CRIF GULF INSIGHTS OF THE WEEK (121)

ByCRIF GULF INSIGHTS OF THE WEEK
Monday, 18 May 2020
Published inMay 2020

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Kuwait

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

Dun & Bradstreet downgrades Kuwait’s country risk rating as low oil prices will lead to challenges to fiscal consolidation, resulting in a record deficit. Resumption of operations in the Divided Zone will boost oil-production capacity (though OPEC quotas will still constrain actual production).

Market Overview

Saudi sovereign fund seeks $10bn margin loan
Saudi Arabia's sovereign wealth fund plans to borrow about $10 billion by pledging some of its investment in SoftBank Group Corp's Vision Fund, Bloomberg News reported. The report comes a day after the $300 billion Public Investment Fund (PIF) disclosed its stakes in major US companies including Boeing, Facebook, and Citigroup. The wealth fund is in talks with investment banks regarding a margin loan backed by some of its investments in Vision Fund, the report said, citing sources. PIF's decision to pledge stake happens amid a time when SoftBank's finances are being squeezed after a disastrous bet on co-working firm WeWork and souring portfolio bets on startups.

Arab stocks fell almost 25% in Q1 amid low oil prices and Covid-19 pandemic
Arab stock markets plunged almost a quarter in value in the first three months of 2020 due to the coronavirus pandemic and the collapse in oil prices, a UN agency said Thursday. "The drop in oil prices and the Covid-19 pandemic resulted in a 23-percent average loss for major Arab stock markets by the end of the first quarter of 2020," the Economic and Social Commission for Western Asia (ESCWA) said. The twin crises have "shattered the stock market in Arab countries, putting the performance of financial markets below the 2008-2009 collapse", ESCWA said in a report.

Deposits with Omani banking sector reach $63b
Total deposits in Oman's banking sector grew 4.8 per cent to OR24.1 billion ($62.62 billion) at the end of March. Data issued by the central bank indicate private sector deposits witnessed an increase of 9.1 per cent to OR15.9 billion ($41.31 billion). Looking at the distribution of total deposits base from the private sector, figures show that from individuals reached 48.8 per cent, and that of non-financial and financial companies were 32- and 16.9 per cent respectively. The total credit line extended by the banking sector also made gains, by 3.7 per cent to reach OR26.4 billion ($68.59 billion). The data issued by the central bank indicate that credit granted to the private sector was up 3.2 percent to OR23.1 billion ($60.02 billion).

Commodity Tracker

Oil prices rose on Thursday as US producers continued to shut crude production and more economies moved ahead with plans to relax lockdowns intended to curb the coronavirus pandemic. US West Texas Intermediate (WTI) crude surged by 17.03% as compared to last week to settle at $27.56 on 14th May. The global benchmark Brent crude increased by 5.67% over the week to settle at $31.13 on Thursday. Gold price increased by 0.87% to reach $1740.90 per ounce on Thursday.

Stock Market Update

The GCC bourses closed mixed on the last day of the trading week. The Abu Dhabi Securities Exchange jumped slightly by 0.13% to close at 4067.03 points. On the other hand, the DFM’s general index dipped by 1.46% or 28.14 points to end the week at 1894.47 points on Thursday. TASI gained by 1.33% to close at 6716.98 points at the end of the week. Bahrain’s All Share Index dropped by 3.05% primarily due to the decline in commercial banks and industries sectors. MSM30 declined by 1.79% to close the week ended 14 May at 3421.67 points. Kuwait’s All Share Market Index plunged by 3.35% or 162.81 points as compared to the previous week.

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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