Wednesday, May 26, 2010

Global Investment House - Returns to Sound Principles of Investment, Corporate Governance, Asset Valuation and Strengthening of Management with New Competencies


As part of its campaign to repair its brand and image, GIH held a two day seminar /training session for members of the Kuwaiti press on how to read financial statements (clearly a very needed and worthy goal) earlier this week.  At the closing ceremonies in which the participants were presented certificates, both Ms. Maha Al Ghunaim, Chairperson and Managing Director, and Mr. Bader Al Sumait, CEO spoke.  Both AlWatan and AlQabas have articles in their 27 May editions.

Let's start with a quote from Ms. AlGhunaim - which incidentally was the headline used by AlWatan for its article.
مها الغنيم: «جلوبل» تعلمت من الدروس الماضية ورجعت إلى القواعد السليمة في الاستثمار والحوكمة وتقييم الأصول وتعزيز الإدارة بكفاءات جديدة
The above quote can be roughly translated as:
Maha AlGhunaim:  "Global learned from the past lessons and has returned to sound principles in investment, corporate governance, asset valuation, and strengthening of management with new capabilities."
Which I suppose we can take to be an admission that at some point it was operating with unsound or no principles in those rather key areas in running a business.  Sadly, the reason for that lapse wasn't addressed.  Or wasn't reported.  In any case it is, I suppose, comforting that this is a "return" rather than a "first encounter".

As you'd expect, both GIH's Chairperson and CEO sounded themes designed to put a positive spin on the firm, though frankly my head is still reeling from the quote above.
  1. To my surprise I learned from Ms. Maha that the putting of GIH's assets into the Global Macro Fund and the Real Estate Company was designed to protect their value of the assets and preserve the rights of the shareholders.  Mistakenly, I had thought this was done to facilitate creditors' ability to seize the assets in case of a failure by GIH to perform.  You'll recall hat these assets (some US$1.7 billion equivalent) are pledged to the banks.  In the event of default, instead of having to go through the laborious and legally risky step of registering a host of individual assets in their names, all they need do is take the equity in the two companies.  Presumably, with documents of transfer already signed by GIH - whose shareholders confirmed the transfer and the restructuring in their Ordinary General Meeting.  So that all the legal steps apparently have been well covered.  In any case, when you're wrong, you're wrong and it's good to be set straight.
  2. Global's asset management business is large - US$6 billion in assets under management - and the firm is at the top (literally summit) of the regional asset management cohort.
  3. Global's research and analysis is rigorously impartial and professional.
There was also a tour d'horizon on local and international affairs to reinforce the image of expertise of GIH. 
  1. There was some discussion on the crisis - global in nature.  You'll note that that's "global" not "Global".  Unprecedented distress requiring unprecedented government action.
  2. Some criticism of the Kuwaiti Government's efforts to deal with the crisis.  Not enough done.  The USA's program was held up as a model.  The KG needs to start buying assets to alleviate the problems as clients wallets are empty and the banks sit on their liquidity.
  3. A  prediction that some of the distressed Kuwaiti companies are probably going down this year.  Those that didn't face their problems with "courage".  I wonder who Ms. Maha might be  thinking about when she mentions courage.  Perhaps, Mr. AlMusallam? Mr. Al Janahi?
  4. The loan market is likely to be tight and not improve before 2011.  
  5. The Kuwaiti Government pumped a lot of money into the banks but they're not lending.  Rather they're asking the Government to issue bonds so they can employ their liquidity.  Considering all the excellent lending opportunities in Kuwait that the banks don't have, I guess this is surprising to some.
  6. It will be wise to give listed firms time to get ready for the new Capital Markets Authority Law.  And the KSE should not try to be an interim CMA.   The experience in Egypt, Dubai, Oman and Saudi is good and should be studied. 
  7. The Government's privatization scheme may founder on its desire to make a profit.  Conditions are not conducive to trading.  The Government should bear in mind the benefits to both itself and the private sector from privatization. 
  8. The GCC states plans to intervene to prop up the Euro (and thus their foreign investments denominated in the Euro) were criticized.  Government money should be spent in Kuwait solving the crisis at home. 
  9. Apparently, there is a rumor that she and Mr. Al Sumait are being considered for the CMA Board!  Though it seems that she and Badr have only one thought and that is to preserve and protect the rights of GIH's shareholders.  How very lucky that is!   I trust they saved a seat for Dherar.  Or Ali. 

2 comments:

The Rageful Cynic said...

"Apparently, there is a rumor that she and Mr. Al Sumait are being considered for the CMA Board!"

oh please Lord let it not be so.....

the audacity of this firm is really quite stunning....

Anonymous said...

yes the audacity of hope has done much for many including the venerable - and dare i say optimistic - president of the united states of america.

more here: http://www.amazon.com/Audacity-Hope-Thoughts-Reclaiming-American/dp/0307237699

the lord may have had a hand in it too