Global Developments Bottomline: Though the Xi-Trump meeting at the G20 resulted in a gentleman’s agreement, there is a long winding road to navigate (technology, intellectual property, security issues etc.) before the tariffs are rolled back or a historic deal is reached. The G20 communique meanwhile steered clear of references to the ongoing trade wars or climate change. In another meeting, Russia and Saudi Arabia agreed to extend the deal to curb oil output; OPEC+ meets Jul 1-2 to discuss the deal. In the backdrop are ongoing US-Iran tensions, the UK elections and Brexit conundrum.
- The Bahrain-origin exports increased by 16% yoy to BHD 210mn (USD 553mn) in May, with Saudi Arabia, US and UAE the top three nations importing from the nation.
- Egypt approved the 2019-2020 budget, which targets a 7.2% deficit for the year and 6% GDP growth (from 5.6% growth in 2018-19). Allocation for fuel subsidies was drastically reduced by 41% to $3.18bn. Separately, according to the finance minister, Egypt is expected to tap debt markets for $4-7bn this financial year.
- Egypt’s bilateral trade with Japan grew by 6.7% yoy to USD 401mn in Q1 this year; exports picked up to USD 93mn in Q1 versus USD 64mn in the same period a year ago.
- German investments in Egypt touched USD 7.4bn at end-Jun 2018; Egypt’s exports to Germany grew by 10.6% yoy to $410.97mn in Q1 (2018 bilateral trade was $5.1bn).
- Indian investments in Egypt exceeded $3bn, according to the Indian ambassador to Cairo, who also stated that bilateral trade between the two touched USD 4bn a year.
- Egypt’s gold exports surged by 132% qoq to USD 328mn in Oct-Dec 2018. Total exports of commodities rose to USD 7.48bn in Q2 of 2018-19, compared to USD 6.78bn in Q1.
- Remittances into Egypt from the UAE increased by USD 55mn or 9.6% yoy to USD 627mn in Q1 2019; last year, remittances from the UAE touched USD 2.4bn.
- Egypt’s military pensions will increase by 15% from Jul 1: military pensioners will see a minimum pension increase of EGP 150; minimum pension to be raised to EGP 900.
- Jordan’s minister of energy disclosed that work is under way to interconnect the electric power grids of Jordan and Iraq.
- Jordan‘s Cabinet, in a bid to reduce the number of public sector employees, plans to limit the service of public employees to 30 years.
- The World Bank approved a USD 200mn healthcare project in Jordan to support delivery of critical primary and secondary health services to poor uninsured Jordanians and Syrian refugees.
- MSCI announced an upgrade of Boursa Kuwait to its emerging markets Index starting 2020: 9 Kuwaiti stocks will be included, giving ~0.5% weight in the index.
- The central bank of Kuwait issued bonds and related tawarruq (reverse murabaha) worth KWD 200mn (USD 660.69mn); this issue was oversubscribed by 13.61 times.
- Two property funds in Kuwait – each with a non-controlling stake of now less than KWD 15mn – are in talks with the CMA to get listed on the exchange.
- Budget deficit in Lebanon widened to 11.71% of GDP in 2018, versus 9.28% the year before, according to the finance ministry. The government allocated LBP 2.647trn to the EdL last year (+32.26% yoy), while income generated from the telecom sector fell by 16%.
- Lebanon‘s central bank governor disclosed that though the apex bank supports government efforts to cut public debt serving costs, no agreement was reached as to the measures – also stating that “nothing will be imposed on the banks”.
- Oman Capital Market Authority introduced an electronic registry which acts as a database of eligible persons that can join boards of directors of public joint stock companies.
- Qatar is planning to invest USD 3bn in Pakistan, via deposits and direct investments, announced the state news agency.
- Saudi Arabia’s CMA removed a limit on ownership for foreign strategic investors in shares of listed companies (previously 49%). The CMA clarified that a strategic investor buying a stake in a listed company will need to maintain the holding for at least two years.
- The IIF, in its latest Capital Flows Tracker, highlighted a surge in equity inflows to Saudi Arabia: it attracted $10.8bn of foreign equity investments as a result of upgrades to emerging market status, with May witnessing $4.5bn worth inflows.
- Saudi Arabia’s international reserves increased by 2.48% yoy and 2.37% mom to SAR 1.939trn (USD 517bn) in May. SAMA’s assets rose by 1.77% yoy to SAR 1.965trn.
- Saudi Arabia’s Shoura Council approved a draft competition and government procurement law, which aims to prevent the abuse of power and influence.
- Saudi Arabia‘s finance ministry issued $731.71mn in domestic sukuk in Jun.
- Mortgages granted by banks and financial institutions in Saudi Arabia grew by 122% yoy to SAR 5.65bn in May, bringing the total this year to SAR 27.02bn (+131.33%).
- Saudi Arabia officially launched its new special residency scheme for expatriates – one a permanent residency option for SAR 800k and a 1-year renewable residency for SAR 100k. These options allow free movement for expats, as well as the ability to do business and own properties.
- Saudi Arabia signed a MoU with the Industrial Bank of Korea for the establishment and operation of a bank for SMEs.
- Average salary of a government employee in Saudi Arabia was SAR 11,405 in Q1 2019: 59% more than the SAR 4,595 a private sector employee makes doing the same work.
- The UAE central bank, in its quarterly review, disclosed that GDP grew by 2.2% yoy in Q1 this year, with the non-oil economy rising 1.6% during the quarter.
- Nine initiatives have been announced as part of Abu Dhabi’s three- year, AED 50bn “Ghadan 21” initiative: this includes an “Abu Dhabi Instant Licence”, an industrial tariffs initiative and vendor payments within 30 days to name a few. This also includes an SME financing scheme that provides guarantees to Abu Dhabi banks in case of defaults. The government will guarantee up to 75% of loan value extended to Abu Dhabi based SMEs run by UAE nationals and up to 60% for expat-run SMEs. The companies need to have been in business for at least 2 years.
- Money supply in UAE (M2) dropped by 1% mom to AED 1.321trn in May; gross bank assets dropped by 0.4% mom to AED 2.9trn & gross credit up to AED 1.7tn (0.3% mom).
- Remittances from the UAE declined by 11.7% yoy to AED 38.41bn (USD 10.45bn) in Q1 2019. Indian received 37.4% of total followed by Pakistan (10.2%), Philippines (7.9%) & Egypt (6%).
- Inflation in Abu Dhabi increased by 0.5% yoy and 1.3% mom in May.
- UAE’s Federal Tax Authority approved 390 requests to refund housing tax worth AED 17.52mn (USD 4.76mn).
- UAE’s Dubai and Abu Dhabi were listed as the 21st and 33rd most expensive cities for expats in the 2019 Cost of Living survey published by Mercer. Eight Asian cities were among the top 10 spots in the list topped by Hong Kong, Tokyo and Singapore.