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Dubai Gold & Commodities Exchange Weekly Market Views - 4 October 2009
October 5, 2009--Commodities Overview
Commodities prices may move sideways to lower next week. Oil prices may trade around $70. Gold and silver are vulnerable to a round of profit-taking, having recorded strong advances over the past several weeks.
Other commodities are in a similar position: vulnerable to profit-taking and short-term selling. In this environment, prices could come off some. A series of holidays will reduce Chinese demand for most commodities over the coming week, which could serve as an occasion for opportunistic short-term selling. A stronger dollar, should one emerge, would be expected to contribute to such a sell-off in commodities. If the dollar does not break above its recent range, however, commodities may mark time. While the markets may show signs of being exposed to down-side moves, demand for gold and silver as safe-haven investments remains strong. Bargain hunting by fabricators and investors would be expected to limit any sell-off in commodities prices this week. Signs of economic recovery are continuing to mount, even as some economic data point to continued economic pain. The recovery is likely to be V-shaped, but with some aspects of demand subdued by on-going structural economic imbalances.
Currencies Overview
Currency markets may see continued volatility, as traders and others seek direction in a directionless market. While there remains concern that the dollar could fall further, a growing body of evidence suggests the dollar may find strength against the euro and yen, if not other currencies, in the short term. There is a risk for dollar bears that a wave of short-covering could trigger stop-loss liquidation of massive short positions taken on in the past several weeks. Such a development would push the dollar quickly higher, at least for a time. Barring such an event, currency markets seem more likely to trade sideways in a volatile fashion. The markets will be watching to see if the dollar mounts a convincing defence above recent lows. It may, but it may not rise sharply. This week the World Bank and International Monetary Fund are meeting in Istanbul. It is expected that very little agreement about major, substantive economic and financial issues will emanate from the meeting. Recent G20 and other meetings have shown growing disagreement among the major industrialized economies’ governments, which may shine through in the meetings communiqués. This could lead to further currency market turmoil, with the dollar moving sharply in both directions.
Source: Dubai Gold & Commodities Exchange (DGCX)
MENA region represents $30bn in asset management revenue opportunities for developers
October 4, 2009--.T. Kearney, one of the world's leading management consulting firms, sees an untapped revenue opportunity of $30bn in ancillary revenues for developers in the MENA region, of which around $5-10bn are in UAE and an additional $8-12bn are in Saudi Arabia.
Like a vast majority of economic sectors and geographies, real estate in the GCC has been impacted by the existing economic climate.
Source: AME Info
DIFC and MIGA collaborating to support development of bond & Sukuk market and promote FDI into MENA
October 1, 2009--The Dubai International Financial Centre (DIFC) announced today that it is working closely with the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA), on an initiative to assist and support the development of the region’s bond and Sukuk market.
The two institutions are also co-operating closely on their overall aim of promoting Foreign Direct Investment (FDI) into the Middle East North Africa (MENA) region.
HE Dr. Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC) and Vice Chairman of UAE Central Bank said: “DIFC’s partnership with MIGA will contribute significantly to enhancing the growth potential of the bond and Sukuk markets in the region. This partnership supports DIFC’s long-term strategy for developing highly efficient and liquid capital markets. By providing the means for mitigating political risks, this partnership can play a significant role in stimulating foreign investment, which is critical to the region’s economic growth.”
As part of the initiative, the DIFC and MIGA hosted a conference for the region’s capital markets industry at the DIFC Conference Centre. The delegates were welcomed by Abdulla Al Awar, Chief Executive Officer of the DIFC Authority.
Announcing the joint initiative, Al Awar explained that: “By leveraging DIFC’s knowledge of the regional markets and MIGA’s experience in working closely with emerging markets, the initiative will help create cost-efficient, cross-border financial structures, which are critical for facilitating investments.”
The DIFC Authority CEO pointed out that the risk perception of the region, and particularly of the Gulf Co-operation Council (GCC) member countries, is reducing rapidly with the abatement of the global financial crisis. “Despite the financial crisis, there have been a couple of successful bond issues, in the UAE for example this year, indicating a continuing appetite. The DIFC and MIGA are working closely to nurture, assist and support the industry to expand and gain depth,” Al Awar said.
Source: Dubai International Financial Centre (DIFC)
Gulf States' Sovereign Wealth Funds Lose $350 Billion
The World Investment Report 2009, released last week, said that assets held by the four Gulf funds dropped to $1.115 trillion last year from $1.165 trillion at the end of 2007 and that government injections of $300 billion helped narrow their losses.
Source: NDTV
National Bank of Abu Dhabi and DVB to launch aviation investment fund
NBAD and DVB will act as 50%-50% joint venture partners in establishing and managing the fund. As sponsors, NBAD and DVB will also proportionately invest in the fund alongside the investor base primarily from the UAE and other GCC countries.
It is expected that the fund will acquire approximately $1bn in assets over the next two years. The fund represents the first major cooperation between NBAD and DVB, and both organisations bring complimentary skills and expertise to the fund.
Source: National Bank of Abu Dhabi
ADX welcomes UAE promotion to Secondary Emerging market status
Tom Healy, ADX Chief Executive said, "We are delighted that the UAE will be promoted to the new designation within FTSE Global Equity Index Series; ADX fully supports the GEIS initiative and will cooperate with the FTSE Group in communicating progress back to the international investment community."
Jonathan Cooper, Middle East and Africa Managing Director for FTSE Group, said:
"The UAE's inclusion as a Secondary Emerging market to the Global Equity Index Series is a great achievement. It is proof of the commitment that has been undertaken by the exchanges to achieve international recognition and to facilitate access for international investors. FTSE is proud to announce this decision which will bear considerable weight in creating further visibility of the region across international markets."
Source: Abu Dhabi Securities Exchange (ADX)
Nasdaq Dubai Academy to provide expanded courses on investor relations and financial public relations
The extended programme, to be held in October 2009, aims to promote best practices by listed companies in the region. It follows a successful initial programme held in June.
Jeff Singer, Chief Executive of Nasdaq Dubai, the region's international exchange, said:
"Following a period of volatility in the capital markets, companies are increasingly aware of the need to communicate their strengths and achievements effectively to investors and the general public. These courses help companies to identify the appropriate information to give out and the right methods for distributing it."
Nasdaq Dubai Academy will hold three one-day foundation courses on October 11-13, followed by a one-day practitioner course on October 14, all aimed at in-house and external investor relations and public relations practitioners. The courses are:
• Introduction to Financial Markets, Financial Public Relations and Investor Relations;
• Introduction to Financial Results and Annual Reports;
• Introduction to Corporate Finance and Valuation;
• Best Practice and Compliance in Financial Communications.
The tutor for the courses will be Louise Breen, a Director of FinanceTalking, the UK-based market leading financial corporate communications training provider.
Ms. Breen said, "We were delighted with the feedback from our initial programme in June and are looking forward to delivering this extended programme, once again in partnership with Nasdaq Dubai."
Nasdaq Dubai Academy provides financial training courses for businesses and individuals in a range of topics including equity derivatives, trading, Islamic finance and risk management.
Source: Nasdaq Dubai Academy
Fitch downgrades banks in UAE
The credit ratings agency also downgraded two important Dubai-based companies, and put Etisalat the UAE’s dominant telecoms company, on review for a downgrade, indicating that the Gulf state is still facing stresses due to the global financial crisis.
Source: FT.com
Proposed law changes regarding foreign ownership of companies onshore in the UAE
100% foreign ownership is already available for companies set up in the UAE's freezones, which have been a cornerstone of the UAE Government's drive towards diversification of the economy.
At present, foreign participation in local liability companies (known as 'LLCs' - the form of company at which this law change is targeted) is limited to 49% of the shares of those companies.
Source: AME Info
Islamic syndicated lending
Within the realm of Islamic finance, syndicated loans can take a variety of forms and may be a form of Musharaka financing but because of the prohibitions in Islamic finance concerning riba there are significant differences between an Islamic syndicated loan and a conventional syndicated loan.
Source: AME INFO
September 29, 2009--Sovereign wealth funds (SWFs) of four oil-exporting Gulf states lost around $350 billion last year due to the global financial crisis, according to a UN report.
September 27, 2009-National Bank of Abu Dhabi (NBAD) and DVB Bank SE (DVB) have signed an agreement to launch a new aviation investment fund, which will invest in aviation assets, principally aircraft and engines on lease to international airlines.
September 27, 2009-Abu Dhabi Securities Exchange (ADX) today announced that the Global index provider, FTSE Group 'FTSE' has finalised its annual review of country classification for the FTSE Global Equity Index Series (GEIS) and confirmed that the UAE is to be promoted to Secondary Emerging market.
September 27, 2009-Nasdaq Dubai Academy is expanding its range of courses on investor relations and financial public relations to meet growing demand, in association with specialist training company FinanceTalking Ltd.
September 24, 2009--Fitch Ratings downgraded a raft of banks in the United Arab Emirates on Thursday due to the lower likelihood of state support for some of the smaller or privately owned financial institutions
September 18, 2009--The UAE Ministry of Economy proposes to change the rules regarding 'onshore' companies in the UAE so that foreigners can own up to 100% of such companies' shares.
September 17, 2009-The concept of syndicated lending may have been born in the 1960s in the world of conventional finance but it was not until earlier this decade that it found its way into the Islamic finance lexicon. Syndicated loans are quite simply an integral part of capital raising for large corporate and financial institutions.
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