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Emirates 24|7
Abu Dhabi more than doubled capital spending to a record
high level in 2009 as part of massive fiscal expansion measures taken by
the emirate to mitigate the impact of the 2008 global fiscal crisis,
official data showed on Monday. Total expenditure also soared by around
33 per cent despite a staggering 53 per cent decline in the emirate’s
revenue because of lower crude prices and production, the Abu Dhabi
Department of Economic Development (ADDED) said in a new part of its
annual economic report. “The year 2009 witnessed high growth rate in
expenditures by nearly 33 per cent, compared to the public expenditure in
2008,” the report said. It said capital spending rocketed by around 102.8
per cent while there was a similar increase in expenditure on government
projects and around 31.3 per cent growth in capital transfers by the Abu
Dhabi government. The report said spending sharply increased although oil
export earnings plummeted by nearly 53 per cent mainly because of a drop
of more than $30 a barrel in crude prices and a cut of about 200,000 in
Abu Dhabi’s oil output.
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Emirates 24|7
Financial services firms, including banks, insurance and
investment companies, and real estate/construction companies are among
the most profitable companies in the UAE, dominating the list of the Top
25 profitable entities in the country. An Emirates 24|7 analysis of the
results of the 87 firms that have announced their Q3 financials so far
reveals 20 of the Top 25 most profitable listed companies in the country
belong to the two sectors that have been the most impacted by the global
economic slowdown. This website analysed 101 listed companied on the Abu
Dhabi (60 firms) and Dubai (41 firms) bourses and found that net profits
at the 87 firms that have so far announced third-quarter results are down
15.55 per cent. Combined nine-month net profits at the UAE’s listed firms
amount to over Dh24.5 billion compared with the Dh29.02b that the same
companies recorded during the first nine months of 2009. However, as the
famous proverb goes, what statistics reveal is suggestive, but what they
conceal is vital. Although profits are down year-on-year, some of the
most profitable companies in the country belong to sectors that have been
the most impacted by the global economic slowdown, viz. real estate and financial
services.
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Khaleej Times
DUBAI — The Abu Dhabi economy plays a
pivotal role in the Gulf region as the emirate provides multiple
investment opportunities, an official report said. The
UAE capital attracts investors in the fields of industry, real estate,
infrastructure and alternative energy sources. A close observation of the
economic development indicators in the region during the last few years,
confirms that the emirate is working on to be a focal economic centre,
and a model for development and economic openness, according to the
latest Annual Economic Report of the Emirate of Abu Dhabi 2010. Released
by the Studies Directorate at the Department of Economic Development, the
study also said that the emirate is experiencing a historical phase
characterised by economic expansion, which is based on the leadership’s
vision and ambitions. It also aims at embarking its economic potential,
through the adoption of new policies and legislation, conducive to
investment and development. This encompasses the implementation of a new
wave of investments in various economic sectors and giving the private
sector a greater role in economic activity, as well as accentuating
openness to foreign investments.
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Gulf News
Abu
Dhabi: Abu Dhabi plans to raise foreign direct investment to 23 per cent
of gross domestic product (GDP) by 2030 and to increase direct investment
growth by 9 per cent per year, according to the Annual Economic Report
for the Emirate of Abu Dhabi 2010, released Saturday by the Department of
Econ-omic Development (DED). "Abu Dhabi as well aims at increasing
non-oil exports to 11 per cent of GDP, which will support the
diversification of the production structure and reduce the volatility of
GDP," the report said. The Department of Economic Development is
currently working to establish an export development and support centre
which will contribute to the promotion of exports, and provide necessary
information, and enhance the business environment to help investors in
the domestic market to locate external partners and have access to
foreign markets and importers," the report added. Energy sector
"The centre will provide the necessary studies and render advice and
guidance in addition to drawing the attention of investors towards
potential investment sectors, particularly small- and medium-sized
investors," said the report. It noted that the energy sector is an
important source of income in the UAE in general, and Abu Dhabi in
particular.
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Khaleej Times
DUBAI - The medium-term outlook for
GCC bank lending to the private sector should improve, and both the
supply and demand for credit are expected to recover in the backdrop of a
gradual economic recovery in the GCC, the Institute of International
Finance, or IIF, said. In its Regional
Overview, the IIF said empirical evidence shows that on average,
recessions end two quarters before the credit crunch ends and nine
quarters before housing prices bottom out; equity prices tend to bottom
out just as the associated recession ends. In the short term, however,
private credit growth in all the GCC countries will likely remain subdued
as banks remain cautious in light of the recent deterioration in asset
quality, Garbis Iradian, deputy director of IIF said. “In the first three
quarters of 2010, the effect of both supply and demand factors on private
sector credit continued to be felt. Bank deleveraging continues. However,
credit to nonfinancial public enterprises, particularly in Abu Dhabi and
Qatar, increased significantly, reflecting some rebalancing of banks’
portfolios towards safer assets,” he said. According to IIF, in Dubai,
supply-side factors, in particular higher costs of funds and the need to
deleverage, were the most important factors holding back loan growth,
although the contraction of GDP also played a role.
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The National
Abu
Dhabi's semiconductor industry is expected to contribute up to US$4
billion (Dh14.69bn) to the capital's economy and create as many as 6,000
jobs over the next 10 years, industry officials say. The capital has
targeted the high-tech sector as one of the pillars of a strategy to
diversify outside the energy industry. Abu Dhabi will emerge as an
important link in the global microchip supply chain by 2015, when
Globalfoundries expects to build a $6bn plant near Masdar City. The
state-of-the-art foundry will be the "centre of gravity" for
Abu Dhabi's semiconductor ecosystem, said Ibrahim Ajami, the chief
executive of Advanced Technology Investment Company (ATIC), the
government concern that controls Globalfoundries. That ecosystem,
composed of equipment supply, design and service companies, is projected
to contribute between $3bn and $4bn to Abu Dhabi's GDP and create between
3,000 and 6,000 jobs. "How our strategy has [been] shaped over the
past 12 months is to have both the Globalfoundries ecosystem and the Abu
Dhabi ecosystem," Mr Ajami said. "These two ecosystems will
talk to each other and work together because Globalfoundries is
ultimately going to be the centre of gravity of the Abu Dhabi ecosystem …
From Abu Dhabi's side, it's not just about how do we create that
excitement or hosting conferences and events or sending students on
scholarships, but how you do really get real substance out of it."
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Arabian Business
The
Dubai government has pumped $2bn into Dubai Holding, taking control of
the conglomerate's financial restructuring, the Financial Times said on
Tuesday. The newspaper quoted Mohammed Al Shaibani, director of the
Ruler's Court, the body that coordinates the activities of government
departments, as saying the government has already injected $2bn into
Dubai Holding and is willing to put more capital into the loss-making
conglomerate. "I don't want to put any more money in as the
government, but I will do it as and when it's required," he said.
The government also expects banks to accept some of the pain, as was the
case in the Dubai World restructuring, Shaibani told the newspaper in an
interview. He said banks could expect to win advisory deals as the government
considered future asset sales and privatisations. "Priority will
definitely go to banks that have been very supportive - we are very loyal
customers," he said.
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Khaleej Times
The restructuring of Dubai Holding is
under way and will include a haircut for creditors and injections of
fresh government funds. The vice-chairman of Dubai’s top
fiscal body told the Financial Times Mohammed
Al Shaibani, who is also director of the Dubai Ruler’s Court, told the FT in an interview that the
government had so far pumped $2 billion into the conglomerate. A year
ago, Dubai’s other flagship state-owned conglomerate, Dubai World,
shocked global markets when it asked for a standstill agreement on $26
billion worth of debt. The group reached a restructuring agreement in
September, but investors are still worried about debt troubles at other
firms. Seventy per cent of the banks involved were the same as those in
the Dubai World restructuring process, Shaibani said. Dubai World’s bank
creditors included HSBC, Lloyds, Standard Chartered and Abu Dhabi
Commercial Bank. Shaibani said Dubai Holding’s problems were “not the
size” of Dubai World’s, but that its restructuring process was under way,
led by Dubai’s supreme finance committee.
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The National
After
the global financial crisis, regional monetary authorities focused their
attention on loopholes and failures of domestic banking systems and their
practices. Most GCC financial regulators toughened their provisioning
requirements, sometimes forcing banks to strengthen their capitalisation
ratios. New credit policies and procedures have been formulated requiring
banks to improve their customer knowledge and profiling, as well as
adhering to more cautious lending rules. Central bank auditors are now
stimulated to roll up their sleeves and gear up their oversight of asset
quality in the system, looking for cracks and early alerts for
potentially large problems. This is a good exercise anyway. Strict
provisioning requirements and proper assessment of credit portfolios is
good practice and preparation for Basel III, the result of which is
obviously positive for banks' long-term fundamentals. In the meantime,
banks have retrenched significantly from the credit market and the
continued sluggishness of bank credit could become counter-productive. As
the credit market is constrained from the supply side, corporate
organisations and households dependent on bank financing must look for
alternative sources of financing or cut back their consumption and
investment plans. The absence of wholesale funding creates a drag on the
economic recovery.
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Emirates 24|7
An economic recovery driven by a surge in crude prices in
Gulf oil producers boosted the income of many listed companies in the
first nine months of 2010 as they continued their march towards a full
post-crisis recovery. According to a Kuwaiti financial institution, the
combined profits of nearly 44 per cent of the listed firms, accounting
for 80 per cent of their capitalization, swelled by about 16 per cent
year-on-year in the third quarter and around three per cent compared with
the second quarter of this year. The earnings also soared by nearly 24
per cent in the first nine months of 2010 compared with the same period
of last year, Markaz Financial Centre said in a study on corporate
earnings in the six-nation Gulf Cooperation Council (GCC). The figures showed
the net income of those companies swelled to around $8.7 billion in the
third quarter and to nearly $25.4 billion in the first nine months.
“Growth was driven mainly by a surge in the region’s commodities and
banking segments’ earnings. The commodities segment’s impressive
performance aided the nine-month growth as well.…consequently, the GCC’s
overall earnings for the first nine months soared by 24 per cent,” it
said. It showed there was an increase of 18 per cent in the income of
Saudi Arabia’s companies to nearly $5.4 billion in the third quarter.
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Gulf News
Abu
Dhabi : Tentatively improving investor sentiment has delivered a mild
rally on most Gulf stock markets recently, but trading volumes remain
woefully low. The average daily turnover in the Gulf markets so far this
year has been $980 million (Dh3.5 billion), almost half that in the same
period last year, and almost a third of the $2.55 billion daily average
in 2008, according to Zawya, a local data provider. The primary victims
have been brokerages, but many company executives also argue that the
trading slump has hindered effective "price discovery" and
their shares trade below their true worth. DP World, Dubai's ports
operator, has signalled plans to list shares on the London Stock Exchange
to boost its shares. Some bankers argue that Gulf companies should also
consider listing depositary receipts, or DRs, on international exchanges
to counter low trading volumes and boost foreign institutional interest.
Depositary receipts are financial instruments that represent the economic
value of a company's underlying shares, or occasionally bonds, and are
often used by local companies to list and trade on international
exchanges, such as the LSE or the New York Stock Exchange. "The
[local] liquidity is really horrendous, and DRs could have to come back
due to the low local listing liquidity," says the head of capital
markets at a leading investment bank.
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