Global Developments Bottomline: Listening to global central bankers, loose monetary policy is the way forward (unless global outlook improves), except for the Bank of England which is battling Brexit. Geopolitical tensions have flared with the US deciding last minute to back out of air strikes on Iran. As we edge closer to the end of H1 comes the potential Xi-Trump meeting at the G20 summit amidst weak global macro data. Outcome of trade policy discussions will decide the direction of global growth this year: so far, Trump has in one way or the other clashed with India, Mexico, Canada and Germany on trade (in addition to China). Currency wars could be next (Trump has already complained about the “devalued” euro).
- The second phase of VAT rollout in Bahrain: businesses with turnovers exceeding BHD 500k have to register by Jun 20th, as VAT will apply to them from Jul 1.
- Bahrain’s MPs have called for a ban on expats in upto 35 different professions and to increase the minimum wage for Bahraini nationals by 83% to BHD 550 ($ 1,462.77).
- Bilateral trade between Bahrain and Italy increased by 52% yoy to a record-high EUR 550mn (USD 617mn) last year; Bahraini exports to Italy surged by 156%.
- Bahrain is one of the top 10 start-up ecosystems with the largest share of female founders: the 2019 Global Startup Ecosystem Report disclosed that 18% of start-ups in Bahrain are founded by women versus 15% in London and 16% in the Silicon Valley.
- Foreign holdings of Egypt’s debt instruments equaled USD 17bn as of end-May, gaining ~USD 5bn in Jan to end-May; this is expected to rise to USD 23bn by Nov.
- Egypt plans to issue international bonds either in CNY, JPY or KRW, with the currency to be determined by various factors including investor demand and cost.
- Egypt’s draft law to grant residence to foreigners in return for purchasing a property has been submitted to the Parliament to be discussed and voted on.
- Egypt’s banking sector received cash inflows of about USD 200bn since the central bank decided to free float the EGP in Nov 2016.
- Egypt’s exports to India surged by 47% yoy to USD 1.7bn last year. Egypt’s imports from India grew 18.2%, thanks to an increase in fuel imports to USD 507mn.
- Egypt is targeting a gasoline deficit of 3.8% in FY 2019-20: domestic production is expected to touch almost 7.6m tonnes annually with consumption at 8m tonnes.
- Foreign workers in Egypt’s private sector fell by 8.4% between 2013-2017 to 13,460. However, foreigners in public sector grew to 1,132, rising from 956 in 2013.
- Egypt’s legislators passed the country’s first data protection regulation.
- Jordan’s tourism revenues increased by 6.1% yoy to USD 1.746bn in Q1, as per central bank. Remittances from Jordan grew by 1.6% to USD 1.202mn as of end-Apr.
- Political tensions and budget delays in the Parliament have resulted in Lebanon’s Eurobonds entering distressed territory: average extra yield investors demand to hold the country’s debt over US Treasuries climbed to a 10-year high of 946bps last week; dollar securities maturing in 2022 and 2023 have spreads of over 1000bps.
- Lebanon’s Solidere share prices picked up by 8% last week. This follows weeks of decline in the shares amid signs that the real estate company continued to sustain heavy losses due to the economic slowdown & drop in sales and rents of properties.
- Fourteen government establishments in Oman have met their commitments towards SMEs and offered 10% of tenders and purchases to SMEs in 2018.
- Oman’s ruler announced tax breaks to new tourism investors in Musandam. Investors will be allowed (starting this month) exemption from customs duties covering building materials, tools and equipment in the construction phase, as well as the 4% tourism tax, the 5% municipal tax and the 15% company income tax during the first 10 years of operation.
- About 87% of Omani job seekers want to work in the government sector, according to a study conducted by the National Centre for Statistics and Information.
- Oman will continue to face a “liquidity squeeze”, according to Moody’s, especially given the banks’ reliance on government deposits.
- UAE’s First Abu Dhabi Bank relinquished its Qatar Financial Centre license and closed its branch in the country. This move is unlikely to impact the bank much.
- Saudi Arabia has delivered 45% of over 500 planned reforms, according to the Saudi Arabian General Investment Authority.
- Inflation in Saudi Arabia fell for the fifth consecutive month, posting 1.5% yoy in May; in mom terms, inflation was up by 0.1%. The sub-index for housing, utilities, gas and fuel prices fell 7.5% yoy in May (Apr: -7.8%).
- In an interview with Asharq al-Awsat, Saudi Arabia’s Crown Prince disclosed that the Aramco IPO was still on track (but only “at the right time”) and that the assets of the PIF had doubled to about SAR 1trn in two years.
- Saudi Arabia plans to tap the international bond markets, with a sukuk issue before end of this year, revealed the head of the debt management office.
- Saudi Arabia’s trade surplus widened by 12.3% yoy to SAR 47.65bn in Apr: exports were up 3% yoy to SAR 86.96bn while imports declined by 16.8% yo SAR 39.31bn.
- Oil exports from Saudi Arabia declined by about 44k bpd to 8.57mn bpd in Apr.
- Saudi Arabia increased its US Treasury holdings for the third consecutive month by 10.44% yoy and 3.9% mom to USD 176.6bn in Apr.
- OPEC+ have agreed to hold their next meeting to discuss oil-output cuts on the first two days of Jul. Prolonging the cuts in oil production till end of the year would shrink inventories at a rate of about 500k barrels a day in H2.
- Following rising geopolitical tensions, Middle East oil shipping rates have surged: the rate for transporting 2mn-barrel cargoes from Saudi Arabia to China jumped to almost USD 26k a day last Thur, more than double where they were at the start of June. Insurance companies have been charging at least USD 180k in premiums to go to the Gulf, versus about USD 30k earlier this year.
- UAE’s Dubai’s non-oil private sector activity increased to a 52-month high of 58.5 in May, from Apr’s 57.9 reading, as total business activity increased at the strongest rate since the series was first compiled in 2010. But weak job creation (employment rose at a marginal rate below the long-run trend) and price discounting (selling prices reduced for the 13th consecutive month) remain worrisome trends.
- Dubai issued 2599 new licenses in May, up 50% yoy, and creating 8,348 jobs according to the Dubai Department of Economic Development.
- Abu Dhabi’s trade with the GCC grew by 7.7% yoy to AED 18.22bn in Q1; exports to the GCC increased 18% to AED 7.725bn in Q1. Saudi Arabia topped Abu Dhabi’s largest importers with AED 2.36bn in Mar (+22.8% yoy).
- The newly enacted DIFC Employment law stipulates a minimum threshold basic salary of 50% of total salary: employers have 90 days from May 30 to correct all employment contracts.
- The UAE has been ranked second in the world for largest token sales up to June 2019, accounting for more than a quarter of global funds raised in Q1, according to Coin Schedule.