CGI Gulf Insights of the Week

  • ByCGI Gulf Insights of the Week
  • Tuesday, 07 May 2019
  • Published inMay 2019
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CRIF GULF WEEKLY INSIGHTS
Country Risk Update - Egypt

Risk Indicator  - DB6a
Risk Level       - Very High
Ratings Trend - Improving

Egypt's prime location as a base for exports to the Middle East, Asia and Africa creates potential for long-term economic growth, as does its large population of almost 100m. Fresh opportunities open up for portfolio investors as both the government and private companies aim to tap into a marked improvement in investor sentiment.
Market Overview
Drake & Scull International's chairman resigns
The chairman of Drake & Scull International, the financially troubled engineering firm, has resigned. Obaid Bin Touq put in his papers along with another board member, Khamis Buamim, DSI said in a statement on Dubai Financial Market. This leaves the company without a chairman, a group CEO and chief financial officer within a matter of a few days. DSI is to hold a shareholders meeting on 07 May 2019, morning, and it could be that a new chairman, even one in an interim capacity, could be named. The shareholders’ meet is also expected to take up for discussion a restructuring plan, including the issuance of a sukuk. But it remains to be seen whether fast-moving developments that happened on 2 May 2019 and 7 May's announcement of Bin Touq’s exit will delay that process. Last Thursday on 2 May 2019, the stock market regulator confirmed appointing an external committee to oversee the financial reporting of DSI for the better part of the last 10 years. Other related matters have also been brought under the purview of this committee. DSI, whose shares remain suspended since November, had reported losses of Dh5 billion plus for 2018.
After Saudi And UAE, This GCC Country Might Be Investing In $100B SoftBank Fund
Japan’s SoftBank Group Corp might soon have one more Gulf investor among its fast-growing investor list. The Japanese conglomerate is in talks with Oman to rope in to invest in its $100 billion Vision Fund, the Wall Street Journal reported quoting anonymous sources. The fund currently has investors from the Gulf such as Saudi Arabia’s Public Investment Fund and UAE’s Mubadala, which has committed $15 billion to the fund. While no other details are known, the investment that SoftBank might be seeking could be up to a billion dollars. Representatives from SoftBank are yet to comment on this. SoftBank has had a large appetite for deal-making, investing most of the funds it raised from existing investors. Its stake in Uber alone is estimated to be worth $10 billion.  The firm has also maintained an exhaustive pace of investments and has ambitions to double its staff to 800 over the next 18 months. The reports have also indicated that it could list its Vision Fund to procure investment to pump into the vibrant startup scene. Meanwhile, it has found willing partners in the Gulf governments who are eager to diversify their investments to insulate themselves from overarching market risks. Due to a fall in petrodollars, these economies are also turning increasingly towards tech – a focus of SoftBank’s investments- to generate higher returns on their investments.
Dubai introduces new digital wallet for government payments
Dubai’s Department of Finance (DOF), in collaboration with Smart Dubai and emaratech, has launched a digital wallet to facilitate payments for government service fees. According to a statement, the new payment channel noqodi enables individual and corporate customers to pay “quickly, easily and securely” for different government and non-government fees under Dubai Pay, the digital platform for payments. “DOF is keen to raise government customer happiness by providing more secure and easy-to-use payment options, such as noqodi e-wallet, through cooperation with Smart Dubai,” said Abdul Rahman Saleh Al Saleh, the department’s director general. “We commend Smart Dubai’s efforts in developing the digital infrastructure and the provision of smart payment channels,” he added. The new digital wallet, noqodi, is the latest option available to pay government fees through Dubai Pay, the Dubai Now smart application.
ADGM, RAK Courts sign MoU on judgments
Ras Al Khaimah Courts (RAK Courts) and Abu Dhabi Global Market Courts (ADGM Courts) have signed a Memorandum of Understanding (MoU) on judicial matters for the reciprocal enforcement of their judgments, decisions, and orders, and the arbitral awards recognized by them. The latest collaboration follows the signing of their first memorandum of understanding on legal and judicial endeavors in November 2017. “RAK Courts is continuously seeking to further its cooperation with ADGM Courts, which is known for its unique world-class judicial services. This MoU will enhance the trust and confidence of users and ensure efficient delivery of services,” said Ahmad Mohammad Al Khattari, chairman of the Ras Al Khaimah Courts Department, in a statement on 6 May 2019. On the other hand, David Hope, Baron Hope of Craighead and Chief Justice of ADGM Courts, said the widening and strengthening of their enforcement framework across the UAE will serve to increase the local and global community’s confidence in the UAE judicial system and, in turn, bolster the growth of the economy through more investment and trade. The two entities plan to continue their engagement on all judicial matters particularly regarding the use of technology to assist in the enforcement of judgments. 
Oil prices slump after Trump’s tariff threat against China
Oil prices tumbled on 6 May 2019, after US President Donald Trump said he would sharply raise tariffs on Chinese goods this week, risking the derailment of trade talks between the world’s two biggest economies. Brent crude futures were at $70.31 per barrel at 1124 GMT, down 54 cents. Brent earlier hit its lowest since April 2 at $68.79. US West Texas Intermediate (WTI) crude futures were at $61.31 per barrel, down 63 cents. WTI hit $60.04 earlier in the session, its lowest since March 29. Trump said on Twitter on 5 May 2019, that he would hike US tariffs on Chinese goods this week, pulling down global financial markets, including oil futures. “Trump’s sudden hard line on China tariffs has spooked investors, who are scrambling to reduce their risk levels in the markets,” said Jasper Lawler, head of research at futures brokerage London Capital Group. “The prospect of months of trade talks being derailed by Trump has raised concerns over future demand for oil,” he added. Chinese Foreign Ministry spokesman Geng Shuang told a news briefing on Monday 6 May 2019, that a Chinese delegation is still preparing to go to the United States for trade talks. “We are also in the process of understanding the relevant situation,” he said. News of rising tariffs on $200 billion of Chinese goods at the end of this week has outweighed the announcement that the US is to send a strike group to the Arabian Gulf, Vienna-based consultancy JBC Energy said. In a sign of rising tensions in the region, the United States is deploying a carrier strike group and a bomber task force to the Middle East.
 
Commodity Tracker
Business Events this Week In UAE
Ramadan 2019
Date: 06 May To 05 June 2019
Business Updates

D&B Business Valuation
D&B Business Valuation Study is a neutral, third party and comprehensive assessment of the prospects of the business entity. As a part of the business assessment process, a comprehensive business valuation report is submitted that cover issues related to nuances of the business. The business valuation report helps investors, banks and financial institutions validate their own research findings and make a more informed decision. The neutral assessment and the analysis conducted on different dimensions also assist the users of the report to understand better the risks inherent and can formulate strategies to mitigate the same.
 
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