Gulf Daily News Monday, 5th April 2010
27
In association with www.tradearabia.com
Tough time ahead for
sovereign fund chief
DUBAI: The new head of the
world’s biggest sovereign wealth
fund, whose appointment is expected imminently, will need to find a
balance between delivering consistent returns and conservative values,
say industry observers.
The top role at Abu Dhabi Investment
Authority (ADIA), has been vacant
since Shaikh Ahmed bin Zayed Al
Nahayan, a younger brother of the ruler
of Abu Dhabi, who is also president of
China may
revalue its
currency
WASHINGTON: Expectations
are rising that China will revalue
its currency after Washington
held off on potential reprisals,
but any adjustment may not be
enough to mollify the anger of
US legislators and firms.
Treasury Secretary Timothy
Geithner delayed a semi-annual
report scheduled for April 15
that could have declared that
China was manipulating the
value of its yuan, leading the
way for trade sanctions.
The delay was widely
expected after China said
President Hu Jintao would visit
Washington for an April 12-13
summit on nuclear security.
China watchers say Hu would
not dare come and risk the loss
of face of a reprimand days
later unless he had at least an
informal assurance from the
Treasury.
But with US legislators clamoring for action on the yuan, all
eyes are on China to see if it
will reciprocate Geithner’s gesture by revaluing its currency.
“I think the prospects (of
a revaluation) have improved
very significantly in the
past few days,” said Cornell
University professor Eswar
Prasad, who used to head the
International Monetary Fund’s
China division.
One adviser to China’s central bank, Li Daokui, recently called for an adjustment
by September so it does not
become an issue in US midterm elections two months later.
Prasad said that a smooth
summit by Hu – including cooperation on unrelated issues –
would make it easier for China
to adjust its currency as it does
not want to be seen as having
been forced.
“But if the Chinese come
under a lot of pressure from
Capitol Hill, I think it could
make it somewhat harder for
the Chinese to move because in
China there is a very vigorous
debate” on revaluation, Prasad
said.
the UAE, died in a glider plane crash
last month. In its first annual review,
the fund with assets of $500 to $700
billion, provided a rare glimpse into its
portfolio, with an allocation of up to 85
per cent in developed markets.
Although ADIA funnelled funds from
the emirate’s oil exports into overseas
stocks and bonds under Shaikh Ahmed,
the new chief will soon find that heavy
exposure to developed markets may not
yield the kind of returns the fund has
enjoyed over the years and will need to
look at emerging markets for growth.
The fund returned 6.5pc on an annualised basis over a 20 year period.
“Bearing in mind macro prospects
for the couple of years ahead and the
low developed countries growth versus
higher emerging countries growth, one
challenge for ADIA will be to diversify the portfolio to capture... growth
opportunities from emerging markets,”
said ING Middle East and Africa senior economist for wholesale banking
Dorothee Gasser.
n A boy
takes
picture
of his
parents
at the
observation
deck
of Burj
Khalifa
Tower viewing
deck reopens
DUBAI:The observation deck of the world’s tallest skyscraper
reopened yesterday in Dubai, two months after an elevator
malfunction.
Dozens of tourists were lining up for tickets to take an
elevator to the 124th floor of Burj Khalifa, where the tower’s
observation deck is located.
The deck was shut in February after an elevator packed with
visitors got stuck between floors for 45 minutes before rescuers
dropped a ladder into the shaft so those inside could crawl out.
Most visitors who paid the 100 dirhams ($27) for a threeminute ride to the deck.
“We feel fortunate to have gone up,” said Sheetal Gulati, a
tourist from the UK who’s on a three-day trip to Dubai.
Emaar, the state-linked company that owns the tower, had
little to say about February’s accident. The company said nothing about an elevator malfunction at the time of the accident
and did not provide details of any repairs or maintenance work
on the elevators before the viewing deck reopened.
Burj Khalifa was designed by Chicago-based Skidmore,
Owings & Merrill, which has a long track record engineering some of the world’s tallest buildings, including Chicago’s
Willis Tower, the tallest in the US formerly known as the Sears
Tower.
“In spite of its sophistication, ADIA
is still a government-owned entity and...
thus has still to keep a certain amount of
conservatism in strategies,” said Gasser.
Shaikh Ahmed, ranked number 27 on
Forbes list of the world’s most powerful
people last year, also moved the firm’s
investment strategy from that of an
active fund to more of a passive one,
focusing more on index-tracking funds.
A succession plan for the sovereign
fund has been set and will be announced
within days, a source said.
Aabar bonds update
ABU DHABI:Aabar Investments, which has stakes in Daimler
and Virgin Galactic, said its planned $2 billion convertible
bonds sale will be made to International Petroleum Investment
Company (IPIC).
IPIC, wholly-owned by the government of Abu Dhabi, is the
majority shareholder in Abu Dhabi-listed Aabar. No date has
been set for the conversion, Aabar said.
In a regulatory filing, Aabar said it was mulling convertible
bonds worth up to 7.35bn dirhams at a conversion price of 2.5
dirhams per share.
The bonds are being issued for general corporate purposes,
Aabar said.
Aabar’s assets have grown over 11 times in value as total
assets increased from 3.2bn dirhams in 2008 to 37.3bn UAE
dirhams ($10.16bn) last year.
US sees jobs
growth on
reforms push
WASHINGTON: The Obama
administration expects US
job creation to accelerate and
Congress to approve financial reform legislation, White
House economic adviser
Lawrence Summers said yesterday.
Employers created jobs last
month at the fastest rate in
three years as private firms
stepped up recruiting. It was
the strongest signal yet the
economic recovery is on more
solid footing.
Speaking on ABC’s This
Week programme, the former US
Treasury Secretary said employment figures fluctuate from
month to month but steps taken
by the administration to support
the economy are paying off.
“I would expect continued progress in job creation,”
Summers said.
Non-farm payrolls rose
162,000 and the unemployment
rate held steady at 9.7 percent
for a third straight month, the
Labour Department said earlier.
Private employers recruited
more workers than expected.
Additionally, Summers said
he expects the US Senate to
approve a regulatory reform
bill, saying the measure sponsored by Banking Committee
chairman Christopher Dodd, a
Democrat, makes a compelling
case.