Further Pressure on Qatar. Really?

When A Story Falls Through the Cracks, Who Catches It?

If you read Gulf News regularly, you’ll have seen their article on Fitch’s downgrade of Qatar’s long term sovereign risk rating to AA- “Qatar Faces Further Pressure as Fitch Downgrades Sovereign Rating”.  

Sounds grim, perhaps even "subdued" if we apply Indian standards. 

But when context is missing, AA is there to catch what’s fallen between the cracks or perhaps in this case deliberately dropped between the cracks given GN’s demonstrated past ability to quote press releases verbatim.

Fitch did indeed downgrade Qatar’s sovereign rating.

A couple of points.  

First, AA- is still investment grade. 

Second, within the GCC context, Qatar’s sovereign rating is certainly well within range of its neighbors.  Fitch ratings page here.

COUNTRY	RATING
Bahrain	BB+
Kuwait	AA
Oman	BBB
Qatar	AA-
Saudi Arabia	A+
UAE	AA

Earlier this year, Fitch downgraded KSA several notches in one go. The pressure must be intense if one applies GN standards.  As to Bahrain, if you don’t know, BB+ is non-investment grade.  

Third, regarding my comment about taking flawless dictation from press releases, here are some quotes that GN somehow omitted.  Fitch press release here.  AA comments in red boldface.  Other boldface to highlight key points.

At an expected 146% of GDP in 2017, Qatar's SNFA [sovereign net foreign assets] are well above the 'AA' median and are sufficient to finance two decades of fiscal deficits or to repay all the estimated external liabilities of GREs, banks, and the private sector (around 90% of GDP).  Qatar's SNFA are underpinned by the foreign assets held by the QIA. Specific figures on the size, returns and asset allocation of the QIA are not publicly disclosed, but we estimate that its foreign assets amounted to USD283 billion at end-2016. We expect QIA foreign assets to fall in 2017 as a result of draw-downs to support the banking sector, which may not be completely offset by the return on QIA assets.

And here's another.

Qatar has been able to restructure its supply chain and avoid major economic and social instability. We expect only a slight up-tick in inflation (to 4% in 2017 from 2.8% in 2016). Inflation was 0.2% yoy in July 2017 (4% for food). Imports dropped 40% in June, but we expect that this will be temporary. Ports in India and Oman have replaced Dubai's Jebel Ali as transhipment points for goods destined for Qatar. Significant stockpiles of construction materials are giving the government time to examine longer-term supply options even as deliveries from quarries in Iran and Oman continue. Qatar Airways' cargo capacity has been used to maintain supplies of food and other perishable goods.

When you factor all this in, and AA hopes you do, you may have a different view of Qatar’s current situation. (Note that caveat.)

Dubai World - Lord Mandelson's Speech - It's All A Matter of Perspective

 

 Picture Copyright World Economic Forum/Natalie Behring 

Creative Commons Attribution-Share Alike 2.0 Generic License

And for something completely different the account by Khaleej Times (Dubai) of Lord Peter's speech.

“The British government will stand besides Dubai,” said Mandelson. “We do so not just because of the historical nature of the relationship between Britain and Dubai. We do so because we believe in Dubai, we are an admirer of Dubai and we believe in Dubai’s future. So it’s therefore not just the natural solidarity but it is self interest as well.”

The National in Abu Dhabi a slightly different take. 

 “Dubai has to be conscious of the fact that how it resolves its current problems and how it deals with its creditors will mean a great deal to the Dubai brand, its reputation and how it secures investment from overseas in the future,” he told a gathering of British business leaders in the emirate.

Lord Mandelson’s comments are likely to increase pressure on the Dubai Government to more swiftly conclude the restructuring announced late last year, including a proposed standstill on US$22 billion (Dh80.8bn) of debt.

I'm guessing it all comes down to where you sat.  No, not at the speech.  When you wrote your article.

AlArabiyya Loses Case for Not Showing "Royal" Interview

There is an old saying "Justice delayed is justice denied".

I suppose the Dubai Court has updated this to "Interview delayed is an interview denied".

I believe that the plaintiff's own words describe the harm caused him.  And there is really no need to say more.

The claimant's lawsuit said: "The defendant's failure to broadcast the televised interview inflicted emotional, moral and social damage on the prince's status as a royal and academician. His fame was affected before his family, students and the social circles to which he belongs. According to article 293 of the Civil Procedures Law, the claimant is entitled compensation because the defendant damaged his reputation and social status."

The Prince of a fellow had claimed Dh500,000 in "moral and financial" compensation.   There is a reason they call it lese majeste. 

The Court in Dubai granted him only DH100,000 but admonished AlArabiyya for breaching the "media code of ethics".

AlArabiyya has lodged an appeal with the expected decision date 12 January.

Gulf News Journalistic Standards - The Wider Picture

A tip of my virtual tarboush to Aqoul for bringing this news item to my attention.

The attempt to control or influence  the news is a fairly widespread phenomenon. It's not just GCC rulers who can be "tetchy". 

There are a lot of very sensitive and fragile CEOs out there.  Mike Mayo was a victim.  Thomas K. Brown  another.  Many a negative analyst has found himself suddenly dropped from the information flow by a peeved company.  Or the recipient of senior management guidance after a customer has called in at "the top".

That's one reason why there has historically been a strange anomaly in ratings: more "buy" recommendations than "sells".

It seems that AA is in "good" company as he applies Gulf News journalistic standards to his blog.

UAE Extends Charitable Hospitality to Indigent Businessmen

With Gulf News redefining journalism in Dubai and providing important lessons for all of us in the media, including bloggers, it's time to begin spreading the word.  And thus hopefully the practice.

Here's a rather negative article from The National in Abu Dhabi.  "Debt Ridden Developers Face Prison or Flight".

How much better if the writer had stopped his Emirates bashing and looked at the positive side to this story.

Here's a more uplifting story based on the sound journalist principles in use at Gulf News, the newspaper of record in Dubai.

UAE Extends Charitable Hospitality to Indigent Businessmen

Abu 'Arqala

Last Updated: December 28. 2009 5:12PM UAE / December 28. 2009 1:12PM GMT

Despite heroic efforts, the wise political and economic leadership of the Emirates have been unable to shield the UAE fully from the global economic crisis caused by imprudent and unwise actions of foreign financial markets and financial firms.  If that foreign malfeasance weren't enough, there is sadly foreign perfidy.   Many local businesses have suffered financial reversals due to the foreign media spreading unfounded and unjustified rumors about the local economy.

In this atmosphere, where can a businessman - particularly a foreigner - turn in times of trouble?

The story of the Emirate's assistance and charity is truly remarkable and one hopes an inspiration to other countries around the world.

While there are many cases, this article will relate just a few - the most touching stories.

There's Dirk Sassen, a German citizen who had been a successful real estate developer.  His business suffered and he ran out of money, demonstrated by the fact that he was unable to settle several checks.  Is Dirk out on the street as he would be in New York, perhaps living in the subway?  Remember that the New York subway is not as clean or modern as Dubai's Metro!

No he's not living in the subway or washing car windshields in Manhattan with a dirty squeegee. Currently he's a guest of the Emirate of Sharjah, which is providing him accommodations.  But that's only part of the story.  While a guest of Sharjah, Dirk has seen a dramatic improvement in his health.  He's lost over 10 kg as part of the health regime offered by his hosts.  A new haircut and sartorial style - just the ticket to prepare for a job interview.  Access to the telephone for those all important calls to headhunters.  Not only that, but he's been made part of a twenty-seven strong support and networking group sponsored by the Emirate.   And no doubt making new friends and business contacts to help him get back on his feet.

With the global crisis being of such a magnitude that it may take decades for business to recover, who is providing businessmen with assurance of basic support during this period?  Certainly, not the UK where even the most sacred of institutions, bankers' compensation, seem to be under unrelenting attack.

But the story is different across the UAE.

The Emirate of Dubai has guaranteed Peter Margetts twenty years fully paid accommodations courtesy of Shaykh Mohammed.  Yes, you read that correctly, Peter need not worry about where he will rest his head for the next two decades!  And he too will be given opportunities similar to Dirk's to make new friends and contacts.

Ras Al Khaymah has ensured that Frank Khoie will have a place to stay for the next three years.  What a relief not to have to worry about housing when one's mind is pre-occupied with rescuing one's business!

These three accounts prove that the tradition of bedouin hospitality remains intact to this very day.  And one might say even flourishes in the United Arab Emirates since as you will notice three different Emirates have extended helping hands to those less fortunate.  What's remarkable here is that all three are foreigners.  What other country would show such solicitude to foreigners down on their luck?

Dubai Financial Market Provides Unrivaled Liquidity - Passes All Tests

Frankly, when I read this article in the Gulf News, I was more than a little dismayed.  It seems perhaps that not everyone has gotten the editor's memo yet.  I suppose one excuse is that this is a guest columnist .

Here's just one example of the unjustified negativism in this article:

"The most important thing to keep in mind at this time is that the market trend of both the Dubai Financial Market General Index (DFMGI) and Abu Dhabi Securities Exchange General Index (ADI) continues to be down. There is high risk of further declines both in the near and medium term."

Well, aware not only of the Gulf News editor's memo but possessed of a keen civic spirit, I've taken it upon myself to write the article as it should have been written.

Dubai Financial Market Provides Unrivaled Liquidity - Passes All Tests

Special to GulfNews:  Abu 'Arqala  December 28. 2009

"The most important thing to keep in mind at this time, particularly in the light of the unjustified negative campaign being waged against Dubai by the world press, is that the Dubai Financial Market  ("DFM") is thriving and reaching new pinnacles of success.

Under the wise political and financial leadership of the Emirate, the DFM has been providing unrivaled access to liquidity to investors wishing to rebalance their portfolios from equities to cash.  As part of this process, the DFM has repeatedly not only tested its lower support levels, but also in keeping with the spirit of Dubai has surpassed every test.  And thus broken through every barrier placed in its way.

At the present time we can expect this trend to continue, demonstrating yet again that the Emirate is motivated not only by a sound vision but excellence.  And while it may seem a bit self-centered, the DFM can truly claim to have set not only the tone but also the trading pattern for other regional markets as well.  This is after all Dubai - a model for the GCC.

As the Dubai market consolidates at these new levels, it is positioning itself for a renewed period of explosive growth."

Dubai Assumes Leadership Role in Tackling Global Financial Crisis

(The following article has been prepared according to press guidelines at "Gulf News" for reporting on the non-crisis in Dubai. Delay in publication resulted from the normal review process to ensure that the article did not contain any deviant or incorrect thoughts).

14 December 2009 – Dateline Dubai, United Arab Emirates

Under the patronage of the wise and benevolent leadership of the Emirate of Dubai, the Government of Dubai graciously hosted a meeting for international bankers still reeling from the effects of the global financial crisis. While the meeting was called in part to afford international bankers an opportunity to enjoy the much warmer climes of Dubai during this winter season, the meeting had a much more serious purpose.

As a leading global financial centre, Dubai and its progressive leadership are well aware of the responsibilities such an unrivaled status places on their capable shoulders. Therefore, Dubai World took the unprecedented step of advising its creditors at this meeting that it was willing to extend the repayment tenor of its obligations. This generous sacrifice is being made in view of the desperate need of international and local creditors for high quality earning assets, saddled as they are with poor underwriting decisions made outside the UAE. A Dubai World spokesman was reported to have said that while this step was perhaps inconvenient for Dubai World and its subsidiaries "the decision was sound and favours all parties in long term and not short term as Dubai World Group has strategic projects."

Not unexpectedly, creditor response was enthusiastic.

One unnamed European banker said, "GLOBAL crisis or not, Dubai has done it again. It has once again shown the world, beyond doubt, its ability and willingness not only to meet its obligations but any challenge to its unrivalled status as the most dynamic global financial and trading hub in the Gulf region."

Another grateful banker noted: 'Usually, each of the world's countries has an icon to be proud of. Dubai has many, such as Burj Dubai, Burj Al Arab, Dubai Mall, as well as Dubai International Airport and the Emirates Airlines which are seen as major drivers for tourism."

A local banker from Dubai commented: "People try to pelt stones or anything else within their reach at a fruit bearing tree. Then how it will be when we have seven fruit-bearing trees or more? It is natural that we are exposed to all these exaggerations, which are far from reality".

One US investment firm with a sizeable position in Nakheel sukuks said: "However, the markets might react, this is Dubai we are talking about. An emirate that has redefined the terms "vision" and "ambition" for the world, which has given it the tallest tower, the largest mall, the tallest hotel, the largest man-made harbour and, in-the-making, the world's largest airport, among a host of other marvels. It has a track-record second to none. Dubai is one of the foremost centres of world gold trade and has indeed been gaining in importance as the preferred global destination for tourism, entrepot, real estate and construction activity, especially over the past three decades."

A banker with a faint Scots burr in his voice remarked: "The Dubai dream lives on. If anything, this latest episode is a sign of Dubai's economic maturity, a clear conscience and commercial intent." In a culturally uncharacteristic bit of loqaciousness, he continued: "Dubai World's debts are small and some companies have been saddled with debts more heavier than tnose of the Dubai Group."

Finally, another banker from Dubai neatly summed up the consensus of attendees at the meeting: "And I want to tell those people who nag about Dubai and Abu Dhabi to shut up."

(Editor's note: All quotes are actual verbatim statements made by various parties and reported in the press, though attribution may vary from that in the original reports).

When the Going Gets Tough, The Tough Shut Up Any Criticism

Rupert Bumfrey posted this gem about the new "style guide" at Dubai's "Gulf News" newspaper at his blog.

All the news that fits the government view is fit to print.

You can measure how bad a situation is by the attempt to control the press.

Though I suppose points should be given for upholding the sacred concept of lèse majesté.  They are often quite fragile I'm told.  A sad condition of those in power.