CRIF GULF INSIGHTS OF THE WEEK

  • ByCGI Gulf Insights of the Week
  • Monday, 11 May 2020
  • Published inMay 2020
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CRIF GULF WEEKLY INSIGHTS
Country Risk Update - Saudi Arabia

Risk Indicator  - DB4a
Risk Level        - Moderate
Ratings Trend  - Deteriorating rapidly

Dun & Bradstreet downgrades Saudi Arabia's country risk rating as the economy is hit by weak oil prices, a new oil production quota, and Covid-19. Weak oil prices over the next five years will see the government forced to liberalize the economy, opening up opportunities for cross-border investment and trade. 
Market Overview
Gulf banks in strong position to weather Covid-19 economic storm, S&P Global Ratings
Banks in the Gulf can absorb as much as $36 billion in new credit losses before their capital base starts to erode, placing them in a strong position to weather the current economic headwinds, according to S&P Global Ratings. “Regional banks are highly profitable - due to large proportions of non-interest-bearing deposits, sustainable sources of fee income and high operational efficiency” and they have “generous provision cushions built over recent years”, S&P said in a research note. “That will help them navigate the current economic rough waters.”
Saudi wealth fund exploring an investment in Facebook-backed Jio Platforms
Saudi Arabia’s $320 billion sovereign wealth fund is exploring a potential investment in Reliance Industries Ltd.’s digital unit, according to people with knowledge of the matter. The Public Investment Fund is considering purchasing a minority stake in Jio Platforms, said the people, who asked not to be identified as the information is private. Deliberations are ongoing and might not lead to a transaction, the people said. Representatives for Reliance and PIF didn’t immediately respond to requests for comment.
Over 1,000 firms sign up for DIFC's pension-style savings scheme
A total of 1,100 firms have signed up for the Dubai International Financial Centre’s (DIFC) pension-style savings scheme for employees. The firms, all based in the Dubai financial centre, met an April enrolment deadline for DIFC Employee Workplace Solutions (DEWS), according to Zurich Workplace Solutions (ZWS), a subsidiary of Zurich International Life Limited and scheme administrator. The number of firms that have signed up represents 85% of all eligible DIFC organisations.
 
Commodity Tracker
Oil prices increased on Thursday as countries plan to relax lockdowns that were put in place to curb the coronavirus pandemic, kindling hopes for a boost in demand. The global benchmark Brent crude gained by 16.58% for the week. US West Texas Intermediate (WTI) crude surged by 25% as compared to last week to settle at $23.55 on 7th May. The gold price reported an increase of 1.87% to reach $1725.80 per ounce on Thursday.
Stock Market Update
GCC bourses suffered significant losses last week amid rising cases of coronavirus infections in the region. The Abu Dhabi Securities Exchange (ADXGI) fell by 3.99% reaching 4,061.62 points on Thursday, compared to 4,230.37 points a week earlier. The Dubai Financial Market plunged by 5.13% to close the week at 1,922.61 points. Tadawul, the region’s largest bourse, dropped by 6.81% or 484.37 points to close the trading week at 6,628.53 points. Bahrain’s All Share Index tumbled by 2.37% to close at 1,279.73 points on Thursday. The commercial banks and investment sectors fell by 3.78% and 1.13% respectively. MSM30 Index dipped by 1.57% to close the week at 3,483.98 points. Kuwait’s All Share Index declined by 2.28% to close at 4,861.92 points on 7th May.
CRIF D&B Business Update
As covid19 continues its spread around the world, more and more companies are asking their employees to stay away from the office. Most of our 'Field Due Diligence' - CCAM partners needed in-person meetings to establish trust in individuals and entities they do business with. They have, in most part, required real-life meetings with potential borrowers, to process their credit transactions. Luckily, modern technology enables us to conduct due diligence without needing to be in the same room.
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