CGI Gulf Insights of the Week (106)

ByCGI Gulf Insights of the Week
Monday, 10 December 2018
Published inDecember 2018

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Kuwait

Risk Indicator - DB4b
Risk Level - Moderate

Ratings Trend - Stable

Business opportunities should increase in Kuwait as the government targets a more diverse economy with its national development plan. Contract awards suggest that Divided Zone oil production will restart in 2019: this would tie in with the end of OPEC-led production cuts.

Market Overview

Mubadala Acquires 20% Stake In Egypt's Nour Concession From Eni
The wholly-owned subsidiary of Mubadala Investment Company, Mubadala Petroleum, has completed the acquisition of a 20% participating interest in the Nour North Sinai Offshore Area “Nour” concession from Italy’s Eni. The amount of the deal was undisclosed. Eni, operating through its subsidiary, IEOC, now holds a 40% interest. The other partners in the concession are BP with 25% and Tharwa Petroleum Company with 15% interest. "This acquisition is another step in Mubadala Petroleum’s growth strategy, marking our second investment in Egypt this year. At the same time, we further strengthen our partnership with Eni, the operator of both the Nour and the Shorouk concessions," said Bakheet Al Katheeri, CEO of Mubadala Petroleum. The Nour exploration block is located in the prolific East Nile Delta Basin of the Mediterranean Sea, approximately 50km offshore in the Eastern Mediterranean, with water depth ranging from 50 to 400 meters, and covering a total area of 739km2. Eni and Tharwa Petroleum Company are currently carrying out the drilling of the exploration as well as foreseen in the first exploration period of the Nour concession. Earlier this year, Mubadala Petroleum acquired a 10% stake from Eni in Egypt’s Shorouk offshore concession, which contains the massive Zohr gas field, in a deal valued at $934 million.

Kuwait To Be Added To S&P Dow Jones’ Global Benchmark Indices
Kuwait’s stock market will soon be added to S&P Dow Jones’ Global Benchmark Indices with an emerging markets classification. The move will be effective before the market opens on September 23, 2019, S&P said in a statement. S&P DJI further said that it recognized the progress Kuwait had made in terms of trade clearing and settlement, including changing to a T+3 settlement cycle and establishing a delivery vs payment system. Inclusion of a country in such indexes helps it attract money from passive investors who track indexes and not specific stocks. The move to include Kuwait in S&P Dow Jones comes as the country’s stock market ranks among the best performing in the region. It is also on course to be included in MSCI’s emerging markets index, after the UAE and Saudi Arabia. That could bring passive capital inflows of up to $2 billion, according to analysts. Kuwait was also included in the FTSE Russell Emerging Markets Index earlier this year – a move that could help steer close to $1 billion in passive inflows. The inclusion of Kuwait in major indexes comes as it introduced several measures to increase transparency for investors. Having GCC’s oldest stock exchange, Kuwait has for decades enjoyed growth on the back of oil wealth. But ever since oil prices fell below its $100 peak, GCC countries are actively courting foreign investors to sustain economic growth.

Empowering Women In Banking Could Add Trillions To The Global Economy
With only 35% of women in the Middle East and Africa having access to bank accounts compared to 52% of men, governments and banks in the Arab world are missing a significant opportunity to boost their economies, according to Ann Cairns, Vice Chairman of Mastercard. “There are still two billion people underbanked around the world and the vast majority of them are women. Mckinsey say they could add $28 trillion to the world’s economy,” reveals Cairns. “Allowing women that are setting up their own businesses access to finance is vital. We will be poorer as a world if we don’t include women to the level that they should be included as 50% of the human race.” According to Cairns, 75% of the current wealth of the global population will be inherited by women over the next 20 years, leading to a shift in allocation of capital around the world and an altering of investment profiles. This means that it’s not just the inclusion aspect that’s important for women, but also how they use their capital and the potential impact that could have. Mastercard expects to see an increase in social investment as women get wealthier. Cairns is now urging women to become more involved in artificial intelligence as banks begin to build the future algorithms that will replace bankers in deciding the parameters for automated finance decisions, such as who can access a bank loan and how much.

Bahrain's Investcorp eyes $1bn foray into India
Bahrain-based Investcorp is reportedly looking to invest up to $1 billion in India over the next 5-7 years. CEO Rishi Kapoor told BloombergQuint that the company will start evaluating investment opportunities in the country early next year. “We would look to grow that through an additional investment activity to about a billion-and-a-half dollars,” Kapoor was quoted as saying, adding that the company is looking to invest a billion dollars over the medium term. He said the investment firm is eyeing acquisition opportunities in specialised healthcare, real estate lending, student loan financing, insurance, online lending, and fintech platforms. Its foray into the Indian market is part of the firm’s expansion strategy, said Kapoor. He added that Investcorp intends to double its assets under management to $50 billion in 5-7 years and plans to invest in new markets such as Japan and China.

India, UAE agree to $500m currency swap
India and the UAE have agreed to a currency swap that is expected to boost economic ties between the two countries, it was announced on 4th December,2018. In an official statement, the Indian government explained that through the agreement, both countries can make payments in their own currency without involving a third currency, such as the dollar. The swap is for 35 billion rupees or AED 1.8 billion ($496m). “The bilateral currency swap agreement between India and UAE is expected to reduce the dependency on hard currencies like the US dollar,” the embassy said. ‘It is also expected to give a push for the local currencies of the two nations and it may reduce the impact of volatility in exchange rates arising from dependency on a third currency.” The statement added that “it is also expected to reduce the transmission costs arising from exchange rate risk.” The signing agreement between the UAE Central Bank and the Indian Reserve Bank took place during the ministerial meeting of the 12th session of the UAE-India Joint Commission Meeting, or JCM, in Abu Dhabi. Bilateral trade between the UAE and India stood at $52 billion in 2017, of which the non-oil economy comprised $34 billion.

Commodity Tracker

Business Events this Week In UAE

The Indian Property Show
@ Dubai World Trade Centre
Date: 13th - 15th December,2018

Business Updates

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