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January 2010

News Letter - 24th January 2010

Cut price air line in the A.G – Air Arabia –has ordered another 44 more Airbus planes – to be delivered over the next 5 years. They have been exceeding 82% seat factor on many routes over the past year – despite the economic down turn effecting the region. With a number of cut price airlines reporting success during this serious down turn is this type of travel a sign of future trends even in good times?

BMW – that much loved auto by the locals in the A.G. suffered a 9% decrease in sales in 2009 although the overall premium auto market shrank by 25% - so BMW faired better than others. Business confidence in the UAE. in 2009 shrank with the confidence index sliding from 72.2 down to 69.8 however 2010 is expected by most to be better. However the Dubai’s World debt issue is a major contributor to the UAE lack of confidence in 2009

The Dubai Financial Market ( DFM ) fell for most of the past week with six consecutive day of losses – the longest continuous run since March 2009. However a small rally at the end of the week of 1.7% ended the trend - however briefly! As the market continues to ‘head south’ it is rapidly approaching the psychological 1,500 level. Again the main losers are the financial sector followed by that of the real estate.

Dubai’s economy is set to contract in 2010 but that of the UAE as a whole is expected to grow by 2.5% - up from a negative figure of 3.5% for 2009. In 2009 Dubai’s growth was a whopping negative 5%! No prizes for guessing which emirates will be the major contributor to growth in 2010? Once again the real estate sector will be Dubai’s Achilles heel for 2010 after up to 50% reductions in property prices and rents in 2010 it is estimated a further drop in 2010 of 20 – 30% as even more units come onto an already over supplied market. Credit rating of many Companies in the region has gone from A1 in 2008 to Baa1 in 2009 but this is expected to slowly improve as the global economy picks up

Exxon Mobil have agreed to sign a contract with Iraq for the development of the 8.7 billion barrel West Qurna Phase One oilfield. Iraq intends to substantially increase its daily oil output over the next few years – whether this will succeed will depend greatly in being able to improve the security within the country.

Drydocks World – secured a contract to build a large (210mtr) off shore construction vessel for Scottish Highland International. In meantime Drydocks World confirmed they have sufficient financial capability to service their debt and are not party of the problem Dubai World property problem.

Crude oil remained below $78 per barrel for most of this week thought to be due to concerns that China will take additional steps to rein in its booming economy.

Reported collision between a tanker and barrage in Port Arthur, Texas resulted in a crude oil spill of 450,000 gals – about 2000 tonnes which is reputed to have been contained within booms. Even if containment is correct it will still take a great deal of effort to clean up. Any oil spill in the eyes of the public is a reflection of incompetence in the industry and / or poorly maintained vessels. We must continue working to reduce still further such incidents and one of the most effective ways of doing this is training, training and more training!