GLOBAL Developments Bottomline: News about trade uncertainty dominated last week: be it the US threatening 100% tariffs starting early next year on $2.4bn worth of popular French products, or Trump’s tweet about re-imposing tariffs on steel from Brazil and Argentina, or his comment at NATO about liking the idea of “waiting until after the election” to make a pact with Beijing. As the Dec 15 deadline for next round of tariffs approach, China’s gesture of exempting US soybeans and pork from the current tariff regime gives a silver lining, though it also serves China’s internal requirements. Global PMIs continue to mirror the trade chaos and accompanying business uncertainty. This week sees two central bank policy meetings: Fed is likely to remain neutral; though the ECB’s new President Lagarde will have the latest weak business activity data to consider, she will be under no pressure to take any immediate policy action. Separately, UK elections are to be held on Dec 12th, with polls leaning towards a victory for the Conservative Party.
- Inflation in Bahrain increased by 1.9% yoy in Oct (Sep: 1.2%), largely due to a 4.3% rise in food and non-alcoholic beverages prices.
- S&P upgraded Bahrain’s outlook to positive from stable and affirmed the country’s long- and short-term sovereign credit ratings at ‘B+/B’. Fiscal deficit is estimated to dip to 4.2% of GDP by 2020 vis-à-vis an average 12% between 2015-2017.
- Egypt’s PMI contracted for the 4th consecutive month, declining to 47.9 in Nov (Oct: 49.2), with output sub-index falling to 46.6 (Oct: 48.6) while employment fell to 48.3 – the lowest since May.
- Egypt announced several government initiatives to support industry, housing and also boost investments: EGP 100bn funding for businesses in the industrial sector will be offered at a declining rate of 10%; another initiative to finance closed factories to re-operate (benefitting 5184 factories with an interest relief of EGP 31bn); EGP 100bn financing will be provided for SMEs at a 10% interest rate; EGP 50bn programme to finance housing units for middle-income families.
- Non-oil exports from Egypt increased by 2.3% to $21.3bn in Jan-Oct this year while imports declined by 3% to $57.7bn. In 2018, overall exports grew by 11.5% to $29.3bn while non-oil exports grew by 9.3% to $24.6bn.
- Net foreign reserves in Egypt grew by 2.5% mom to $45.4bn in Nov; foreign currencies reserves by 0.8% mom to $41.93bn.
- Egypt is expected to issue its first corporate Sukuk “within weeks”, according to a Financial Regulatory Authority official. Separately, the value of securitisation bonds issued so far this year jumped to EGP 18bn from EGP 5.3bn in 2018.
- Jordan plans to increase public sector wages next year: pay will rise by 15-20% for 700k state employees and will add at least JOD 0.5bn ($700mn) more to the budget.
- Net foreign assets of banks in Kuwait grew by 6.39% yoy to KWD 18.712bn ($61.743bn) in Oct; net assets however declined by 0.87% mom.
- Kuwait’s trade surplus declined by 8% yoy to KWD 6.52bn ($21.5bn) in Jan-Aug 2019, largely due to a 6.3% fall in exports alongside a 4.6% drop in imports.
- The sale of a 50% stake in Boursa Kuwait to Kuwaiti citizens was more than 8.5 times oversubscribed.
- Kuwait’s foreign reserves increased by 5.23% yoy and 0.25% mom to KWD 11.8bn ($38.9bn) in Oct. Value of monetary gold at the CBK remained stable at KWD 31.7mn.
- Lebanon’s crisis drags on: the central bank cut interest rates in its latest move to tackle the crisis lowering the lending and deposit rates to 5% on dollars and 8.5% on local currency for six months. The Parliamentary blocs are meeting today to decide on candidates for PM, ahead of meetings with the President (scheduled Mon).
- After Lebanon appealed for import aid, France announced plans to convene a meeting of an international support group for Lebanon on Dec 11; Saudi Arabia and UAE were also expected to be invited to the meeting.
- The BLOM Lebanon PMI fell to 37 in Nov (from Oct’s 48.3) – the sharpest rate since data was first gathered in May 2013.
- Total of 1.25mn guests stayed at Oman’s 3- to 5-star hotels in Jan-Sep, generating OMR 155.2mn ($401.8mn) in revenues (+8% yoy). Hotel occupancy rates fell by 7.4% to 51.4% at end-Sep. Europe (31.8%), Oman (31%) and Asia (12.7%) topped guests list.
- Qatar’s foreign minister expressed hopes of “progress” in talks with Saudi Arabia; a few other recent developments include an unannounced visit by Qatar’s foreign minister to Saudi, Saudi Arabia, UAE and Bahrain participating in the Gulf cup and an invite for the Qatari emir to the GCC Summit to be held in Riyadh on Dec 10th.
- Aramco raised a record $25.6bn in its initial public offering, surpassing Alibaba’s 2014 record $25bn and valuing the company at $ 1.7trn. Aramco’s shares will start trading on Dec 11.
- Saudi non-oil PMI increased to 58.3 in Nov (Oct: 57.8) – the highest in 4 years – supported by new order growth (45% of businesses reported rise in order books) though job growth remained subdued.
- Saudi Arabia announced it would grant citizenship to “innovators” as well as to distinguished professionals including those from medicine, technology, cultural and sports fields.
- Non-oil exports from Saudi Arabia declined by 5.5% yoy to SAR 165.8bn in Jan-Sep. Non-oil exports accounted for 22.44% of total exports vs 21.54% in Jan-Sep 2018.
- Point of Sales transactions in Saudi Arabia grew by more than 30% in Oct; credit to the private sector, grew by 4.2% yoy – the highest in 2 years – while bank claims on the public sector was up by 24.2%. Mortgage loans surged by 21% yoy in Q3 this year, according to SAMA; share of SMEs in total finances grew by 6.2% yoy.
- Saudi Arabian Monetary Authority launched a draft for payment system and services: the system aims to raise the level of efficiency and flexibility of financial transactions, as well as promote innovation in financial services.
- Saudi general public reserves declined by 1.2% mom and 14.4% yoy to SAR 490.06bn in Oct while the current account declined by 19.89% yoy and 32.67% mom to SAR 47.59bn.
- Construction contracts awarded in Saudi Arabia touched SAR 47.8bn in Q3; oil and gas, real estate and industrial sectors accounted for about 80% of all contracts.
- OPEC+ extended deeper cuts in oil output: curbs include an extra 500k barrels per day (bpd) plus Saudi Arabia’s plans to cut 400k bpd more than its quota.
- UAE PMI declined to 50.3 in Nov (Oct: 51.1), posting the lowest reading since Aug 2009. Slowing market conditions saw companies reporting their first-ever monthly drop in new orders last month while payroll numbers declined marginally. Expo 2020 and a potential revival in domestic demand is a key reason for firms expecting output to rise in the coming 12 months.
- The UAE central bank expects economic growth at 2.3% yoy this year, a tad lower than its Sep estimate of 2.4%, but higher compared to 2018’s 1.7%. Growth this year is supported by rising public and private spending at the federal and emirate levels and also higher investment ahead of the Dubai Expo 2020 event.
- Dubai’s GDP grew by 2.1% yoy to AED 208.2bn ($ 56.7bn) in H1 this year, supported by transport and storage sector (+6.2%) and wholesale and retail trade (+3.3%).
- The new tax on e-smoking devices and sweetened drinks (including carbonated and energy drinks) was implemented starting Dec 1.