Summit Notebook

Exclusive outtakes from industry leaders

Moscow: The least worst place for your money

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   Russian investment bank Renaissance Capital was a big backer of Moscow’s ambition to become a major emerging-markets financial centre, a bridge between European and Asian capital, a rival to Dubai.

    It not only trumpeted the idea, but was one of the first big local firms to take out offices in a sleek glass skyscraper by the Moscow River, surrounded by foundation pits and towers of naked steel girders that were to become Moscow’s Canary Wharf.       Then the financial crisis hit in September 2008, knocking back the city’s ambitions.       Renaissance Capital President Ruben Aganbegyan said, however, that other world financial centres were inadvertently helping Moscow’s case despite its setbacks.       “A lot of people in the world are doing everything they can to help us,” Aganbegyan told the 2009 Reuters Russian Investment Summit. “Like the UK raising taxes.”     Russia instituted a 13 percent flat income tax rate in 2001 to stop rampant tax evasion. Earlier in the day, Finance Minister Alexei Kudrin told the summit that Russia would try to avoid raising taxes to cover budget deficits for at least three years

Is Dubai real estate downturn reason for sukuk slump?

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This week we had the opportunity to speak with Mohsin Khan, Senior Fellow at the Peterson Institute for International Economics and the former head of the Middle East department at the International Monetary Fund, ahead of the 2009 Reuters Islamic Banking and Finance Summit. I asked him why he thought that the once red-hot market for Islamic bonds had slowed to a trickle. Khan says some of the largest issuers of Islamic bonds, or sukuk, were real estate developers and the reason corporations are reluctant to buy or issue sukuk these days is due in large part to the continuing decline in the value of real estate in Dubai. Click below to listen:
Kahn on sukuk issues from Reuters TV on Vimeo.

Could Islamic banking consolidation bring more uniformity?

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Mohsin Khan, former head of the Middle East department at the International Monetary Fund, says the Islamic banking industry could benefit from consolidation by reducing the number of sharia boards, or groups of Islamic scholars, that each bank employs in the Middle East to decide whether or not investments comply with Islamic law. I spoke with Khan earlier this week ahead of the 2009 Reuters Islamic Banking and Finance Summit that kicks-off on April 13th in Dubai, Bahrain, Kuala Lumpur and London. Click here to listen:
Kahn on consolidation from Reuters TV on Vimeo.

Tom, Dick, Harry and a shotgun

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The days of Tom, Dick and Harry taking a shotgun in Dubai and shooting willy-nilly and renting a ballroom with big parties and all of it bearing fruit are over.

Got it? No? Here’s a translation:

Everyone considered themselves a developer amid Dubai’s property boom but the global credit crunch has put paid to the days when all you had to do was make a splashy announcement, draw in tons of money and flip a project as soon as it’s built.

Kuwait’s Noor bullish on Pakistan

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Pakistan’s foreign reserves are dwindling fast and many worry about the country descending into chaos.
But Naser Al-Marri, managing director of Noor Financial Investment Co. is taking a longer view of the country.
“I love Pakistan,” he told a Reuters summit. “For me Pakistan is a mini-China.”
The country’s potential lies in its agricultural resources and its potential as a bridge for ferrying energy into fast-growing China.
Marri’s Noor, a major shareholder in Karachi Electric Supply Company, urged Gulf Arab desert countries to invest more in growing crops in Pakistan. Gas could also flow from the Gulf to China through Pakistan, he said.
As Pakistani president Asif Zardari visits Saudi Arabia seeking aid, he would be heartened by some long-term optimism.
“Many people don’t like Pakistan, but I am sure in five years, Pakistan will be the place to be,” Marri said.

Obama victory could help Gulf economies, Kuwaiti banker says

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A Barack Obama victory in the U.S. presidential election on Tuesday could bring much-needed good news to the Gulf Arab region, the chairman of Kuwait’s banking association told a Reuters summit.
Gulf Arab stock exchanges have tumbled this year and its economies are forecast to slow as the price of oil, its main export, drops.
The prospect of conflict involving nearby Iran is often cited as a risk factor for investing in the oil-exporting region.
“Maybe the pressure that is on this region in terms of U.S.-Iran tension might ease up,” said Abdulmajeed al-Shatti, who is also chairman of Commercial Bank of Kuwait, the chairman country’s third-largest lender. “Obama has indicated he would engage Iran and if the U.S. wants to change Iran, it has to engage.”

Mr Prime Minister, you’re no President

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The Reuters Middle East Investment Summit in Dubai was hit by the whirlwind visit of British Prime Minister Gordon Brown across the Gulf as he looked to drum up support for ailing British firms and convince Gulf investors the IMF’s bailout fund was a safe place to put their cash. After courting Saudi Arabia and Abu Dhabi, it was a fleeting visit to the region’s commercial hub Dubai. As his motorcade flew passed the world’s tallest tower But hark…we have seen this before. President George Bush headed to the United Arab Emirates more than a year ago. But that’s where the similarities stop. For Mr Bush, Dubai ground to a halt. Chaos ensued. Streets were closed. Workers sent home. The President was in town, so that was that. Fast forward November 4, 2008. Mr Brown is here. Dubai is business as usual, although The Prime Minister’s motorcade did delay a speaker for the Reuters summit. Perhaps the credit crunch has meant random days off are no longer on the Dubai agenda……. unless you’re the President of course.

Boeing may see benefit from strike as demand slows

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An eight-week strike by machinist workers at commercial aircraft maker Boeing delayed production and may cut profit by hundreds of millions of dollars.
But a major aircraft leasing company in the Gulf Arab state of Kuwait – and a Boeing client – sees one possible benefit to the company.
A global industry downturn is forcing manufacturers to slow down growth plans and control capacity, Ahmad A. Alzabin, chairman of Kuwait-based Alafco Aviation Lease and Finance Co. told a Reuters summit.
“Probably with Boeing they’ve been somehow more fortunate with the strike that was going on for two months. This absorbed some of the excess capacity that had happened.”

Young minds, old bodies offer private equity opportunities

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Healthcare and education offer a new frontier for Middle
East private equity firms as they take advantage of dramatic
demographic changes in the region.

At least that’s the view held by Dubai-based private equity
player Abraaj Capital.

“Oil wells with taps”

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U.S. companies who think they can command the prices of a
bygone era from Middle East investors need to think again, says
Zabeel Investment’s executive chairman.

Because of the hype surrounding sovereign wealth funds from
oil-rich Gulf Arab states, in particular, U.S. corporate players
seem to have visions of “oil wells with taps” when they see an
Arab investor, Mohammed Ali al-Hashimi said at the Reuters
Middle East Investment Summit.

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