At the time of writing, shares in Emaar Properties are down 10 percent in the first five hours of trading since it announced it would be acquiring Dubai Holdings companies Sama Dubai, Tatweer and Dubai Properties Group.

Investors are trying to absorb the complexity of the deal and, in the absence of hard facts about the future of the business, they are taking the obvious course of action: clear out of the stock until reliable information emerges.

Sama, Tatweer and DPG are private companies without published accounts. In essence, all three are holding companies - subsidiaries of the daddy of all holding companies: Dubai Holdings.

As such, they are the sum of their assets, rather than assets in their own right. To illustrate the intangible role of these companies, you only have to read their mission statements. For example, on Tatweer’s web site, it has a frequently asked question section that provides the following insight:

Question: What is Tatweer’s main strategy?

Answer: Tatweer will focus on leadership development to achieve business excellence and world class quality standards for all of its subsidiaries.

Tatweer will become a world class enterprise through value generation, customer focus and excellence for our people and stakeholders. In addition, it will focus on developing and diversifying the business portfolio by capitalising on market opportunities in existing and new sectors.

If anybody can find a statement with less meaning than this, please send it on a postcard to Arabian Business.

The assets under management by these holding companies are considerably more meaningful, but no easier to value.

Emaar has said that the combined companies will have assets worth a total of $52.85 billion. Not $52 billion, not $53 billion, exactly $52.85 billion - precision that suggests real mathematics and accounting is involved.

In its current trading statement, Emaar says that its assets are valued at $16.5 billion. The combined total for Sama, Tatweer and Dubai Properties is therefore $36.35 billion.

The value of Sama, Tatweer and Dubai Properties assets are therefore priced at more than double the value of Emaar’s assets.

Judge for yourself whether that calculation seems reasonable, by comparing the value of these assets:

The first thing that strikes me when comparing these lists of projects is that Emaar is considerably more diversified in terms of its geographic spread. Between Sama, Dubai Properties and Tatweer, only three projects are outside the UAE. For Emaar, the majority are non-UAE.

Real estate values are falling all around the world, but nowhere faster than the UAE. Emaar’s asset value should therefore be more robust than those of its new businesses.

The real question for investors is how to value these assets, what are the business plans of each project (cashflow, revenues, profits), and what will be their impact on the overall profitability and growth prospects of the group.

This would require a full time team of forensic accountants and researchers several years to evaluate.

Which makes it all the more surprising that a value of $52.85 billion has been established only moments after the news was released that these companies would be merging. I’m not saying that it isn’t $52.85 billion, but I expect I could make a case for $52 billion or $53 billion just as easily.

You do the maths, and let me know what you conclude.

News that Abu Dhabi’s Sheikh Mansour is cashing in his stake in Barclays is attracting cries of anguish from institutional investors.

A £2 billion ($3.26 billion) investment of convertible shares in Barclays was bought at the height of the UK credit crunch when the bank faced the choice of raising capital in the market or accepting a bailout that would see the British government become its largest shareholder.

Sheikh Mansour Bin Zayed Al Nahyan extracted what other investors considered to be preferable terms for its convertible shares, and criticised the bank for not making those terms available to all.

This week’s profit taking, which could net the Abu Dhabi sheikh a royal return of up to 70 percent, according to analysts, will do nothing to dampen the resentment of these investors.

Their chagrin is misplaced, as shareholders in General Motors will testify. In the case of the bankrupt motor manufacturer, the US government rescue almost entirely wiped out what was left of the company’s share value.

A British bailout of Barclays would not have been quite so bad for its shareholders, but it would probably have been a good deal worse for them than the deal that was struck with Abu Dhabi and Qatar investors.

They would have no doubt liked the sweeteners that Sheikh Mansour extracted, but they weren’t sitting at the negotiating table with the ability and willingness to write a cheque for £2 billion.

Sheikh Mansour took the risk, and is now fully entitled to the rewards.

Buried on page 34 of yesterday’s edition of The Times was news that should have knocked MP’s expenses and even Jordan and Peter Andre’s divorce off the front page of UK newspapers.

The credit crunch has ended.

The London interbank offered rate (LIBOR), the rate at which banks lend to each other, fell to levels last seen in early 2003, and around one quarter the level of 2005 when subprime mortgage defaults rattled the US banking sector and set in chain events that led to the collapse of Lehman Brothers a year later.

The spread between the UK Bank of England base rate and Libor has also narrowed to 2007 levels, still not back to the razor thin spreads seen at the height of the credit splurge of 2005, but low enough to prompt respected economists and bankers to suggest “normal” lending should now resume.

The GCC banking sector is also returning to normal. The three month Emirates interbank offered rate (EIBOR) dropped to 2.4875 today, down from a peak of 4.7875 in October last year. The Saudi Arabian interbank offer rate (SAIBOR) is down to 1.13 percent after averaging 3.37 percent last year.

The technicality of whether the credit crunch is over or not may be of little interest to the average man on the street. But it is more than a mere academic question.

Interbank rates directly affect current and future home owners in the UAE. HSBC offers tracker mortgages of 4 percent above EIBOR, making home loans available today at 6.5 percent 2-3 percent lower than the banks variable rate of 8.5-9.5 percent, depending on the size of a customer’s deposit.

The new company that emerges from the merger of Islamic lenders Amlak and Tamweel is expected to open within weeks with competitive mortgage deals.

Lending is beginning to become cheaper and more affordable at the same time.

It is unlikely that lending to businesses and individuals will return to 2007 levels any time soon. Nor should it. Lending should be made on the conservative calculation of customers’ ability to service loans, and should be secured on assets that are properly valued or on salaries that can be reasonably expected to continue.

2007 lending was based on the price of real estate that was assumed to be permanently increasing, and on salaries that were expected to rise, uninterrupted, forever. The banks will not make the same mistake any time soon.

So while you may be able to wave goodbye to the credit crunch, you have to accept that living within your means in a new age of austerity is not going away any time soon.

If you want to know which direction the GCC economy is heading, always check the oil price.

The global economy is more interconnected than ever, and so is the GCC economy. And no other sector of the global and local economy is a more reliable indicator of future trends than the oil price.

Statisticians could play all day with different numbers, and they would struggle to find an example that disproves the theory that when the oil price is strong, the GCC economy is strong. When the oil price is weak, so is the rest of the GCC economy.

Being a journalist, I could only be bothered to compare three variables: Brent Crude oil price, the GCC All Share Index and Dubai land sales.

The graph above begins in May, 2008, which was the peak month for Dubai land sales (which is affected by volume and the price of the land (I have calculated May 2009 by multiplying the first 10 days by three)). It was also just about the peak of the GCC All Share Index, and two months before the peak oil price in July.

The relationship between the oil price and GCC shares is almost perfect. Dubai land sales have underperformed - not surprising when you consider the massive bubble that was created in the run up to summer last year.

So, which way now for the GCC economy? Well I’m no expert in commodity trading, but I know an organisation that is. PMV Oil Associates predicts that oil will approach $63 dollars per barrel in the coming weeks and will rally to $78 within the next six months. (http://www.arabianbusiness.com/555058-crude-oil-price-to-hit-78-within-6-months).

So far it’s an epidemic, not a pandemic. But it has swept across the globe and left chaos in its wake. I am talking, of course, about Swine Flu Flop - the highly contagious market-sapping disease that has seen billions of dollars wiped of the values of certain stock, ever since the influenza outbreak in Mexico.
In just one day last week, as the WHO ramped up its pandemic alert from stage three to stage four, shares dived worldwide. Travel and leisure firms have been hit the hardest, as industry bellwether British Airways dropped eight percent on April 26 while Lufthansa, Europe’s second largest airline, fell more than 12 percent. Air China dropped 13 percent, and Carnival, the cruise operator poised to begin operations in the Gulf, jumped 2.2 percent on news it had scrapped afternoon stopoffs in Acapulco.
So what’s in store for Gulf stocks? At the region’s bourses, investors should certainly be on high alert for Swine Flu Flop. The majority of state-backed travel and leisure firms aren’t listed, so we may have to wait to see if there’s been any significant impact. But it can’t be much fun for the national carriers, or their private competitors. The Gulf is one of the globe’s biggest transit hubs, and with people avoiding airports for fear of picking something up from other travellers, there are sure to be empty seats in the sky.
Ps. Pharmaceutical firms are looking at the whole thing in a different light, of course Roche, the Swiss maker of Tamiflu, climbed almost six percent as news spread of the virus. Rival GlaxoSmithKline, which makes the influenza treatment Relenza, gained 7.6 percent. As ever, it’s good to see the drug companies doing well. Do we think they’ll drop the prices of their drugs as a result of the good times?