CGI Gulf Insights of the Week (135)

ByCGI Gulf Insights of the Week
Sunday, 08 March 2020
Published inMarch 2020

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Saudi Arabia

Risk Indicator - DB3c
Risk Level - Slight
Ratings Trend - Deteriorating

Falling 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. Longer-term growth will be driven by Government reforms under its Vision 2030, which aims to reduce dependence on oil export revenues and boost the private sector.

Market Overview

Gulf central banks follow Fed move with half-point rate cuts
Policy makers in the Gulf followed the US Federal Reserve’s emergency move on Tuesday, lowering interest rates in response to the coronavirus outbreak. Central banks in Saudi Arabia, the United Arab Emirates and Bahrain matched the Fed’s half-percentage point cut. Gulf central banks largely move in lockstep with the US to protect their currencies’ pegs to the dollar. The UAE’s central bank said it’s reducing the repo rate and its certificates of deposit rate by 50 basis points. The Saudi Arabian Monetary Authority cut the repo rate to 1.75% from 2.25% and the reverse repo rate to 1.25% from 1.75%. Bahrain’s central bank lowered its key rate to 1.75% from 2.25%.

UAE to allow full foreign ownership in industrial, agricultural and services sectors

The UAE will allow full foreign ownership in 122 economic activities in the industrial, agricultural and services sectors. In the industrial sector, 51 activities will be included such as manufacturing food and drinks products and aircraft repair. In the services sector, 52 activities will allow full foreign ownership including scientific research and development while the agricultural sector will include 19 activities such as the cultivation of grains.

Emirates NBD announces reduction in bank charges
Emirates NBD has reduced its bank charges in a bid to support business in the UAE. In line with recent government and UAE Central Bank initiative, the bank’s 'Transaction Banking' unit has announced reduced tariff offers over the next three months. In particular, it applies to customers using its revamped 'Smarttrade' platform, which replaces the need for physical branch visits.

Commodity Tracker

Oil prices declined to multi-year lows as OPEC’s allies rejected additional production cuts that the organisation proposed. U.S West Texas Intermediate Crude slid by 2.5% as compared to last week to settle at $45.90 on Thursday. In comparison to last week, the International benchmark Brent crude slid 4.2% to settle at $49.99 per barrel on 5th March. Gold price increased by 1.5% as compared to last week to reach $1666.40 per ounce on Thursday.

Stock Market Update

All the GCC indices closed the trading week on Thursday in the red territory, pressured by concerns over the spread of the coronavirus. The Abu Dhabi Securities Exchange (ADXGI) declined by 5.3% to end the first week of March at 4,643.08 points. The DFM's general index slid by 129.46 points or 4.9% to close the week at 2,460.54 points. The decline in both the UAE indices were led by the banks sector. TASI lost 160.82 points or 2.1% to close the week ended on 5 March at 7,467.52 points. The transportation sector led the losers after sliding by 5.3%, followed by the commercial services sector which fell by 4.9%. Bahrain’s All Share Index declined by 2.6% to reach 1,617.79 points on Thursday. MSM30 fell marginally by 0.6% to close the week at 4107.79 points on 5th March. Boursa Kuwait’s All-Share Market decreased by 4.7%, reaching 5,788.04 points on Thursday.

CRIF Business Updates

On the latest Power of Data podcast, Yanna Winter from Generali explains the importance of data management in the insurance sector.

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