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QUEST MEANS BUSINESS
Is Financial Crisis in Dubai Over?
Aired December 1, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINIGHAN, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Crisis (AUDIO GAP) facing a financial sand storm.
Breathing a sigh of relief investors on Wall Street put the Dubai crisis behind them.
And, the applications, the interview, the hopes, getting back on the employment ladder is tough. We catch up with some old friends in our "Job Quest".
Hello, I'm Adrian Finighan, in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello and a very good evening to you.
After days of silence and sharp falls on stock markets around the world, there are now signs that the financial sandstorm gripping Dubai is easing. Tonight, on QUEST MEANS BUSINESS, we find out if the worst is over.
Well, at last, Dubai World is beginning to unravel some of its debt problems. Dubai's troubled investment vehicle says that it is in talks to restructure $26 billion of debt, most of it relating to the property arms, Nakheel and Limitless.
Dubai World's says that more than half of its liabilities are financially stable and they won't be included in the restructuring. The statement has eased global fears that the company will default on its debts. However, traders in the region are still showing signs of distress.
Dubai's benchmark index plunged for a second day, shedding 5.6 percent. While Abu Dhabi's main market was 3.5 percent down. Qatar's main index trading for the first time this week lost more than 8 percent.
Well, Khaled Masri is the head of brokerage at Rasmala, a leading regional investment bank, I asked him whether there is currently an air of crisis in Dubai.
KHALED MASRI, HEAD OF BROKERAGE, RASMALA: Well, I wouldn't call it an air of crisis. I mean, certainly local markets have been jolted and local investors have been jolted, particularly by the, I'd say, unprecedented media attention to the issue. We have seen across our businesses in the region, in the GCC, and also in Mena, where my company is active. That we have certainly seen a nervousness. We have certainly seen foreigners, you know, foreign investors asking a lot of questions. And some, obviously, heavy selling.
The tone today, I would say, coming from yesterday's very bleak tone, where only the UAE and Egypt were open yesterday. It was extra bleak. The tone today, I would say is a little bit better. Some -let's say some information trickling in from high-level sources and a better mood than international markets, I would say the tone is a little bit better.
FINIGHAN: I suppose the media does have to take some blame for stoking the fire, for perhaps whipping up some of the initial panic. There seems to be a more relaxed attitude today now that we are talking about $26 billion, and not the full amount.
MASRI: Part of the problem was perhaps an information gap, which the blame for that could be shared around. The -and again, the media catching on to it. Perhaps the timing with very many investors not being in the market led to extra thin markets which exaggerated certain, you know, certain movements. The issue is more sort of the form over the substance; the substance itself, you know, indeed, there is a debt issue in Dubai. There is no denial.
I think it is a good sign that they have bitten the bullet, so to speak, and they have come out and said, OK, there is an issue with some of the assets, that are owned by some of these companies. And discussions will be held to see how best to address those issues.
We will take it, certainly, as manageable. The issue at stake here, which we are seeing the government beginning to address, is to influence the important parts of the economy, the strategic parts of the economy. The central bank has come out and effectively reinforced (ph) the banks to preclude any system risk to the system. That has worked. Inter-bank rates today we saw settle down, a little bit. So that certainly seems to be working and that certainly is important. And as well, a lot of the good assets of what is commonly referred to here as Dubai, Inc., which are literally dozens of companies, running everything from the ports to the free zones, to the airline, to a lot of the things that make Dubai what it is today, which is a first-class city. These are certainly going to be reinforced (ph).
FINIGHAN: So, as far as the markets are concerned. After being whipped into a frenzy by the media, perhaps the worst is now over. But what about the long-term damage that this has done to Dubai's reputation as a financial center?
MASRI: I would say that is also, you know, that is also, I would say, exaggerated. You know, just the restructuring of General Motors, did not signal the end of Detroit, or some of the problems coming out of the Internet, or boom of the late `90s, early 2000s, did not signal the end of California. And the financial crisis has not signaled the end of London and New York. I think it is very exaggerated to think that this issue has had a fatal effect on Dubai.
FINIGHAN: Khaled Masri, speaking a little earlier.
Well, the problems at Dubai World Center are linked to the collapse in the regional property market. It means that Dubai World's property subsidiaries are having a tough time raising fresh capital. As CNN's Jim Boulden discovered some people actually think the property slump is a good thing.
JIM BOULDEN, CNN INT'L. CORRESPONDENT (voice over): Even after a week of worry about Dubai's debt and more than a year of falling property prices, Sultan Al Qassemi is bullish on Dubai and says the property price crash will work in Dubai's favor.
SULTAN AL QASSEMI, AL SAUD COMPANY LTD.: A couple of years ago Dubai was being ranked in the top 20 most expensive destinations to set up a business. That was a bad ranking to be in. And now, Dubai, once again has gone down and is the cost of setting up, so it is becoming more and more attractive.
BOULDEN: In the long-term perhaps, but for now people are hurting. Ryan Mahoney runs a family owned property sales and rental firm based in Dubai and says his number of transactions have fallen by 70 percent this year. But he is optimistic now.
UNIDENTIFIED MALE: In terms of prices they have fallen by about 40 to 50 percent, depending. And so they bottomed out maybe about three or four months ago and we've seen sort of a stabilization of prices since then. And in some areas, some prices have started to pick up a little bit.
BOULDEN: Many of the properties that Mahoney manages were built by Dubai World's Nakheel, the arm at the forefront of the debt crisis. Part of Nakheel's cash shortfall comes from weak rental values and home sales far below estimates. And with more and more housing stock coming onto the markets, prices are further under pressure. Like this one-year old, five bedroom villa out on one of the Palms. It has never been occupied. The asking price, now a third cheaper, $5 million.
(On camera): Right. So, if I said, $4.5 million on here, I might find it a little hard to buy.
CLAIRE NALL-CAIN, BETTERHOMES: I'd probably say to you, No. I'm not even going to speak to the seller about that.
BOULDEN: Dubai has had many property milestones. Dozens of skyscrapers rising form the sands, including the world's tallest tower. And the iconic shell shaped hotel, the Burj Al Arab.
(On camera): It would be hard to over exaggerate the sheer amount of building that has gone on here in Dubai since that hotel opened 10 years ago this week. The difference now is real estate experts say that few people are willing to speculate on projects that are yet to be built. They only want to put money down on a house or a building that already complete. And experts say a number of people here want to get their money back.
MAHONEY: Some people have been able to get their money back, and some people have been unable, you know, with no horizon of ever getting their money back.
BOULDEN: For many investors here the question is when will Dubai's property nightmare end?
FINIGHAN: And Jim joins us now live from Dubai.
Jim, everyone knows about the construction boom in Dubai that you were just illustrating for us. Give us some actual facts and figures, though, about the property market.
BOULDEN: Yes, we were looking into this today. Just to try to get some numbers to the end of this. And some of the reports by the commercial real estate companies here say that prices for residential are back to 2006 level. So the huge number of drop -the huge drop from about 40 to 50 percent on these houses. It takes us back to 2006. That is not dissimilar to places like the U.S. and even places like London.
As far as commercial goes, I was told there was about a 25 percent vacancy rate, as far as the number of offices available in Dubai. And you see many, of course, buildings that haven't yet been finished. But I can say the ones I looked at, when you are just driving around, Adrian, they still seem to be getting worked on. The idea, of course, is to complete those.
And one of the persons I interviewed today says, believe it or not, he thinks there will actually be a shortage of office space and homes here. That is how bullish he is in the long-run. And that some of these things that are off plan right now, that probably aren't going to get built right now, because they can't get the loans, are eventually going to finally actually start.
FINIGHAN: Yes, all right, the market is breathing a sigh of relief today that Dubai World is setting about the task of restructuring. But of course, as I was saying to our previous guest, there is a certain harm that has been done here to Dubai's reputation. Is it going to be difficult for them now to raise that kind of financing?
BOULDEN: Yes, I mean, we have been focusing so much on the possibility of restructuring the debt. That doesn't change the fact that there is less money into the place at the moment. The cash flow is critical. And one of the areas that you would have gone to get more cash flow, of course, would be to the banks, to lenders. But because of the reputational problem here analysts are saying it is going to be very difficult for Dubai companies to go out and get commercial rate loans at a decent interest rate and have a lot of investors very keen on coming in here, because they are not sure they are going to get their money back.
So, it could be years until those towers that are planned, that haven't started yet, would actually start. And that is something the could keep this economy, you know, pretty slow for the next couple of years.
FINIGHAN: All right, Jim. Many thanks. CNN's Jim Boulden live in Dubai.
Well, the European markets roared back to life following Monday's slide, today. Dubai World's statement on its debts seems to have reassured traders. Banks added plenty of points to those indices as fears over their exposure to Dubai World faded.
Standard Chartered, that was one of the best performers in London. Adding 5 percent today, Deutsche Bank gained more than 3 percent in Frankfurt. And in Paris, shares in the power and transport company, Alston added more than 6 percent. Together with Schneider Electric, is just won exclusive bidding rights for part of a French nuclear power company.
We'll have more the markets a little later in the show, but right now let's get you up to date with what else is happening around the world. Fionnuala Sweeney joins us live from the London newsroom.
FIONNUALA SWEENEY, CNN INT'L NEWS ANCHOR: And Adrian, here are the latest stories making headlines.
And in-depth interview with Iran's president has been airing on Iranian state television. Mahmoud Ahmadinejad told viewers that Western powers have been trying to isolate Iran over it's controversial nuclear program. He said that is a bad idea and called his country one of the most strategically important in the world.
Britain has asked for a quick resolution to the case of five British sailors being held in Iran. They were arrested last week while on their way to Dubai. British officials say their racing yacht apparently drifted into Iranian waters. Iran has threatened to take strong action if it is proven the group had bad intentions.
U.S. President Barack Obama plans to send 30,000 more troops to Afghanistan. White House officials say he'll make the announcement in about six hours at the military academy at West Point. The president will also order military officials to deploy the reinforcements within six months. The decision comes after weeks of debate.
Sri Lanka is allowing nearly 127,000 Tamils to leave crowded government camps. They have been held against their will since the country's civil war ended six months ago. And thousands of Tamils are already heading home to reunite with family members. In May the Sri Lankan military crushed the Tamil Tiger insurgency ending their fight for a separate homeland.
And those are the headlines. We'll have more on those stories on "WORLD ONE" at 80:30 p.m. London time.
In the meantime, back to you, Adrian, in the studio.
FINIGHAN: Fionnuala, many thanks we'll see you later.
Now, inches closer to inking a deal, General Electric clears a major hurdle in an effort to sell off its NBC/Universal unit. We'll look at what that means for the media landscape. We'll be right back.
FINIGHAN: So, we showed you that European markets have bounced back after yesterday's falls. Let's find out what is happening right now on Wall Street, across the Atlantic in late afternoon trade. Susan Lisovicz is with us today at the New York Stock Exchange.
SUASAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Hi, Adrian. Well, we have a terrific rally for the start of the final months of the year, end of the decade for that matter, triple-digit gains. You know, some things that certainly gave the bulls impetus. Pending home sales rose for the ninth straight month. It seems that investors very much like the fact that AIG is paying down its debt. Those shares are up 11 percent.
GE did get a boost earlier on over reports that it is going to buy the remaining stake that Vivendi owns in NBC/Universal. Some action there. We had some improvement on Ford sales for the month of October. So, you know a combination of things that are giving the bulls some life on this Tuesday.
FINIGHAN: All right, Susan many thanks. And how about that? AIG paying back $25 billion in debt.
Well, another corporate headline coming from the U.S. this hour, General Electric is one step closer to selling its controlling stake in media giant NBC/Universal. It is the result of a long-running back and forth between GE, France's Vivendi, and the U.S. cable network provider, Comcast. Well, CNN's Maggie Lake is following the story for us from New York. And she joins us right now.
Maggie tell us all about it.
MAGGIE LAKE, CNN INT'L. CORRESPONDENT: Yes, Adrian, this is really the piece of the puzzle that needed to sort of find its way into place if this whole thing was going to move forward. And it did and by all accounts it seemed like Vivendi actually got a pretty good deal. Considering they really wanted to do this and there wasn't another eager buyer out there.
So, they needed -- GE is paying Vivendi for it's share of NBC, $5.8 billion. A little bit lower than Vivendi had actually originally valued the stake at, but not that much lower and it is actually higher than some analysts thought they were going to be able to wrestle from GE.
The other important thing is that Vivendi did secure some assurances that they are going to get $2 billion no matter what. If for some reason the deal falls through or gets stuck or gets locked in, they are going to get $2 billion up front. So that was another very important thing for them.
Now, this should clear the way to the ultimate merger, and this is what we're really talking about, and that is Comcast buying NBC or going into a joint venture, is what they're calling it, with GE. But it essentially means that GE is going to sort of distance itself from its stake.
And you know what is interesting, Adrian, for both Vivendi and GE, this is a rolling away from those media ventures that both of them undertook during the `90s and really getting back - trimming down - getting back their focus back on their traditional core businesses, utilities, industrials. And certainly GE investors have been really anxious for them to do that. So, with this big Vivendi piece out of the way, analysts and industry watchers are saying that the Comcast/GE deal could happen maybe as soon as the end of this week.
FINIGHAN: All right, Maggie, many thanks. Maggie Lake, live in New York.
Now, here on QUEST MEANS BUSINESS we believe the financial is also the personal and that is why we are following our "Job Questers" Tonight, we are going to meet a new face. And we'll catch up with some old friends. We'll be back in just a couple of minutes.
FINIGHAN: Hello, again.
There is some good news out of Germany today. The number of people out of work is falling. And that is surprising economists. The unemployment rate down by a 0.1 percent, to 8.1 percent in November. Those figures are hinting that Europe's largest economy is finally getting back on its feet. But the jobless queues are still long. Right now there are over 3 million people out of work in Germany.
Well, wherever you are, and whatever your qualifications, if you are unemployed times are tough, especially at this time of year. Today on "Job Quest" we meet a new person looking for a position. Fran Hales, from right here in London, wants a job in sales and account management. We are also going to catch up with some old friends and see if they've had any luck getting back on the career ladder.
ANNOUNCER: Last week on "Job Quest".
UNIDENTIFIED MALE: Things went quite well. I talked directly to the decision maker which seems good news. And at the end of the interview it ended up being very informal, which is always good when you have an interview. So, I have a good feeling about it.
LISA MATHESON, JOB QUESTER: Hi, Jim. I'm Lisa Matheson
UNIDENTIFIED MALE: Nice to meet you.
MATHESON: I'm here today to get some additional skills in social media. Something that I hadn't had on my previous job and since it has been seven years since I did an external communications role, so I thought this would be a great opportunity for me to beef up some skills.
FRAN HALES, LONDON: Hi, my name is Fran Hales. I'm 35 years old. I'm originally from New Zealand. But I've been in the U.K. for 12 years now.
Well, as you can see the Christmas lights are out in London and everybody is out shopping for Christmas presents. But me, I'm shopping for a job.
Up until three months ago I was working for a (UNINTELLGIBLE) media agency, as account manager. I've been extremely busy in my role, so when I was made redundant it was actually a complete shock to me. Because I didn't have any idea it was going to happen. I had been with the company for about eight years and when I was made redundant it was quite a shock because I had been really busy up until that time. And I kind of thought because I had been with the company for a long time that finding another job wouldn't be too difficult, but actually I've had, the first couple of months I actually had no response at all from agencies, or from companies I approached. So it is a lot more difficult than I thought it would be.
What I have been doing, in order to look for a job is approached agencies, initially, when I heard from them that the market was quite difficult and that there was a lot more candidates than jobs, I then started approaching companies directly. And I've also offered to work for free, for people, to get my experience levels up. I looked through lots of different companies web sites to see if they have any jobs available. And even if they haven't I still write to them anyway, even just to get an interview to chat about what is happening in the industry.
Other ways and methods, I've also changed my Facebook status, saying that I'm looking for a job. And ironically, from that, I've had about two or three people come back to me. I got an interview out of that. At the moment there is a possibility that if I get full-time work before Christmas, that I am going to have to do temporary work in order to get some money in. The difficulties with that is I may have to work outside of my industry. Also, because I was working in sort of a middle management role, it could actually be difficult for me to get part-time work because I might be overqualified.
DIDIER PICARD, DUBAI: The summer has been fantastic, in fact, I took the opportunity to first of all take a break and keep working this web site project that I have now decided to activate.
It has been probably the best, ever, holidays I've had.
The last three or four weeks have been quite pleasant. I spent them in the South of France, in my house with my family and catching up with friends in Europe. And we are closing the house and we are actually driving toward San Tropez, and then Venice, in Italy.
So, basically, the idea of this web site is to take advantage of the crisis. I realized that people love brands, fashion brands, designer brands, but most of the time they can't afford them, or now they're careful with their money. So, the idea came to sell on this web site last year's collection at a discount, obviously. This is something that has started in the West, in Europe and in the U.S., and doesn't exist in the Middle East. So, I'm just jumping on the bandwagon and setting that up.
Being outside the corporate world is probably a scary one for most people, including myself. Having said that, now that I'm out of this, I wonder why I waited for so long. It is an incredible experience. I have my life in my hands. I can just decide whatever I want to do.
JASON YOUNG, AUSTIN, TEXAS: A lot has happened the last few months. Finally I got to move the family here and we are in an apartment, which is -it's tough, being in an apartment, going from a bigger house to a small apartment.
Everything has been really good except for the fact that we haven't sold our house in Atlanta yet. And most of the country right now, the Atlanta market, is having a tough time. And it has actually been a while since anyone has even looked at our house.
Our house has been on the market for about six months, which was a lot longer than we ever thought it would be on the market for. We have already lowered the price. We have had a lot of people look at it. We have had great feedback. People say they love the house. They think that the price that it is listed at now is great. There is just not a lot of buyers. So that has been frustrating and tough.
But we keep going back to, at least we are together. We have a roof over our heads. I've got a job, which has been very nice, just knowing that I have a job. Because a lot of people are still losing their jobs.
FINIGHAN: Great to see Jason and Didier enjoying their success after being featured on "Job Quest" for a couple of months. And we'll catch up with Fran, Rodrigo and Lisa, next week on "Job Quest", in their search for work, right here on QUEST MEANS BUSINESS.
Coming up in a moment, though, the shock waves from Dubai's debt crisis still hitting investors in the Middle East, but in Egypt, they are hard at work building a pretty robust defense. We'll explain when we come back.
FINIGHAN: Welcome back.
Live from London, this is QUEST MEANS BUSINESS.
In for Richard Quest, I'm Adrian Finighan.
Let's show you what's happening right now on Wall Street, where U.S. stocks are bouncing back this hour. Lessening worries about Dubai's debt problems, it seems, behind this rally. Investors also keeping an eye on gold today, which is nearing $1,200 an ounce. As you can see, the Dow Jones up 151, almost 152 points right now.
So, let's return to our top story this hour, Dubai's decision to restructure $26 billion in debt.
John Defterios from CNN's "MARKETPLACE MIDDLE EAST" joins us once again on the program -- John, all respect toward you. It's great to have your perspective on this story.
Investors had pretty mixed messages from the central bank to the Dubai government, not supporting Dubai World's debt.
What's transpired today?
JOHN DEFTERIOS, HOST, "MARKETPLACE MIDDLE EAST": Well, it's quite interesting, because I would say on this road to rebuilding confidence, let's say if there's 20 steps up this staircase as to rebuilding confidence, we're about a quarter of the way there -- about five steps along where we were before, because, again, the central bank did step in over the weekend and say they were going to provide liquidity.
Then it became abundantly clear, in the last 24 hours, that, in fact, Dubai World is going to be, you know, pored through and this $26 billion of debt restructured. And now this distancing by the Dubai government on Dubai World.
But, today I think what the difference is, Adrian, is we're going to the top. So the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum, came out and said that we are strong and persistent, meaning, basically, we're going to get through the crisis, we didn't get to the top before.
I find it interesting, though, that he did follow up that, quote, unquote, they don't understand anything, referring to the international investors. He thought the reaction by the international markets was way overblown because they didn't see the division between Dubai World and Dubai Inc., you know, basically the government investments.
But they are interlocked. And that's where there -- there is disagreement between the international markets and the ruler of Dubai right now.
FINIGHAN: And it's not just the top of Dubai we've heard from, it's the -- it's the top of Abu Dhabi, as well.
DEFTERIOS: I know. International viewers probably would wonder why we're getting into this. But in the subtleties of the UAE, it's quite important. We actually -- ahead of the National Day Speech, which is December 2nd, tomorrow, in the UAE -- they released the speech of Sheikh Khaled bin Zayed Al Nahyan. We have a quote here -- because he did weave in this -- this issue about the crisis right now, saying: "The global financial crisis or its severity will not be a reason for hesitation or a retreat right now," speaking of the greater UAE, not about Dubai or not about Abu Dhabi.
He goes on to say: "We are confident that our people and the source of our strength will continue steadily."
Now, if you understand the UAE politics or the politics of the Middle East, that is basically providing some support to Sheikh Mohammed right now, to say we should sit down, we have to think of this collectively, we need to move forward, we did talk about it in the last three days ourselves.
But they're behind closed doors right now, poring over the debt issues.
DEFTERIOS: And then they have to come out with some sort of sense of unity to keep it together. And it's not by accident that this is happening on National Unity Day, tomorrow.
FINIGHAN: Yes, but one would think that -- that given that show of unity, the markets would -- would take heart. And yet we've -- we've continued to see falls on the markets.
DEFTERIOS: Yes, and, in fact, I was drawing a parallel to the 1987 U.S. crash, which was -- if you go back in the history books, 22 percent, going back to 1987. And that's a -- President Ronald Reagan came out on the White House lawn -- I remember because I was covering it...
DEFTERIOS: ...as a junior producer -- saying that, in fact, that the U.S. economy is stable and we can move on from here, followed up by the central bank offering the liquidity.
This has been a 15 percent correction in two days. It's not very dissimilar. And it wipes out a lot of wealth in Dubai. So what happens going forward is the big question. I mean we saw the market reaction today. Let's take a look. I mean you had the big sell-offs yesterday. And then you have another sell-off of 5.6 percent in Abu Dhabi. You see a sell-off in Dubai of -- sorry, of Dubai, 5.6 percent, the Abu Dhabi down 3.5 percent. Qatar, in its first day of being open after the Eid holiday, is 8.25 percent. And then the spillover that we talked about before, an amount of about 2.25 percent.
Now, that's going to be the worst of it?
We don't know. But we -- it's positive that the Asian markets are rallying. We saw the European markets bounce back. And we saw the rally that you talked about in the Dow Industrials.
The big question mark, what happens in 2010?
The IMF, just a month ago, moved up the forecast for UAE growth from 2.4 percent for 2010 to 3 percent. But you can't have that growth and that sort of economy if there's not consumer confidence and that we haven't marked the bottom of the real estate market. We've had a correction of 50 percent in Dubai. If this confidence is eroded yet again, we're going to have problems hitting 3 percent for 2010.
John, many thanks, indeed.
You'll draw all this together, no doubt, on that "MARKETPLACE MIDDLE EAST" this week.
FINIGHAN: ...45 hours GMT is when you can see that.
Well, the regional aftershocks of Dubai's debt crisis aren't confined to the UAE. Egyptian stocks have also taken a beating this week.
But, as senior investigative correspondent, Ben Wedeman, explains now, many investors there have confidence in their country's economy.
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: We're at the Cairo Stock Exchange, one of the oldest stock exchanges in the Arab world. Now, the tremors from Dubai's financial collapse were felt in Cairo. On Monday, stocks fell by nearly 8 percent, wiping out $10 billion in stock value in just one day.
But things aren't quite as grim as they might otherwise seem.
YASSER EL MALLAWANY, CEO, EFG-HERMES: Egypt was similar to other markets. You know, the plethora (ph) got hit. Most of the places got hit. But when you look at Egypt fundamentally, there is no correlation, because, first of all, the -- the UAE investments in Egypt is not that large as -- as a percentage of total investment. And, at the same time, there's no exposure to -- to Dubai in the sense of the banking sector.
WEDEMAN: (voice-over): The Egyptian economy, despite the world economic downtown, is doing pretty well, focused very much on things like manufacturing. In other words, Egypt actually makes things, unlike many of the Gulf economies. The Egyptian economy grew last year by more than 4 percent. And Egypt's finance minister, Boutros Ghali, says in a few years, economic growth could double.
(on camera): Now, financial analysts say that some of the money that's fleeing Dubai now could find a home here in Egypt.
MALLAWANY: The maturity and the transparency of the stock market makes Egypt a -- a winner, even in tough times, because we are a better place. We have better transparency and better corporate governance. So right (INAUDIBLE), we also need to continue our drive to -- to open up and to deregulation and to offer the investors more and more of opportunities to come and -- into Egypt.
WEDEMAN: And at Tuesday, close to closing time, stocks were going up more than we were going down.
I'm Ben Wedeman, CNN, reporting from outside the Cairo Stock Exchange.
(END VIDEO TAPE)
FINIGHAN: Now, banks and bonus -- dirty words for many people. There's concern that the system overhaul isn't going far enough. But a new report may just change all that. Details when we come back on QUEST MEANS BUSINESS.
FINIGHAN: Now, the U.K.'s chancellor is talking tough on bank bonuses. Alistair Darling says a report released last week may not go far enough. Sir David Walker's report called on banks to disclose the number of people who make over $1.6 million.
CNN's Charles Hodson sat down earlier today with Sir David and asked if finding out how many people collect big bonuses would be enough to diffuse the public anger at bad behavior in the banking sector.
DAVID WALKER, BANKING ADVISOR: It's very important we take this opportunity, when there have been these immense problems -- I totally sympathize with the public anger, I share it -- we use this opportunity to make very substantial changes in the way banks are run, in their boardrooms, the way risk is assessed and overseen by boards and the way the owners of banks -- as well as other companies, but my focus is with banks - - relate to the boards and discharge their own responsibilities. And under all those headings, there is, frankly, serious failure.
And we need to use this unique opportunity where the public anger is a force for precipitating change to ensure we get change.
CHARLES HODSON, CNN CORRESPONDENT: The media, I think, in covering your report, very much focused on one idea, which was that banks should be forced to disclose the number of their employees who would receive more than one million pounds, $1.6 or $1.7 million in annual salary.
Was that right?
And some people said you should have gone further and forced them to just disclose the names.
WALKER: There's no evidence that the disclose of names would do anything at all to help in what the public are likely concerned about and I'm concerned about, which is getting these institutions, which are critical for our free market economies in the whole developed world, to work better.
So I'm not proposing to name names. But we do need disclose and we need better oversight of remuneration in these places. But that's only one element in better oversight.
Much more important is a better oversight of risk and challenge in the boardroom.
HODSON: OK. Now you're talking there about non-executive directors. You want a bigger role for them. The problem, though, for non-executive directors, A, the good ones do not grow on trees; and, B, even the good ones do not necessarily have time to think long and hard about what a company is doing and they don't have the technical expertise, sometimes, to come up with the tough questions.
WALKER: I think it's very important those issues be addressed. The - - the point about the tough questions, if I could start there, is I think in this country, but probably elsewhere, it's not been seen as that loyal, friendly, collegial in the boardroom to raise tough questions and when you don't get a decent answer, persist with them, you are them becoming disloyal and maybe a nuisance.
We have to change that culture and make the boardroom a challenging environment. I think conversations like this -- and I would like to think reports like the one I've just produced and the media coverage of it -- ought to be helpful in raising levels of awareness that challenge of the kind I'm talking about is -- should be a normal part of the board process.
We will then get better decision taking. We can't afford to manage without it.
HODSON: How important, though, Sir David, is it that this is thought of at an international level, because, clearly, a hawkish report that gets turned into law in -- in a financial center like London is going to turn a lot of people away from London, is it not?
WALKER: There's a risk of that kind, I acknowledge, which is why, in the report, a lot of the proposals are for implementation in the course of the next year or some of them at the end of next year are on the basis that we have to strive mightily to get greater international convergence on the sort of recommendations, for example, on remuneration, but in other areas that I'm proposing. And we need to seek to persuade the international community that high standards of the kind that I'm commending are actually good for everybody.
(END VIDEO TAPE)
FINIGHAN: Sir David Walker speaking there to CNN's Charles Hodson.
Let's get a weather forecast.
Guillermo is with us today at CNN World Weather Center -- and after, well, a miserable few days here in Britain, here in the U.K., Guillermo, it's been glorious today, although very cold, very apt for the first of December.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Well...
FINIGHAN: It feels very Christmassy.
ARDUINO: I think -- I think it's going to continue. That's obviously a trend. I have the atlas here with me. I was checking out a couple of cities and I'll tell you why.
Look at the radar in here. In the Liverpool area, a little bit into Manchester -- and we're talking about the Midlands in general in England -- we see some severe storms popping up right now. So it must be bad, what's going on weather wise in here, severe storms, severe downpours.
Now, if you see the problem is to the north. And that's where we see all the rain now. And we're going to see some winds, too.
Dublin is not going to be in good shape in the next 24 hours. But London hasn't been hit yet. And we're going to see what's going to happen. I'll tell you specifics. But the winds are in Dublin. Elsewhere, we're getting later some -- on Wednesday, some clouds there. The rain is going to be more abundant, as you see, in the same areas I was talking about, even into the southwestern parts of Scotland, the same area that was actually affected severely last week.
And then London, we'll see some rain, because that area is going to get there. Look at the low temperatures of the day, three degrees. So it's more, as you say, Christmassy, and wintry conditions.
Well, today is the beginning of the winter from the point of view of meteorology. The weather is changing dramatically. And now, even though on the 21st is officially when the -- the winter begins in the Northern Hemisphere, we're going to see some more of those conditions.
And, also, Adrian, look, Munich is going to see snow. Zurich, there's going to be some snow there. So we may anticipate some delays. And compared to the east, the west is not doing bad. Look at this -- Romania, Bulgaria, Greece, all the way to Russia, Belarus, Ukraine, the Czech Republic, Hungary. Bad weather over there, as well. And I don't know it's going to change any time soon.
Stay with us.
After the break, Adrian will be back.
FINIGHAN: Now, today, December 1st, is World AIDS Day. And it's being marked right across the globe. The newest numbers from the U.N. show that more than 33 million people live with HIV worldwide.
Business is trying to help beat the disease. RED is the HIV awareness charity co-founded by U2 singer, Bono. Now, it's getting the private sector to help fight the spread of AIDS and teaming up with companies to make RED branded products. A portion of the profits goes directly to the global front to invest in African AIDS programs.
Now, RED has some really big iconic names on board. And Nike is their latest partner. It got on board just this Monday. The trendy sports manufacturer joins the likes of Apple, Starbucks and Gap. And to date, RED has raised $140 million. And that money has helped over four million people affected by HIV in Africa.
Well, earlier today, I sat down with Seb Bishop.
He's the CEO of RED for Europe, the Middle East and Africa.
I asked him to tell me about the charity's year so far.
SEB BISHOP, CEO, (RED), EMEA: RED, as you know, is a business designed to engage the private sector in the fight against AIDS. And over the last quarter, we've signed new -- five new partners. I started the beginning of the quarter with Bugaboo, who came on board as a new partner, and then we launched Starbucks in the U.K. Serenge Azarguro (ph), who's a famous fashion designer, came on board. And then also we launched an additional partner, which was Shazam.
And then yesterday -- we're very proud of the new announcement, which is Nike, who came to join the already 10 iconic partners that we already have at RED.
FINIGHAN: That's an -- an amazing gig. And you got all those footballers together in -- in London.
FINIGHAN: (INAUDIBLE) Nike.
BISHOP: They were -- that was amazing to -- that -- to have -- for all of them to have given up their time. But it's -- I think it's a cause that they all feel very passionate about now. I think, you know, AIDS -- HIV/AIDS globally is the number one killer of -- of women between the age of 15 and 44. And I think they recognize that coming out with the World Cup and everything that's associated with it...
BISHOP: ...sport is an incredibly powerful tool to -- in the fight against AIDS.
FINIGHAN: And today is pretty significant, too, it being World AIDS Day. I mean you've got Twitter today has gone...
BISHOP: It's gone red.
FINIGHAN: ...has gone red.
FINIGHAN: You go to Star...
FINIGHAN: Yes, absolutely. You go to Starbucks, as well, and -- and, you know, they've got the -- the red cups and money. And I've seen people out on the streets today all in -- in red. It's terrific.
It's clear that, as far as the corporate world is concerned, brand RED, product RED has -- has caught the imagination.
Is that, do you think, that message getting through to the public?
Has it quite -- has it caught on enough, do you think, with the public?
BISHOP: Yes, I think the -- I think -- I mean, today, we have raised, in three years, $140 million through the sale of our branded products. I think that, in itself, as evidence, has proven that we have captured the imagination of the audience. I think consumers are looking to large organizations to give a little back.
BISHOP: And I think RED encapsulates that. Let's not forget but for those large global iconic companies, you know, RED provides them with brand differentiation. It drives sales. It helps drive employee engagement for these large global organizations that are turning red. Some of the companies come back to us and say they've actually seen a marked increase in the caliber of applicants to those organizations once they've gone RED.
So it has a -- a great effect.
BISHOP: And most importantly of all, obviously, it helps those people.
FINIGHAN: But is it -- is it something that -- that you, as an organization, have to be pretty -- pretty choosy about, as well, in that who you decide to be involved in?
I mean, I should imagine that you've got people cueing up at the door and -- and you -- you can't have everybody on board at once...
FINIGHAN: ...that that would dilute the brand, wouldn't it?
BISHOP: (INAUDIBLE) and I often talk about the fact that -- actually, it's one of those jobs that -- I that we have where, actually, we spend a lot of time actually having to turn away brands, because the truth is that we don't want to over dilute the RED brand. Our job is to create a sustainable flow of money to the global fund, the recipient of all RED money. And if we were to find -- you know, if you were to find RED products in a -- I don't know, a -- a gas station food court, obviously, I think people would get bored with the RED brand. So we're very particular about which brands we're willing to partner with.
FINIGHAN: So it's been a great year this year, 2009. Next year, as well, will be pretty important then, with Nike's involvement and the World Cup coming up?
BISHOP: Well, I think with the World Cup and I think, also, you know, there are now, in Sub-Saharan Africa, a little over three million people on ARVs. There are still four million people that need anti-retrovirals, those two pills that keep people alive. And I think, hopefully, we'll sign up some new partners in the months to come. And hopefully we can get the $140 million figure up much, much higher.
(END VIDEO TAPE)
FINIGHAN: Sir Bishop. And here they are -- some of the rarest things on the planet at the moment -- Nike RED laces, product RED laces. "Lace- ups save lives," it says on the box. Didier Drogba was wearing these in his boots when he put two away against Arsenal in Chelsea's 3-0 win against Arsenal at the weekend. I wonder if he'll have the same impact on -- on my footwear, whether I'll suddenly become a goal scorer. I doubt it very much.
Now, he's the richest athlete in the world, but Tiger Woods' wealth is largely down to big deals with his sponsors.
So, how are those companies reacting to the speculation surrounding Friday's car accident?
Will they stand by their man?
CNN's Morgan Neill takes a look.
MORGAN NEILL, CNN HAVANA BUREAU CHIEF (voice-over): Until this early morning car crash, the public image of Tiger Woods had been undamaged. That, combined with his athletic dominance, has earned him unprecedented riches. According to "Forbes" magazine, Woods is the first athlete to earn $1 billion in his career, the majority of that from endorsements.
So how will the speculation surrounding his car crash affect Brand Tiger?
RITA CLIFTON, INTERBRAND: I think at the moment it's a wait and see issue, wait and see what does emerge.
NEILL: To this point, Woods' major endorsers don't seem worried. In statements, Nike pledged its full support for the star and his family and Gatorade said its partnership with Woods continues. Gillette, whose ads feature Woods with another star endorser recently embroiled in scandal, Thierry Henry, said the incident hasn't changed its marketing strategy.
(on camera): Most brand analysts expect Woods to maintain his massive appeal as an endorser. But some worry about how he's handled the media attention.
CLIFTON: One of the difficulties here is that there's almost a feeling of a cover-up, maybe something deeply unpleasant is happening below the surface. And that's not great for a brand that is built on this rather dynamic, sportsmanlike association.
NEILL (voice-over): In the short-term, Woods withdrew from the Chevron World Challenge, which benefits the Tiger Woods Foundation. And his sponsors stand to lose money from his absence. But most experts don't believe Woods will lose sponsors. In the long-term, they say, expect the world's most successful athlete sponsor to keep doing what he does best.
Morgan Neill, CNN, London.
(END VIDEO TAPE)
FINIGHAN: All right, when we return, an update on the market numbers from the U.S., the Europe and the Middle East.
We'll be right back.
Stay with us.
FINIGHAN: All the major markets there ended the day firmly in the red.
And that will do it for QUEST MEANS BUSINESS on a Tuesday.
Thanks for being with us.
I'm back tomorrow.
Christiane Amanpour is next on CNN, right after an update of the headlines from the I Desk.