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Exports a bright, blind spot for the U.S.

clipped from www.marketwatch.com WASHINGTON (MarketWatch) — Exports have been “an economic blind spot” for the United States government, allowing other countries to chip away at America’s international competitiveness, said Commerce Secretary Gary Locke on Thursday. In a speech at the National Press Club, Locke said expanding exports is now “front and center” for the Obama administration, echoing the president who called for a doubling of American exports over the next five years in the State of the Union speech last week. Locke said less than one-percent of America’s 30 million companies export at the moment. The commerce secretary said the White House would not focus on one sector at the expense of others. Doubling exports is “an aggregate goal,” he said.

HAITI

Join the partners and friends of TradeFlow21 by supporting the American Red Cross relief efforts in Haiti.  Now is the time!  Simply text “HAITI” to “90999″ and a donation of $10 will be given to the Red Cross, charged to your phone bill.

Thank you.

Abu Dhabi’s entertainment arm takes 10% stake in UFC

Zuffla LLC’s Ultimate Fighting Championship (UFC) is potentially a billion dollar-plus company, based on reported prior buyout offers of similar amounts. Abu Dhabi’s 10% stake thus, while undisclosed, could be upwards of $100 million. UFC is the largest grossing PPV franchise in history, having beaten its own record in 2009 at $349 million. With seemingly plenty of growth still possible in the U.S., the UFC and Abu Dhabi have their eyes set on international growth — and of course on some MMA action in Abu Dhabi. See the clip (and link) from Yahoo! Sports below for more details.

clipped from sports.yahoo.com Zuffa LLC, the parent company of the Ultimate Fighting Championship, announced on Tuesday the completion of a deal in which a 10-percent interest in the company to the Abu Dhabi government-owned Flash Entertainment. Flash Entertainment was formed two years ago by the Abu Dhabi government’s Executive Affairs Authority, which brings big-name entertainment and sporting events to the United Arab Emirates and the city, including big-name concerts, Formula 1 racing, and in recent weeks, a Rihanna New Year’s Eve concert and the Capitala World Tennis Championship. Sheikh Tahnoon Bin Zayed Al Nahyan, who is affiliated with Flash Entertainment, is an MMA fanatic who promoted early world submission grappling championship events through the Abu Dhabi Combat Club. He was attending college in the U.S. and saw the first UFC event live in 1993.

Abu Dhabi extends $10B lifeline to Dubai

The Dubai Exchange rallied 10.4 percent yesterday in the wake of a $10 billion credit line from Abu Dhabi, coagulating some of the recent hemorrhaging.  A portion of the funds will reportedly be used to meet a $4.1 billion bond payment owed by Nakheel–a real estate subsidiary of Dubai World.  Though seen as a positive step in restoring fiscal balance, the process, in the view of one market analyst, “is far from over.”  (See Financial Times coverage and also read TF21 Managing Partner Lew Nescott’s take on the viability of Dubai.) 

Four reasons why Dubai will survive

1) Actual (Strategic) Value of “Distressed” Real Estate: Dubai World, the government-affiliated parent company under scrutiny, is strapped with an estimated $24B in debt,including $7.3B in deteriorating real estate assets held by their Nakheel subsidiary. On paper, these assets are distressed. In brick-and-mortar reality, they include new-to-market commercial and residential units that help define the Dubai skyline. Vacancy rates are transitory, but quality real estate will return value if strategically positioned as part of a larger initiative or economic plan. A shift, for example, in the commercial focus from financial services and tourism to energy, such as the creation of a solar-powered city, could restart investment and development.

2) Primacy of DP World: Dubai World’s marine and port subsidiary, DP World, maintains deep-water terminals in over 30 countries from the Americas to Asia. It is simply too valuable a commodity (commercially and politically) for the government to abandon to creditors in courts. DP World’s port presence across the globe is central to the UAE’s identity and prestige.

3) Capitalism 2.0: The Dubai crisis was an inevitable and necessary step in the maturation process of an emerging free-market economy. Sheik Mohammed bin Rashid Al Maktoum’s undisciplined approach to development, coupled with investors who naively assumed their bets were covered by state revenues derived from oil, created conditions that plunged the Emirate $80B in debt. Despite the poor timing of Dubai  World’s announcement of a standstill just prior to the Muslim holiday of Eid al-Adha, Dubai and its flagship company should emerge from the crisis with a new sense of purpose and propriety. Abu Dhabi will likely take the lead in helping Dubai restructure its financial institutions and reshape its strategic thinking as part of a wider effort to regain a measure of market integrity and public trust.

4) Human Capital: Dubai’s “oil reserves” are its people. They are educated (77.9% literacy rate), able, and multi-lingual with commands of Arabic, Persian, English, Hindi, and Urdu. The  serious, sophisticated investor recognizes this as a key attribute in any successful venture. Human capital is the critical “X factor” on a balance sheet.

Qatar wasting no time deploying capital, linking people and goods

A $25B joint venture was announced earlier today between Qatari Diar Real Estate Investment Co. and Deutsche Bahn AG, to build a railway system in the very liquid Gulf state of Qatar — the world’s largest producer of liquefied natural gas and the issuer of $7B of 4x oversubscribed bonds last week. Qatari Diar is a real estate company owned by the state’s sovereign wealth fund. It owns 51% of Qatar Railways Development Co., while Deutsche Bahn owns the remaining stake. The three phase project has an expected completion date of 2026, but Reuters reports that a major section will be done by 2022, when Qatar hopes to host the FIFA World Cup. The project includes passenger and freight trains, as well as connections to Saudi Arabia and Bahrain.

As Gulf states continue to spend tens (make that hundreds) of billions of dollars on infrastructure and other domestic projects, TradeFlow21 believes that it is a terrible mistake, for whatever reason, for American businesses and politicians to miss opportunities to do business and deepen ties with the Gulf. Qatar’s GDP is expected to grow over 9% this year and upwards of 35% next year, both clips by far the fastest among the GCC.

Middle East states move to mine sun: Solar output could exceed 1 trillion barrels of oil annually

A published report by NCB Capital, a Saudi subsidiary of the National Commercial Bank, cited a study by the German Aerospace Centre that estimates the region’s deserts “receive annually average solar energy equivalent to 1.5m barrels of oil per sq km.” The Arabian Desert, which covers an area of 2.3m sq km (900,000 sq mi), would yield the equivalent of 1.1 trillion barrels of oil per year, assuming solar panels were erected on one-third of the available land. The UAE’s recent committment to support 7 percent of its energy needs from renewable sources by 2020 further suggests that other Middle East states, particularly those where shortfalls are reportedly “looming,” may soon follow suit (see full article in Financial Times, via Zawya). From TradeFlow21’s perspective, the commercial opportunities for green industries, including water desalination/filtration, are immediate and immense. For more information on doing business in the Middle East, contact Lew Nescott, Jr. at 203.848.7257.

Growing sense of optimism in Dubai — FT

clipped from www.ft.com Signs of revival for Dubai property Dubai property prices have risen for the first time since the market crashed last year , up 7 per cent in the third quarter as demand revived and lending conditions eased, consultancy Colliers International said. The figures reflect a growing sense of optimism in Dubai, which was badly hit by the credit crunch as its vast debts combined with the puncturing of the real estate bubble a year ago. However, Colliers warned that an upcoming surge in completed properties would drag down average prices next year, although not across the board. “Well-planned mature developments in good locations, supported by facilities and community infrastructure, will receive relatively higher demand,” said Mr Albert.

New US Ambassador to Saudi Arabia addresses the facts

See clips below from The National Newspaper’s coverage of James B. Smith’s (the recently appointed U.S. Ambassador to Saudi Arabia) poignant talk to approximately 100 U.S. company representatives in Riyadh. TradeFlow21 lauds Ambassador Smith for his timely and critical assessment — hopefully a wake up call for businesses.

For information on the latest global economic competitiveness ranking and how the GCC ranks (note Saudi Arabia moved up to #13 this year and is knocking on the door for a top-10 spot), see Doing Business 2010: Saudi Arabia nears goal; UAE climbs ranks.

clipped from www.thenational.ae Diplomat warns US firms are losing edge RIYADH // The new US ambassador to Saudi Arabia yesterday warned American businesses to wake up to the fact that they are losing their edge in an increasingly competitive Saudi market. Ambassador James B Smith, a retired air force general, also told his audience of about 100 US company representatives that it was time for both Saudis and Americans to “rethink some opinions” of each other forged in the wake of the September 11 terrorist attacks. Noting that many US companies are “on the sidelines waiting to see what’s going to happen in Saudi Arabia”, he added: “My message back to them is: What’s happening is the train has already left the station. You are losing market share to India, China, Russia and if you don’t move you’re never gonna catch the train.”

Rothschild sees opportunity, to expand in Saudi Arabia and Qatar

Hats off to Rothschild for its successful M&A advising in the Gulf; and it looks like the investment bank is far from finished. Rothschild recognizes Saudi Arabia (the Gulf’s largest economy and one that is poised for sustained solid growth) and Qatar (which is forecast to grow over 9% this year and a whopping 35%-plus next year thanks to an expansion of LNG capacity and exports) as the two places it most desires to grow its business. See clip from Reuters below.

clipped from www.reuters.com Rothschild busiest in Mideast M&A DUBAI (Reuters) – Rothschild ROT.UL has been the Middle East’s busiest advisor on mergers and acquisitions so far in 2009, data shows, underlining the growth potential for independent investment banks in the region. “Our strategy is long-term driven, our view remains that we expect this to be one of the fastest-growing regions,” said Michael Helou, co-head of investment banking in the Middle East for Rothschild. “The crisis didn’t change our plans, it’s been almost business as usual,” Helou said, adding that Qatar and Saudi Arabia are the regional markets where the investment bank sees more opportunities to expand its presence.