Saturday, March 25, 2017

Gulf Notes, for the week ending 5 December 2009

December 7 2009

“The old [financial] centers…view the Dubais, the Shanghais and the Rios with suspicion and with errant conviction that their models are built on foundations of sand,… when it was their own foundations that have proved to be weak. Judging from the misguided reaction to Dubai’s challenges, the past year hasn’t changed those attitudes. That should make us worried, very worried, but not about Dubai.”
Wall Street Journal, November 29, 2009

The Burj Al Arab, Dubai’s seven-star, sail-shaped hotel celebrated its 10th anniversary.

Dubai developer Nakheel asked for trading of its Islamic bonds to be suspended on the NasdaqDubai bourse. A media frenzy over Dubai’s debt continued: Reuters quoted a British historian: “Where do these guys go from here?” The Wall Street Journal suggested that events in Dubai were more “leftovers” of “mid-decade mania” than signs of new troubles. With the help of hindsight bias, The Independent said Dubai “was bound to fail.” The New York Times cited Goldman Sachs’ warning that the absence of guarantees from the UAE government might signal other similar events worldwide. Later quoting EFG-Hermes’s estimate that Dubai’s debt could rise up to $150 billion, the Financial Times stated “the city and now the rest of the world are left to operate on rumors and speculation rather than facts.” An edition of the Sunday London Times, with a full-spread graphic negatively depicting Sheikh Mohammed bin Rashid al Maktoum, Ruler of Dubai, was removed from UAE newsstands.

Sheikh Mohammed bin Rashid al Maktoum, Ruler of Dubai: “It is the fruit-bearing tree that becomes the target of stone-throwers, or anything else in their hands.” Reuters gauged that UAE papers at first “ignored the gravity of the crisis” and then started defending Dubai’s leaders. Dubai business leaders came to the city’s defense: Arabtec’s CEO, “I’m not going to lose sleep over this issue;” Al Habtoor Group’s Chairman, “I am very relaxed;” Emirates National Bank of Dubai’s CEO, “Exaggerated.” The president of the World Bank said the debt issue in Dubai was manageable.

Head of Dubai’s finance department: “”Creditors need to take part of the responsibility for their decision to lend to the companies.” Pince Alwaleed of Saudi Arabia: “When things go sour, you can’t have some banks in the West going to Dubai and saying ‘oops’ and crying wolf and saying, ‘You should have guaranteed those loans.” Standard & Poor’s gave junk status to six Dubai government-linked companies: DP World, DIFC Investments, Jebel Ali Free Zone, Dubai Multi Commodities Centre Authority, Dubai Holding Commercial Operations Group and Emaar Properties PJSC. What HSBC and Standard Chartered stand to lose: $17 billion and $7.8 billion, which would cut equity by 18% and 43%, respectively. National Bank of Abu Dhabi’s potential loss: $345 million. Dubai house prices were forecasted to fall another 20-30% sooner than at first expected. The International Monetary Fund reported its 2010 growth forecast for the UAE would be “significantly lower” than 3%, it projected rate two months ago.

Sheikh Khalifa bin Zayed Al Nahayan, Ruler of Abu Dhabi and President of the UAE: “We would like to comfort everyone that our country today is stronger and better, and that our economy and society are healthy.” The UAE president also made reference to a “new economic model.” For National Day celebrations, Abu Dhabi hosted the world’s largest fireworks display and unfolded the world’s largest flag. The Ruler of Ajman passed up an option to buy the French fashion label Christian Lacroix by missing a deadline to submit financial guarantees.

Al Masah International has started taking deposits from home investors in stalled Ajman projects in exchange for down payments on unsold properties in Dubai. It was estimated that the vacancy rate for Dubai’s office space is 40% and Abu Dhabi’s 6%. Realtors in Qatar warned of a looming housing oversupply. Bahrain-based developer Ithmaar appointed Mott Macdonald to design the infrastructure for Dilmunia Health Island, the world’s first dedicated healthcare island. An HSBC-sponsored poll found Bahrain the best place for expatriate living in the MENA region.

Jeddah residents complained about the smell of the decaying bodies of flood victims. Despite governmental assurances otherwise, residents in proximity of Musk Lake, Jeddah’s receptacle for untreated sewage, began evacuating the area as fear spread its dam walls might burst. Students at KAUST were complaining online about leaky roofs and a flooding campus after the region’s major thunderstorms. The king of Saudi Arabia ordered 10,000 new homes to be built in one year for Saudis displaced by the conflict on the Saudi-Yemeni border.

Gulf News December 1, 2009 / The National November 30, 2009 / Reuters November 27, 2009 / Wall Street Journal November 29, 2009 / The Independent November 29, 2009 / New York Times November 30, 2009 / Financial Times November 30, 2009; Financial Times November 27, 2009 / Wall Street Journal November 30, 2009 / The National December 2, 2009 / Reuters November 30, 2009 / Kuwait Times December 1, 2009 /Business 24/7 December 5, 2009 / Reuters November 30, 2009 / Arabian Business December 3, 2009 / Zawya December 3, 2009 / New York Times November 30, 2009 / Arabian Business November 30, 2009 / Arabian Business November 30, 2009 / Business Intelligence Middle East December 3, 2009 / Wall Street Journal, December 2, 2009 / Khaleej Times December 2, 2009 / The National December 1, 2009; Khaleej Times December 2, 2009 / Arabian Business December 2, 2009 / The National December 1, 2009 / Arabian Business December 1, 2009 / Arabian Business December 5, 2009 / Construction Week November 30, 2009 / Business Intelligence Middle East December 3, 2009 / Arab News December 2, 2009 / Arab News December 1, 2009 / Arab News December 1, 2009 / Arab News December 3, 2009.

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