Regional & GCC Developments:

• Bahrain’s GFH Financial Group and Abu Dhabi Financial Group (ADFG) and are jointly setting up a new Islamic bank in Abu Dhabi’s new financial free zone with initial capital of USD 100mn. The bank will be run as a commercial bank accepting offshore deposits and dealing in dollars, according to an official from the ADFG.
• Egypt’s PM disclosed that the World Bank’s first USD 1bn tranche of its USD 3bn soft loan is subject to the passing of the VAT in Parliament.
• Net foreign reserves in Egypt rose to USD 17.52bn at end of May (Apr: USD 17.011bn).
• Egypt’s investment target for fiscal year 2016/17 is set at EGP 531bn, representing 16.0-16.5% of GDP, according to the planning minister. Private investment is expected to reach EGP 292bn, reported Al-Ahram’s Arabic news website, quoting the minister.
• Non-petroleum exports from Egypt grew by 1.6% yoy in Jan-Apr 2016 to USD 6.5bn; exports to the Arab countries was up 4% to USD 2.9bn.
• Egypt received an estimated USD 19.7bn in global remittances last year, according to the World Bank, of which USD 1.83bn originated in the UAE.
• The National Bank of Egypt plans to boost its SME portfolio to EGP 30bn by the end of financial year 2016/17 from an estimated EGP 23bn currently.
• Fitch Ratings affirmed Egypt’s Long-Term Foreign- and Local-Currency Issuer Default Ratings at “B” with a Stable Outlook. Even though characterised by high fiscal deficit and general government debt/GDP ratio amidst low foreign reserve coverage of imports and recent political history, factors that lent support included low external debt and gradual progress in implementing an economic and fiscal reform programme.
• The central banks of Turkey and Iran have re-opened their connection on the SWIFT global transaction network, according to an Iranian official.
• Iraq is expected to supply 5 million barrels of extra crude to its partners in June, reported Reuters, citing according to industry sources familiar with the issue.
• Inflation in Kuwait slowed to 2.9% yoy in Apr, thanks to falling food prices. Food inflation eased to an almost one-year low of 2.6% yoy in Apr (Mar: 4.1%).
• Kuwait’s new airport terminal, which will raise the capacity of the airport to 25 million passengers from the current five million, is expected to cost KWD 1.31bn and will be completed over six years, according to the country’s public works minister.
• The market capitalisation for credit securities and sukuk in Oman reached OMR 2bn by the end of May due to listing of government development bonds, worth of OMR 100mn. The equity market capitalisation reached by OMR 52mn to touch OMR 6.12bn.
• Money supply in Qatar shrank by 1.6% yoy in Apr (Mar: -0.4%), registering the third consecutive month of declines. Total domestic credit growth, at 19% in Apr vs Mar’s 13.9%, accelerated to its fastest since Apr 2013.
• Qatar-Saudi Arabia bilateral trade reached QAR 6.94bn in 2015. In previous years, trade was substantially higher: around QAR 8bn in 2014, which up from QAR 7.9bn in 2013.
• Saudi Arabia’s foreign assets fell by 1.1% mom and 15.7% yoy to SAR 2.15trillion in Apr – their lowest level since Apr 2012.
• Saudi Aramco, with an aim to expand its global market share, has signed a contract with Poland’s biggest refiner PKN Orlen. Aramco will supply PKN with 50,000 barrels of crude oil per day starting this month.
• Uber raised USD 3.5bn from Saudi Arabia’s Public Investment Fund. This investment puts the company’s total balance sheet, including cash and debt, at more than USD 11bn.
• Saudi construction firms move to new areas: given fewer development projects, about 20% of construction firms have closed down, while 50% have switched over to maintenance, operations and electrical areas over the past eight months, and 40% of the companies face serious problems due to the low oil prices and the proposed tax on unused land, according to officials of various construction/ contractors committees in the country.
• Foreign remittances from Saudi Arabia fell by 8.3% mom and 11.9% yoy to SAR 11.9bn in Apr, the lowest level recorded since 2014, reported Arab News.
• GCC announced the formation of a new agency – Economic and Development Affairs Authority – aimed at increasing economic cooperation. This agency “will boost coherence, integration and coordination between member states in all economic and development sectors”, according to an official statement.
• Qatar and UAE ranked 13th and 15th respectively in the World Competitiveness ranking compiled by the IMD World Competitiveness Centre. Hong Kong, Switzerland and US took the top three spots. (Rankings can be accessed http://www.imd.org/wcc/news-wcy-ranking/)
• Regional e-commerce grew by only 23% last year, reported Payfort, with the UAE representing the largest growth market, followed by Saudi Arabia and Egypt. People in the UAE spent over USD 10bn in internet transactions last year, and it is forecast to nearly triple to USD 27.13bn over four years.
• GCC nations have together created 17mn jobs for expats, a Joint GCC Cabinet official revealed at the International Labour Conference.
• The average value of construction disputes in the Middle East increased by 7% over the past 12 months to USD 82mn, making it the world’s costliest market ahead of Asia (where average dispute cost is USD 67mn), according to construction consultancy Arcadis. In contrast, average cost of disputes in the UK, Europe and North America is just USD 25mn.
• Middle Eastern carriers posted a 12.7% traffic increase in Apr, the only region with a double-digit percentage increase in demand, according to the International Air Transport Association. Global passenger traffic showed demand rose by 4.6%, the slowest pace since Jan 2015.
• Over USD 750mn was invested in 450+ tech startup deals in MENA between 2013-2015, according to ArabNet’s report titled “The State of Digital Investments in MENA”. UAE and Lebanon together captured 65% and 15% of the value of total investments in 2015.

UAE Focus

• Inflation in the UAE increased by 0.4% mom and 1.6% yoy in Apr; housing and utility costs were up 3.7% yoy while food prices grew by 3.1%.
• UAE Ministry of Energy hiked the fuel prices for the month of June: petrol prices were up 4.5-5% while diesel went up by 10%. Brent crude is trading at the highest since Nov.
• Emirates NBD plans to invest AED 500mn over the next 3 years towards digital innovation and intends to launch the UAE’s first digital bank for millennials, according to its CEO.
• In a bid to support fintech growth in the UAE, Abu Dhabi Global Market (ADGM) signed an agreement with the start-up accelerator Flat6Labs. Plans include the creation of a RegLab that will create an environment conducive to fintech firms (cost effective and not too stifling for small firms).
• Etihad Airlines and its partners’ combined direct economic contribution will amount to USD 7.4bn this year, with Etihad contributing USD 6.8bn. Indirect contribution via tourism is a further USD 2.2bn while total contribution is expected to rise to USD 18.2bn by 2024. Together, it expects to support 91,700 jobs this year, according to research undertaken by Oxford Economics.
• Abu Dhabi plans to issue tenders for infrastructure worth AED 20bn over the next 2-5 years, and these are most likely to be public-private partnerships, revealed the undersecretary of the department of municipal affairs.
• Dubai-based Majid Al Futtaim plans to boost its investment in UAE to AED 48bn by 2026, from AED 18bn currently. The plan includes development of 10 new City Centre-branded shopping malls (scheduled to open before 2020), six hotels, a mixed-use community, 28 cinemas and 40 Carrefour outlets, as well as expand six existing malls. The CEO stated that Dubai has room for more “quality shopping centres” and that land had already been acquired for the new developments.
• Abu Dhabi is facing an over-supply of properties, according to a senior official on the sidelines of a forum; he also mentioned “we’ll meet [the demand-supply gap] with innovative solutions to make sure there is a balance”.
• Dubai Parks and Resorts, which successfully raised AED 1.68 billion from a 1.6 times oversubscribed Rights Issue, also revealed that Qatar Holding had increased the stake in the company to 11%.
• Dubai Investments is in talks with banks for a USD 300mn loan, according to the CEO. The loan, to be finalised by the end of the summer, will support financing of the Mirdif Hills project in Dubai.
• Arabtec’s shareholders approved the use of AED 1bn of the company’s statutory reserves to cover around 44% of its accumulated losses, leaving a reserves balance of AED 148mn.
• The first-ever Dubai Happiness Meter revealed that 89% of around two million respondents who used government facilities in 28 different departments in Dubai were satisfied with the service they received. While Dubai Customs trumped other departments to the top spot, the results also disclosed some interesting details like 10am on Tues was the “happiest hour”.  

Regional news and commentary courtesy of Nasser Saidi.