Silk Invest Ltd acquires a majority interest in Danfonds Frontier Funds SPC

Silk Invest Ltd, a specialist asset management firm regulated by the FSA, has acquired Danfonds Frontier Fund SPC, a Cayman based hedge fund, in an all equity deal.

Danfonds Frontier Fund SPC will be renamed Silk Invest Frontier Fund SPC and Danfonds Investment Management (Cayman) Limited will be renamed Silk Invest (Cayman) Limited.

Zambia to get S&P rating

Zambia will get its first credit rating from Standard & Poors in 2009. A sovereign rating is long overdue. Zambia could possibly get a B/B+ credit. It has had good economic growth, modest budget deficits and now has low debt. Its political history, with its Presidential elections and volatile exchange rate will probably work against it.

Asian Frontier Markets 2009 - Hong kong

Daniel Broby, Chief Investment Officer of Silk Invest, will speak at the Asian Frontier Markets 2009 - Hong kong.

5 March 2009 - Day 1
Macro view on Asian Financial Liberalization
Understanding Vietnam’s Market Fluctuation
Frontier Market in the context of Global Financial Crisis
Panoramic view on Cambodian Market
Investment Strategies in Frontier Market
Mitigating Idiosyncratic Risk in Frontier Market
Encouraging better investments in Bangladesh Market

6 March 2009 - Day 2
Positive positioning: Asian Frontier Markets in attracting Foreign Investors
Exploring the potential of Capital market on pre-emerging countries
Evolution Hedge Funds in Frontier Market
Kazakhstan: Leading Central Asia market
Most preferred Asset Class in Frontier Market by Mainstream Investors
Forecasting Asian Frontier Market
Lessons Learned: Investment Strategies in African Frontier Markets

Unity Bank

Unity Bank Plc and Shenzhen Energy are looking to Nigeria's power industry and discussing a potential JV. Shenzhen Energy Group has strong expertise in gas-turbine powered plants. Unity Bank has already assisted Shezhen Energy Group to secured a site in Geregu, near Ajaokuta in Kogi State, to build a power plant.

Soveriegn wealth funds rumours

Shares in Qatar, Oman and Saudi Arabia all rose sharply on rumors local soveriegn wealth funds intend to buy shares in local companies. Oman Telecommunications and Saudi Basic Industries Corpóration were the biggest benefitiaries of the rumours.

Bahrain real estate market

The Bahrain real estate market is not in as bad shape as the UAE. Buyers do not want to commit right now and the market is in mild decline. That said, the majority of homes in the Kingdom have been bought by owner-occupiers and speculator activity has been restrained, although it does exist. One aspect that has helped the Bahrain market so far is he presence of the U.S. Navy’s Fifth Fleet. Despite falling house prices, there is a shortage of housing and that makes the long term picture look brighter.

In the north, various new developments are being constructed on reclaimed land. This does not help the increasing demand in low cost housing, so investors are keenly watching demand.

Misr National Steel - Ataqa takover

Misr National Steel - Ataqa is to be aquired by Red Sea Steel for LE 370.6 million ($67 million). The takeover values in Ataqa at LE 247.09 a share. Ataqa is listed on the Egyptian stock exchange but few will benefit from the massive premium as there have been no transactions in the shares throughout 2008!

Iraq announces 100 bps interest rate cut

Iraq's central bank will cut interest rates by one percentage point to 14 percent on Jan. 4. The good news is that Iraq's core inflation fell to 12.7 percent rate in November, from 13.6 percent in October.

Maridive and Oil Services

Maridive has begun work on the the EPC contract with Aramco Saudi Arabia to develop the Manifa oil fields (a US$400 million deal). Although the Egyptian economic environment is not great and oil price weak, the company claims the offshore support market is still healthy and that demand of offshore support services is supported by short supply. Indeed, the 3 new AHTS support vessels it bought were instantly hired to new clients at daily charter rates!

One to watch when oil prices recover...

Arabtec Holding predicts impressive full year

Arabtec, a UAE construction firm, predicted a net profit of $272.3 million and announced a one for one bonus issue (in lieu of a dividend). This represents an 87 per cent above last years figure. The gloomy talk about the credit crunch, however, saw the shares fall 9.93 per cent on Tuesday before rebounding 14% today.

UAE Christmas sell off.

Not much Christmas cheer in the UAE as the stock market ended the 25th Dec lower, following six trading days of losses. There are few bids for stocks at the moment and there are sellers who want to get out of the market before the end of the year.

Saudi Arabia moves into deficit

BMI has just produced a piece of research downgrading Saudi Arabian growth. As can be ssen, government spending is taking a dive into fiscal deficit(of 1.2% of GDP). This is the first time since 2002 and will force the country to forcing it to use the sovereign wealth fund or build up public debt to match the gap. Still, most ountries would die for problems like that right now. The economy is still growing and should weather the storm.

Olympic group

Producing economically sensitive goods like washing machines, refrigerators, electric water heaters and gas cookers is going to be a tough business in the next few quarters. Egyptian Olympic group will face some tough times. Indeed, its third-quarter profit already fell 60 percent, mostly on cost increases on its marketing and salary side. Still, things may not be that bad as it has just announced it will buy back up to 3 million shares representing 5 percent of the company's capital. The shares in jumped 17.46 percent on the news!

Qatar Islamic Bank raises more capital

In an all too familiar pattern the Qatar Islamic Bank issued shares worth 3.8 billion riyals to Qatar´s sovereign wealth fund. Qatar Islamic shareholders the issue of about 39.38 million new shares at a price of 97 riyals to the Qatar Investment Authority. This is part of Qatar's $5.3 billion plan plan shore up investor confidence in the banking sector.

Emaar buyback cancelled?

The UAE stock market regulator cancelled Emaar Properties' 10 percent share buyback licence after the firm failed to buy shares in time. Emaar only bought 200,000 shares, or 0.003 percent of its capital. It is not clear why the cmpany did not buy the shares. It apparently has cash on its balance sheet and was recently rated by a credit agency (see earlier report on this blog). The stock is not that illiquid, so 200,000 shares is fairly pathetic. Seems the company may be having cash flow issues.

Merry Christmas

In Akan (Ghana) Afishapa
In Arabic Milad Majid
In Zimbabwe Merry Kisimusi
In Afrikaans (South Africa) Geseënde Kersfees
In Zulu (South Africa) Sinifisela Ukhisimusi Omuhle
In Swazi (Swaziland) Sinifisela Khisimusi Lomuhle
In Sotho (Lesthoto) Matswalo a Morena a Mabotse
In Swahili (Tanzania, Kenya) Kuwa na Krismasi njema
In Amharic (Ethiopia) Melkam Yelidet Beaal
In Egyptian (Egypt) Colo sana wintom tiebeen
In Yoruba (Nigeria) E ku odun, e hu iye' dun!

Columbia cuts interest rates 50bps

Colombia's central bank cut 50bps cut from its benchmark interest rate taking it from 10.00% to 9.50. This is the start of monetary easing, despite world wide cuts and inflationary pressures.

Etisalat wins Iranian license

UAE telecom Etisalat, as part of a consortium, won the bid for Iran's third mobile telephone licence.

Etisalat was the first telecom operator in the Gulf to introduce a mobile phone service, and was one of the early adopters of GSM technology. Since then it has established itself as a regional pioneer by introducing both 3G and MMS, and most recently, a BlackBerry service in 2006

Guinea coup

Guinea's constitution has been suspended following the death of President Lansana Conte in a military coup. The self styled National Council for Democracy and Development claim they will put in place a government of national unity.

The military officers criticized the government’s inability to revise contracts with mining companies. Guinea is a big Bauxite producer. Guinea is a member of the West African Economic and Monetary Union (UEMOA) established in January 1994, and comprising eight West African countries (Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, Togo, including Guinea) and capital markets are covered by the Regional Stock Exchange (BRVM) in Abidjan.

Reuters poll predicts GCC GDP growth

A new poll of 11 economists shows that economists expect real economic growth in Saudi Arabia, the United Arab Emirates and Kuwait to slow - but remain positive!

The good news is that the sconomies are still expected to expand. What is clear, however, is that the Gulf is sensitive to the oil price. Obviously, a fall in oil prices from $147 a barrel to $34 a barrel has an impact.

The forecasts are for real growth of 2.4 percent in Saudi Arabia, 2.7 percent in the UAE and 3.5% in Bahrain. Qatar, the world's top exporter of liquefied natural gas, is expected to see the fastest GDP growth next year at 9.5 percent!

We will monitor the extent of the slowdown in the non-oil sectors. across the Gulf will be a key element to monitor," said Giyas Gokkent, chief economist at National Bank of Abu Dhabi.

Al-Rajhi Bank

Al-Rajhi Bank, the largest Gulf Arab bank, has fallen 70% so far this year. The concern is that last years record profitablity will suffer the same fate as happened to its net profit in December 2006. At that time the bank had a run of negative results on the back of a 2006 regional stock market crash which slashed its brokerage and fund management revenue.

Although the bank continues to develop its investment and banking side, unfortunately(market rumours are that) its subsidiary, Bakheet Financial Services, boosted lending when interest rates were low and there were record oil receipts. In other words, they may face the same problem again.

Emaar Properties rating downgraded

Standard & Poor's Rating Services revised its outlook of the Middle East's largest development company from stable to negative. The good news is that it reaffirmed the 'A-' long-term corporate credit ratings!

The revision is natural in the current environment and obviously reflects a rapid weakening of the real estate markets in Dubai. A prolonged downturn could hurt Emaar's development model. Right now, the company has a healthy financial position.

Emaar Properties made headlines around the world for building the world's tallest tower in Dubai.

MSCI Arabian Markets Real Estate Capped Index

A new property index has just been launched that should help gauge what is going on in GCC's market. The MSCI Arabian Markets Real Estate Capped Index is a free float-adjusted, market capitalization index, and contains more than 60 leading real estate securities of the largest and most liquid companies from 11 Arab countries. The Index will be calculated daily.

Zain in Ghana

Zain has now launched the services that were developed as part of its investment of $420 million (the cost of rolling out its network across Ghana). Its new commercial services are supported by a 3.5G backbone. Zain's new Ghana network will offer its customers ultra high-speed internet access and the ability to make video-calls and use rich multimedia content including the ability to send video clips, music and pictures

Botswana cuts interest rates 50bps

The Central Bank of Botswana has reduced interest rates by half a percent from 15.5 to 15 percent.

Although inflation remains above the bank’s medium-term objective range of 3 – 6 percent and the country has price stability is projected there is a chance that the impact of the increase in the alcohol levy would outweigh the effect of the recent decrease in fuel prices. It is therefore possible to see a temporary rise in inflation at the same time as a monetary easing.

Bank PHB acquires Spring Bank

Nigerian Bank PHB acquired Spring Bank following the fulfillment of all the conditions of its offer. The N21 billion bid was on the bac of its initial stake of 33 percent in Spring Bank which.

The takeover and the injection of management into Spring Bank plc, should arrest the latters decline. Bank PHB has delivered a far better return to shareholders in the last three years.

Renaissance Capital writes that Bank PHB’s acquisition of Spring Bank is not only a good deal for Bank PHB and Spring Bank’s shareholders but also for customers, regulators, and employees. The new bank will have an expanded distribution network and extended product offerings

Will Nigerian banks continue their foreign expansion?

The diversification of Nigerian banks out of its own borders using their strengthened balance sheets may be slowing due to the credit crisis. Ten out of the 24 licensed commercial banks in Nigeria now own at least one full-fledged licence in a foreign country. They are First Bank of Nigeria, FBN, Union Bank of Nigeria, UBN; Bank Intercontinental; Access Bank; Platinum Habbib Bank; Bank PHB, the United Bank for Africa, UBA, Guaranty Trust Bank, GTB, Zenith Bank, Oceanic Bank and FinBank. Nigerian bankers are breathing a sigh of releif that they came late to the international leverage party and are now re-evaluating their strategy.

The trend to own international branches was started by the problems Nigerian businesses have in transfering money internationally following clamp downs on international money laundering. This will not go away. By opening branches, the banks faciliated the acquisition of property and eliminated the cost of engaging a correspondent bank.

Perhaps now, the bank will use their balance sheets to domestic finance the oil and gas sector!

KenGen to build new plants

KenGen’s is to build a USD 460 m coal plant in Mombasa. The facility will be 300MW

Plans are also underway to add a third unit of 35 MW to the 70 MW Olkaria II Geothermal Power Plant. This emanated from the excess steam available in both Olkaria II and Olkaria I geothermal fields. The World Bank has already approved the funding for the project.

Kuwait credibility on the line

The Kuwaiti decision to refer the Petrochemical Industries - Dow Chemical joint venture to the Fatwa and Legislation Department threatens its cancellation. The project has become a micocosm of Kuwaiti politics. There is serious friction between the parliament and the cabinet. At the same time, the political and economic outlook for Kuwait is weak. There is disappointment in Emir Sabah's failed efforts to implement reforms.

As far as the Petrochemical Industries - Dow Chemical joint venture goes, the whole Kuwaiti business environment is concerned about an undermining of the concept of contract sanctity. Still, the Kuwaiti government is confident that the deal will move forward, especially since it considers that all the financial concerns expressed by the parliament have been addressed.

Republic of Gabon Eurobond delays payment

The Republic of Gabon delayed the interest payment on its 2017 Eurobondby for one week. The action follows a dispute with CECF Transgabonais. Gabon has a history of late debt service payments.

The dispute is over a contract which CECF Transgabona had to manage the national rail system, but was withdrawn five years ago.

Saudi Arabia cuts interest rates 50bps

The Saudi Central Bank reduced its benchmark repurchase rate to 2.5 percent from 3 percent and lowered the reverse repurchase rate to 1.5 percent from 2 percent today. This follows 2 1/2 percentage points of cuts since Oct. 30.

Aviva Corporation's merger with Northern Energy Mining Inc. scrapped

Botswana's Aviva Corporation's proposed merger with Northern Energy Mining Inc. (NEMI) has been cancelled following the discover of 'errors' realised in the books of Northern Energy. It was Nothern Energy who advised Aviva that errors in determining its partners' historical cash calls at its Peace River Coal Limited Partnership had effectively reduced what it believed its particpation was in the venture, thereby making them worth substantially less than was thought.

Equador defaults

Suppose it is about time someone defaultd. President Rafael Correa made his country the first Soveriegn in the current credit crisis to announced that the government will not make payments on some of its bonds. Specifically, the $30 million coupon on the 2012 bonds. The 2012, 2015 and 2030 bonds, with a nominal of $3.86 billion, will alos default.

The Equadorian government will present a debt restructuring proposal which we expect will result in a substantial haircut for investors!!! The government is likely to have a fight on its hands as the country is not short of funds to pay the interest...

Nigeria currency slide worsens

The weekly auctions and uas of the reserves have failed to stabilize the naira. The Nigerian Central Bank has ordered the country's banks to reduce foreign exchange positions to reduce local demand for dollars.

Kenya government announces share sales

Kenya’s government plans to sell sharesin National Bank of Kenya Ltd., East African Portland Cement Co. Kenya Pipeline Co., Consolidated Bank, the Development Bank of Kenya and Kenya Electricity Generation Co. It will also sell shares in five sugar companies.

Volume up after Eid holiday in Oman

The Muscat Securities Market opened for trading after Eid Al Adha holidays on substantially increased turnover. The number of shares traded increased by 56.4 per cent based on 38 traded securities.

The market was weak but AES Barka rose 3.5 per cent and Oman Cables Industry rose by 2.3 per cent.

Botswana suffers from diamond price collapse

Demand for diamonds, Botswana’s principle export, has forced the well run country's Finance Ministry to fall back on its USD 10.2 billion reserves. With inflation at 13.1% the country will no longer remain isolated from the global credit crunch.

OPEC

It apears that OPEC is reaching out, in desperation at the current oil price, to Russia. It has asked Russia to consider a cut of 300,000 barrels a day. If Russia joined OPEC, the oil price would certainly react. Indeed, Dmitry Medvedev has said Russia may join 'suppliers organisations' in the future.

Update on our (outsourced) back office

Close followers of Danfonds will know that it has outsourced its back opperations to GlobeOp Financial Services S.A., a leading independent provider of business process outsourcing, financial technology services and analytics to hedge funds and asset
managers. In view of the turmoil in financial markets, we though it useful to highlight their financial stregth, as announced for the year ending 31 December 2008.

$95 billion in Assets under Administration¹ (AuA) as at 30 November 2008
$1 billion of new client assets anticipated in December
Strong balance sheet with $47 million in cash as at 30 November 2008 and no debt

Aldar Properties PJSC and Sorouh Real Estate PJSC rated buy by Citigroup

Looks like there are some property bulls left. Aldar Properties PJSC and Sorouh Real Estate PJSC, Abu Dhabi’s biggest developers, have been rated “buy” by Citigroup Inc. The rationale for the recommendation is that they trade at a discount to their net asset value. Citigroup estimated Aldar’s net asset value per share at
16.6 dirhams and Sorouh’s at 5.6 dirhams.

Citigroup argue that the current share prices of Aldar and Sorouh imply a property price collapse, zero developer margin and no future low-cost land grants.

Orascom Telecom starts operations in North Korean

Orascom Telecom surged 11.11 percent on the news that it would begin operations in North Korea. As a market, North Korea has one of the lowest telecom penetration rates in the world, hence the excitment. That said, part of the jump in Orascom could simply be bottom fishing, as the stock has fallen a staggering 74 percent this year!

Mood in the Gulf

With oil prices at levels below $50 a barrel, further weakness in the Dubai real estate market, as well as general concerns over public and private debt levels, it is not surprising the mood remains depressed in the Gulf. That said, Kuwait's court order to close its market for a day, and the Kuwait Investment Agency cash injection, have helped; as indeed did the Saudi Arabian announcements on the soundness of its fiscal position.

Borse Dubai struggling with its financing of OMX acquisition

Borse Dubai is in talks with HSBC and other banks to fund a syndicated loan to refinance the $3.78 billion loan it took to acquire Nordic exchanges group OMX jointly with Nasdaq.

The original financing, agreed in March matures on Feb. 28 2009. Difficult credit conditions will make it hard and or costly to raise such an amount. Borse Dubai may have to pay up over 450 basis points over LIBOR with a maturity of just one year.

African currencies

Year to date movements against USD.

Nigeria naira -7.8%
Kenya shilling -18.6%
Ghana cedi -21.0%
CFA franc -11.6%
Morocco dirham -9.7%
Mauritius rupee -12.8%
Botswana pula -24.4%
Zambia kwacha -20.9%

Angola

Angolan reforms are slowly improving and diversifying the economy. Deployment of a $1billion World Bank loan to aid in diversification, and establishment of two funds to collect oil revenues should keep things bouyant. The banking sector is looking interesting.

GDP growth of 11.8% in 2009, down from 15% in 2008. One single company, Sonangol, which has a turnover of $17 billion, represents almost a third of GDP. Sonangol takes a 51% stake in all production from Cabinda, as well as from offshore concessions.

Ecobank and Nedbank form alliance

In a move that follows Ecobanks stalled ambitions (shortfall on its rights issue) to become a pan African bank, Ecobank has formed an alliance with South Africa's No. 4 banking group, Nedbank.

The alliance between Nedbank, which is strong in southern Africa, and Ecobank, which operates in west, east and central Africa, would create a network of 1,000 branches and banking outlets in 30 countries in the continent.

Morgan Stanley Capital International Frontier Index - Proposed new entrants

Morgan Stanley Capital International stock benchmark for frontier markets looks set to include Ghana, Botswana, Jamaica and Trinidad & Tobago by May 2009.

The classification was created by MSCI for stock markets that have less-developed economies and financial markets than emerging markets, and that typically have more restrictions on foreign stock ownership.

Rating agencies review corporates in GCC States

The rating agencies are looking into various GCC institutions and may adjust some ratings. Moody’s believes that governments will intervene before a default occurs, but over the long term particular institutions may not be viable and may be merged or taken in “a sort of orderly bailout”.

Talk of a GCC liquidity crisis is probably more to do with investor confidence than traditional fundamentals. The other issue is transparency and the level of disclosure. Rating government-related entities in the region hinges on the assessment of the level of government backing they might receive, which can be tricky.

Currently there are conflicting rumours about the likelihood of mergers between real estate companies, the role of Abu Dhabi and the scale of Dubai’s government debt.

Eveready East Africa Ltd profits before tax fell 91%

Eveready East Africa Ltd., Kenya's largest maker of dry cell batteries, fell 91%percent because of increased competition and post-election violence.

Net income for the year ended Sept. 30 declined to 17.84 million Kenyan shillings, or 0.085 shillings a share.

The Company saw an 18% reduction in revenues for the 1st six months of the year. The short fall was caused by unfair competition from large quantities of zero rated duty imports of very low priced batteries

Nigeria acts to manage the naira

Central Bank of Nigeria intervened in the Nigerian foreign exchange markets, purchasing $912 million worth of naira at a rate of 130/USD. Nigeria’s history of multiple exchange rate regimes make it imerative that the Central bank give better guidance on what is going on in its currency. In the past, there have been unregulated parallel markets. The potential for such informal currency arrangements arrising again are a concern.

Maghreb Minerals in discussions about its future

The Tunisian AIM listed Maghreb Minerals is in discussions with its principal shareholders regarding the future of the business. Firebird Global Master Fund Ltd. and Firebird Global Master Fund II LLP together hold 24.06 percent of Maghreb’s issued capital.

Maghreb has limited financial resources and, in current market conditions, external funding will be difficult to secure.

Sovereign Trust Insurance Plc acquires Acen Insurance Plc

After several rebuffs by the shareholders of Acen Insurance Plc, the acquisition by Sovereign Trust Insurance Plc is set to go ahead. The agreed terms are 1 Sovereign Trust share for 85 shares in Acen Insurance.

Acen Insurance Plc was de-listed from the Nigerian Stock Exchange for falling short of certain listing requirements, in a clean up exercise by the Exchange two months ago. Hopefully, Sovereign Trust knows what it is letting itself in for.

Attijariwafa Bank expands branch network

Morocco's Attijariwafa Bank has just bought Credit Agricole's African branches. The transaction includes assets in Congo, Cameroon, Gabon, Senegal and a consideration of 250 million euros.

In turn, Credit Agricole is purchasing 24 percent of Credit du Maroc, held by Wafa Assurance (the insurance branch of Attijariwafa Bank) for 144 million euros.

Calm ahead of Eid al-Adha holiday

Arab stock markets closed ahead of a week-long holiday marking Eid al-Adha in a relatively calm mood.

Saudi shares trimmed losses, mainly in response to remarks by King Abdullah that the Saudi economy was still 'strong'.

Jordanian shares saw some 'buying by foreigners, and Kuwaiti stocks rebounded on reports that the state-owned Kuwait Investment Corporation planned to buy equities after the holiday with USD 20 billion.

Cambodia to start stock exchange

Cambodia will start its stock exchange in 2009. The country is in the process of finalising securities rules and has broken ground on the exchange building.

Mauritius just misses double digit inflation

November inflation hit 9.9% in Mauritius for a second month running. Goods prices rose as a result of the lagged impact of currency depreciation.

We expect inflation will fall significantly next year. The central bank has cut its benchmark rate from 8.25% to 7.75%, so that is already discounted.

Saudi pharmaceutical industry

The USD 1bn Saudi pharmaceutical market is structuraly well positioned to benefit from growing population and rising demand fo health care in the region. The local players remain focused on basic medicines but this is no bad place to be in a country where the governement has only recently become focused on the cost of treatment.

There are 27 pharmaceutical manaufacturing companies in the Kingdom. The largest are Saudi Pharmaceutical Insdustries and Medical Appliances Corporation (SPIMACO), TABUK, Al Jazeera, Dal Al Dawa and Riyadh Pharma. Riyadh is the fastest growing. SPIMACO is our prefered listed name with over 170 brands under license from names such as Eli Lilly, Schering-Plough and GlaxoSmithKine.

Saudi Arabia is on the USTR Watch List for infringement of intelectual property rights.

Iraq revisited

Danfonds had a one on one with Bjorn Englund, the manager of the Babylon fund, today in Copenhagen. Bjorn is one of those managers who inspires confidence and is prepared to push the traditional boundaries of investment out to their geographic limits.

Iraq is not a stock picking market but rather a politically driven one. We therefore prefer to access it through a basket or a fund such as Babylon. Although an oil resource story, the listed companies are largely banks. These are generally small. Even Dar El Salam Investment Bank, owned 70% by HSBC, is only USD 248m. Commercial Bank of Iraq, however, sounded more interesting to us, standing on a PE of 5 and PB of 1. There is, as they say, a price for everything.

Zambeef sales + 69%

Zambeef delivered yet another impessive turnover number, up by 69% to ZMK 493.7m The beef division contributed 32% to total gross profit. The Company buys young heifers and steers from commercial farmers throughout the Zambia which are fattened in feedlots for 90 days prior to slaughter. The division has continued to grow significantly both in terms of volumes and profit, and the Company has plans to make further investments in this area, which we support.

Zamchick Inns continues to perform extremely well. There is reason to believe that the profitability of this division will continue to grow as the number of Zamchick Inns increase.

Nigerian Breweries Plc

Nigerian Breweries Plc had sales of NGN 102bn for the 9 months ended September 30, 2008, a 32% increase. The company is benefiting from continued investments and improved operating efficiencies, resulting in an increase in operating profit of 45%.

Performance update

The yellow line is the one to focus on - Danfonds frontier fund SPC, model portfolio with hedging contribution.

Tanzanian Breweries

Tanzania Breweries Ltd ignored increased operations costs and grew its sales revenue for six months by 21 per cent from $183.4 million to $222 million

UAE banking sector

The UAE banking system is undergoing a period of stress. Many of the banks have been expanding rapidly, adding branches across the UAE. There has been a lot of product innovation and these products require an overhaul of existing IT systems at the same time as their in conversion to Basle II.

Other key metrics include:

1) Loan growth to stay below 10%,
2) Capital adequacy will have to grow to 11% in 2009 and 12% in 2010.
3) Significant wage inflation

Emaar

Emaar, the Dubai real estate company, has fallen over 75% this year. All the fundamentals point down. Land has turned negative, the secondary market is bad, developers are in trouble, discount rates are rising, and construction costs are up.

Emaar has grown thanks to its international sales. The company therefore has to turn to cash preservation and cost rationalisation, something they have not been good at in the past.

Time to buy? Not yet!

Benue Cement Company (Dangote Industries Ltd.)

Benue Cement Company (controlled by Dangote Industries Ltd.) reporting a 119% increase in sales to N9.8bn ($83.9m) and a 174% increase in PBT to N4.8bn ($40.9m) in the period to the end of the third quarter.

Benue Cement Company is not yet operating at full production capacity and are slowly ramping up the second kiln which will take production towards 3 million tons. As to its newly commissioned plants it intends to cut prepayments to postpone the start of
construction to avoid flooding the market with new supply.