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Weekly update: MENA at a glance

  • The MSCI’s world index posted the first week of gains since September
  • AT&T-Time Warner deal and British American Tobacco bid for Reynolds American Inc. boost US stocks
  • Most regional markets close on positive note, except for Oman and Egypt

The dollar rose to a seven-month high against a basket of currencies and the euro fell to its lowest level versus the greenback since March after the ECB left its policy rates unchanged.

China’s offshore yuan fell to its lowest against the dollar in six years.

A closer look at MENA economies:

The IMF highlighted that fiscal balances in MENAP are likely to stay in the red on the medium term. Only Iraq, Kuwait and the UAE are projected to post surpluses by 2021.

Saudi Arabia sold $17.5 billion of debt in its first international bond offering, breaking Argentina’s $16.5bn record, thanks to low interest rates and cheap bond price.

Asian investors took 22 per cent of the 30-year tranche, though US registered buyers got the most with 44 per cent.

Yet the IMF expects Saudi Arabia to run a fiscal deficit of 13.0 per cent of GDP this year, compared to an estimated 15.9 per cent last year. Calling the pace of the country’s austerity measures “appropriate”, a senior IMF official stated that there was not a lot of scope for postponing fiscal consolidation.

Egypt arranged approximately 60 per cent of the $6bn required bilateral financing before the IMF board approves and releases the $2.5bn initial loan tranche.

The North African country also issued a decree to establish a Supreme Investment council to boost investments. Members include the country’s prime minister, Central Bank governor, ministers of defence, Interior, Finance, Investment, Trade, Justice and the head of the General Intelligence Service. It is tasked with following up on the execution of investment plans and major economic projects.

This comes in parallel with a new investment law in Egypt, which will be sent to cabinet next month.

On a trade level, Egypt’s exports to UAE increased by 149.1 per cent year-on-year, to reach EGP10.3bn during the first half of 2016. Trade with EU states reached EUR12.8bn during the same period.

In Kuwait, trade surplus expanded for the first time in a year, reaching KWD1.2bn in the second quarter of the year, as oil picked revenues picked up.

Meanwhile in Jordan, the government issued its first local currency Sukuk, raising JOD34 million for its funding purposes.

In neighboring Lebanon, industrial exports dropped 14.7 per cent to reach $1.713bn between January to August, given high transportation cost, high competition and economic slowdown of some Arab countries.

Expat remittances into Lebanon are forecasted to rise by 1.6 per cent year-on-year, according to the World Bank estimates. The Levant country is expected to be the 16th-largest recipient of remittance globally, and the 11th-largest recipient among developing economies in 2016.

Oman’s Central Bank plans to float OMR150m worth of government development bonds by the end of the year, to repay a maturing bond issue. This brings the total amount raised by development bonds to OMR450m.

Qatar’s central bank sold QAR1.5bn in its third domestic bond sale last week; this follows last month’s sale of QAR1.975bn.

The cabinet of Qatar also approved a new law allowing non-Qataris to invest up to 100 per cent of the project capital in all sectors of the national economy provided they have a Qatari services agent.

The UAE is projected to grow 2.3 per cent this year compared to 4 per cent last year, according the latest IMF report on the Regional Economic Outlook. Current account is expected to post a surplus of 1.1 per cent of GDP this year and 3.7 per cent of GDP in 2017.

The country’s Investment Law, allowing 100 per cent ownership to foreigners, is in the final stages of approval.

Source: Nasser Saidi & Associates