CGI Gulf Insights of the Week (139)

ByCGI Gulf Insights of the Week
Monday, 10 February 2020
Published inFebruary 2020

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Kuwait

Risk Indicator - DB3d
Risk Level - Slight
Ratings Trend - Deteriorating

Business opportunities in Kuwait should increase as the government targets a more diverse economy with its national development plan. A dispute between the interior and defense ministers led the government to resign; a new cabinet has formed but tensions persist over succession to the emir. A pending resolution of the Divided Zone dispute with Saudi Arabia will boost oil production capacity.

Market Overview

Embattled NMC Health gets preliminary takeover approaches
NMC Health Plc, the operator of the biggest network of hospitals in the United Arab Emirates, said it received approaches from private-equity firms after being targeted by short-seller Muddy Waters Capital LLC. The UK-listed hospital operator said Kohlberg Kravis Roberts & Co and GK Investment made highly preliminary approaches though neither party made any offer and no terms were discussed. The stock rose as much as 18% in London, after having lost 46% of its value last week. In a separate release, the company also said a review of its shareholders suggests that the size of the stakes of chairman Bavaguthu Raghuram Shetty’s and other investors have been incorrectly reported. They include Vice Chairman Khaleefa Butti Omair Yousif Ahmed Al Muhairi. The board has asked Shetty and Butti not to attend any board meetings until the matter is clarified, and said the board will make a decision about their roles as company directors. On Feb. 4, Muddy Waters published a tweet asking if NMC’s top shareholders aren’t selling shares because of margin calls. Muddy Waters published a report in December saying the healthcare company’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt. Insufficient disclosure of related-party transactions, manipulation of the balance sheet and inflated asset purchases are some of Muddy Waters’s most serious allegations.

Bitcoin breaches $10,000 to hit the highest level since October
Bitcoin is back above $10,000. The largest cryptocurrency’s recent upward momentum carried it past that psychologically significant level on Sunday for the first time since October, according to Bitstamp pricing. It rose as much as 2.6% to $10,179, capping a gain of about 40% so far this year. Its breach of five figures comes amid an equities rally that’s seen the S&P 500 Index reach new highs as fears abate that the coronavirus will dent global growth. “The rally is a part of a broader appeal for risky assets as optimism grows that the coronavirus impact might be limited to the first quarter and on optimism that China will play nice with the U.S. on phase-two trade talks,” said Ed Moya, senior market analyst at Oanda. Cryptocurrencies have been on an upward trend all year, with some analysts and digital-asset enthusiasts suggesting they’ve benefited as safe-haven plays amid ongoing geopolitical concerns around the globe. Some Bitcoin enthusiasts are predicting further gains. Fundstrat Global Advisors’ Rob Sluymer, for one, sees it rising through the second quarter this year to trade in a range of $10,000 to $11,000. Mike McGlone, an analyst with Bloomberg Intelligence, says the 2020 outlook for the largest digital token remains favorable.

UAE, India agree to tax exemptions for sovereign investments
The UAE and India have reached an agreement that will lead to tax exemptions for the UAE’s sovereign investments in India, it has been announced. According to a statement from the UAE’s Ministry of Finance, the tax exemptions are applicable to the infrastructure for all sovereign investment institutions in the UAE, both federally and locally. The announcement forms part of a wider set of amendments and investment incentives recently announced by the Indian government to attract and encourage foreign sovereign investment in key sectors of the Indian economy. “These exemptions are part of the UAE’s unrelenting efforts to further improve economic relations with countries around the world,” said Younis Haji Al Khoori, undersecretary of the Ministry of Finance. “The move also reflects the success of the recent negotiations between the joint venture teams from the UAE and India. “These meetings strengthen bilateral ties and help create investment incentives that support trade exchange and economic activities between the two countries,” he added. The statement added that other sectors may be identified for tax exemptions by the Indian government. The exemptions will come into effect on April 1, 2021, and will be limited to investments made within the period not exceeding March 31, 2014, provided that the investment is maintained for at least three years.

UAE banks head for Indian courts to recover $7bn loan defaults
As many as 9 UAE-based banks are understood to be in the process of initiating legal action against Indian defaulters to recover around $7 billion. The action follows the introduction of a new Indian reciprocal agreement last month aimed at deterring expats from fleeing debt and civil cases in the UAE. The UAE-based banks are said to have approached Indian law firms to assist them in completing the legal process in India, such as serving notices on the defaulters and approaching India’s insolvency court - the National Company Law Tribunal (NCLT), according to a report in Economic Times. The majority of the cases involve corporate loans taken by Dubai or Abu Dhabi-based subsidiaries of Indian companies, while others involve cases against individuals, the report said, quoting unnamed sources. The Economic Times says that Emirates NBD, Abu Dhabi Commercial Bank, and Mashreq Bank are among the UAE financial institutions that in the process of starting legal action. In many cases, especially those of corporate loans, the amounts involved are substantial and so the UAE banks are moving fast to enforce the UAE court rulings on them through the legal channels in India. The enforcement of UAE courts’ rulings in cases involving Indian corporate or nationals is now easier after the Indian government issued a notification on January 17 under section 44A of Civil Procedure Code, allowing the decrees of certain UAE courts in civil cases to be enforceable in India.

UAE's Federal Tax Authority simplifies VAT recovery on new-build homes
The Federal Tax Authority (FTA) has launched a new platform to further streamline the process of recovering Value-Added Tax (VAT) incurred by UAE citizens on the building of new homes. Citizens who qualify for VAT recovery on new-build homes will receive an email with a request to submit the necessary documents to complete the processing, the FTA said in a statement. FTA statistics reveal that the total number of requests submitted by UAE citizens to recover VAT on the construction of their new homes has reached 1,474, allowing citizens to recover AED84.07 million. This marks a significant increase from the previous year, when the FTA received 539 applications claiming AED23.74 million that was approved by the end of June 2019. After verification of the documents, the citizen is notified of their entitlement. If the refund amount matches the tax invoices provided, then, following final approval, the refund amount is transferred to the applicant’s bank account. The move follows a series of consultation meetings with UAE citizens seeking to recover VAT incurred on building new homes, as well as tax agents. It added that the number of original documents that need to be submitted with the application has been reduced to just four, citing contractor/consultant authorization and passport as examples of documents no longer required for the process while the application form itself has also been simplified.

Commodity Tracker

Business Updates

In this Power Of Data podcast, was joined by Rachel Keane, co-founder of Women in Data to encourage young women into data careers.

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