Investors expressing preference for corporate over sovereign risk

Investors have recovered their bullishness towards equity markets but are shifting their focus away from Europe and into the US and Japan, according to the BofA Merrill Lynch Survey of Fund Managers for March.

After weakened sentiment in February, investors have restored their faith in equities with a net 46 percent of asset allocators saying they are overweight the asset class, up from 33 percent the previous month. Cash positions have fallen with respondents at a net neutral cash allocation compared with a net 12 percent underweight in February.

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• High-yield investment opportunity, estimated yield of circa 6 per cent
• Option of semi-annual income distribution
• 40-strong professional team to manage fund

Emirates NBD announced today the launch of the Emirates MENA Fixed Income Fund. The fund will be managed by Emirates NBD Asset Management Limited (Emirates NBD AM), a provider of a full range of investment products and services and the asset management arm of the Emirates NBD group, the largest banking group in the Middle East in terms of assets.

This is an open ended US dollar denominated fund, which aims to achieve a high level of income as well as capital growth, through investing in a portfolio of fixed-income instruments, predominantly from issuers in the MENA region.

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Marc Faber to comment from The Gulf

In collaboration with CFA Bahrain, CFA Institute, the global association of investment professionals, is to host its first investment conference in the Middle East on Tuesday 23 March. It is anticipated that around 200 delegates will attend the 2010 CFA Institute Middle East Investment Conference, taking place in Manama, Kingdom of Bahrain, including portfolio managers, analysts, chief investment officers, chief executive officers, investment advisers, pension plan investment officers and other senior consultants, who’s names regularly appear in Financial Times Magazine.

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Al Rajhi Capital, the investment banking subsidiary of Saudi Arabia’s Al Rajhi Bank, and Arcapita Bank B.S.C.(c), an international investment firm headquartered in Bahrain, announced today the launch of a USD 500 million (SAR 1.875 billion) fund, the ARC Real Estate Income Fund.

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Since the November standstill announcement, little information was released from either Dubai World or the government to reassure investors. Discussions with creditors have been inconclusive to date and it is expected the market to remain nervous until more clarity is given.

The bailout from Abu Dhabi to help repay the US$4bn Nakheel bond in December has significantly enhanced  confidence in investors that Abu Dhabi will continue to play a supportive role in debt restructuring processes for Dubai Inc credits, which suggests that  the likelihood of an extreme downside scenario for Dubai World creditors, such as bankruptcy/liquidation, or restructuring with a punitive haircut is now much lower.

However, the government support mechanism and its communication will now be viewed, quite rightly, as a more unpredictable process and spreads are likely to remain volatile until a formal standstill agreement is reached.

Below are highlighted  the key implications or risks in the near term for investors,  outlined in the latest MENA Quarterly report from Bank of America Merrill Lynch – Global Research, dated 15 February 2010 and authored by the Emerging Markets research team at Bank of America Merrill Lynch Global Research.

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The Gulf Islamic Fund, a Shariaa Compliant investment vehicle of Gulf Investment Corporation (GIC), ranked first among Shariaa compliant funds investing in the GCC with a 24.6% return. This result was reported by the Zawya Financial Site and the Kuwait Financial Center (Markaz) on the performance of Gulf funds during 2009.

Commenting on these results, Head of GCC Equities, Talal Al-Tawari said:”This achievement by Gulf Islamic Fund is particularly important against the backdrop of the ongoing global financial crisis. In addition to the remarkable performance, the fund distributed 5% cash dividend for the first six months of 2009.”

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• Minister of Economy emphasizes the strength of UAE Economy and Commends ability of Dubai economy to deal with global challenges
• Invites Airbus to leverage country’s potential

His Excellency Sultan Bin Saeed Al Mansouri, Minister of Economy, said the UAE economy is strong and offers strong investment opportunities across varied sectors including aviation. He also Commended the ability of Dubai economy to deal with global challenges.

He presented the robust outlook of the national economy at a meeting with the Prime Minister of Bottom Saxony His Excellency Christian Woolf and an accompanying German delegation. He also invited Airbus, which has an operational base in Bottom Saxony, to leverage the capabilities offered by the UAE. Read more

• DIFC to host Dubai World hearings

Dubai World may offer creditors 60 cents on the U.S. dollar guaranteed by the sheikdom’s government as part of a deal to reschedule $22 billion of debt, two people familiar with the matter told Zawya Dow Jones.

Under the terms of the deal, banks including HSBC Holding PLC, Royal Bank of Scotland Group PLC, Standard Chartered PLC and Abu Dhabi Commercial Bank, will receive 60% of the money they’re owed by the troubled conglomerate after seven years, Maktoob Business reports.

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Aabar Investments, the Abu Dhabi fund that is the biggest shareholder in car maker Daimler, said on Monday that full- year profit more than doubled to AED1.68 billion ($457m).

In a statement posted on the website of the Abu Dhabi Securities Exchange, the company, which holds a 9.1 percent stake in Daimler, said net profit rose from AED721.6 million in the previous year.

It added that total assets at the end of 2009 had rocketed to more than AED37bn, from AED3.3bn in 2008.