switch). It is also not clear that transports native to the Caspian have sufficient capacity for this.• Another route sidesteps the issues of both transport across the Caspian and the sensitivity of Georgia by crossing Russian territory above the Caspian. Kazakhstan, Uzbekistan (and likely at least a small corner of Turkmenistan) would connect the route to Afghanistan. There are options of connecting to the Black Sea or transiting to Europe through either Ukraine or Belarus.• Iran could provide a potential alternative, but relations between Tehran and Washington would have to improve dramatically before such discussions could even begin — and time is short. Many of the details still need to be worked out. But they are largely variations on the two main themes of either crossing the Caspian or transiting Russian territory above it. Though the first route is already partially established for fuel, it is not clear how much additional capacity exists. To complicate matters further, Turkmen acquiescence is unlikely without Russian authorization, and Armenia remains strongly loyal to Moscow as well. While the current Georgian government might leap at the chance, the issue is obviously an extremely sensitive one for Moscow. (And with Russian forces positioned in Azerbaijan and the Georgian breakaway regions of Abkhazia and South Ossetia, Moscow has troops looming over both sides of the vulnerable route across Georgia.) The second option would require crossing Russian territory itself, with a number of options — from connecting to the Black Sea to transiting either Ukraine or Belarus to Europe, or connecting to the Baltic states.Both routes involve countries of importance to Russia where Moscow has influence, regardless of whether those countries are friendly to it. This would give Russia ample opportunity to scuttle any such supply line at multiple points for reasons wholly unrelated to Afghanistan.If the West were to opt for the first route, the Russians almost certainly would pressure Azerbaijan and Turkmenistan not to cooperate, and Turkey would find itself in a position it doesn’t want to be in — namely, caught between the United States and Russia. The diplomatic complexities of developing these routes not only involve the individual countries included, they also inevitably lead to the question of U.S.-Russian relations. Even without crossing Russia, both of these two main options require Russian cooperation. The United States must develop the option of an alternative supply route to Pakistan, and in doing so, it must define its relationship with Russia. Seeking to work without Russian approval of a route crossing its “near abroad” will represent a challenge to Russia. But getting Russian approval will require a U.S. accommodation with the country.
The Russian Natural Gas Connection
One of Obama’s core arguments against the Bush administration was that it acted unilaterally rather than with allies. Specifically, Obama meant that the Bush administration alienated the Europeans, therefore failing to build a sustainable coalition for the war. By this logic, it follows that one of Obama’s first steps should be to reach out to Europe to help influence or pressure the Russians, given that NATO has troops in Afghanistan and Obama has said he intends to ask the Europeans for more help there. The problem with this is that the Europeans are passing through a serious crisis with Russia, and that Germany in particular is involved in trying to manage that crisis. This problem relates to natural gas. Ukraine is dependent on Russia for about two-thirds of the natural gas it uses. The Russians traditionally have provided natural gas at a deep discount to former Soviet republics, primarily those countries Russia sees as allies, such as Belarus or Armenia. Ukraine had received discounted natural gas, too, until the 2004 Orange Revolution, when a pro-Western government came to power in Kiev. At that point, the Russians began demanding full payment. Given the subsequent rises in global energy prices, that left Ukraine in a terrible situation — which of course is exactly where Moscow wanted it.The Russians cut off natural gas to Ukraine for a short period in January 2006, and for three weeks in 2009. Apart from leaving Ukraine desperate, the cutoff immediately affected the rest of Europe, because the natural gas that goes to Europe flows through Ukraine. This put the rest of Europe in a dangerous position, particularly in the face of bitterly cold weather in 2008-2009.The Russians achieved several goals with this. First, they pressured Ukraine directly. Second, they forced many European states to deal with Moscow directly rather than through the European Union. Third, they created a situation in which European countries had to choose between supporting Ukraine and heating their own homes. And last, they drew Berlin in particular — since Germany is the most dependent of the major European states on Russian natural gas — into the position of working with the Russians to get Ukraine to agree to their terms. (Russian Prime Minister Vladimir Putin visited Germany last week to discuss this directly with German Chancellor Angela Merkel.) The Germans already have made clear their opposition to expanding NATO to Ukraine and Georgia. Given their dependency on the Russians, the Germans are not going to be supporting the United States if Washington decides to challenge Russia over the supply route issue. In fact, the Germans — and many of the Europeans — are in no position to challenge Russia on anything, least of all on Afghanistan. Overall, the Europeans see themselves as having limited interests in the Afghan war, and many already are planning to reduce or withdraw troops for budgetary reasons. It is therefore very difficult to see Obama recruiting the Europeans in any useful manner for a confrontation with Russia over access for American supplies to Afghanistan. Yet this is an issue he will have to address immediately.
The Price of Russian Cooperation
The Russians are prepared to help the Americans, however — and it is clear what they will want in return. At minimum, Moscow will want a declaration that Washington will not press for the expansion of NATO to Georgia or Ukraine, or for the deployment of military forces in non-NATO states on the Russian periphery — specifically, Ukraine and Georgia. At this point, such a declaration would be symbolic, since Germany and other European countries would block expansion anyway. The Russians might also demand some sort of guarantee that NATO and the United States not place any large military formations or build any major military facilities in the former Soviet republics (now NATO member states) of Estonia, Latvia and Lithuania. (A small rotating squadron of NATO fighters already patrols the skies over the Baltic states.) Given that there were intense anti-government riots in Latvia and Lithuania last week, the stability of these countries is in question. The Russians would certainly want to topple the pro-Western Baltic governments. And anything approaching a formal agreement between Russia and the United States on the matter could quickly destabilize the Baltics, in addition to very much weakening the NATO alliance.Another demand the Russians probably will make — because they have in the past — is that the United States guarantee eventual withdrawal from any bases in Central Asia in return for Russian support for using those bases for the current Afghan campaign. (At present, the United States runs air logistics operations out of Manas Air Base in Kyrgyzstan.) The Russians do not want to see Central Asia become a U.S. sphere of influence as the result of an American military presence.Other demands might relate to the proposed U.S. ballistic missile defense installations in the Czech Republic and Poland.We expect the Russians to make variations on all these demands in exchange for cooperation in creating a supply line to Afghanistan. Simply put, the Russians will demand that the United States acknowledge a Russian sphere of influence in the former Soviet Union. The Americans will not want to concede this — or at least will want to make it implicit rather than explicit. But the Russians will want this explicit, because an explicit guarantee will create a crisis of confidence over U.S. guarantees in the countries that emerged from the Soviet Union, serving as a lever to draw these countries into the Russian orbit. U.S. acquiescence on the point potentially would have ripple effects in the rest of Europe, too.Therefore, regardless of the global financial crisis, Obama has an immediate problem on his hands in Afghanistan. He has troops fighting there, and they must be supplied. The Pakistani supply line is no longer a sure thing. The only other options either directly challenge Russia (and ineffectively at that) or require Russian help. Russia’s price will be high, particularly because Washington’s European allies will not back a challenge to Russia in Georgia, and all options require Russian cooperation anyway. Obama’s plan to recruit the Europeans on behalf of American initiatives won’t work in this case. Obama does not want to start his administration with making a massive concession to Russia, but he cannot afford to leave U.S. forces in Afghanistan without supplies. He can hope that nothing happens in Pakistan, but that is up to the Taliban and other Islamist groups more than anyone else — and betting on their goodwill is not a good idea. Whatever Obama is planning to do, he will have to deal with this problem fast, before Afghanistan becomes a crisis. And there are no good solutions. But unlike with the Israelis and Palestinians, Obama can’t solve this by sending a special envoy who appears to be doing something. He will have to make a very tough decision. Between the economy and this crisis, we will find out what kind of president Obama is.And we will find out very soon.
extract from the artcle writen by By George Friedman http://www.stratfor.com/

Credit crunch to persist and economic recovery only by 2010

2009-01-18T23:14:00.000-08:00

Credit crunch to persist and lead to weak economic recovery only by 2010, says Prof. Nouriel Roubini
The current credit crunch is expected to persist due to the impaired financial system, leading to a very weak economic recovery only in 2010, according to Nouriel Roubini, Professor of Economics and International Business, Stern School of Business at New York University. The leading economist has also stated that other repercussions of the present global economic downturn, including the sharp fall in oil and energy prices will have greater ramifications on regional oil exporting countries.
With the global economy expected to contract by 0.4 per cent in 2009 - the first such shrinkage since the Second World War - the Middle East and North Africa is expected to witness a sharp slowdown in growth. Latest Economist Intelligence Unit (EIU) reports indicate that the UAE economy’s growth will slow down from a projected 7.7 per cent in 2008 to 1.5 per cent in 2009. The Economist Intelligence Unit forecasts a weak overall performance from the region, with real GDP growth of only 2.8 per cent compared with about six per cent in 2008.
"This is the worst financial crisis since the Great Depression and the global economy will experience its worst recession in decades in 2009,” said Prof. Roubini. “Even emerging market economies will experience a sharp slowdown of growth that will be the equivalent of a hard landing. In severe recession oil, energy and commodity prices will fall further even from current levels. Thus, oil exporting countries around the world and in the Middle East will suffer from this very sharp fall in oil and energy prices. Only very aggressive fiscal and monetary and financial policy response in the US and other countries may lead to an economic recovery in 2010, but it may still feel like a recession in 2010 even if we may be technically out of it.”

Analysts opinion Dubai's assets, including real estate, aviation and tourism interests and taxes, far outweigh its debt

2009-01-17T23:15:00.000-08:00

S&P credit analysts estimate Dubai's debt, relative to gross domestic product, is about 42%. Compared with the U.S., where gross debt stands at more than 60% of GDP, according to the International Monetary Fund, that isn't bad. But in Abu Dhabi, debt is equal to just 2.9% of GDP.

Dubai may need help from Abu Dhabi and the United Arab Emirates government to finance a surge in borrowing that paid for the world's tallest tower, palm tree- shaped man-made islands and stakes in banks worldwide.

Dubai's ``potential reliance'' will be ``most significant'' in coming years, Moody's Investors Service said in a report today. Government-controlled companies owe at least $47 billion, more than Dubai's gross domestic product, and they will continue to accumulate debt at a faster pace than the economy grows, the New York-based rating firm said.

``These companies that are based in Dubai have become larger than Dubai itself,'' said Giyas Gokkent, chief economist at National Bank of Abu Dhabi, the U.A.E.'s second-largest commercial bank by assets. ``If anything were to go wrong with any of these companies, Dubai does not have the wherewithal to deal with it.''

DUBAI, United Arab Emirates -- Dubai is on a spending spree, and financial analysts are starting to wonder about the amount of debt the city-state is racking up.

Its oil production is dwindling, and its debt load is four times the average among other Persian Gulf states. Credit-rating companies are asking for more information to determine how sound the government really is.

"From published documents, it is difficult to get a picture of the complete financial situation," said Standard & Poor's analyst Farouk Soussa. "The transparency isn't good."

One of seven emirates making up the United Arab Emirates, Dubai, like other Middle East governments, has been on a deal-making binge. Companies owned or backed by the government have signed agreements or made plays for billions of dollars in assets this year, including stakes in American and European stock exchanges, a Las Vegas casino operator and, most recently, a chunk of Sony Corp. Part of Dubai's deal-making is financed by debt.

At the same time, other Dubai entities have launched expansion plans relying on public borrowing. Nakheel, a government-controlled company building a giant, palm-tree-shaped island development, placed $750 million in bonds this month to finance its plans. Government-owned Jebel Ali Free Zone recently listed 7.5 billion dirham ($2 billion) of bonds.

Demanding Dubai Data

Moody's Investors Service, Fitch Ratings and Standard & Poor's Ratings Services are handing out credit ratings to many of these government-backed companies, and they are starting to ask for more disclosure from the emirate, which they assume will bail out the companies if they get into a jam.

"The rapid economic development of Dubai is certainly being accompanied by increased levels of leverage from companies that are closely associated with the government," said Tristan Cooper, a Moody's analyst in Dubai. "Without a clearer picture of the overall financial position of the central government and the broader public sector," investors could become more cautious.

The situation highlights a broader issue. Many of the world's governments and the companies they control are notoriously opaque, especially in the Middle East. But big regional investors like Qatar, Kuwait and Abu Dhabi (also part of the U.A.E.) have big hydrocarbon reserves to back up their deals. Production can be relatively easy to estimate from public figures. Dubai's reserves have been shrinking for years.

Dubai also has taken a more-complex approach to investing overseas. Most other deal-making countries have used massive investment authorities to pursue their deals. The Abu Dhabi Investment Authority, for instance, bought a $7.5 billion stake in Citigroup Inc. last month. In contrast, Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, has entrusted a cadre of lieutenants to run his own and his government's business interests. They often compete with one another and hunt for deals independently, but they all ultimately answer to Sheik Mohammed.

The government association has helped a handful of Dubai corporate entities get high credit ratings. The assumption is that Sheikh Mohammed or his government will come to the rescue in a pinch. And if Dubai gets overextended, analysts expect the emirate's much-richer cousins in Abu Dhabi will lend a hand. Abu Dhabi is the capital of the U.A.E., and its ruler is the country's president. Sheikh Mohammed is prime minister.

Moody's recently gave one of its highest corporate ratings, A1, to government-controlled DIFC Investments LLC. DIFC owns a stake in Borse Dubai, the holding company that recently agreed to acquire Nordic exchange OMX AB for some $4.9 billion. The complex deal aims to eventually give Dubai a stake of nearly 20% in Nasdaq Stock Market Inc. In a ratings note, Moody's said the rating reflects "the credit support the Government of Dubai is likely to provide in a distress situation."

This year, S&P rated Dubai Holding Commercial Operations Group LLC single-A-plus, citing "strong implicit support from the Emirate of Dubai." Sheikh Mohammed owns the entity's parent, Dubai Holding. A Dubai Holding subsidiary recently bought the Sony stake.

Mystery Investments?

The trouble with these corporate ratings is that without more disclosure, it is difficult to evaluate the financial soundness of these entities and the government backing them. As its oil supplies dwindle, Dubai has diversified its economy into financial services, tourism and real-estate development, among other pursuits. Those revenue streams and their underlying assets are difficult to pin down without access to government books.

In an emailed response to questions, a Dubai government spokesman said the emirate's debt load is "very moderate" by international standards, and the debt raised by Dubai entities "has all been in their capacity as leading international players that are successfully expanding in a number of profitable markets." He said Dubai is in the process of obtaining a rating on its sovereign, or government, debt. Such a rating gauges a government's ability to pay back its borrowing, and it is used to price publicly sold debt.

Analysts think Dubai's assets, including real estate, aviation and tourism interests and taxes, far outweigh its debt, but they would like to know more.

Of course, credit-rating companies have another motivation: In most cases, they are paid to rate the creditworthiness of firms and governments, and the big three firms are eager for clients like the government of Dubai.

The Dubai International Financial Centre

2009-01-14T23:49:00.000-08:00

The DIFX is located in the Dubai International Financial Centre (DIFC), a financial free zone which opened for business in 2004. Financial activities in the DIFC are governed to international standards by an independent regulator, the Dubai Financial Services Authority (DFSA). The DIFX has a license from the DFSA to operate an exchange. The President of the DIFC is Sheikh Mohammed bin Rashid Al Maktoum, the UAE Vice President, Prime Minister and Ruler of Dubai.

Listed Products and Member Banks in Nasdaq Dubai

2009-01-14T23:46:00.000-08:00

Products listed on the DIFX include ordinary shares listed by Kingdom Hotel Investments as well as Global Depository Shares issued by Investcom (delisting in 2006). The exchange currently has ten member banks – Jefferies, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank, EFG-Hermes, HSBC, KAS BANK, Morgan Stanley, SHUAA Capital and UBS. On March 26, 2006, DIFX announced the appointment of Per E. Larsson, former head of the Sweden-based OM Group (now OMX and owner of several Nordic Exchanges), as the next Chief Executive of the exchange. He will take up his post in early July 2006 and succeed DIFX's first Chief Executive Steffen Schubert

Nasdaq Dubai

2009-01-14T23:38:00.000-08:00

NASDAQ Dubai (formerly called the Dubai International Financial Exchange, or DIFX), is a stock exchange opened on September 26, 2005, in Dubai, United Arab Emirates. DIFX aims to become the leading stock exchange between Western Europe and East Asia.

NASDAQ Dubai

Type :Privately held Founded 2005, Rebranded 2008

Headquarters :Dubai, United Arab Emirates

Industry: Financial exchange

Employees :1718

Website :www.nasdaqdubai.com