GLOBAL Developments Bottomline: Coming up this week is the potential signing of the US-China Phase 1 trade deal, as the US-Iran tussle continues: so far this year, the US killed Iran’s top military commander, Iran retaliated with missile attack on US troops in Iraq, US imposed additional sanctions on Iran and rebuffed an Iraqi request to pull out troops (and we are only on Day 12 of 2020!). In the UK, meanwhile, the Parliament approved PM Johnson’s Brexit deal paving the way for UK to leave EU on 31 Jan 2020 (fears of a no-deal exit are no more) even as a BMG survey for The Independent found a 52-48 split in favour of Remain.
- Oman’s Sultan Qaboos – the longest serving ruler in the Middle East and the last of the founding members of the GCC and an important mediator to multiple feuds in the region – passed away late last week. Haitham bin Tariq Al Said was named the new Ruler, after a sealed envelope nominating him was opened hours after the death: he has since announced that he will continue to uphold Sultan Qaboos’s policies.
- World Bank expects 2.4% growth in MENA in 2020 (2019 growth was estimated at a weak 0.1%), citing geopolitical tensions and lower oil demand alongside weaker global growth. Oil prices are projected to decline to $59 per barrel in 2020 and 2021.
- Bahrain grew by 1.58% in Q3 2019, supported by 1.99% growth in the non-oil sector while oil GDP dipped by 0.15%.
- Bahrain’s Mumtalakat hired banks for the potential issuance of a USD denominated sukuk. This could be the first international debt sale in 2020 by a Gulf borrower.
- Egypt’s PMI inched up to 48.2 in Dec (Nov: 47.9), though remaining under 50-mark that separates expansion and contraction. Output rose to 47.1 from 46.6 (with some firms highlighting liquidity constraints) while new orders stood at 47.9 (Nov: 47).
- Annual urban inflation in Egypt increased to 7.1% in Dec (Nov: 3.6%) while core inflation was 2.4% yoy (Nov: 2.1%). The central bank meets this week, and likely to hold rates steady: overnight rates are 12.25% for deposits and 13.25% for lending.
- Egypt’s first commodities exchange will start trading within the next 36-48 weeks, disclosed the Internal Trade Development Authority head.
- Iraq’s parliament voted “to work towards ending the presence of all foreign troops on Iraqi soil”, after the US attack killed Iran’s top military commander. US Administration later warned that Iraq could lose access to its central bank account at the Fed if US troops were to be expelled.
- Iraq will likely more than double its crude oil exports to China as part of an oil-for-reconstruction agreement signed last year, disclosed the financial advisor to Iraq’s government. Exports are likely to rise to 300k bpd from 100k bpd currently.
- Jordan received 1.136 mn barrels of Iraqi crude oil in 2019, as part of an MoU signed by the two nations, according to Jordan’s minister of energy.
- Jordan’s Q3 GDP grew by 1.9% yoy, with the highest growth rate registered by extractive industries (7.4%), followed by social and personal services (3.4%) and finance & real estate (3%).
- Jordan‘s finance minister disclosed that the government repaid overdue arrears to the private sector: JOD 350mn ($492mn) during last week of Dec and 1st week of Jan.
- Kuwait’s oil output in the zone shared with Saudi Arabia is expected to touch 250k barrels per day by end-2020, when production resumes.
- Kuwait’s Nov foreign reserves accelerated by 3.89% yoy and 3.85% mom to KWD 12.3bn. Money supply in Kuwait declined by 0.3% yoy to KWD 38.219bn (USD 126.352bn) in Nov.
- Tourism revenues in Kuwait surged by 69% yoy to KWD 152.1mn ($503.2mn) in Jan-Sep 2019; meanwhile, spending by Kuwaitis on foreign tourism rose by 21.34% to KWD 4bn.
- As Lebanon‘s multiple crises grow without a functioning government (since Oct), the central bank governor stated that the banks are solvent and will not go bankrupt while deposits remain secure (also insisting that there would be no haircuts on deposits). He also disclosed that contact with the IMF had so far been limited to technical support.
- Total foreign assets at the Central Bank of Oman increased by 2.9% yoy to OMR 6.26bn by end-Oct. M2 grew by 5.2% yoy to OMR 17.52bn while private sector deposits rose by 5.8%.
- Qatar Petroleum signed a 15-year agreement to supply Kuwait with up to 3mn tonnes of liquefied natural gas per year, starting 2022. Qatar plans to boost its LNG production to 126mn tonnes a year by 2027.
- PMI in Saudi Arabia fell to a 5-month low of 56.9 in Dec (Nov: 58.3), after business activity slowed (58.1, the lowest since Oct 2018). New orders (down to 64.2 from Nov’s 65.9) and employment remained subdued (50.5).
- Bank credit in Saudi Arabia increased by 5.3% yoy and 1.5% mom to SAR 1.5trn in Nov, thanks to an increase in long-term credit (+17.9% yoy to SAR 601.3bn). Saudi Arabia’s investment assets abroad grew by 8.9% yoy to SAR 4.3trn ($1.1trn) by Q3.
- The Board of Saudi Arabia’s Capital Market Authority approved the Securities Central Counterparties Regulations, aimed at regulating securities clearing activities and strengthening capital market infrastructure.
- Consumer spending in Saudi Arabia grew by 4.5% yoy to SAR 934.37bn, thanks to a surge in point of sales (+22.6% yoy to SAR 275.39bn).
- Saudi Arabia’s Real Estate Development Fund deposited SAR 1.7bn (USD 451mn) in Dec to the accounts of citizens benefiting from Sakani program.
- Saudi Arabia issued 2,716,858 Umrah visas since the beginning of this year’s Umrah season. Pakistan, Indonesia and India were the largest source nations.
- Saudi Arabia will permit visitors to use existing UK, US, and Schengen visas to obtain visitor visas at airport arrivals regardless of citizenship.
- Egypt has the highest number of startup investment deals in the MENA region – 25% of all deals in 2019 (MAGNiTT’s 2019 MENA Venture Investment report). 2019 saw a total 564 investments in MENA-based startups amounting to USD 704mn in funding (+13% yoy, excluding the Careem and Souq mega-deals). UAE remained the highest recipient of funding (60% of the total). Saudi Arabia is the fastest growing ecosystem across MENA and ranks third in both number of deals and total funding.
- UAE’s PMI ended 2019 on a downbeat note, with the reading slipping to 50.2 in Dec compared to Nov’s 50.3. Output continued to slow for a 3rd consecutive month – at 51.6, it was the softest reading over 8 years.
- A Dubai Council was established by Dubai’s ruler to “drive change in Dubai”; in the first meeting of the Dubai Council, a 50-goal plan for the Emirate was announced, with details to be revealed within 60 days and implemented in the next 5 years.
- Inflation in the UAE fell – for the 11th consecutive month – to 1.4% yoy in Nov (Oct: 1.9%), aided by falling food and beverage costs (-1.13%), textile and clothing (-7.07%) and housing and utilities (-4.17%) among others.
- The UAE announced the rollout of a 5-year multiple entry tourist visa for all nationalities: the details of the visa is expected to be announced soon. UAE welcomed about 21mn tourists last year, with the H1 number at 15mn.
- Dubai registered a total of 41,988 real estate transactions in 2019 – the highest number registered annually since 2008, according to Property Finder. Off-plan properties accounted for 56.3% of the total, though much lower compared to 2017 and 2018 levels.