Good guys are being tarred with the macro brush

You can't help but feel sympathetic towards Mohammad Sharaf, the genial CEO of ports operator DP World. While he does an excellent job overseeing 30,000 staff at 49 terminals and 12 new developments across 31 countries, he's also braced for the inevitable drop of the ratings agency axe.

Earlier this month, DP World was listed among six government-owned companies in Dubai whose credit ratings are under review at Moody's for possible downgrades as the economy slows.

In the context of the global economic meltdown and concerns over the vulnerability of Gulf markets to economic recession, reappraisals make sense. But when applied to DP World, Sharaf can be forgiven for feeling a little picked on.

Even the most bright-sided observer would accept that Gulf stock markets have tanked over the last 12 months. But even after having lost around 80 percent of its value since listing, DP World has outperformed the local benchmark - a remarkable feat and one that suggests the company has been harshly treated by the agencies, perhaps as a result of its association with Dubai, a market troubled by the recent real estate slump.

"People don't know the region enough and they don't know Dubai enough - they are panicking," Sharaf told me last week as we returned to Dubai from Djibouti, the small nation on the Horn of Africa into which parent company Dubai World has invested some $1bn, according to some estimates.

"We have been through crises many times before, when Moody's and Standard & Poor's and the others were not there, and we have got through them and sailed smoothly on," he added. "We will do so again, I have no doubt in my mind."

Last week, the chairman and founder of another venerable Gulf institution responded with admirable sangfroid when I asked for his reaction to his company's recent downgrade by another ratings agency.

"They look at the whole region, with the oil price down, and they look at it pessimistically," he said. "They cannot isolate us from the larger picture - we're part of the world and our own assets as a result of the global crisis, are worth less than they were before.

"However, the agency will admit that we have the liquidity and we have the balance sheet, and so on a micro basis we pass all the tests. The macro, I can't help."

His confidence stems from that fact that - like DP World - his company has grown large enough, and diversified its investments widely enough, that it will make money even when times are bad. It may not register the outrageous profits that have characterised the last few years, but thanks to a responsible balance sheet and careful risk assessment, it will hold fast while other more profit-obsessed firms disappear.

Ratings agencies are looking at the Gulf market, and they are transferring their macro views on the region, to companies with wildly diverse characteristics. This is understandable, but unfairly taints those organisations that look beyond the next rating, into the next decade and beyond.

No one knows for sure what will happen over the next couple of years in terms of shipping volumes, but one thing's for sure - that DP World will be there at the end of it all, breaking into uncharted waters, and making the most of those it already rules.

Andrew White is the editor of Arabian Business English.

RELATED LINK: Ports in the storm

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