GLOBAL Developments Bottomline: The World Policy Uncertainty Index is at its highest in a 20-year history– not surprising given the latest political dramas in the US (impeachment, ongoing confrontation with China) and the UK (Brexit, potential no-confidence vote and possible elections) on one hand, and the trade spats on the other (the unabated China-US wars, US trade tariffs that could hit Europe this week). PMI numbers continue to be depressing reading, though the latest data shows more resilience in the US (for now) than in Europe.
- Bahrain, in its first dollar bond issue since being bailed out by its Gulf allies last year, raised USD 2bn.
- The Central Bank of Bahrain’s BHD 100mn bond issuance was oversubscribed by 233%.
- Bahrain-India bilateral non-oil trade grew by 24.6% during 2016-2018 to over USD 1.1bn. Bahrain now exports aluminium worth USD 140.3mn to India.
- Egypt’s central bank lowered rates for the second consecutive month, with a 100bps cut to both the overnight deposit and lending rates to 13.25% and 14.25%.
- Stakes in five or six “large” state-owned enterprises would be offered by end-Jun 2020 in a public listing, announced Egypt’s PM, “to encourage the private sector and citizens to invest”.
- Egypt‘s finance minister assured that there would be no increase in tax rates in the currently being drafted income tax law; it will also not include any amendments on tax exemptions.
- Non-oil exports from Egypt grew by 4.6% yoy to USD 1.694bn in Aug, with exports of the Food Export Council up to 197mn.
- Egypt’s key trade partners in H1: bilateral trade with China increased by 4.6% to USD 6.5bn; two-way trade with the US grew by 8% yoy to USD 3.7bn while US investment in the country was up 5.2% to USD 1.07bn; bilateral trade with the EU was up by 13% yoy to EUR 14.2bn.
- In the Cabinet’s annual report for fiscal year 2018-19, it was revealed that Egypt has become gas self-sufficient after receiving the last LNG shipment in Sep 2018: its LNG exports touched nearly 226bn cubic feet of gas and LNG, valued at around USD 1.2bn, during Jul 2018-Jun 2019.
- India’s oil imports from Iraq surged to a record high of about 1.32mn barrels per day (bpd) in Aug, up by more than 33% mom and 29% yoy.
- The Central Bank of Jordan lowered interest rates on all monetary policy instruments by 25bps.
- Trade deficit in Jordan narrowed by 10% yoy to JOD 5.1bn during Jan-Jul this year; exports grew by 5.5% to JOD 2.749bn while imports were down by 4.4%.
- Jordan’s public debt increased by 4.2% to JOD 29.5bn by end-Jul this year, rising to 94.4% of the estimated GDP.
- The value of bonds and related Tawarruq issued by Kuwait’s central bank declined by 6.7% yoy to KWD 6.02bn (USD 19.87bn) in Jan-Sep 2019.
- According to the finance minister, Lebanon has begun preparing to issue a Eurobond of around $2bn in Oct to meet financing needs. Separately, the Central Bank governor, trying to allay market jitters, stated that interest rates on Lebanese bonds traded on secondary markets were inflated and also assured that Lebanese banks were meeting customer demand for US dollars.
- About 35% of the 1.7mn+ tourists into Oman during H1 this year were GCC nationals. India (12%), Germany (6%), UK (5%) and China (2.8%) rounded up top source nations.
- Output from Oman’s oil refineries grew by 2% at end-Aug 2019 while diesel production declined by 6%.
- Promoting tourism – Saudi Arabia announced the issuance of tourist visas: for the first time, visitors from 49 countries will be able to apply for e-visas online or get them on arrival. Foreign women, above 24 years of age, will be allowed to travel without a male and can be dressed in “modest clothing” (easing the strict dress code). By 2030, tourism is estimated to contribute up to 10% of Saudi GDP, versus just 3% now.
- Reuters reported that Saudi Aramco, via the banks appointed to handle its IPO, was directly reaching out to sovereign wealth funds (UAE’s ADIA, Mubadala, Bahrain’s Mumtalakat, Singapore’s GIC and others) to invest in domestic leg of the listing.
- It was reported late last week that Saudi Arabia had restored oil production capacity to 11.3mn barrels per day (bpd), maintaining a faster than expected recovery after the Sep 14 attacks. Saudi Arabia’s crude exports fell post-attacks: it averaged 5.875mn bpd in the 10 days since the attacks, down 1.494mn bpd from shipments in the first 13 days of the month, according to tanker-tracking firm Petro-Logistics, reported Reuters.
- CPI in Saudi Arabia declined by 1.1% yoy in Aug, registering the 8th consecutive month of deflation. The decline was largely due to a 6.5% drop in housing and utilities.
- Saudi Arabia’s exports to China, Japan, India, South Korea and the US together accounted for 50.9% of total volume of exports in 2018. Exports to these nations grew by 36% to SAR 562.3bn.
- Total assets and liabilities of commercial banks in Saudi Arabia increased by 5.2% yoy to SAR 2.433trn in Q2, according to SAMA. Deposits grew 3.9% to SAR 1.677trn.
- About 712k non-Saudi workers will benefit from Saudi Arabia’s decision to waive fees for expat workers in industrial institutions – starting Oct 1st, for 5 years.
- Sovereigns and corporates from the MENA region have raised around $85bn this year from dollar and euro bond issuances, with Saudi Aramco and Qatar biggest issuers.
- The UAE central bank revised upwards its growth estimate for this year to 2.4%, supported by growth in the oil sector (+5%) while the non-oil sector will grow only at 1.4%. UAE grew by an estimated 2.2% in Q2, with non-oil GDP growth at 1.5% yoy.
- Total credit disbursed to micro, small and medium enterprises in the UAE amounted to AED 88.7bn by end-Q1 this year. This accounts for 11% of loans to the corporate sector and 5.8% of total bank credit during the period.
- Remittances from the UAE fell by 8% yoy to AED 80.96bn in H1, according to the central bank. Indians (37.2% of total), Pakistanis (10.5%) and Filipinos (7.2%) were the top remitters in Q2.
- Employment in the UAE private sector increased by 1% in Q2 to 5.1mn compared to Q1’s 0.1% growth. Construction and real estate sector together account for 45.7% of total; employment. Interestingly, H1 witnessed an increase in net new work permits issued: growth more than doubled for clerks (121.6% yoy), as well as blue collar skilled (+549.7%) and unskilled labour (+376.3%) though professionals and technicians work permits declined compared to a year ago. Wages dipped across the board in Q2, with the highest declines among unskilled labour (-19.1% ytd) and managers (-2.3% ytd).
- Abu Dhabi sold USD 10bn of bonds in its first international deal in two years. The emirate sold USD 3bn of five-year fixed notes (at yield premium of 65bps more than Treasuries of similar maturity), USD 3bn of notes due 2029 (at a spread of 85 bps) and USD 4bn of 30-year notes (at 110bps).
- UAE’s consolidated government expenditure increased by 21.6% yoy to AED 119bn (USD 32.4bn) in Q1 this year. Revenue growth also eased during the quarter (-0.9% yoy) largely due to a decline in tax revenues (-9.3% yoy to AED 42.4bn).