GLOBAL Developments Bottomline: PMI releases dominated last week, underscoring slowing economic growth in Oct as well; growth of output and new orders weakened in the JP Morgan Global Composite PMI while employment fell for the first time since Feb 2010. Global concerns continue to centre around the still unresolved US-China trade uncertainty: with internal White House reports and Trump contradicting statements from China regarding a tariff rollback, the phase one “deal” no longer seems anywhere near agreed. As Brexit unfolds with a new deadline (and elections in Dec), Moody’s became the latest ratings agency to lower UK’s credit outlook to negative while the Bank of England has slashed growth rates (basing its forecasts on the government sealing a Canada-style trade agreement with the EU i.e. it would involve no tariffs but customs checks, some loss of market access for financial and legal services, and some regulatory divergence).
- Bahrain reported a 29% yoy surge in e-payments for government services in Q3; about 445k financial transactions worth USD 122mn were carried out during this period.
- Egypt’s PMI slipped to 49.2 in Oct (Sep: 49.5), posting the 3rd consecutive month of below-50 reading, after new orders fell at the fastest rate since May alongside lower sales and liquidity problems.
- Annual urban inflation in Egypt fell to 3.1% in Oct (Sep: 4.8%), the lowest since Sep 2010, thanks to a drop in prices of fruit and vegetables. This sets the stage for a potential rate cut at the upcoming Nov 14 meeting.
- Foreign trade in Egypt increased by 6.85% yoy to USD 95.024bn in 2018-19 fiscal year. Exports grew by 74.3% to USD 28.5 and imports accelerated by 87.1% to USD 66.5bn. China was the largest trade partner ($6.5bn), followed by US ($6.3bn) and Saudi Arabia ($5.99bn).
- Egypt plans to increase the capital its Sovereign Wealth Fund fivefold to EGP 1trn (from EGP 200bn) by the end of this year, disclosed the minister of planning.
- The Financial Regulatory Authority in Egypt revealed an exemption for green bond issuers: fees levied on issuers of green bonds will be reduced to 0.05% for the public offering and 0.025% for the private offering.
- Egypt’s Banque du Caire plans to float between 30-40% of its shares when it launches its IPO in Q1 next year, disclosed the bank’s deputy chairman.
- Egypt’s deputy minister revealed plans to increase local components of renewable energy industry to 40% for wind farms and 30% for solar plants.
- Egypt approved a 3-month extension of the state of emergency till 26 Jan 2020.
- The Central Bank of Egypt disclosed that banks disbursed EGP 144.2bn to finance 556k projects of micro, small, and medium-sized enterprises from Dec 2015-Jun 2019.
- Jordan’s Cabinet further expanded real estate exemption measures last week, including lowering the registration and purchase fees of apartments and lands.
- Foreign reserves in Kuwait grew by 1.89% mom and 6.36% yoy to KWD 11.772bn (USD 38.868bn) in Sep. Remittances declined by 2.94% yoy to KWD 2.15bn ($7.1bn) in H1 2019; in Q2, remittance outflows increased to KWD 1.2bn from KWD 947.9mn in Q1.
- Kuwait’s spending on tourism abroad grew by 31.38% yoy to KWD 2.818bn (USD 9.304bn) in H1 this year. Last year, spending on tourism grew by 17.6% to KWD 4.03bn.
- Kuwait’s balance of payments posted a deficit of KWD 9.5mn (USD 31.4mn) in Q2 versus a surplus KWD 234.6bn in Q1 and KWD 961mn (USD 3.2mn) surplus in Q2 2018.
- Kuwait plans to increase crude oil exports to China to more than 600k barrels per day (bpd) in 2020, according to a senior official from Kuwait Petroleum Corp.
- Lebanon PMI increased to at 48.3 in Oct, up from 46.4 in Sep; the survey’s data collection ended earlier than planned after businesses shut down during the anti-government protests. Overall, while output and new orders fell at softer rates, input prices increased slightly.
- Lebanon’s caretaker finance minister assured that the country is fully committed to paying its maturing Eurobonds on time while also stating that the planned USD 2bn Eurobond issuance slated for end of this month will be delayed.
- Moody’s downgraded Lebanon’s three largest banks by assets further into junk territory, after lowering Lebanon’s issuer ratings to Caa2 earlier citing higher probability of debt rescheduling.
- Saudi Arabia’s PMI reached a 4-year high of 57.8 in Oct (Sep: 57.3), thanks to output growth (fastest rate of expansion in 22 months) and new businesses (highest pace in 45 months).
- The Aramco prospectus was issued: while details of the number of shares on offer or a price range were missing, it was disclosed that up to 0.5% of its shares would be offered to individual retail investors. The final offer price would be disclosed on Dec 5th, with bookbuilding taking place from Nov 17-Dec 4 for institutional investors while individual investors will have till Nov 28th to request shares. Aramco cannot list additional shares for a period of 6 months after trading starts and will also be restricted from issuing additional shares for 12 months. Also, in spite of promising high dividends (of at least USD 75bn), Aramco warned that it may change its dividend policy without prior notice to its minority shareholders.
- China (through the Silk Road Fund, oil producer Sinopec Corp and SWF China Investment Corp) is reportedly in discussions to invest between USD 5-10bn in the Aramco IPO, reported Bloomberg. Separately, Aramco has signed crude sales deals for 2020 with five Chinese customers, increasing total volume by 151k barrels per day compared to 2019 oil supply contracts.
- Saudi Arabia’s deficit narrowed by 4% qoq to SAR 32.1bn (USD 8.56bn) in Q3; a year ago deficit was just SAR 7.3bn. Government expenditure declined by 18% qoq to SAR 239.4bn in Q3, alongside a 24.6% drop in oil revenues to SAR 131.8bn and a 12.2% decline in non-oil revenues to SAR 75.4bn.
- Industrial production index in Saudi Arabia declined by 4.5% mom in Sep to 121.55.
- Saudi Arabia’s cabinet approved the setting up of Saudi Payments Company, aimed at improving financial inclusion, eventually moving towards a cashless society.
- Remittances from Saudi Arabia declined by 11% yoy to SAR 93bn in Jan-Sep 2019; however, in Sep alone, remittances ticked up by 4% yoy to SAR 10.28bn.
- Capital flows into the Middle East and North Africa (MENA) region are forecast to accelerate by 21% to USD 200bn in 2019, according to the IIF. While nearly two-thirds of additional inflows in 2019 are associated with Saudi Arabia’s MSCI upgrade, debt issuances also support the inflows.
- IPOs in the MENA region dropped by 45.3% yoy to USD 190mn in Q3, according to EY. Only 2 deals were recorded in Saudi Arabia and Egypt versus 4 deals in Q3 2018.
- UAE PMI remained unchanged at 51.1 in Oct, with new orders at the lowest since the survey began a decade ago. About 96% of the survey respondents kept workforce levels unchanged and the output price index decreased to 45.1 in Oct (Sep: 47.3).
- UAE announced the discovery of new hydrocarbon reserves estimated at 7bn barrels of crude oil and 58trn standard cubic feet of conventional gas. This would raise UAE to 6th globally in terms of oil and gas reserves (from 7th currently).
- Passenger traffic to Dubai International Airport declined by 2.4% yoy to 23.2mn in Q3; this brings the year-to-date figure to 64.5 passengers (-4.5%). India was the top destination (8.8mn persons), followed by Saudi Arabia (4.8mn) and UK (4.6mn).
- Dubai issued 64,360 active business licenses to 246,737 Indian business persons, according to Dubai Economy. These companies added 854,234 jobs to the market.
- UAE central bank governor disclosed that plans are underway to allocate about 40% of banking jobs to citizens within 3 years, from 26.1% currently.