GLOBAL Developments Bottomline: A week of mixed news – the temporary trade truce seems to be in trouble following rhetoric from China while in the UK, Brexit uncertainty drags on with elections coming up (again). Jobs growth in the US and China’s PMI numbers provided relief towards the end of the week which saw weak GDP numbers in the US and EU alongside a recession in Hong Kong while the Fed and BoJ meetings sprung no surprises. The trade tensions and its impact continue to be evident: latest UNCTAD data revealed that global FDI flows – at USD 640bn in H1 – remained below the average level of the past decade; the IIF reported a slowing of portfolio inflows to emerging markets to USD 22.5bn in Oct from Sep’s USD 37.7bn.
- Saudi Crown Prince gave the green light for the Aramco IPO, and the official intention to float was approved by the Saudi Capital Market Authority. The approval is valid for 6 months with shares are likely to start trading in Dec. The valuation is likely to have been lowered to USD 1.2-1.5trn, and next year’s dividend likely to be boosted by USD 5bn to USD 80bn to woo investors. Bloomberg reported that IPO investors have been guaranteed that the dividend won’t fall until after 2024.
- The IMF issued the Regional economic Outlook for the MENA region: oil exporters’ growth is expected to soften to 1.3% in 2019 on lower and more volatile global oil prices, geopolitical tensions, and global slowdown while oil importers’ growth is projected to be higher at 3.6%.
- GCC central banks lowered interest rates last week, mirroring Fed’s 25bps rate cut.
- Bahrain’s money supply increased by 8.4% yoy to BHD 13.5bn (USD 35.9bn) as of Sep 2019. Outstanding loans and credit disbursed by banks grew by 5.6% to BHD 9.8bn.
- Foreign investment in Bahrain edged up by 1% qoq to BHD 10.9bn ($29.25bn) in Q2, according to the initial Foreign Investment Survey. FDI flowed most into the financial & insurance sector (+1.2% to BHD 7.9bn) while FDI from Kuwait topped the list (+1.3% to BHD 3.6bn).
- Bahrain’s Economic Development Board set up a fast-track process for global and regional startups: the process covers residency, visa requirements and business registration as well as access to grants and financial support.
- Egypt’s GDP grew by 5.6% yoy in the Jul-Sep quarter, according to the planning minister. The target is 6% growth in the 2019-20 fiscal year.
- Money supply in Egypt moved up by 13% yoy to EGP 4.01trn (USD 249.22bn) in Sep. Separately, external debt jumped by 17.3% yoy to USD 108.7bn as of end-Jun, resulting in external debt-to-GDP ratio at 36%.
- Non-oil exports from Egypt increased by 3% yoy to $19.2bn in Jan-Sep. About 37% of Egypt’s exports went to the US, followed by UAE and Saudi Arabia at USD 1.4 and 1.3bn respectively.
- Egypt’s industrial production accelerated by 21.6% yoy to EGP 188.8bn in Q4 2018.
- Egypt attracted FDI flows worth USD 3.6bn in H1 this year, according to UNCTAD, and was the largest FDI recipient in Africa (which witnessed inflows of USD 23bn).
- Egypt’s finance ministry disclosed the selection of 5 international lenders for a new dollar-denominated bond offering to be made in 2019-20 (no dates specified).
- Egypt’s unemployment rate fell to 7.5% in Q2 2019, recording the lowest level in 30 years, according to the cabinet’s media centre.
- Jordan’s central bank lowered interest rates by 25bps for the third time this year, given low inflation rates amidst rise in tourist incomes and remittances.
- Bilateral trade between Kuwait and China grew to USD 7bn (excluding petroleum products and derivatives); China was also Kuwait’s top trading partner in 2018.
- Reuters reported that US White House budget office and National Security Council had decided to withhold $105mn in security aid for Lebanon. No reason was provided.
- Lebanon’s President called for the formation of a new government of technocrats, after Tuesday’s resignation of Saad Hariri and asking the cabinet to continue in a caretaker role. Banks, which were shut for more than 10 days, reopened on Fri.
- Lebanon is delaying a planned Eurobond issuance of up to $3bn given the unrest but will repay debt maturing in Nov, reported Bloomberg.
- Oman’s non-oil exports grew by 18.3% yoy to USD 9.7bn in 2018, providing employment to over 240k persons, according to a senior Ithraa Oman official.
- Saudi Arabia expects its 2020 budget deficit to widen to SAR 187bn (USD 49.86bn) or 6.5% of GDP, from an estimated SAR 131bn this year (4.7% of GDP), according to the finance minister. Revenues are expected to dip to SAR 833bn next year from a projected SAR 917bn this year, on lower oil prices and revenue. The minister also added that real GDP growth is estimated at 2.3% next year, from 0.9% this year (IMF estimates 2.2% growth next year from this year’s 0.2%).
- Saudi Arabia closed 24 investment deals worth a total of USD 20bn at the Future Investment Initiative held last week.
- The Public Investment Fund (PIF) in Saudi Arabia has successfully raised a USD 10bn bridging loan to cover its general corporate expenses and investment requirements; the loan will be repaid following the completion of the SABIC-Aramco transaction.
- New residential mortgage contracts jumped by 353% to 16,816 in Sep; value of residential loans surged by 249% to SAR 7.125bn.
- Saudi Arabia’s foreign reserves declined by 1.3% yoy and 1.4% mom to SAR 1.877trn (USD 500.59bn) in Sep – recording the lowest level since Mar 2019.
- Saudi Arabia launched an export bank with a capital of SAR 30bn ($8bn), to support local producers; 3 industrial free zones were also ready to be launched.
- Saudi Arabian General Investment Authority announced a 30% yoy increase in new foreign investor licenses to 251 in Q3 this year. Total licenses touched 809 in Q3.
- Saudi Arabia revealed the issuance of 77,069 tourist visas since the launch, of which a total 28,190 persons had arrived during the period between Sep 27-Oct 30. About 17,988 Chinese tourists had secured visas followed by the British at 17,777.
- Saudi Arabia plans to launch a carbon trading scheme, energy minister disclosed at the FII conference.
- Saudi Arabia and UAE are planning to issue a joint visa enabling visitors to UAE to visit Saudi and vice versa. The visa is likely to come into force in 2020.
- UAE cabinet approved a zero-deficit federal budget of AED 61bn (USD 16.61bn) – the largest budget ever recorded – for the fiscal year 2020 (2019: AED 60.3bn).
- Total re-exports from the UAE amounted to AED 1.046trn over the past three years, together accounting for 1/4th of UAE’s total trade volume during the period.
- Non-oil exports through Abu Dhabi’s ports touched AED 136.3bn in Jan-Aug; total trade declined by 17.5% yoy in Aug, with exports and imports down by 14.7% and 26.4% respectively. Saudi Arabia, US, Kuwait, Japan and UK were top trade partners.
- Dubai Economy’s Composite Business Confidence Index of local businesses increased 14.9 points (from Q2) and reached 129.8 in Q3 this year. The main challenges firms face includes delays in payments (as cited by 43% of firms), followed by competition (34%) and insufficient demand (17%).
- The Foreign Direct Investment Transparency Index in Abu Dhabi touched 73.8 points a 100-point scale in 2019.
- Fitch affirmed Abu Dhabi’s rating at AA with a stable outlook, reflecting the emirate’s strong fiscal and external metrics and high GDP per capita. S&P affirmed Sharjah’s ‘BBB+/A-2’ long- and short-term foreign and local currency sovereign credit ratings, with a stable outlook.