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UAE developers suffer shabby second quarter
Abu Dhabi’s largest developer by market value, Aldar Properties, blamed lower land sales and investment values as it reported a net loss of $214.9 million in the second quarter of 2010, from a net profit of $310.3 million a year ago. Major banks covering the company cut their target prices for the developer: Citigroup cut its target price to $1.25 from $2.09, Credit Suisse slashed it to $0.62 from $1.11, HSBC cut its target price to $0.54 from $1.27, while EFG-Hermes cut its fair value to $0.54 from $1.19. The last three banks and Moody’s ratings agency all downgraded Aldar Properties’ rating by varying degrees. Sorouh Real Estate, Abu Dhabi’s second-largest developer by market value, posted a 79 percent drop in its second quarter net profit to $8.4 million from $40.3 million in the same period last year. In Dubai, Emaar Properties reported second quarter profit of $218.4 million compared to a $348.6 million loss a year earlier, while Deyaar posted a net loss of $66 million in 2010’s second quarter.
Kuwait telecom sector on the rise
The telecommunication sector in Kuwait showed healthy financial results for the first half of the year. Kuwait-based mobile operator Zain saw revenues grow by 10 percent to $2.33 billion compared to the same period last year, with net income climbing some 488 percent during that period to reach $3.09 billion – this included capital gains of $2.65 billion from the sale of the company’s unit in Africa to India’s Bharti Airtel in early June, 2010. Nevertheless, the company lowered its workforce by 70 percent as part of the group’s new strategy in the coming period. Wataniya Telecom posted a 12 percent increase in first half revenues to $900 million, with net profit hitting $123.9 million relative to $272.3 million in the first half of 2009. Furthermore, the number of customers served by the company rose 33 percent in the first half of 2010 compared to a year earlier, to stand at more than 15.8 million.
CBQ cut rate to spur economic diversity
As Qatar’s real GDP grew by 8.7 percent in 2009, mostly on proceeds from gas exports, no specific measures were required to aid its economic performance. However, the Qatari government is targeting a 16 percent rise in real GDP this year, more than any other oil producing country. To be able to meet the set target, the country is aiming to expand gas output as well as to diversify the economy by implementing an infrastructure concentrated expansionary fiscal policy in hopes that it will spill over into productive sectors. Concurrently, new financial policies are being implemented to boost domestic private investment along side the government spending initiatives. As such, Central Bank of Qatar (CBQ) cut its overnight deposit rate by 50 basis points to 1.5 percent in August for the first time in two years. The CBQ is hoping that the move will shift some of the economy’s dependency on the oil and gas sector to other productive sectors. The CBQ will also monitor capital movements in the coming period to prevent any large outflows that could potentially cause instability.
