CGI Gulf Insights of the Week (103)

ByCGI Gulf Insights of the Week
Monday, 31 December 2019
Published inDecember 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Oman

Risk Indicator - DB4c
Risk Level - Moderate

Ratings Trend - Stable

Dun & Bradstreet upgrades Oman's country risk rating on the back of the improved outlook for oil prices and production (and consequently for oil revenues). The government is targeting high-end tourism as an area for growth. The ports of Sohar and Salalah are emerging as regionally-competitive infrastructure facilities, soon to be joined by Al Duqm.

Market Overview

UAE aviation sector contributes 15% to the country's GDP
The aviation sector contributed 15percent to the country’s GDP in 2018, according to Saif Mohammed Al Suwaidi, director-general of the General Civil Aviation Authority (GCAA). Al Suwaidi said the UAE has invested an estimated $270 billion (AED1trn) in the aviation sector, which includes improvements to airport infrastructure and a fleet of 884 commercial aircraft. In an interview with UAE news agency WAM, Al Suwaidi said GCAA is replanning routes to neighbouring countries that will increase airspace capacity and generate annual financial savings of $14 million (AED50m) for airline companies. The GCAA chief said passenger traffic across all UAE airports is expected to increase at a rate of 5.2 percent (142m passengers). UAE accounts for 45 percent of the Arab aviation sector, which takes into consideration the number of passengers and aircraft capacity, and the addition of up to five aircraft each month to the UAE’s four carriers. He said the UAE registered a total of 6,438 drones this year, with each recorded on the GCAA’s unified e-platform.

Saudi Arabia reports 18% drop in expat remittances
Expat remittances fell by 18% in November, according toSaudi Arabian Monetary Authority (SAMA). The banking authority said $2.6 billion (SAR9.9bn) was transferred by expats in November, compaired to $3.2bn (SAR12bn) in the same month last year, SAMA said remittances by Saudis also dropped by 39.5% - $1.2bn (SAR4.8bn) in November, compared to $2.1bn (SAR7.9bn) in 2017.The value of retail (point of sale) transactions in the kingdom reached a record $56bn (SAR210bn) for the first 11 months of this year, up from $48bn (SAR180bn) in 2017.

Raya Holding's Chairman Submits MTO To Acquire 36.7% Stake Of The Company
Egypt's Financial Regulatory Authority has obligated the controlling shareholders of Raya Holding For financial Investments including the Founder, CEO and Chairman Medhat Khalil and related parties to submit a mandatory tender offer (MTO) for 100% of the company. FRA's decision aims to protect the minority shareholders, as the stake owned to Medhat Khalil and his related parties exceeded the legal limits which allowed them to control the company. According to Egypt's securities regulations, controlling a stake of 33% by related parties requires submitting a mandatory tender offer to the minority shareholders. The offer comes after weeks of negotiations between FRA and Raya, as the latter has submitted an appeal to FRA, and claimed that the related parties have a stake under 33%. FRA refused the company's complaining and the bourse suspended and reversed transactions on Raya's stock over the past few days. As per the latest statement from Raya, the company will offer a bid to buy 36.7% stake of the company priced at 9.4 EGP per share. Headquartered in Egypt, Raya Holding shares have been listed in the Egyptian Exchange (EGX) since 2005; the share's price in the offer is 2.8% higher compared to the current price at 9.14 EGP.

Saudi Arabia sets up $2.9bn program to increase homeownership
Saudi Real Estate Refinance Co, a unit of the kingdom’s sovereign wealth fund, set up an SR11 billion ($2.93 billion) Islamic bond program to increase liquidity in the country’s mortgage market. HSBC Saudi Arabia has been appointed as the sole arranger and bookrunner for the riyal-denominated program, the company said in a statement. Sukuk will be issued through multiple tranches. Saudi Real Estate Refinance Co is fully owned by the Public Investment Fund and was set up in 2017 to increase home ownership among Saudi citizens and promote the development of a housing finance market in the kingdom. In line with Vision 2030 objectives to improve the performance of the real estate market, the new company plans to raise the rate of home ownership among Saudis to 52 percent by the end of 2020. Demand for real estate financing in the kingdom is expected to increase from SR280 billion in 2017 to SR500 billion in 2026. Launched in partnership with the Ministry of Housing, and under the chairmanship of Majed al-Hogail, the Minister of Housing, SRC is expected to refinance up to SR75 billion for the kingdom’s housing sector over the next five years, reaching SR170 billion by 2026.

1,000 jobs said to be at risk in proposed Abu Dhabi banking merger
A proposed three-way bank merger in Abu Dhabi may lead to about 1,000 jobs being cut, according to three people with knowledge of the matter. Talks among Abu Dhabi Commercial Bank, Union National Bank and privately-held Al Hilal Bank are at an advanced stage, the people said on condition of anonymity because the topic is private. The lenders are working on issues such as valuation and are conducting due diligence, two of the people said. No final agreements have been reached and the discussions may not result in a transaction, the people said. A combination of the companies would create a lender with about $115 billion in assets and the Gulf Cooperation Council’s fifth-largest bank. Abu Dhabi, home to 6 percent of global oil reserves, has stepped up efforts to create leaner and more competitive financial institutions. There are almost 50 banks operating in the United Arab Emirates serving a population of about 9 million, compared with 28 lenders in Saudi Arabia catering to more than 30 million people.

Commodity Tracker

Business Events this Week In UAE

New Year Dubai

@ Citywide
Date: 31st December 2018 - 1st January 2019

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