CGI Gulf Insights of the Week (140)

ByCGI Gulf Insights of the Week
Monday, 03 February 2020
Published inFebruary 2020

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Egypt

Risk Indicator - DB5d
Risk Level - Slight
Ratings Trend - Stable

Egypt's prime location as a base for exports to the Middle East, Asia and Africa creates a potential for long-term economic growth, as does its large population of almost 100m. Economic reforms enacted since late 2016 have sought to address deep-seated weaknesses and create the basis for sustainable high rates of growth over the medium term. The government is seeking a standby-arrangement with the IMF, following the completion of its extended fund facility programme.

Market Overview

India relaxes fiscal deficit target as it seeks more foreign investment
India relaxed its fiscal deficit target Saturday, February 1, raising spending and slashing taxes as it seeks to attract foreign investment and increase consumption in the wake of a prolonged economic slowdown. Finance Minister Nirmala Sitharaman announced the changes as part of the country's annual budget in parliament, a day after official data showed that Asia's third-largest economy grew five percent last year, its slowest expansion since the 2008 global financial crisis. In a sprawling three-hour speech peppered with references to ancient Indian history and poetry, Sitharaman said the fiscal deficit target for the current financial year was now 3.8 percent of GDP, up from an earlier 3.3 percent. It will edge down to 3.5 percent next year, she added. Prime Minister Narendra Modi's right-wing government has been trying desperately to revive the economy, which has flagged for several quarters, with per capita consumption falling for the first time in four decades. The finance minister said Indians earning under 1.5 million rupees ($21,000) a year could pay lower taxes if they agreed to forego existing exemptions, with a view to raising their purchasing power.

Dubai's Mashreq hires Citibank veteran to head international banking
Dubai-based banking major Mashreq has hired Citibank veteran Tarek El Nahas as its new head of International Banking Group. He previously spent 25 years at Citibank, most recently as the head of Corporate and Investment Banking for North Africa, Egypt, and the Levant, managing teams across six countries in the MENA region. He has also held several senior roles in Egypt, Algeria, and the UAE. Ahmed Abdelaal, CEO, Mashreq Bank, said: “I am delighted to welcome Tarek to the Mashreq family. Our legacy has been built upon a commitment to developing our leadership capabilities and as we look to grow our international presence Tarek’s experience will be invaluable. “Tarek will take over from Jan-Willem Sudmann later this month. Jan played a pivotal role in the success of Mashreq’s international banking story for the last 4 years. We wish Jan good luck and gratitude for his service to Mashreq.” El Nahas added: “Mashreq is recognized for innovation and service excellence and with my regional experience, I look forward to collaborating closely with my new colleagues to enhance the bank's customer experience and creating further inroads to the international business group for Mashreq."

Dubai's DGCX to hold a special trading session for the Indian budget
The Dubai Gold & Commodities Exchange (DGCX) is to hold a special trading session on Saturday, February 1, to allow market participants to hedge their risk before, during and after the announcement of the 2020 Union Budget of India. All products listed on the DGCX will be available for trading. The market will open at 7 am Dubai time with continuous trading until 3.30 pm on the same day. Post-trade reports will be made available for download from 4.30 pm. Trades from Friday, January 31 will be settled on Saturday, February 1, while all trades on Saturday, February 1, will be settled on Monday, February 3. Les Male, CEO of DGCX, said: “Although an unusual announcement, the decision has been taken in conjunction with the DGCX Group’s Members. An event like the Union Budget of India has the power to drive markets, and as such, with the DGCX’s ‘customer first’ approach, we decided it was only fitting that we give ample opportunity for traders to hedge their risk.” The DGCX last held a special trading session on Saturday, February 28, 2015, which saw trading across all Indian Rupee products as well as the precious metals and equities asset classes.

Abu Dhabi bank ADIB provides $87m financing for UK deals
Abu Dhabi Islamic Bank (ADIB) has provided through ADIB UK a combined AED320 million ($87.1 million) Shari'a, a compliant structured financing for two clients from the Gulf. Deals have been agreed for a private UAE-based client to refinance an AED900 million prime central London healthcare facility and a Bahrain-based client for the acquisition of an AED55 million logistics hub in Edinburgh. The London property comprises one of the most established private healthcare facilities in the UK capital and is operated by an international healthcare group. The Edinburgh property, let to Royal Mail, consists of a distribution warehouse and office facility extending to 94,323 sq ft situated in the Scottish city’s premier industrial location, South Gyle Industrial Estate, a statement said. Abu Dhabi Islamic Bank (ADIB) has provided through ADIB UK a combined AED320 million ($87.1 million) Shari'a compliant structured financing for two clients from the Gulf. Deals have been agreed for a private UAE-based client to refinance an AED900 million prime central London healthcare facility and a Bahrain-based client for the acquisition of an AED55 million logistics hub in Edinburgh. The London property comprises one of the most established private healthcare facilities in the UK capital and is operated by an international healthcare group. The Edinburgh property, let to Royal Mail, consists of a distribution warehouse and office facility extending to 94,323 sq ft situated in the Scottish city’s premier industrial location, South Gyle Industrial Estate, a statement said.

Lebanon central bank chief says $1bn sent abroad
The governor of Lebanon's central bank said Thursday, January 30, that $1 billion had been transferred out of the country, despite tight restrictions on withdrawals as the protest-hit country faces a liquidity crisis. Governor Riad Salameh's comments came amid suspicions of politically motivated capital flight that are the subject of a probe launched late December. "Of the $1.6 billion that was withdrawn (from the Lebanese banking sector) between October 17 and the end of the year... one billion dollars were transferred abroad by Lebanese," Salameh said Thursday, January 30, in an interview with the France 24 TV news channel. Since October 17, Lebanon has been rocked by an unprecedented protest movement against an entrenched political class seen as corrupt and incompetent. The protests coincided with an increasingly crippling shortage of dollars, prompting banks to impose tight restrictions on withdrawals and transfers overseas. Protesters have accused bankers of complicity with the political class and suspect politicians of transferring funds abroad despite the restrictions and a prolonged local bank closure when protests first broke out.

Commodity Tracker

Business Updates

In this Power Of Data podcast, was joined by Richard Lumb, Board Member at Finastra, who shares his perspective on the transformation of financial services.

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