GLOBAL Developments Bottomline: On one end of the world, focus was on the progress in US-China trade negotiations, which for now seems to be steering clear of issues like cyber theft, industrial subsidies, IP rights, state-owned enterprises and the like. Meanwhile, Brexit continues to drag on with no clear picture even as the Oct 31 deadline approaches: the PM calls for fresh elections and while EU ambassadors have agreed to delay Brexit, the new deadline date will be revealed only this week. Central bank meetings are also on the agenda this week: Fed – widely expected to announce the third interest rate cut of the year – and the BoJ (the first meeting after the hike in consumption tax amidst weak domestic demand and declining exports). Amidst all the macro numbers, one must not forget the geopolitics: protests continue in Lebanon, Iraq, Hong Kong, Chile and Catalonia while US braces for the impeachment enquiry and UK for a new Brexit deadline.
- Bahrain’s progress on the fiscal front has been encouraging, and it remains on track to eliminate deficits by 2022, stated the finance minister. Bahrain’s deficit narrowed by 37.8% in H1, thanks to a 47% surge in non-oil revenue alongside a 14% dip in administrative costs.
- A new oil discovery in Egypt will add an expected daily output of 5k barrels, revealed the Italian energy company Eni.
- The Egyptian pound was its strongest in more than two and a half years last week, boosted by higher foreign exchange inflows.
- Egypt’s domestic gas consumption grew by 3.8% yoy to 5.97bn cubic feet per day (scf/day) in the last fiscal year, as per the Egyptian Natural Gas Holding Company.
- Total exports from Jordan grew by 6% yoy to JOD 3.195bn during Jan-Aug; imports declined by 5.2% to JOD 8.95bn during this period.
- Jordan is planning to roll out a new digital payment system by the beginning of 2020 to enable all government payments to citizens to be made using bank accounts or digital wallets.
- Inflation in Kuwait increased by 1.68% yoy in Sep, driven by a rise in transportation costs (+5.4%) while housing group was down by 0.78%.
- Kuwait central bank issued bonds and related tawarruq worth KWD 240mn (USD 793.3mn): the issue was oversubscribed 11.19 times.
- Foreign reserves in Kuwait grew by 2% mom to KWD 11.02bn in Sep. The highest level reached was KWD 11.215bn in May this year.
- Kuwait’s trade surplus with Japan widened by 9.2% yoy to USD 469.9mn in Sep, backed by lower imports from Japan (-21% to USD 129.57mn).
- Lebanon’s anti-government protests continued over the weekend in spite of the President’s speech inviting protestors for a dialogue, amidst hints of a government reshuffle. Banks remained closed for a 7th consecutive working day on Fri: this will negatively affect businesses, grow the LBP black market and create depositor panic.
- Lebanon’s government passed the 2020 budget with deficit reduced to an unrealistic 0.6% of GDP (2019: ~9% of GDP), and banks, including the central bank, set to participate in the deficit-reduction through an amount of LBP 5.1trn (USD 3.4bn).
- Oman’s budget deficit narrowed by 24.7% yoy to OMR 1.4bn by end-Aug; supported by an oil price recovery, total revenue grew by 6.9% yoy to OMR 7.1bn in Jan-Aug 2019.
- Credit disbursed by Oman’s banks grew by 3.3% yoy in Aug, with non-financial corporate sector receiving 46% of total credit, followed by households (45.3%).
- Oman’s new bankruptcy and insolvency law will come into force on 1 Jul 2020.
- S&P affirmed its “BB/B” long- and short-term foreign and local currency sovereign credit ratings on Oman and the outlook was negative.
- Oman is planning to make travel insurance mandatory for all inbound tourists.
- Inflation in Saudi Arabia slipped for the 9th month in a row, falling 0.7% yoy in Sep (Aug: -1.1%) as the effects of last year’s VAT introduction fade off.
- Saudi Arabia raised USD 2.5bn through a Sukuk issuance; investor demand was for more than USD 13bn.
- Saudi Aramco IPO was delayed to allow for deal advisers to lock in cornerstone investors, reported Reuters.
- Saudi Arabia’s credit card debt increased by 6.96% qoq and 19.25% yoy to SAR 16.72bn (USD 4.46bn) in Q2. Around 3mn cards were issued and used in Q2 (+4.3%).
- Saudi Arabia’s trade surplus with Japan narrowed by 30.7% yoy to USD 1.47bn in Sep, with exports slipping by 21.8% to USD 1.94bn.
- Saudi Arabia reduced domestic gasoline prices from Oct 20th: depending on the grade of petrol, prices were lower by 1.96%-5.96% from the previous quarter.
- Saudi Arabia’s shisha tax: 100% tax on shisha tax is applied on all tobacco products; a ruling issued by the ministry of Rural and Municipal Affairs states that the tax would apply to “total invoice of businesses serving tobacco products”.
- About 133k expats left private sector jobs in Saudi Arabia during Q2 2019 (averaging 1468 persons on a daily basis); an average 492 Saudis joined the private sector daily during the period.
- A new “host visa” is being planned in Saudi Arabia: will allow citizens and expats in the country to host people under their personal sponsorship for up to 90 days.
- The Virgin Hyperloop One Centre of Excellence project, if approved, is expected to raise Saudi Arabia’s GDP by USD 4bn by 2030 and create 124k high-tech local jobs.
- The World Bank’s Doing Business 2020 report identifies Saudi Arabia, Jordan, Bahrain (which implemented the highest number of regulatory reforms – 9) and Kuwait among the top 10 economies that improved the most in easing the cost of doing business. UAE, ranked at 16, topped MENA region. Overall, MENA put in place 57 business regulatory reforms in the 12 months to May 1, up from 43 previously.
- Saudi Arabia remained China’s largest crude oil supplier in Sep as imports from Iran and Venezuela continued to dip due to sanctions. Separately, Saudi Arabia replaced Iraq as top oil supplier to India after a gap of about 13 months.
- According to Credit Suisse’s Global Wealth Report, wealth in the GCC has been rising: Saudi Arabia’s total wealth touched USD 1.55trn in mid-2019, followed by UAE (USD 922bn), Kuwait (USD 405bn) and Qatar (USD 106bn).
- Fintech start-ups in MENA have received USD 237mn in investments since 2015, accounting for 10% of all venture investments in the region, according to a report by ADGM and MAGniTT. UAE accounted for 47% of all fintech deals made in 2019.
- Banks need to send feedback on the UAE central bank’s proposed property lending caps to limit exposure to the real estate sector by Oct 31. Real estate and construction accounted for about 20% of gross loans at end of Q1 this year.
- UAE will levy excise tax on electronic smoking devices and tools and sweetened beverages from Dec 1. The minimum standard price for a pack of 20 cigarettes has been set at AED 8 and excise price cannot be set under 40 fils for one cigarette.
- The financial sector accounts for 14.3% of Abu Dhabi’s non-oil GDP, according to a senior UAE official.
- The Dubai Free Zones Council discussed proposals related to long-term rental agreements for investors in Dubai’s free zones as well as the one free zone passport i.e. a unified license for businesses to operate across Dubai free zones.
- The Shanghai Stock Exchange will set up a “Belt and Road” international exchange in ADGM, according to the Financial Services Regulatory Authority, to meet the financing needs of investors and participants in the Belt and Road Initiative.