NL/27.11.2017

/ / 2017, Newsletters, November 2017
 

 

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NOV 2017 ISSUE

CGI. 97

Country Risk Update – Oman

The ports of Sohar and Salalah are emerging as regionally competitive infrastructure facilities, soon to be joined by Al Duqm. The government is targeting high-end tourism as an area for growth.The economy is weakening, although business performance is holding up for now. Growth will remain slow in the outlook period due to the drop in oil revenues, which has also forced the government to prioritise certain projects. In addition, the government is looking to raise alternative revenue streams through taxation, and to issue greater levels of debt in order to ease pressure on the public accounts. It has already started to reduce subsidies, although public dissent over higher prices is rising.

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Market Overview
UAE seen returning to budget surplus in 2019
The UAE’s budget balance will return to surplus by 2019, owing to the recovery in oil prices, the introduction of new taxes – most notably the value-added tax in 2018, according to a new research note.Analysts BMI said capital expenditure will drive total spending over the coming years, but will pose no threat to fiscal sustainability.The research note said the UAE’s fiscal situation will continue to improve over the next few years, with the budget to return to surplus by 2019. BMI forecast the budget deficit to shrink to 0.7 percent of GDP in 2018, down from a projected 1.6 percent in 2017, and to return to surplus in 2019. Higher oil prices will boost government revenues in the UAE, notably by supporting the hydrocarbon revenue of Abu Dhabi – where the majority of oil production is located.
Artificial intelligence halves bank operation costs – Al Ghurair
Artificial Intelligence (AI) and digitisation can cut bank and financial operating costs by half, according to Abdulaziz Al Ghurair, Chairman of the UAE Banks Federation.Speaking at the Middle East Banking Forum in Abu Dhabi, Al Ghurair said that the UAE is among the most advanced nations when it comes to the implementation of technology in the banking sector. “Artificial intelligence and digitalisation save up to 30 to 50 costs for the banking and financial system,” he said, adding that digitalisation is “a must” for UAE banking and financial-sector companies to keep pace with global developments.“The banking sector is an integral part of the UAE economy, playing a major role in the economic diversification drive,” he added.
Saudi wealth fund said to take over $10bn financial hub
Saudi Arabia’s sovereign wealth fund has finalised a deal to take ownership of Riyadh’s $10 billion unfinished financial hub as the government attempts to revive the project, according to people familiar with the matter.The Public Investment Fund is taking control of the King Abdullah Financial District from the Public Pension Agency, the people said, asking not to be identified because the information is private. Details of the deal aren’t clear, they said.The fund will appoint Hilmi Ghosheh as the head of the hub that has been plagued by delays and cost overruns, the people said. Ghosheh is currently advising the PIF’s Managing Director Yasir Al-Rumayyan on real estate projects, according to his LinkedIn profile.Crown Prince Mohammed Bin Salman lists the rehabilitation of the financial district as one of his objectives in the kingdom’s Vision 2030 economic reform plan.
Financing completed for Abu Dhabi’s $1.2bn Reem Mall
Al Farwaniya Property Developments, the consortium behind Abu Dhabi’s Reem Mall, on 21 November,announced that financing for the $1.2 billion project is now complete. Reem Mall, located on Abu Dhabi’s Reem Island, will offer 2 million sq ft of leasable area comprising 450 stores, including 85 food and beverage outlets. It will also feature education-oriented anchors and family-focused entertainment, including Snow Park Abu Dhabi, when it opens in 2020.“The business climate in Abu Dhabi is one of the things that makes it so attractive to investors. The speed with which Abu Dhabi authorities completed the formalities to proceed with Reem Mall is a great example of efficiency in action,” said Tarek Sultan, CEO, Agility, one of the companies involved in the consortium.
Dubai’s Emirates REIT picks Standard Chartered for debut dollar sukuk, say sources
Emirates REIT, a Dubai-based sharia-compliant real estate investment trust, has appointed Standard Chartered to lead its planned debut US dollar-denominated sukuk, sources familiar with the matter said.The sukuk transaction, which according to a company’s presentation could range between $350m and $425m in size, will be issued before the end of the year or in the first quarter of next year at the latest.Emirates REIT’s sukuk will be the latest corporate addition to the Gulf debt capital markets, which are in their second consecutive record-breaking year in terms of volume of issuance as corporates and sovereigns borrow funds internationally to mitigate the impact of lower oil prices.Debt issuance in the Gulf totalled $63.5bn last year and it exceeded $80bn so far this year. Emirates REIT plans to issue the sukuk, or Islamic bond, to fully replace its existing debt and lengthen the debt repayment profile of the company.
New ‘waste fee’ coming to Dubai building owners
A new ‘waste fee’ could soon be levied on building owners and property management companies, according to reports, after Dubai Municipality announced plans to outsource its waste collection service to the private sector. The proposed charge was confirmed by a senior municipality officer, who said that, the civic body would stop its waste collection and transportation service to all buildings – commercial or residential – that are considered business, according to sources.To arrange for collection, building owners and management firms will have to sign a contract with private companies approved by the municipality to transport waste to landfills, said Abdul Majeed Abdul Aziz Al Saifaie, director of the Waste Management Department.A circular sent by the municipality to building managers across Dubai said that contracts with private service providers must be in place by December 1, added the news outlet. though Al Saifaie is quoted as saying that the plan has now been deferred.
ADNOC’s distribution unit could raise as much as $2bn in IPO
Abu Dhabi National Oil Co’s (ADNOC) distribution unit set an indicative price range for its initial public offering (IPO) that could raise as much as $2bn to become the biggest listing in the UAE since 2007. ADNOC Distribution set an indicative price range of between Dhs2.35 ($0.6400) and Dhs2.95 ($0.8034), it said in a statement on 26 November. ADNOC is selling a minimum of 10 per cent, or 1.25 billion shares, and a maximum of 20 per cent, or 2.5 billion shares, in the IPO of its unit. At the top of the price range, the deal could be valued at Dhs7.375bn ($2.01bn), assuming it sells a maximum 20 per cent, that would make it the biggest IPO in the UAE since 2007 when DP World raised nearly $5bn, according to sources.
Crescent Enterprises launches $150m corporate venture capital arm
UAE-based multinational, Crescent Enterprises, has announced the launched of its venture capital arm, with plans to invest $150 million across the next three years.CEO Badr Jafar said the fund would focus on strategic direct investments in early-to-later stage start-ups worldwide, according to state news agency WAM. The company said in a press statement that half of the total fund would be allocated to firms in the Middle East and North Africa.Crescent has already been “quietly active” in venture capital, according to Jafar, who expanded: “In the last six months alone, we have invested in a wide range of start-ups from a Silicon Valley-based drone company for the industrial sector and robotic surgery technologies, to an e-commerce platform for fisheries in India.“We also seeded entrepreneur graduates from the American University of Sharjah who are developing an artificial intelligence project management system” he added.
TAQA looks at loans as government did not approve bond issue, say sources

Abu Dhabi National Energy Co is talking to banks to obtain loan facilities of up to $1.3bn which would refinance maturing debt after the Abu Dhabi government declined to approve a planned bond sale in October, sources close to the matter said. TAQA, a state-controlled oil explorer and power supplier, had planned to issue an international bond to refinance an outstanding $500m bond that was due in October, a company official said in August. But the refinancing did not go ahead and the company instead used an existing revolving debt facility to pay down that bond. Abu Dhabi’s debt management office (DMO) did not approve TAQA’s planned new bond issue because other government-related entities “whose need for issuance is greater” intended to issue bonds this year, said one source directly involved the matter. A banker close to the situation said the DMO chose not to approve TAQA’s bond because it wanted to give priority to the Abu Dhabi government, which issued a $10bn bond in October, and it did not want to overcrowd the market with other Abu Dhabi issuers.

 

UAE’s Bank of Sharjah and Invest Bank in merger talks
Bank of Sharjah and Invest Bank are in merger talks that could create an institution with about Dhs50.6bns ($13.8bn) of assets, sources familiar with the matter told sources.In the latest latest sign of consolidation in the United Arab Emirates’ crowded banking industry, the two lenders have held on-and-off discussions over a potential merger since last year, the sources said.One of the sources added that the tie-up between two of the UAE’s smallest banks was being driven by authorities in the emirate of Sharjah, where the lenders are based. JPMorgan is advising Bank of Sharjah on the potential deal, two of the sources said. It was not immediately clear which institution is advising Invest Bank. Bank of Sharjah and Invest Bank did not respond to the request for comment. JPMorgan declined to comment. Bank of Sharjah is 22.2 per cent owned by the Sharjah government, its top shareholder, as per the sources. The biggest shareholder in Invest Bank, which is slightly smaller in terms of assets, is Sharjah-based International Private Group, which owns 15.5 per cent.
Commodity Tracker
Commodity 20 Nov 27 Nov Chg.%
Brent 62.62 63.85 1.96
WTI 56.76 58.72 3.45
Natural Gas 3.07 2.91 -5.21
Gold 1291.6 1289.5 -0.16
Business Events this week In UAE

 

 

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Dubai Shopping Festival 2018

26 December 2017 to 27 January 2018

Dubai

Business Updates
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Tel. +971 4 406 9900
www,crif.ae  /  www.dnbuae.com

 

 

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CRIF GULF DWC LLC · 48 BURJ GATE, DOWNTOWN BURJ AREA, SHEIKH ZAYED ROAD · Dubai · United Arab Emirates