Daily Personal Finance Insights – UAE Bonds

Daily Personal Finance Insights – UAE Bonds
05 March 2013

Central Bank Governor indicates need for a bond market

In a speech released today, the Governor of the Central Bank of the UAE, H.E. Sultan Bin Nasser Al Suwaidi has supported the establishment of a local market for bonds (essentially debt) to stop outflows of liquidity, calling the need essential: “Developing a Bonds and Sukuks market is almost essential for dealing effectively with future financial crises.” He further stated: “The existence of a robust domestic bonds market is likely to provide higher levels of liquidity within the economy.” 

UAE consumer price inflation recorded in January

The overall Consumer Price Index (CPI) for the UAE reached 117.41 in January 2013. It increased by 0.13% compared to the end of December 2012, while it increased by 0.43% compared to the end of January 2012, according to the National Bureau of Statistics (NBS). The findings of the CPI for January 2013 indicate increases in the following major expenditure groups: Restaurants and hotels (0.55%), food and soft drinks (0.29%), transportation (0.28%), housing (0.21%), beverages and tobacco (0.17%), medical care (0.17%) and recreation and culture (0.16%).

Bank shares continue to outperform

Dubai's banking share index declined every year in the previous 5 years. But the pattern is very different so far in 2013. The Dubai bank index is up 13.2% since the end of 2012, contributing to a 15.3% in the overall index; the Abu Dhabi bank index is up 11.4%, outperforming a 10.1% increase of the overall market.

Could the growth be due to investor appetite for dividends? Both ENBD and ADCB have proposed a cash dividend of 25% for 2012. 

Shortfall in staff leads to increased costs for Islamic Banks

A report by Ernst and Young into Global Islamic Finance trends indicates there is a global shortage of about 50,000 professionals in the industry. This shortage has led to costs rising for Shariah compliant lenders as they are forced to pay higher wages to attract and retain staff.

Abu Dhabi offers enormous potential for investors

At the conclusion of the 2013 Global Financial Markets Forum Michael Tomalin, the Group Chief Executive of National Bank of Abu Dhabi (NBAD) outlined the economic strengths and prospects of the UAE for investors. Mr. Tomalin indicated that Abu Dhabi investment towards diversifying its economy and transitioning the contribution of petroleum from 60% of the Emirate's GDP to 40% offers substantial opportunities for investors and was an ‘enormous opportunity for all.”

Al Jaber and top creditors agree debt terms

Abu Dhabi conglomerate Al Jaber Group has agreed terms to restructure nearly US$ 4.5 billion in debt with its main creditors. The re-negotiations of debt have been ongoing for 2 years.

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Head of Behavioral Finance
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