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Inflation in UAE is stabilising

Basel: Inflation in the UAE, which pegs its currency to the dollar, is stabilising and likely US interest rate hikes will lift the ailing greenback, the UAE central bank governor said on Sunday. Speaking to Reuters on the sidelines of the annual central bankers meeting in Basel, Sultan Bin Nasser Al Suwaidi said Gulf Arab oil producers are « very firm » concerning their dollar pegs and have no plans to revalue their currencies. Inflation in the UAE hit 11.1 per cent in 2007, its highest level in at least 20 years. Price rises are accelerating across the world’s biggest oil-exporting region, where economies are booming on a seven-fold rise in oil prices since 2002. While inflation is rising globally due to surging food and energy prices, Al-Suwaidi said inflation is steadying in his country now. « It is stabilising now. That’s good news, » he said ahead on the sidelines of the Bank for International Settlements meeting. The UAE does not release monthly inflation data. Inflation in top global oil exporter Saudi Arabia was 10.4 per cent in May, easing slightly from 10.5 percent a month earlier. The Gulf region is struggling to control soaring inflation as higher oil prices spur rapid economic growth and currency pegs to a globally weak dollar fuel import price inflation. However, Al Suwaidi said the dollar was likely to rise in the near term and there was no change in the region’s exchange rate policy. « We are firm on the peg, there’s no revaluation. We are very firm. We see that inflation is causing the United States to raise interest rates in the near future and that’s going to take the dollar up. So why do anything opposite to what is good for us? » As the dollar plunged to repeated record troughs against the euro and a basket of major currencies this year and last, investors began betting the UAE and Qatar may follow Kuwait’s lead to fight inflation. But reform bets have receded since April as Gulf rulers closed ranks, saying they had no plans to drop their pegs or revalue their currencies ahead of achieving a regional monetary union plan. Asked about oil prices, which hit record highs above $142 a barrel on Friday, Al Suwaidi said the high energy costs were a double-edged sword for the UAE. « Oil prices – we would like to see them lower … whatever the market can reduce them to. I know [it benefits the UAE] but it creates also other problems. » Oil prices – we would like to see them lower … whatever the market can reduce them to. I know [it benefits the UAE] but it creates also other problems. » Source: Reuters

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UAE pavilion ready at Expo Zaragoza

Abu Dhabi: The UAE national pavilion at Zaragoza International Expo (Expo Zaragoza 2008) is gearing up to attract as many as eight million visitors, according to the event’s commissioner general Emilio Fernandez-Castano. Castano, who is visiting the UAE on invitation by the national media council, thanked the UAE for being one of the first countries to announce participation in Expo Zaragoza. « The Emiratis should hold their heads high as their wonderful pavilion is set to attract over eight million visitors during the exhibition, » he said. Expo Zaragoza 2008 will be held with the topic of « water and sustainable development ». The event is being placed in a meander of the River Ebro. Some 104 countries, including the UAE, will take part in the expo. « I am here to offer thanks to the government of the UAE for putting together a very impressive national pavilion at Expo Zaragoza. I am pleased that the UAE is taking part in this major event to showcase its efforts and achievements in water conservation, environment protection and alternative energy, » Castano said. Castano said UAE’s participation in the expo to demonstrate its pioneering experiment in renewable energy and green cities will be an eye opener for the rest of the world and also an opportunity to intensify economic and cultural cooperation between the UAE and Spain. Source: WAM

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UAE bourses remain flat

Dubai: Dubai Financial Market yesterday closed higher for a fifth trading day, adding 0.15 per cent to 5,720.51. Emaar Properties rose 0.87 per cent and Emirates NBD 0.43 per cent. Abu Dhabi’s benchmark, which crossed 5,000 points for the first time in more than two years on Sunday, slipped 0.09 per cent to 4,995.74 points, its first lower close in five trading days. National Bank of Abu Dhabi declined 1.42 per cent and Abu Dhabi Commercial Bank fell 1.32 per cent. Elsewhere in the Gulf, shares rose as regional companies reported first-quarter earnings growth. Saudi Kayan Petrochemical increased to its highest in almost two months after announcing results. Qatar Islamic Bank gained for a third day as the lender said first-quarter profit surged 69 per cent. Barwa Real Estate jumped to a record. Saudi Arabia’s Tadawul All Share Index added 1.2 per cent to 9,638.79, its highest close since March 12 while Qatar’s Doha Securities Market Index advanced 1.1 per cent. « Strong earnings have boosted sentiment which brought funds and retail investors back into the market, » said Bashar F. Eisa, an analyst at Dlala Brokerage & Investment Holding in Doha. Saudi Kayan gained 3.8 per cent to 27.5 riyals, its highest close since February 25. The company building the world’s biggest ethylene-glycol plant reported first-quarter profit of 95.6 million riyals ($25.5 million). Qatar Islamic Bank gained two per cent to 125 riyals, its highest close since May 2006. Barwa Real Estate jumped 8.8 per cent to 62.9 riyals. The Qatar-based property-services business said first-quarter net income surged 88 per cent to 332.8 million riyals. Oman’s Muscat Securities Market 30 Index increased 0.5 per cent while the Kuwait Stock Exchange Index declined less than 0.1 per cent and the Bahrain All Share Index dropped 0.3 per cent. Source: Bloomberg

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Abu Dhabi index crosses 5,000 for first time this year

Abu Dhabi: Abu Dhabi’s general index on Sunday crossed the 5,000 mark for the first time this year as bullish UAE markets added more than Dh17.4 billion to the market value of listed companies. The value of traded shares recovered substantially to Dh4.3 billion of which Dh2.6 billion was in Dubai. The Emirates Securities general index advanced 2.07 per cent to 6,180.13, raising the gains since the beginning of the year to 2.72 per cent. In Dubai, the benchmark index added 2.28 per cent to its value to close at 5,711.98 on relatively heavy trading on the leading shares, especially Dubai Financial Market (DFM), Amlak Finance, Tamweel, and Emaar Properties. Emaar rose 3.14 per cent to Dh11.50, followed by its financial arm, Amlak, which reported a better performance, rising almost seven per cent to Dh4.91. DFM’s shares shot up 5.65 per cent to Dh5.80. Only four companies, out of the 26 traded, ended the session in the red. The Abu Dhabi general index advanced 1.82 per cent to 5,000.07. The value of traded shares exceeded Dh1.69 billion, as the rally continued on the real estate, energy, and banking sectors. Banks recorded substantial gains, led by First Gulf Bank which recorded an impressive 5.29 per cent worth of gains to stand at Dh22.75, followed by Union National Bank which advanced five per cent to Dh8.80. Soiurce: Gulfn ews.com

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Cheap energy in UAE is over

The UAE’s electricity demand projections are staggering. Based on future development plans, the current installed capacity of energy will need to double by 2015. The amount of energy the UAE consumes is set to treble by 2020 – a reflection of a very energy-intensive lifestyle. Even as the energy-producing Middle East sells its wares in lucrative global markets, the UAE looks set to suffer from the resulting demand and price rise. The UAE has one of the highest per capita gas consumption rates in the world. Until recently, the assumption was that demand growth would be met by creating additional generation capacity, fed by limitless gas resources. Governments in the region acted in line, seeking to locate energy intensive industries such as aluminium smelting and sponsoring the building boom. However, a significant shift occurred in the past year. Although gas, the principal fuel for power generation and desalination, is abundant in the region, the assumption that it would flow as a cheap resource to underpin the UAE’s growth no longer makes sense. Abu Dhabi’s gas is increasingly used in the oil recovery process. Using this gas for electricity generation instead could cost millions of barrels of oil left unrecovered. Abu Dhabi’s untapped Shah Field gas resource can produce the equivalent of 50 per cent of current UAE consumption. However, this resource is earmarked for supporting the oil recovery process. Furthermore, the gas has a high content of sulphur which has to be removed at a cost nearly equivalent to the current wholesale price. Qatar has instituted a gas development moratorium until 2011 to preserve its valuable resources for future projects. It has invested in special plants that allow its gas to be marketed anywhere in the world, attracting world market prices. Iran has plenty of uncommitted resources, but is no longer willing to sell these at prices significantly below world market standards. Put simply, the gas rich nations of the region have the options to sell their gas in an attractive world market which has raised the benchmark for gas prices at home, particularly in the demanding UAE. No substitute Alternate fuels for power generation all have problems. Fuel oil and coal are dirtier, less efficient and so more expensive options. The cost of generating clean nuclear energy is up to twice as expensive than gas-generated electricity and is a long-term undertaking, with 10-year lead times common. At the right price – which we estimate to be in the order 100 per cent higher than current wholesale price – gas will be available. Unless governments continue to subsidise energy prices, consumers must get used to the idea of higher energy prices. It is quite possible that some energy intensive industries will suffer. A possible solution to the UAE’s fuel problem is a combination of demand management, efficiency and diversification. Price rises will eventually lead to demand elasticity. The UAE’s real estate developments need to be regulated by building codes which make cooling more efficient, and make solar generated electricity and water heating mandatory. Domestic waste water should be recycled to get more use out of costly desalination which consumes vast amounts of electricity. Such consistent use of efficiency measures and demand management could yield the equivalent of roughly 10 per cent of installed capacity over the next five years. To summarise, energy prices are likely to rise significantly from the current level. Demand elasticity should appear and consumers are likely to seek more efficient real estate offerings. The time of abundant cheap energy is over, even in the UAE. Reducing energy intensity has to be a long-term goal, but in the interim: « user pays ». – The writer is managing director, The National Investor. By Gundi Royle, Special to Gulf News

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Dubai eyes longer maturity in $4.1b bonds

Dubai: Dubai said a second set of bonds that it plans to sell from a Dh15 billion ($4.09 billion) borrowing programme will have longer maturities than the first as the emirate seeks to finance infrastructure projects. Dubai this week sold its first bonds, raising Dh6.5 billion to finance projects, including airports and an urban railway system. « It will set another benchmark… with a maturity of seven or 10 years, » Sami Al Qamzi, director general of Dubai’s Department of Finance, said of the planned second sale. He declined to give details. « We believe the dirham market is more liquid regionally and we want to create a bond market, » he said. The emirate sold Dh2.5 billion of five-year fixed-rate securities, paying a coupon of 4.25 per cent, and Dh4 billion of five-year floating-rate bonds with a coupon of 50 basis points more than the three-month Emirates Interbank Offered Rate. Dubai plans to spend about Dh52.5 billion during the next five years on roads, bridges and a metro network as the city’s population surges, Roads & Transport Authority (RTA) Chairman Mattar Al Tayer said last month. The emirate said last year it planned to seek a credit rating to ease the cost of borrowing outside the region. Al Qamzi said the rating exercise was on hold as the emirate was considering its programme. Dubai, a Gulf tourism and trading hub, is targeting economic growth of 11 per cent per year to 2015. Emirates NBD and Standard Chartered are helping Dubai arrange the bond sales. Source: Reuters

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CEO of Dubai property developer Deyaar detained

Dubai: Zack Shahin, the former CEO of the Dubai-based and publicly listed Deyaar Development, was arrested almost three weeks ago for allegedly embezzling more than Dh100 million, Gulf News has learnt. Dubai Attorney General Essam Eisa Al Humaidan confirmed to Gulf News on Thursday the detention of the US citizen Shahin, who was denied bail on Tuesday almost three weeks following his arrest. « The Appeal Court denied him bail on April 15 after the Court of First Instance approved bail. But we appealed against the bail order. He has been detained for almost three weeks. » Deyaar Development Chairman Nasser Al Shaikh issued a statement confirming that « an investigation is being conducted for certain questionable measures taken by previous CEO Zack Shahin. » He added: « In the interest of the company and its shareholders, the matter has been referred to the Public Prosecutor. Investigation « The company is fully cooperating and providing the necessary support in facilitating this investigation, » he said. However, it is unclear why the company had failed to notify the market of the developments and kept shareholders in the dark for as long as three weeks. Confidentiality The company should also have notified the stock market as soon as its CEO was forced to resign last month. Deyaar on March 29 announced a restructuring of the board – at about the same time that Shahin appears to have been detained. No charges have been pressed against Shahin yet, the Attorney General said. Assistant chief prosecutor Khaled Al Zarouni is in charge of the case. Sources close to the case told Gulf News that the money involved is believed to be Dh120 million. But officials declined to disclose any details. « We have only one file concerning the suspect whose questioning over alleged embezzlement charges continues. We will wait to conclude the investigations and finalise the financial reports to see if he should be charged or not, » Al Humaidan told Gulf News. He refused to give specific details, maintaining the investigation’s confidentiality. Gulf News learnt that Shahin has denied his alleged embezzlement charges and is maintaining his innocence. Meanwhile, Deyaar’s share value on the Dubai Financial Market declined 0.85 per cent to Dh2.33 on the news. Source: Agencies

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UAE stocks post gains for second straight session

Abu Dhabi: UAE stocks continued their winning streak for the second consecutive session, with more than Dh2.72 billion worth of shares traded. The Emirates Securities general index advanced 0.65 per cent, after marg-inal gains recorded in Dubai and Abu Dhabi, where some of the blue chips ended the session in the red. In Dubai, the general index advanced 0.78 per cent to 5,515.74 on relatively heavy trading where Dh1.49 billion worth of transactions were executed. The Dubai Financial Market (DFM) was the heaviest traded stock, advancing 2.12 per cent to Dh5.29. Emaar Properties, however, fell 0.46 per cent to Dh11.10. The real estate developer announced a decline in its first quarter revenue. Deyaar Development, the real estate arm of Dubai Islamic Bank, retreated as well 1.26 per cent to Dh2.35. The gainers list included Tamweel which advanced 1.92 per cent to Dh7.46 and Arabtec which gained 3.24 per cent to close at Dh14.35. The general index of the Abu Dhabi Securities Market (ADSM) advanced 0.51 per cent to 4,877.67 with Dh1.23 billion worth of shares traded. The rally in the real estate and energy sectors resumed with Aldar Properties up 1.39 per cent to Dh10.95, closing to the Dh11 mark. Dana Gas rose 2.45 per cent to Dh2.08. The National Bank of Abu Dhabi dropped 0.73 per cent to Dh20.30, while etisalat stood unchanged at Dh21.90. Overall, the Emirates Securities general index inched closer to its value on December 31, 2007, recording only 0.37 per cent worth of losses since the beginning of the year, while the market capitalisation exceeded the Dh834 billion level. Other markets Qatar’s benchmark index ended up for a 12th straight session, led by Industries Qatar and Qatar Gas Transport, which each finished 5.44 per cent and 4.17 per cent higher. The index advanced 1.25 per cent to 111,151.10. Saudi Arabia’s main index closed higher, boosted by first-quarter earnings of banks, including Samba Financial Group and SABB. The index gained 1.13 per cent to 9,630.37 as Samba jumped 7.89 per cent and SABB 7.03 per cent. Oman’s main index closed above 11,000 for the first time, driven by Oman National Investment and Omantel, which jumped 9.1 per cent and 1.5 per cent respectively. The index rose 0.68 per cent to 11,034.53. In Kuwait, Zain and Kuwait Finance House ended up 1.06 per cent and 1.32 per cent respectively. The benchmark index advanced 0.36 per cent to 14,741.00 points. Bahrain’s benchmark index rose for a second day , advancing 0.7 per cent to 2,843.01. By Ahmed A. Elewa, Senior Reporter Source: Giulfnews.com

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UAE stocks gain marginally

Abu Dhabi: UAE’s markets advanced marginally on Tuesday, maintaining the tight range of less than one per cent and gaining only Dh4.5 billion in market capitalisation. The Emirates Securities general index advanced 0.55 per cent to 5,955.70, sustaining a one per cent level of losses since the beginning of the year, one of the best rates among emerging markets so far. The value of traded shares remained in the vicinity of Dh1 billion, a relatively low average, given the ongoing first quarter financial disclosures. In Dubai, the general index advanced 0.92 per cent, reflecting the recovery of most of the leading shares from the losses recorded earlier in the week. The real estate sector was responsible for most of the gains, with Emaar Properties, the country’s leading listed developer, advancing 1.36 per cent to Dh11.15, followed by Deyaar Development which gained 2.6 per cent to close at Dh2.38. Emirates Integrated Tele-communications (du) and Dubai Investments were also among the best performers, advancing by four and two per cent to Dh5.93 and Dh4.16 respectively. The general index of Abu Dhabi Securities Margin ended the session on positive ground as well, recovering by 0.22 per cent to 4,853.11, on account of the relatively strong gains recorded by etisalat, the country’s leading telecommunications services provider which stood 1.15 per cent higher by the close at Dh21.95. Nevertheless, the 0.72 per cent of losses recorded by the National Bank of Abu Dhabi diminished the total market gains, given that the real estate developers and energy companies reported a mixed performance. Aldar Properties remained unchanged at Dh10.80, while Sorouh Real Estate retreated 0.42 per cent to Dh9.45. Meanwhile, Abu Dhabi National Energy’s (Taqa) gains of 0.63, lifting the price up to Dh3.18, were offset by the losses of 0.97 per cent recorded by Dana Gas, which stood at Dh2.04 by the close. Gulf markets Elsewhere in the region, the Oman index closed higher for the fourth successive session, adding 0.02 per cent to 10,960.46 after hitting a record high of 11,011.29 during the day. Oman Cement and Bank Dhofar led the gains, rising 4.01 per cent and 1.36 per cent respectively. Saudi Arabia’s main index ended lower for the first time in seven trading days, led by declines in banking stocks. Bank fell 2.03 per cent and Al Jazira Bank dropped 3.14 per cent after its first-quarter profit declined 49 per cent on a dive in income from stock market activity. In Qatar, the main index rose 3.22 per cent to 11,013.02, its biggest one-day jump since February 4 after hitting a year high during trading. Industries Qatar surged 9.35 per cent after it posted record profit in the first quarter. – With inputs from Reuters

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Dubai plans dirham bonds to access Gulf debt markets

Dubai: The Dubai government will access the debt capital markets through a dirham-denominated issue under its recently established Dh15 billion medium-term note (MTN) programme. The objective of the issuance is to fund the local infrastructure needs of the government and simultaneously contribute to the development of the domestic bond market. Sami Al Gamzi, director general of the Dubai government’s finance department, said that Emirates NBD and Standard Chartered Bank are the arrangers of the MTN programme, and the joint lead managers and book-runners in respect of the inaugural issue under the programme. The roadshows for the transaction have been conducted in Dubai and Bahrain. The issue pricing and size will be determined through a book-building process, subject to market conditions. Application has been made to list the dirham bonds on the Dubai Financial Market. Source: WAM

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