• ByCGI Gulf Insights of the Week
  • Sunday, 12 April 2020
  • Published inApril 2020
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Country Risk Update - Kuwait

Risk Indicator  - DB3d
Risk Level        - Slight

Ratings Trend  Deteriorating

The resumption of operations in the Divided Zone will boost oil-production capacity. Business opportunities should increase as the government's national development plan targets a more diverse economy. Kuwait will suffer a deeper deficit and slower growth as the coronavirus outbreak and the collapse of the OPEC+ agreement depresses oil prices. 

Market Overview
Aramco delays oil pricing statement as OPEC+ talks continue
Saudi Arabia is pushing back a key decision on pricing for its crude exports as the kingdom seeks to commit global producers to a massive coordinated supply cut. State producer Saudi Aramco is set to decide on and announce pricing for May crude exports on Sunday, according to people with knowledge of the situation.  The official selling prices, or OSPs, were meant to be released April 5 before twice being delayed to allow producers time to discuss output cuts amid demand destruction due to the coronavirus.
Fitch joins chorus of alarm over Oman's deficit, funding risks 
Fitch Ratings added to the drumbeat of credit assessors warning Oman about its precarious public finances as it comes under strain from the collapse in crude prices and the coronavirus pandemic. Under the assumption that Brent crude will average $35 per barrel, Oman will run a budget shortfall this year of over $10 billion, or around 16% of gross domestic product, according to a report on Monday. Fitch estimates Oman needed Brent at over $80 to balance the books last year. Following a downgrade in March, it rates the Gulf state at BB, two steps below investment grade, with a negative outlook.
UAE-based NMC heads to administration after bowing to creditor demands
NMC Health Plc has bowed to creditor demands to be placed into administration, saying it’s in no position to contest Abu Dhabi Commercial Bank PJSC’s efforts to install new management. The troubled Middle Eastern hospital operator said on the eve of a London court hearing that it expects to be placed into administration “in due course”. NMC’s new executive chairman, Faisal Belhoul, had resisted creditors arguing that such a move would endanger lives as the coronavirus spreads across the United Arab Emirates.
Commodity Tracker
Oil prices fell again on 9th April despite news that the oil cartel and allies (Opec+) had reached a deal that would end a price war between Saudi Arabia and Russia. US West Texas Intermediate (WTI) crude declined by 10.11% as compared to last week to settle at $22.76 on 9th April. However, the global benchmark Brent crude increased by 5.14% over the week to settle at $31.48 on Thursday. Gold price increased by 6.01% to reach $1736.20 per ounce on Thursday.
Stock Market Update
The Abu Dhabi Securities Exchange Index gained 355.33 points or 9.45% as compared to last week to close at 4,113.68 points on Thursday. The index exceeded 4,000 points for the first time since 12 March. The DFM’s general index increased by 6.22% to end the week at 1830.02 points. Tadawul (TASI) increased by 3.80% over the week to close at 7006.24 points, hitting its highest level since 5 March. Bahrain’s All Share Index declined by 2.21% to close at 1300.37 points on Thursday. The majority of sectoral indices (investment, industries, insurance, and commercial banks sectors) witnessed a decline as compared to last week. MSM30 edged up by 2.63% to close at 3472.43 points on April 9. Kuwait’s All Share Market Index decreased by 2.25% over the week to close at 4596.32 points.
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