Insights

Issue No.133

17 July 2017

This report is designed to give you a snapshot about the MENA region tackling multiple issues:

48.88 USD 1,231 USD

	/USD	/EUR
EGP	18.00	20.60
AED	3.67	4.20
QAR	3.67	4.21
SAR	3.75	4.29
BHD	0.38	0.43
OMR	0.39	0.44

Economic Outlook

Egypt metro ticket prices will increase by 100% in 2018. Passengers will pay ticket price of two, three or four EGP depending on the number of stations.
Egypt core inflation increases to 31.95% y-o-y in June up from 30.57% in May. While annual consumer price inflation rose slightly from 29.7% to 29.8% amid the 50% fuel price hike on June 29.
Foreigners captured 31% of total bond issuance amid 200 bps interest rate hike. Egypt three-year-bonds rose to 19.478% up from 18.382%, furthermore seven-year-bonds rose to 19.214% from 18.346% on June 21.
Egypt will cut flour imports by 10% alongside restricting subsidies to reduce waste and lessen the incentive for smuggling flour. This measure is set to save 447 MM USD from 2017/2018 food subsidy bill as wheat imports reached 5.58 million tons, up from 4.4 million the former year.
Emirates contributed 21.3 BN USD to the US economy through signing the first Open Skies agreement which supported 104,000 American jobs and generated 6.4 BN USD of labor income in 2015.
Oman inflation increased by 0.87% in June 2017 compared to the same month last year. The increase was attributed to the increase in the prices of food and beverages group by 1.73%, tobacco group by 23.84%, education group by 2.85%, housing, water, electricity and gas by 1.4%, clothing group by 0.25% and health group by 0.4%. Nonetheless, the consumer price index decreased by 0.18% for the same month. The decrease was attributed to the decrease of prices of transport by 2.55%, clothing group by 0.3%, housing, water, electricity and gas by 1.13%.
Oman fish production grew by 5.4% last year, from 254,767 tons to 267,981 tons in 2016. Forecasts suggest that the Sultanate's fish production is expected to double by 2020; reaching 500,000 tons per annum.
Saudi citizens will continue to receive healthcare free of charge despite privatization. According to Vision 2030, the volume of the public healthcare centers will be reduced to expand private sector contribution.
The draft VAT law was approved by the Saudi Shoura Council last Wednesday. The law is in alignment with the uniform agreement signed by the Gulf Cooperation Council (GCC) earlier.
Oil exports in Saudi will be cut in August by 600,000 barrels per day (bpd); falling to their lowest level this year at around 6.6 million bpd. July oil output would be lower than June and production cuts are continuing, Saudi Arabia is seeing improvements in the market fundamentals.
Local currency Sukuk or Islamic bonds are issued in Saudi in July 2017. As a result of lower oil prices, in April Saudi issued international Sukuk of 9 BN USD besides its first international bond of 17.5 BN USD in 2016 as a means to finance its budget deficit.
Dubai property transaction plunged by 23% in Q2-2017. Renters benefited from a 2% decline for both apartments and villas; resulting from a strong dollar and low oil prices. Affordable locations are attracting higher demand unlike luxury properties. Burj Khalifa's property prices fell by 25% last year.
Jordan is combating money laundering, according to the 2016 Basel Anti-Money Laundering (AML) Index, scoring 4.88 - medium risk country. In terms of the risk of money laundering and terrorist financing, Jordan is ranked 4^th regionally and 35^th internationally.

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Political Events

The Egyptian Island Al-Warraq witnessed clashes on Sunday between the security forces and the island residents concerning the invasion on the state land. The people refused to leave their homes and objected to the execution decision, resulting in the death of one citizen and the injury of 57 of residents and police forces.
Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain issued a joint statement accusing Qatar of funding and supporting terrorism due to its existing policies that are destabilizing the region. The four nations have met US Secretary Tillerson in Jeddah to discuss the issue; affirming that they will uphold their position until Qatar fully implements their demands.
Gaza strip will be "unlivable" by 2020 as described by the United Nations Special Coordinator for the Middle East Peace, Nickolay E. Mladenov. He has called for the end of the internal Palestinian division and finding a method for the coexistence of the Gaza Strip and the West Bank.
The International Committee of the Red Cross (ICRC) reported that the Yemen Cholera cases pass the 300,000 marks in 10 weeks. Nonetheless, the daily growth rate has been halved to 2% in recent weeks.
UAE stresses that there will be no quick end to the Qatar situation as they are headed for a long estrangement. The statement of the UAE minister of state for foreign affairs suggested no breakthrough in the situation after U.S. Secretary of State Rex Tillerson left the Gulf on Thursday.
Official national Kuwait carriers are exempted from electronic devices ban on all US-bound flights from Kuwait International Airport.

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Stock Market

.TASI banking sector has significantly increased led by Banque Saudi Fransi and Saudi British Bank (SABB).
.KWSE banking sector has slightly increased led by National Bank of Kuwait (NBK) and Warba Bank. In addition, telecommunication sector increased led by Ooredoo Kuwait.
.ADI real estate sector increased led by Eshraq Properties and telecommunication sector led by Etisalat.
.DFMGI real estate sector increased led by Arabtec Holding.

Note: Weekly values are calculated on Thursday of each week.

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Major Companies Transactions

Abu Dhabi National Oil Company ADNOC is weighing proposals by Goldman Sachs, First Abu Dhabi Bank, HSBC and JPMorgan for lead roles in the listing of its retail unit IPO.
Expo 2020 Dubai will provide approximately 100 SMEs with an opportunity to network while understanding the procurement knowledge of the food and beverage sector. Moreover, Dubai workforce will need 5 million meals to be fed from 20 October 2020 to 10 April 2021. Additionally, it is estimated that the Business Connect session will generate 2 BN AED from onsite F&B sales at Expo.
Egypt has signed a 4 BN USD deal with a Canadian company to build a sixth metro line. The first line carries 2 million passengers while its capacity is 1.8 million. To combat Cairo traffic, the sixth line will accommodate for half a million passengers.
Qatar National Bank (QNB) reported a 3.6% increase in profits in Q2-2017 recording a net profit of 6.7 BN QR (1.8 BN USD) for the first half of the year which is 7% higher than the previous year. It is worth mentioning that post the cutting of diplomatic ties with Qatar, QNB have not seen a significant outflow of deposits, and it had a "robust" liquidity position.
National Bank of Egypt is planning to increase SMEs funding by 20%, by the end of the financial year 2017/2018, to reach 36 BN EGP (2 BN USD) as they are fundamental drivers of economic development.
Kuwait's Aviation Lease and Finance Company (ALAFCO) is seeking 300 MM USD loan. ALAFCO is planning to upgrade its portfolio by 2020 by having 100 aircrafts, up from 50 at the end of 2015.
National Bank of Kuwait (NBK) records an increase in net profits of Q2-2017 by10.2% compared to 9.3% in Q1-2017. EFG Hermes forecasts that NBK would make a quarterly net profit of 83.98 MM dinars. The increase is attributed to higher net interest income and net income from Islamic financing.
American airlines end code-share deals with Qatar and Etihad Airways. The former charged the latter of getting an unfair competitive advantage from state subsidies.

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Sports and Culture

Roger Federer became the first man to win Wimbledon eight times and extended his record to 19 Grand Slam titles with victory over Croatia's Marin Cilic. He finished the contest in one hour and 41 minutes.
Maryam Mirzakhani, the first woman to receive the prestigious Fields Medal for mathematics- "Nobel Prize for Mathematics", has died in the US due to breast cancer. Prof Mirzakhani, a Stanford professor who is also Iranian, was awarded the medal in 2014 for her work on complex geometry and dynamical systems.
Saudi Arabia is offering physical education for girls in the upcoming academic year. The initiative is part of gradual reforms taken to increase women access to the labor force.
Abu Dhabi University offered 20 MM AED worth of scholarships and financial aid to 1,200 students in the academic year 2016/2017. This initiative supports Vision 2030 aim at building a knowledge economy.

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