Financial News                                                                                 Wednesday September 14, 2011
















 UAE attends G20 event on price volatility


Gulf Today


ABU DHABI: A delegation from the Ministry of Finance (MoF), headed by Obaid Humaid  Al Tayer, Minister of State for Financial Affairs,  participated in the G20 conference on commodity price volatility held in Istanbul on Tuesday. The delegation included Younis Haji Al Khouri, Undersecretary of the Ministry of Finance (MoF) and HE Khalid Ali Al Bustani, Assistant Undersecretary of International Financial Relations Sector at MoF.  The conference addressed in detail the issue of the volatility of basic commodities prices in global markets in relation to recent market developments, and how it affects the overall economy. Attendees also discussed the key roles that stock markets have on price fluctuations, relations between economic and financial markets and methods of preventing market abuses.  Obaid Humaid Al Tayer presented the UAE’s paper on the commodities market, and explained that the UAE was adamant on ensuring food security for all its citizens and residents through setting comprehensive national strategies to enhance policies in different sectors. Al Tayer went on to explain that the issue of food security was one of the key challenges facing the Arab World and affecting Arab cooperation efforts. He also elaborated on the position of the UAE and other Arab states in light of volatility of the prices of basic commodities.


UAE has enough dollar assets to meet local demand


Arabian Business


Banks in the United Arab Emirates had enough dollar liquidity to cover the needs of local banks and the exposure of the OPEC member's banks to the euro zone crisis was limited, a newspaper quoted a central bank official as saying on Tuesday. The UAE central bank's dollar assets were enough to fully cater to the needs of local banks "immediately", Saif Hadef al-Shamsi, senior executive director at the central bank's treasury department, told the Arabic newspaper Al-Ittihad. "There is no problem on this side," he was quoted as saying. Shamsi also said the exposure of local banks to European banks was limited, adding banks operating in the country had risk management departments dealing with the risks of economic and banking developments and conditions in the world. Spanish press reported US President Barack Obama as saying the euro zone's leaders need to show markets they are taking responsibility for its debt crisis and work out how to tally monetary union with budget policy. European markets have taken a hammering from growing expectations of a Greek debt default, worries over French banks due to their holdings of debt and renewed rises in Italian bond yields. Shamsi said banks in the UAE should be careful in their deposits with foreign banks abroad, the paper wrote, saying "the local banks must have risk managements able to choose their partners in the global markets." 


 MENA banks safer as giants stagger


Khaleej Times


DUBAI — Banks in the Middle East and North Africa region offer safer havens to investors looking for less volatility and limited downside as major banking institutions across Europe and America face seemingly insurmountable challenges.  With the Bank of America, Citibank, Goldman Sachs coming under mounting pressure, and European banks looking “absolutely dicey” due to their overwhelming exposure to Greek and other sovereign EU debt, the MENA banking industry is among the safest in the world “with minimal debt to GDP and very healthy core Tier 1 capital ratios,” banking analysts said in a report. “We believe that banks in Europe and the US potentially offer deep value but with a material downside risk.... On the contrary we see the MENA banks more suitable for investors looking for less volatility and limited downside,” said the report by Audi Capital, a subsidiary of Bank Audi. “Despite the richer valuations, we think that the MENA banks’ solid fundamentals, especially in Saudi Arabia and Qatar, will support them to be materially less impacted than developed banks in the current environment. We believe the MENA banks offer a hedged investment in the global banking universe.”


 UAE economic indicators show positive signs: Daman


Khaleej Times


DUBAI — Most of the economic indicators in the UAE show positive sign and further improvement is expected by the end of 2011, Daman Investments Group Chief Executive Shehab Gargash said.  Talking to reporters on the current and future financial landscape of the country, Gargash said retail sector returns to boom time level, hotel occupancy still down but close to 80 per cent, and deposits and loan both show growth. “We still have activity at least in some sectors of the economy,” he said. He mentioned that there was an 11.5 per cent year-on-year growth in deposits till July this year that shows the banking sector is surging for a return to normalcy. Loans till July also recorded a 2.6 per cent growth, he said, adding: “We are seeing a lot of return to lending.” Gargash looks very bullish when he talked about increased activity at the UAE bourses. He mentioned that there are good arguments for a return of activity in the equity markets in the country. “We don’t think it will happen overnight, but there still are some important factors that need to come into play for that to happen,” he added. Stock market indices in the country year-to-date lost four per cent at Dubai Financial Market and around eight per cent year-to-date declined was noticed at Abu Dhabi General Index.


Islamic banks’ profits soar 29.3% in H1


Emirates 24|7


Islamic banks listed on UAE bourses recorded an increase of nearly 29.3 per cent in their net income in the first half of 2011 while their total assets and deposits also recorded growth, according to their balance sheets. From around Dh1.26 billion in the first half of 2010, the net profits of the five listed Shariah-compliant banks surged to nearly Dh1.63bn  in the first half of 2011, showed the report, published in the semi official daily 'Al Ittihad'. The reports covered The Abu Dhabi Islamic Bank (ADIB), Dubai Islamic Bank (DIB), Emirates Islamic Bank (EIB), Sharjah Islamic Bank (SIB) and Ajman Bank. Their combined assets swelled by around 11.7 per cent to Dh243.5bn in the first half of 2011 from Dh217.8bn in the first half of 2010 while their deposits grew by 8.8 per cent to Dh165.2bn from Dh151.8bn.  The reports showed the five banks recorded strong results in the second quarter of 2011 while Ajman Bank netted its first quarterly profit since it was established. The reports did not cover the remaining three Islamic banks, which are not listed. They showed ADIB recorded the highest earnings of around Dh619.6 million in the first half of 2011 compared with Dh594.9 million in the first half of 2010.


 Market for Nakheel's sukuk hit by uncertainty


The National


Deep concern about the health of Nakheel's business has slowed the development of a market for the Dubai property giant's Islamic bonds, traders say. Nakheel issued a first tranche of the Islamic bonds, or sukuk, to unpaid contractors last month. They are a key part of the company's restructuring. In a prospectus attached to the sukuk, Nakheel revealed that it wrote down the value of its property and project portfolio by almost Dh74 billion (US$20.14bn) in 2009 as its fortunes flagged. The company also said it changed tactics in response to the financial crisis, forging ahead with a selection of its projects and putting others on hold. Given its continued stresses, some observers are worried about how Nakheel will generate cash to pay scheduled 10 per cent annual returns on the sukuk each year - and then pay the principal back after five years. Nakheel executives estimate the company will issue Dh4.8bn of sukuk shares to contractors.



Abu Dhabi wealth fund issues review


Khaleej Times


ABU DHABI - The Abu Dhabi Investment Authority (ADIA) on Tuesday published its 2010 ADIA Review, which builds on the information in its inaugural 2009 Review with a number of new features.  Established in 1976, ADIA is a globally-diversified investment institution that prudently invests funds on behalf of the Government of Abu Dhabi through a strategy focused on long-term value creation.  The 2010 ADIA Review pays tribute to the late Shaikh Ahmed bin Zayed Al Nahyan, Managing Director of ADIA between 1997 and 2010. He is remembered as an important humanitarian and as a modest man of high integrity who worked tirelessly to build the foundations for ADIA’s future.   The 2010 ADIA Review contains a number of new features, including market overviews for each of the asset classes in which we invest, as well as significant developments within our investing departments. It also offers insights into areas such as ADIA’s culture and the many support departments that together make a significant contribution toward our continued success.  The 2010 Review also highlights some of the key developments at ADIA during 2010, including:  ADIA’s compliance with International Financial Reporting Standards (IFRS)   Senior appointments in areas including Private Equities, Equities, Real Estate and Accounts.  H.H. Sheikh Hamed bin Zayed Al Nahyan, Managing Director of ADIA , said, “By building on the information provided in our first Review, the 2010 Review aims to further enhance understanding of ADIA and how we invest, while highlighting the important contributions of all those who make ADIA what it is today.”


Nakheel running a tighter ship


The National


Nakheel has revamped its corporate governance and business practices after reporting a Dh76.6 billion (US$20.85bn) loss in 2009, according to a bond prospectus sent to investors. While not specifically mentioning past problems, the company's filing acknowledges a wide range of issues addressed by management, offering an unusual glimpse at the inner workings of the developer behind some of Dubai's biggest projects, including Palm Jumeirah and The World. The changes include limiting the ability of executives to make financial commitments of more than Dh10 million without the approval of the board of directors and a new public tender process for awarding construction contracts. Nakheel executives could not be reached for comment on details of the report. A new board of directors was installed at the company in March last year. As part of the restructuring process, a review was launched of the company's "financial, reporting and decision-making controls", according to the filing. "It's something we'll see far more around the region," said Matthew Green, the head of consultancy for the UAE office of CB Richard Ellis, the property company. "Companies need to have that accountability." Nakheel's executive committee now meets on a weekly basis and approves expenditures ranging from Dh500,000 to Dh10m. The company has also centralised decision-making and established an independent internal audit department. Contracts awarded through the public tender process must also be approved by the executive committee or board of directors, depending on the value.


Global growth to stay hesitant


Khaleej Times


ABU DHABI — Abu Dhabi Investment Authority, or ADIA, sees the global economic growth to remain hesitant in the near term.  The ADIA’s forecast comes as governments in major developed markets begin the sensitive task of cutting potentially burdensome debt levels without undermining growth.  “Returns from equities will gradually revert close to their long-term historical average between six to eight per cent,” the ADIA said in its yearly review issued on Tuesday. The review said that assuming bond yields remain low and in the absence of major negative macro events, equities appear relatively attractive even when using conservative assumptions with regard to the equity-risk premium.  ADIA didn’t not revealed its balance sheet. Some of the fund’s high profile investments include a 15 per cent stake in UK’s Gatwick Airport, a 4.9 per cent holding in Citigroup and a 12.5 per cent stake in Egypt’s Arab International Bank, according to data. In his letter, ADIA managing director Shaikh Hamed bin Zayed Al Nahyan said two years after the crisis, the investment climate is set to undergo considerable change as economic policies evolve from measures focused on stimulus to steps to ensure the sustainability of growth.


 Growth will slow for all industrialised nations, agency predicts


The National


Global economic growth will slow to nearly 4 per cent a year as debt and inflation in developed nations take their toll, according to the International Energy Agency (IEA). Organisation for Economic Co-operation and Development (OECD) countries would bear the brunt of the GDP slowdown and contribute to a worldwide drop in oil consumption, the agency, which is based in Paris and represents 28 industrialised nations, forecast in a report yesterday. "There are certainly growing concerns about the health of the global economy," the IEA said. "Government debt in the OECD and the spectre of inflationary pressures and currency protectionism in emerging markets raise fears that expectations of 'business-as-usual' 4.5 to 5 per cent world GDP growth are unsustainable." The IEA cut its oil demand forecast for this year by 200,000 barrels per day (bpd) and for next year by 400,000 bpd on the back of the slower economic growth. That followed similar cuts announced on Monday by Opec. "Global oil demand continues to expand at only a tepid pace," said the IEA. Brent, the European crude benchmark, fell below US$112 after the report but recovered to $112.60. Oil has traded between $100 and $120 since the beginning of the six-month civil war in Libya. The country's 1.6 million bpd capacity has dwindled to 100,000 bpd, depriving world markets of Libya's prized light crude. In July, the IEA released 60 million barrels of oil from strategic reserves in the US and its member countries to help fill the gap. The move only temporarily pushed down oil prices, which many economists say are contributing to global economic woes.



Business-friendly initiatives


Khaleej Times


DUBAI - His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Tuesday directed the Dubai Chamber of Commerce and Industry to launch constructive initiatives aimed at encouraging international companies to come and invest in the country “without obstacles or complicated procedures”. During his visit to the Dubai Chamber, Shaikh Mohammed, who was accompanied by Shaikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, urged the DCCI officials to come up with constructive ideas and initiatives including more attractive incentives and facilities to attract greater number of international companies looking for brighter opportunities. He called for the creation of a more conducive investment environment. Dubai, already a sought-after destination for global investors and businessmen, has been named “Middle East City of the Future 2010-11” by FDIMagazine, a ranking that is a strong testament to the economic fundamentals of the emirate and its enormous growth potential to investors from around the world. Dubai is ranked exceptionally well across all categories, achieving top positions in economic potential, infrastructure and business friendliness. Foreign direct investment, or FDI, in Dubai has grown 4.5 per cent this year compared with 2010 and the growth is poised to jump to 30 per cent next year as Dubai economy is poised to grow more than five per cent. The number of new companies in Dubai witnessed an increase of 45 per cent in the first nine months of this year to 11,007 from 7,566 companies in 2009.


Global bond markets yielded solid returns last year


Gulf News


Abu Dhabi: Global bond markets generated solid returns during 2010 as investors sought the relative safety of these assets based on concerns about perceived risks to the global economic recovery, the Abu Dhabi Investment Authority (Adia) said yesterday. In its latest annual review, Adia said: "After holding roughly steady until April, 10-year government bond yields declined by around one full percentage point in the US, Germany, and the UK, and half a percentage point in Japan by the third quarter. Yields reversed much of their decline in the fourth quarter, but still remained at historically low levels — around 3.5 per cent for 10-year government bonds in the US, 3.0 per cent in Germany and 1.25 per cent in Japan." Sluggish data Article continues below It said the strong ecoomic rebound that began in late 2009 had boosted confidence that the recovery was on a sound footing, and markets began to anticipate that unusually low central bank interest rates would be increased by the end of 2010. "By the second quarter, however, sluggish econ-omic data ignited fears of renewed recession and pushed back the expected timetable of higher official interest rates. Yields bottomed out in September after the US Federal Reserve announced that it would renew purchases of Treasury debt — a process known as quantitative easing — as it was unable to lower a federal funds rate already sitting close to zero.



Al Owais named acting UAE minister of health


Gulf News


Dubai: His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued a decision relieving Dr. Hanif Hassan of his post as Minister of Health. The Vice-President assigned Abdul Rahman Mohammad Al Owais as acting Minister of Health, in addition to his duties as Minister of Culture, Youth and Community Development. Dr. Hassan was appointed the Minister of Health in May 2009. Prior to this position; he was appointed as the Minister of Education in February 2006. Al Owais became the Minister of Culture, Youth and Community Development in February 2006 Article continues below Dr. Hassan held the post of Minister of Education from 2006 till 2009. He served as the Vice- President of the Zayed University from 1998 until 2006. Dr. Hassan received his Ph.D. in Islamic Studies, from Umm Al Qurra University, Saudi Arabia, (1991), M.A in Islamic Shari’a, Umm Al Qurra University, Saudi Arabia, (1987), and B.A. in Arts, Islamic Studies, UAE University, (1983). Dr. Hanif was a participant of Harvard Executive Training Program (May 2003), and a visiting scholar, Harvard School of Law-Boston, Massachusetts-USA (1996).