UAE Markets Lose AED33 Billion (US$9 Billion)

ADX down 8.2% and DFM 7.3%.  The ADX drop was the largest in is history.  The DFM hasn't had a drop like this for over a year.

On the ADX (Abu Dhabi) there was a broad decline with many stocks down 9% for the day.  While one would expect declines in the banking, real estate and construction sectors, there were also large declines in companies such as Aabar (AD Government owned energy company), Abu Dhabi National Hotels, Agithia Group (Food Company).  Clearly a general market sell-off as investors  rush to liquidity (cash).   Looking at individual stocks, the forward order books are one-sided - all "asks" (sell offers) and no "bids" (buy offers).  That suggests market pressure for tomorrow.

On the DFM (Dubai), essentially all of the market's drop was in the first 45 minutes of trading - from 1970.2 to 1942.6 with a further slight drop to 1940.36 in the last 45 minutes.  I couldn't find the forward order book summary.  But again a quick glance indicates a broad sell off as in Abu Dhabi.  I'd expect more selling pressure tomorrow at the DFM as well.

On Nasdaq Dubai, Dubai Ports lost 14.88% (and earned the distinction of being the stock with the largest drop and the largest trading volume).  You'll recall that the Government announced that DP would not be part of the debt standstill.

Trading patterns suggest an absence of buyers during today's session.  And as indicated above (at least based on ADX data), there don't appear to be many buyers waiting to jump in tomorrow morning. 

More Dubai Fallout - GCC and MENA

Dubai dropped the first shoe - its request for a debt repayment standstill.  And what a big shoe it was.  Still causing shockwaves.

Not only have Dubai and the region been affected but there have been knock-on effects.  European banks - who reportedly hold some US$35-45 billion of Dubai debt - have seen their shares fall.  As have European companies where Dubai and other GCC countries are shareholders.

Real estate investors in major centers are reportedly licking their lips thinking about  potential fire sales of assets - the Adelphi Building in London and so on.

Let's take a look at some repercussions closer to home.

Following Dubai's real estate boom, everyone who was anyone in the real estate game had to have at least a $1billion dollar project.  And like Dubai, the more adventurous ventured from their home markets.  Jordan, Egypt, Tunisia, Morocco and so on.  Dubai even has a sky scraper building in Doha. Salam Resorts in Bahrain and Oman.  Sama Dubai.

Now that bankers and investors have belatedly rediscovered risk (but perhaps as usual only temporarily) there is bound to be a slowdown.

What is the fate of the projects a-building?  And what is the fate of new developments?

Not likely a positive development (sorry for the pun) for some of the less rich, less resilient economies.

Central Bank of Kuwait Requires Local Banks to Prepare Estimated 2010 Financials

AlQabas reports that the CBK has issued an order to local banks that they must prepare projected financials for 2010 shortly after the end of Fiscal 2009.  These are to be supplied within the deadline for the submission of the 2009 financials.

Given the financial crisis in 2008 and the impact on the banks, the CBK had not required projected financials for 2009.

Other than the obvious motive of instilling greater discipline in banks' planning, the CBK can use these reports to gauge current bank sentiment to business in 2010, the scope of their planned activities and thus the likely impact on the economy. 

GCC Business Confidence Survey

An interesting survey of business sentiment by Oliver Wyman/Zogby International.
Note:  The survey was conducted with C-Level business executives in Saudi, UAE, and Qatar.

There are a variety of interesting findings:

1. The opening of Iran seen as extremely positive (a bit of a surprise) especially given the recent surge of media comment on the regional Iranian threat.
   
2. Conflict with Iran as the biggest negative (no surprise there)
   
3. Sentiment against maintenance of the US Dollar as the major world currency as well as realistic expectations for that happening (or in this case not happening)
   
4. Despite the UAE being seen as the most business friendly, Saudi businessmen are actually more positive about business prospects in their country and the economic stimulus policies of their government.  UAE business views are decidedly and grimly downbeat.
   
5. The comment about consolidation of regional companies into global leaders is in my view applicable to a rather slim segment.  (Page 5)