Newsletter 100 Issue December (Copy 101)

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Country Risk Update
United Arab Emirates

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

The IMF supports the government’s move towards stimulus but has made a recommendation to replace business fees with corporate taxation. Access to global markets from Dubai will be among the best in the world. The UAE will continue to strengthen its position as a regional safe haven and business hub.
Market Overview
Bahrain to IPO three companies by 2020 to boost government revenue
In line with its plan to boost government revenue, Bahrain will sell stakes in three logistics-related companies on its stock exchange over the next two years, according to the country’s transportation and telecommunications minister Kamal din Ahmed. It aims to sell around 20% of Bahrain Airport Services, the operator of Bahrain International Airport, Bahrain Duty-Free and the $1.1 billion new airport terminal, Ahmed told CNBC Arabia. “As the main shareholder in these companies, we hope the other shareholders agree and we float a small percentage of about 20% of the companies on the Bahrain Bourse,” he said, adding that the IPOs will also encourage competition and transparency. Bahrain, which has the smallest economy in the GCC, revealed a series of reforms after it received $10 billion in aid from Kuwait, Saudi Arabia and the UAE in October to help steady its finances and prevent it from experiencing a credit crunch. It also introduced a 33-page financial programme dedicated to eliminating its budget deficit by 2022. It includes reducing public spending, improving efficiency in state expenditure, introducing a voluntary retirement scheme for government employees and implementing 5% VAT next year. The country's gross domestic product (GDP) rose 2.4% in the second quarter of 2018 compared to last year due to an increase in crude prices and growth of its non-oil private sector, according to the Bahrain Economic Quarterly Report produced by the Bahrain Economic Development Board.
Abu Dhabi fund invests $140m in high-speed Moroccan rail project
A high-level delegation from Abu Dhabi Fund for Development (ADFD), the national entity for international development aid, has attended the inaugural ceremony of the $2.3 billion landmark infrastructure project in which it invested. The project includes a high-speed train service connecting the cities of Tangier and Casablanca that reduces travel time to two hours. Inaugurated by King Mohammed VI of Morocco, ADFD’s contribution to the 200km long, 320-km/hr high-speed train amounted to $140 million. Through linking the two cities, this important infrastructure project will bolster the movement of people, increasing nationwide and cross-city trade and tourism as well as driving sustainable economic development, a statement said. Mohammed Saif Al Suwaidi, general director of ADFD, said: “Supporting Morocco’s development programmes and objectives have resulted in economic growth and diversification, new job opportunities, and sustainable development in key sectors in that country. A first-of-its-kind initiative in the African continent, this high-speed train will dramatically improve travel times and living standards.” The fund has so far funded 12 transportation projects worth an estimated $650 million to support socio-economic development in Morocco.
BR Shetty's Finablr raises stake in digital gifting platform
UAE-based billionaire businessman Dr. BR Shetty's holding company Finablr has increased its stake in Swych, a digital gifting platform, with a follow-on Series B investment to become a majority shareholder. With further exposure to the fast-growing digital gifting industry, Finablr will leverage its network’s leadership and global presence to bring Swych’s gifting network to a broader international audience, a statement said. Promoth Manghat, executive director and CEO of Finablr, said: “At Finablr, we facilitate access for consumers and businesses to the digital economy. To deliver on that promise, we are constantly looking to innovate and partner with companies providing exceptional products and services. "Swych has a distinctive business proposition that complements the services offered by the Finablr network brands. We have collaborated closely with Swych’s high-calibre team on exciting projects over the last year. We will seek to continue building on this successful partnership through our majority stake in the company.” Finablr, a UK-based holding company, was launched earlier this year to consolidate Shetty's global portfolio of financial services brands including UAE Exchange, Travelex, Xpress Money, and others. Finablr will comprise over 18,000 employees and handle more than 150 million customer transactions every year.
Audit firm KPMG suspended in Oman over 'irregularities'
Oman’s Capital Markets Authority (CMA) has suspended audit firm KPMG from auditing entities it regulates for one year after uncovering “major financial and accounting irregularities”, it announced on November 14, 2018. In a statement, the CMA said the results of an inspection promoted it to “enforce immediate corrective measures in those listed entities to protect investors and other stakeholders.” “CMA undertook a comprehensive review of the causes that included understanding the reason of the non-discovery and non-reporting of such irregularities by the auditors,” the statement said. “This review established professional negligence on the part of some of the audit firms that warranted disciplinary measures.” The measure against KPMG does not affect projects to which KPMG has already been appointed. Omani law stipulates that KPMG has a right to appeal the decision. In a statement sent to Arabian Business, KPMG said it was “cooperating with the CMA during the review of certain audits dated prior to 2015 and the firm is fully committed to cooperating with the CMA to resolve these matters.” “Audit quality and compliance with professional standards is the highest priority in KPMG. The firm strongly believes that continuously improving audit quality is fundamental to meeting its responsibilities and maintaining public trust,” the statement added.
Oil continues downward trend as Trump blasts Saudi plan to cut production
Oil fell for a 12th consecutive session in its longest losing streak on record after US President Donald Trump criticized top OPEC producer Saudi Arabia’s plan to cut output. Futures in New York fell as much as 1.8 percent, extending a drop of over 11 percent since Oct. 26. Prices “should be much lower based on supply,” Trump said in a tweet after Saudi Energy Minister Khalid Al-Falih said producers need to cut about 1 million barrels a day from October production levels. A slump in US equity markets and the dollar’s climb to an 18-month high also weighed on crude, which slid into a bear market last week. Oil has retreated from a four-high reached in early October as fears of a supply glut deepened after the US gave some nations waivers from its sanctions to continue buying Iranian crude while American output and inventories climbed. With a trade war between the US and China stoking concerns over the global economy, investors are watching if the Organization of Petroleum Exporting Countries and its allies will pump less. “Trump’s message was intended to keep OPEC in check” after the group signaled they may agree to cut production, Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone from Tokyo. “There is not a lot of time left before the OPEC meeting in December, and the group may not be able to build consensus by then. It remains to be seen whether OPEC will agree” on cuts, Tsugata said. West Texas Intermediate for December delivery declined as much as $1.08 to $58.85 a barrel on the New York Mercantile Exchange and traded at $59.23 at 12:46 p.m. in Tokyo. The contract fell 26 cents to $59.93 on November 12, 2018, the lowest close since Feb. 13. Total volume traded was slightly above the 100-day average.
Commodity Tracker
Business Events this Week In UAE
​Solar Decathlon Middle East 2018
@ Mohammed bin Rashid Al Maktoum Solar Park, Seih Al-Dahal, Dubai
Date: 14 November 2018 To 29 November 2018
Business Updates
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