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UAE, Gulf stocks claw back some of their losses in topsy-turvy day

Markets|: The Gulf's stock markets ended the week paring some of the steep losses from earlier in the day. The selling spell in early trades was a reaction seen elsewhere amid lingering concerns about the health of the global economy. Dubai Financial Markets closed 1.1 per cent down after recovering from a deeper red, with top lender Emirates NBD clawing back most of its losses to end the day 0.8 per cent lower. At one point, it had hit a low of 2.9 per cent. The bank, incidentally, had impressed investors on Wednesday with its forecast-beating full-year results. The rout in the global markets triggered wider losses with Emaar Properties shedding 1.8 per cent and Dubai Islamic Bank dropping 1.2 per cent. FAB's smart turn Abu Dhabi Securities Exchange traded 0.4 per cent down with Aldar shedding 2 per cent and Etisalat slipping 0.6 per cent. First Abu Dhabi Bank wiped out all its losses during the day and traded flat at end of the session. The bank had gained 2.5 per cent Wednesday after reporting strong 2020 results, which also helped it neutralise losses on Thursday. Banks disappoint Qatar Exchange's main index traded 1 per cent lower as Al Khalij Commercial Bank shed 1.9 per cent after its board of directors proposed a lower dividend payout than a year earlier despite reporting higher full-year net profits and revenues. The profit rose around 6 per cent on the back of a near 22 per cent increase in revenue, but the board recommended a marginal 0.06 Qatari riyal a share in dividends, down from 0.08 Qatari riyal paid out a year before. Qatar Commercial Bank fell more than 4 per cent at some point during the session, but recovered to settle 1.2 per cent down. The lender announced its plan to raise at least $1 billion in bonds taking advantage of positive market conditions with interest rates running low. The bank earlier in the session slipped 4 per cent as its full-year results and watered-down dividends disappointed investors. Bucking a trend Saudi Arabia's benchmark index actually gained 0.3 per cent, its third rise in the last 11 sessions. Telecoms led the way after a report that the massive NEOM City project is in talks with local and international tech firms for a cloud computing deal. Saudi Telecom rose 1.3 per cent and Zain Saudi traded higher by 0.7 per cent. However, the food group Savola pulled back 1.6 per cent after reporting a 67 per cent plunge in fourth-quarter net profit amidst lower sales and margins. Oman's 30-company index was down 0.3 per cent as National Bank of Oman dipped after announcing no dividends to shareholders and an exposure to the defaulting Darvesh Group, while Bahrain index edged back 0.4 per cent with telco Batelco retreating 0.7 per cent.

GulfNews Business

Failed private equity firm Abraaj's Arif Naqvi to be extradited to US

Markets|: London: Abraaj Group's Arif Naqvi lost a bid to fight his extradition to the US, another blow to the founder of what was once the Middle East's largest private-equity fund. Naqvi should be sent to face American charges of fraud and racketeering, a judge said in a London court Thursday. Prosecutors accuse the former executive of concealing the true position of a fund struggling with a liquidity crisis, while siphoning off hundreds of millions of dollars for his own family. Read More UAE corporate scandals require a clean up Investment firms need patience and more to unlock Gulf state's wealth flow All powerful and then Founded in 2002, Abraaj grew to become one of the world's most influential emerging-market investors. But the fund collapsed into liquidation after a group, including the Bill & Melinda Gates Foundation, sought to investigate the alleged mismanagement of money in its health-care fund. Naqvi himself was forced to surrender control after it was revealed that the firm's main revenues hadn't covered operating costs for years. While Naqvi, who suffers from poor health, has made his home in the UK since 2018, "there is no doubt that the US is where most of the loss and harm has resulted from the relevant activity," Judge Emma Arbuthnot said in her ruling. Jail time By the time of its collapse in 2018, Abraaj owed creditors over $1 billion. He faces up to 30 years in prison in the US. Naqvi has rejected the American charges, with his lawyer saying at a hearing in June that his "unshakable conviction is that he is entirely innocent of these allegations." He can appeal the decision, meaning he's unlikely to be extradited any time soon. Naqvi's lawyers couldn't immediately be reached after Thursday's ruling. Abraaj, which once managed almost $14 billion, collapsed in part because of "a deliberate attack by competitors" and following US concerns over his fund's role in selling a critical Pakistani power company to Chinese investors, according to Hugo Keith, Naqvi's attorney. The judge dismissed Naqvi's arguments that a large amount of the alleged misconduct took place in the UK. "I did not find anything of the sort," the judge said.

GulfNews Business

UAE's real estate stocks get shaken by fresh global worry cues

Markets|Analysis|: Stocks worldwide are suffering a bout of risk aversion, and UAE markets too seem to be in the same boat. The last trading session of the week saw ADX decline 0.35 per cent and DFM in the red by 1.07 per cent. The recent tightening of lockdowns in Germany, France, Denmark and the Netherlands and the new restrictions in China and Japan have reignited fears of a double-dip recession. The second wave has stressed the healthcare infrastructure and wreaked havoc with a nascent economic recovery. Read More Investors further eye how economies navigate COVID-19 crisis What data show and how investors behave have no meeting points Fraught real estate In the UAE, the economy-sensitive real estate sector shares got sold off heavily. The week saw Emaar Properties fall 7.19 per cent, Emaar Malls (7.14 per cent), RAK Properties ( 6.20 per cent), Damac (3.52 per cent) and Aldar (0.83 per cent). Emaar Properties derives almost one-fourth of the revenue from outside UAE, so it's quite sensitive to international developments. The resurgence in pandemic obviously impacts Emaar Malls, which has hedged some of its risks since nearly 30 per cent of its revenue comes from online sales. The decline in Damac, RAK Properties and Aldarare more due to investors taking off risk from the table. Cash in hand Damac has cash of Dh4.94 billion when compared to Dh3.41 billion in debt. And the first three quarters of 2020 saw Damac post double-digit growth in sales. RAK Properties also exhibited sales growth during the period. As is often mentioned, the real estate sector is plagued by oversupply. Yet if one parses through Dubai Land Department data, we will get some interesting information snippets. In 2015, total sales were Dh46.79 billion, in 2016 it was Dh39.53 billion) and 2017 had Dh46.86 billion. Then in 2018 sales were at Dh32.72 billion and for 2019 it was Dh41.82 billion. In 2020, Dubai property sales saw 35393 transactions leading to Dh72.41 billion. The surge in the number of transactions last year indicates that investors are finding bargains, which shows that a bottom might be near. From a macro perspective, central banks' easy money policies are set to continue, and this could fuel risk-on bets on UAE real estate... - Vijay Valecha is Chief Investment Officer at Century Financial.