Financial News                                                                                            Tuesday January 11, 2011
















UAE GDP crosses Dh1tr mark


Khaleej Times


DUBAI — The UAE’s nominal GDP (Gross Domestic Product) for the first time crossed Dh1 trillion mark in 2010 on expansion in non-oil sectors and a sharp rise in crude prices, an official study has found.  Last year in November, the country’s minister of economy Sultan bin Saeed Al Mansouri predicted that the GDP is expected to reach Dh1 trillion by the end of 2010. The country’s GDP jumped by around 6.2 per cent last year in current prices, compared with only about 1.3 per cent in 2009, according to the study issued by the Emirates Industrial Bank (EIB) on Monday. Established in 1982, EIB is a specialised financial institution, which aims to promote economic growth in the country by diversifying its sources of income and assisting in the development of its industrial structure. “The UAE’s GDP in current prices surpassed the Dh1 trillion mark last year for the first time [and] there was growth in both the oil and non-oil sectors,” the state-controlled EIB said in its monthly economic bulletin, according to WAM. The report revealed that the oil sector jumped by nearly 34.7 per cent to Dh346.5 billion in 2010 while the non-hydrocarbons sector expanded by about 5.1 per cent to Dh653.5 billion last year from Dh621.7 billion in 2009. 


UAE sukuk gain on debt restructure, yields


Arabian Business


Islamic bonds from the United Arab Emirates are poised to extend gains after climbing to a record last week, buoyed by progress in debt restructuring and a pickup in appetite for high-yielding assets in the Arabian Gulf. The HSBC/NASDAQ Dubai UAE US Dollar Sukuk Index, which tracks ten sovereign and corporate securities, climbed to 131.15 on January 4, the highest since HSBC started tracking their performance in January 2005. The notes returned 16.5 percent last year after a gain of 23 percent in 2009, the index shows. Sharia-compliant debt sold by Dubai issuers will gain between six percent and seven percent in 2011, outpacing counterparts in the Arabian Gulf, according to Dubai-based Mashreq Capital DIFC Ltd. Dubai World, one of Dubai’s three main state-owned holding companies, received approval from its creditors in October to change terms on $24.9bn of loans. Nakheel PJSC, a property unit of Dubai World seeking to delay payments on at least $10.5bn of debt, said December 30 it received funds from the Dubai government to repay Islamic bonds maturing this month. 


Higher provisions dampen UAE banking shares


The National


Concerns that fourth quarter bank earnings across Abu Dhabi and Dubai maybe hit by higher provisions led to a subdued day's trading on the bourses. First Gulf Bank, Abu Dhabi's third biggest lender by assets, fell 2.1 per cent to Dh18.10. The bank announced on Sunday that its board had recommended the distribution of 75 million shares after the expiration of its buyback programme as bonus stock to its shareholders. Abu Dhabi Commercial Bank lost 0.4 per cent to Dh2.26 a share. Abu Dhabi Islamic Bank lost 0.6 per cent to Dh3.02. In December, the central bank of the UAE ordered banks to increase provisions incurred from exposure of the Saad Group and Ahmed Hamad al Gosaibi and Brothers to 80 per cent by the end of the year, from 50 per cent. "The issues are still not over, nothing is clear yet," said Amied Kanaan, the general manager at Al Jazira Financial Services in Dubai. "Investors are still worried about the economy in general, nobody is confident at the moment. We are all thinking about debts, defaults, and restructuring," he said. Property stocks also fell after The National reported on Sunday that rents in Abu Dhabi fell as much as 16 per cent in the last three months. Losses were led by RAK Properties, which dropped 4.2 per cent to 45 fils a share. Aldar Properties lost 2 per cent to Dh2.40. 


 Emirates seeks $1bn credit terms


Emirates 24|7

Emirates, the Arab world's largest carrier, is seeking terms for a $1 billion revolving credit facility to fund its aircraft purchases, a banking source familiar with the matter told Reuters. A decision should be made in the next couple of weeks as banks flesh out details with Emirates, the source added. Emirates Chairman Sheikh Ahmed bin Saeed al Maktoum said in November there were no plans to issue bonds or raise funds. This followed the announcement of a planned multi-billion dollar increase in its fleet to include 120 Airbus A380 superjumbos. "Emirates has well-documented financing requirements to support its growth plans and hence has a continuous and ongoing dialogue with various financial institutions. We will continue to explore all commercially viable financing options," the airline said in a statement on Monday. Emirates is Dubai's flagship company and one of the biggest contributors to the local economy.


 Lloyds set to fight for Dubai home loan market


The National


Lloyds Banking Group is to resume offering mortgages in Dubai after a two-year hiatus triggered by the collapse of property prices in the emirate. The bank, one of the largest retail lenders in the UK, was among the first financial institutions to cut lending to homebuyers in Dubai in November 2008. Buoyed by evidence of stabilising prices in some areas of the emirate, it is planning to launch mortgage products for apartment buyers as it fights for a piece of the market again. Lloyds never officially stopped lending to homebuyers, but in late 2008 it reduced its loan-to-value ratio to 50 per cent and shifted its focus to purchasers of villas. The move was considered a sign to investors that the market had taken a turn for the worse. Since the start of the year, the bank has quietly been expanding its offerings. Last week, it began offering mortgages for villas with loan-to-value ratios of up to 70 per cent, with two-year discounts on its 7.99 per cent variable interest rates for some customers, according to a circular sent to local mortgage brokers. Several fees were also cut to make the financing more attractive.



UAE realty among first to recover in GCC


Emirates 24|7


Led by the government supportive measures and strong economic fundamentals, the UAE real estate market is expected to be among the first to recover in the Gulf region and will manage to increase its share in the country’s GDP to double-digit again, according to the latest forecast. Bahrain-based Taib Bank said in a research note on Wednesday that the UAE real estate sector to grow at an annual average rate of 4-6 per cent until 2015. It projected UAE economy to grow at an annual average rate of four per cent over the next two years, led by stable oil prices and robust non-oil sectors such as construction, infrastructure, financial services, and real estate. Led by the construction of UAE nuclear power plant and Emirates Railway projects, work on more than Dh110 billion worth of infrastructure projects are set to begin this year opening business opportunities for the construction and its affiliated industries. The Abu Dhabi Government has awarded more than $20 billion (Dh74 billion) worth of contracts to South Korean company to build nuclear power plants and would be spending an additional $11 billion (Dh40 billion) for the Emirates Railway network across the country. 


Unclear future for FNC as its term runs out


The National

ABU DHABI // A month from now the term of the Federal National Council (FNC) will end, and with no new elections in sight, members say they do not know what happens next. "Until now, there is no clarity," Dr Sultan al Muazzin, an elected member from Fujairah, said. "The issue is in the hands of the Government." Dr Abdul Raheem al Shaheen, an elected member from Ras al Khaimah, said: "There is no information, and we don't know why, There is no indication saying there will be elections, and there is no indication saying there won't be elections." Half of the FNC's 40 members were elected by an electoral caucus of about 7,000 Emiratis, who were picked by the rulers of the seven emirates. The other half are appointed directly by the rulers themselves. Members of the half-elected legislature said they had received no information from the Government on when, if any, new elections might occur. "My opinion is that the UAE has taken a step and it must continue," said Dr al Shaheen. "Aborting the first experience and not building up on it is not to the benefit of the practice of democracy in the UAE." Concerns about what happens once the FNC's term ends on February 12 foreshadow a wider debate among members over what powers should be entrusted to the council and what reforms should be instituted as part of any new election process.


FNC discusses shortage in skills of school leavers


Gulf News

Dubai: Members of the Federal National Council (FNC) will discuss on Tuesday a plan to improve secondary schools enough to address shortages in basic skills among school leavers. Humaid Al Qutami, Minister of Education, is expected to be quizzed by three members of the council about a plan to make the foundation programmes for secondary school leavers unnecessary, and a new system for schools to have three semesters from this academic session. Khalifa Abdullah Bin Howaiden, a member from Sharjah, is to pose a question to the minister on the standards of secondary school leavers, which “do not match requirement of higher education”. Salem Mohammad Al Naqbi, another member from Sharjah, is espected to ask a question about the three-semester system, while Ahmad Bin Shabib Al Daheri, First Deputy Speaker of the House, is to raise the question of an educational program to improve skills of students known as Masar. Members of the legislature argue a greater emphasis on problem-solving and creative thinking were key, followed by investing more in local teaching staff and an increased focus on foreign languages. They also suggested measures for improving secondary school education included an increased emphasis on verbal communication skills, stricter enforcement of school attendance and greater investment in educational facilities.