DIFC Weekly Economic Commentary
- Major Middle East sovereign wealth funds (SWFs) are reducing international investments compared to the last three years. According to the annual study by US-based investment firm Invesco, investment in GCC related assets increased from 33% to 56% this year.
- According to Finance Minister Momtaz El- Saieed, Egypt will receive a USD one billion loan from the Islamic Development Bank in a matter of days after signing an agreement earlier this month.
- Saudi Arabia plans to allow cross-listing foreign companies on its stock market within a year as part of the broader plan to open its financial sector to foreign investors.
- Remittances from Saudi Arabia reached USD 27.8bn in 2011, as per the latest SAMA data. This had little impact on the current account, which registered a surplus of USD 174bn on higher oil prices.
- Non-oil exports in Saudi Arabia increased slightly by 0.34% yoy to SAR 14.83bn in May with exports of petro-chemical products accounting for more than one-third of total non-oil exports (37.2%, USD 5.5bn), followed by plastic products (almost 30%) and foodstuff (7.9%). Saudi oil revenues meanwhile increased 48% yoy to USD 318.5bn as volumes of crude oil shipments picked up in 2011.
- Tunisian government issued 7-year bonds for the amount of USD 485mn backed by the US Treasury. As the US government agreed to guarantee repayment of principal and interest, the bonds yielded 1.686%, significantly lower than for the regular government securities issued by Tunisia.
- Real GDP growth in Egypt for the fiscal year ended in Jun 2012 was estimated at 1.8%, according to the Minister of Finance. The minister highlighted the importance of fiscal consolidation to attain sustainable level of government debt, while subsidy reform is seen as a key pre-condition.
- Turkey’s Minister of Finance hinted that new taxes may be introduced as fiscal stance is deteriorating.
- Consumer confidence index in Turkey decreased to 91.8 in June 2012 (May: 92.1), thus remaining in the pessimistic outlook zone, as per the country’s official statistical agency.
- Barclays will leave the Eibor-setting 12-member panel after a mandatory 90-day notice period. This has initiated the search for another international bank to replace Barclays on the panel.
- A Merrill Lynch report identified Dubai as one of the best GCC cities in which to develop business, also making a call of buy Dubai property, based on its view of population growth at 6.1% on average over the next eight years while supply of residences grows by only 4.9% in the same period.
- In line with the provisions of Basel III, the UAE Central Bank has announced that lenders need to hold 10% of liabilities in liquid assets which could include cash, certificates of deposit and highly rated local government bonds. This new rule would come into effect from Jan 2013 and will be replaced by a “liquidity coverage ratio” at the end of 2014.
- UAE has received the necessary approvals for building its first nuclear power plant, with the first reactor expected to be operational by 2017, with a capacity of producing 1,400 MW of electricity.
- Data released by OAPEC showed UAE’s energy demand went up by 5.2% yoy in 2011. Consumption of crude oil, gas and other energy grew to nearly 1.56mn equivalent barrels per day (ebpd) from 1.48mn ebpd, second only to Saudi Arabia where it was 3.22mn ebpd.
- A new real estate sector law is in the offing, according to a recent Jones Lang LaSalle report, which will be geared towards protecting the investors in case of delayed handovers, violation of terms and conditions and related obligations.