The year that was 2008
Here is our summary of the major financial news events for the second quarter of 2008.
April
MOHAMMED FIRM ON DOLLAR PEG
APRIL 2
His Highness Sheikh Mohammed bin Rashid al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai has stressed the UAE will maintain the dirham's peg to the US dollar for the moment. Speaking to the media on board the special plane that took Sheikh Mohammed from Beijing to Shanghai during his official visit to China, he said de-pegging is not easy and it involves several issues.
TOP 100 FOR EMIRATES NBD
APRIL 6
Emirates NBD has set its sights on being one of the top 100 banks in the world by profitability through organic and inorganic geographic growth, Rick Pudner, Emirates NBD Chief Executive Officer said in his first media interview after the merger of Emirates Bank International and National Bank of Dubai in 2007. Saudi Arabia and Abu Dhabi will receive priority investment for organic growth this year.
AL SUWAIDI: GULF'S DOLLAR PEG TO STAY
APRIL 8
The UAE Central Bank Governor Sultan bin Nasser Al Suwaidi said Gulf Arab states are pushing ahead with a landmark monetary union by 2010 but had no plans to end a long standing peg between their currencies and the United States.
100 PER CENT FOREIGN OWNERSHIP
APRIL 10
Nothing should prevent 100 per cent foreign ownership of projects, especially in the UAE industrial sector, said Minister of Economy Sultan bin Saeed Al Mansouri, paving the way for the foreign ownership law.
JP MORGAN EARNINGS DROP 50%
APRIL 16
JPMorgan Chase and Company earnings dropped 50 per cent from a year earlier. The bank reported first-quarter net income of $2.4 billion (Dh8.8bn), or 68 cents a share, on $16.9bn of revenue.
The results included a $2.6bn writedown on its loan portfolio. A year earlier, JPMorgan posted a record performance with net income coming in at $4.8bn, or $1.34 a share, and revenue at almost $19bn.
UAE PLACED AMONG THE TOP 30 IN INTERNATIONAL TRADE
APRIL 17
World Trade Organisation Report on Global Trade placed the UAE in the global 30 ranking. The country's international trade is valued at $41 billion in 2007.
MERRILL LYNCH POSTS MASSIVE SECOND QUARTER LOSSES
APRIL 18
Merrill Lynch & Company issued its latest assessment of the damage it has suffered from the credit crisis: its fourth straight quarterly loss and write-downs from failed investments approaching $40bn.
The world's biggest brokerage firm announced a wider-than-expected $4.89bn second-quarter loss and said it was selling assets its stake in media company Bloomberg LP for $4.4bn and its Financial Data Services subsidiary for $3.5bn.
GCC SOVEREIGN WEALTH FUNDS HOLD STOCKS WORTH Dh300bn IN GULF
APRIL 21
Thirty six SWFs in the region control 27 per cent of the GCC stock market capitalisation worth Dh300bn. The seven SWFs in the UAE hold stakes in 27 listed companies aggregating $6bn.
Ministry of Finance becomes the largest SWF in the region, due to its 60 per cent stake in etisalat.
ARAB MEDIA FORUM GETS UNDER WAY
APRIL 24
Sheikh Maktoum bin Mohammmed Al Maktoum, Deputy Ruler of Dubai and Chairman of Dubai Media Incorporated, heralded Dubai as a global media centre that has attracted the best media leaders from around the world for the Arab Media Forum.
CREDIT CRUNCH WRITEDOWNS FORCE CREDIT SUISSE INTO FIRST-QUARTER LOSS
APRIL 25
The Swiss banking industry suffered another blow as Credit Suisse, until now seen as a mild casualty of the financial crisis, plunged to a first-quarter loss because of big credit crunch writedowns.
Potential losses on leveraged finance and structured credit of SFr5.3bn (£2.6bn) drove Switzerland's second-biggest bank to a SFr2.15bn loss for the first three months of the year. The charges are slight compared with the $19bn of first-quarter writedowns by its bigger rival UBS, but Credit Suisse can no longer claim to be largely unaffected by the market meltdown.
FIRST CANAL FLOODED AT DUBAI WATERFRONT PROJECT
APRIL 29
The First Part of Dubai Waterfront's manmade canals is flooded signalling the beginning of the world's largest waterfront project. Work on the eight-kilometre Cove Canal is progressing. Waterfront, a new city planned from scratch by Nakheel, has Dh12bn projects underway.
May
IRAN STOPS MAKING OIL DEALS IN DOLLARS
MAY 1
Iran, Opec's second-largest producer, stopped conducting oil transactions in US dollars, a top Oil Ministry official said, in a concerted attempt to reduce reliance on Washington at a time of tension over Tehran's nuclear programme and suspected involvement in Iraq.
Iran has dramatically reduced dependence on the dollar over the past year in the face of increasing US pressure on its financial system and the steep fall in the value of the American currency.
Oil is priced in dollars on the world market, and the currency's depreciation has concerned producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.
DP WORLD TO SEEK SHARE BUYBACK NOD
MAY 5
Dubai Ports World will ask its shareholders for approval to buy back up to $581 million of the company's shares pending regulatory approval. Mohammed Saraf, Chief Executive Officer, DP World said these proposals are for approval in the company's annual shareholders meeting.
Even if they are approved, the company will not exercise these options within the next twelve months.
MICROSOFT-YAHOO MERGER TALKS
MAY 5
Microsoft and Yahoo discussed a possible merger or other matchup that would pair their respective strengths, said people familiar with the situation.
The merger discussions are no longer active, these people said, but that does not preclude the two companies from some other form of cooperation.
Microsoft's online division could be heading for a shake-up.
Failure by the Redmond, Washington, company to make better headway against Google in internet search, combined with Microsoft losing a deal to Google last month to buy online-advertising specialist DoubleClick, has spurred Microsoft Chief Executive Steve Ballmer to consider new action.
Dh 100 BILLION BOOST FOR THE WESTERN REGION
MAY 8
Abu Dhabi is planning to spend Dh100bn to boost tourism industry in the Western Region that makes more than half of the UAE land area.
The region has been chosen to be the emirate's biggest tourism and business destination with several projects in the pipeline..
MOHAMMED ANNOUNCES UNIVERSAL MUSEUMS PROJECT
MAY 11
The Universal Museums Project, which will bring leading collections from globally recognised museums, was launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
Located on the Khor Dubai area, a 27-kilometre stretch from Shindigha to Business Bay, will house museums, performances areas and galleries.
LOW COST HOMES PUT ON PRIORITY
MAY 14
Abu Dhabi Department of Planning and Economy urged private property developers to devote part of their investments to develop low-cost housing to curb soaring rent level after a five per cent rent cap failed to produce results.
SEC probes credit rating agencies
MAY 27
The US Securities & Exchange Commission (SEC) was looking into the workings of the three main credit rating agencies, prompted by their handling of the sub-prime crisis and a report of computer errors at Moody's.
"We sent letters to Moody's, Standard & Poor's and Fitch asking for them to get back to us on aspects of their methodology," said Erik Sirri, Director of the SEC's trading and markets division.
"We asked them to explain the policies and procedures used to detect errors in ratings of structured finance products and to tell us about any errors that they found in structured finance products over the past four years, including steps that they followed to correct the problem," he added.
FIRST PROPERTY COURT SET UP IN DUBAI
MAY 29
A New property court set up to deal exclusively with property cases started the first historic session, said Ahmed bin Hazim, Director-General of Dubai Courts in an exclusive interview with this newspaper.
The specialist court is one of the six such special courts established as per the orders of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
The court system will develop in stages and will handle all cases currently handled in Dubai Courts..
June
THE UAE SET TO BECOME THE FIRST GCC COUNTRY TO INTRODUCE VAT
JUNE 3
The UAE is set to be the first GCC country to introduce value added tax, leading the way for fellow members. Ahmed Butti Ahmed, Director-General of Dubai Customs, said the introduction date will be announced by the Federal National Council.
GCC AGREES TO CREATE NUCLEUS OF CENTRAL BANK bank
JUNE 10
Gulf central bankers agreed to create the nucleus of a joint central bank next year in a major step forward for a monetary union but signalled a common GCC currency may not be in circulation as agreed by 2010. Central bank governors from the six GCC countries laid out a road map towards common monetary union by 2010.
US WELCOMES INVESTMENT FROM REGION: PAULSON
JUNE 11
Henry Paulson, US Treasury Secretary, said Gulf oil producers have to open up their hydrocarbon sector to foreign capital to increase crude output.
The US official made these remarks during his visit to the UAE.
LEHMAN BROTHERS POSTS $2.8BN LOSS IN SECOND QUARTER
JUNE 17
US investment bank Lehman Brothers said it suffered a net loss of some $2.8 billion, or $5.14 per share, in the second quarter of fiscal 2008. Reporting figures through May 31, Lehman Brothers cited the repercussions from the crisis on financial markets, with writedowns of assets and trading losses.
With the second-quarter figures, Lehman Brothers' first-half net loss came to $2.3bn, or $4.33 per share, as against net income of $2.4bn in the previous-year period.
Amid the turbulence, company Chairman and Chief Executive Officer Richard S Fuld Jr announced management personnel changes, with Bart McDade to become president and chief operating officer, who takes over from Joseph Gregory.
INDONESIAN PARLIAMENT PASSES ISLAMIC BANKING BILL
JUNE 18
Indonesia's parliament passed a new Sharia or Islamic banking bill into law in a bid to tap the potential of the Islamic finance sector in the world's most-populous Muslim nation. The law allows foreigners to establish Sharia banks in partnership with Indonesian citizens or local entities and also offers commercial banks the option of converting their business into Sharia-compliant banking.
Around 85 per cent of Indonesia's population of 226 million people are Muslim. But Southeast Asia's largest economy has been slow to tap the fast-growing Islamic finance market. "We hope this law can increase the turnover of Sharia banking in Indonesia… By 2013, Sharia banking is expected to reach 5-10 per cent of market share, compared to two per cent currently," said legislator Dradjad Wibowo
DP WORLD BUYS 60 PER CENT STAKE IN SPANISH PORT
JUNE 19
DP World has signed a binding sale and purchase agreement for a 60 per cent shareholding in Contrasa Sociedad de Estiba, a private company that holds exclusive concession for Tarragona container terminal in northern Spain.
THE UAE TO INVEST UP TO $50 BILLION IN ALGERIA
JUNE 25
Sultan bin Saeed Al Mansouri, Minister of Economy, said the UAE's investment in Algeria could go up to $50bn in industry, agriculture and energy sectors.
AJMAN RULES OUT RELAUNCH OF PKN PRINCES RESORT
JUNE 25
The Ajman Government has confirmed the Dh7.3bn PKN Resort Project in Al Manama area has been cancelled and will not be launched under any other branch name. The legal consultant for the Government of Ajman said the project has been cancelled and all cheques received will be returned to the buyers.
EURONEXT BUYS 25 PER CENT STAKE IN DOHA EXCHANGE
JUNE 25
Euronext, the stock-exchange operator, said it agreed to purchase a 25 per cent stake in the Doha Securities Market for $250m as part of a strategic partnership with the Qatar bourse. The operator of the New York Stock Exchange said it submitted the winning bid in an auction for the stake, which is its largest investment in a non-US exchange.
NYSE Euronext said in a statement that the partnership will build an "internationally integrated cash and derivatives exchange in Doha" with links to the world's biggest capital markets.
BUDGET CARRIER IS NAMED FLYDUBAI
JUNE 26
His Highness Sheikh Mohammed bin Rashid al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has approved the name of Dubai's new airline – FlyDubai. The budget carrier would initially focus on regional flights.
ABU DHABI UNVEILS PLAN TO EXPAND PUBLIC TRANSPORT
JUNE 26
The Abu Dhabi Government has unveiled a public transport project to link the UAE capital to other emirates and the GCC countries in a phased manner. The first phase of the project costing Dh700m will be completed by 2010 with 1,360 state-of-the-art buses. The second phase of the project to link Abu Dhabi with other GCC countries will be completed in the next five years.
DIESEL PRICES GO UP BY 75 FILS TO DH19.25
JUNE 30
Diesel prices at Emirates National Oil Company (Enoc) and Emirates Petroleum Products Company (Eppco) outlets went up by another 75 fils as oil marketing companies increased diesel price to Dh19.25 due to high cost of oil in the international market. Diesel price in Dubai has gone up by almost two-and-a-half times from Dh8.325 in January to Dh19.25 in June.