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Monday, 28 December 2015

MIDEAST STOCKS-Saudi mkt positive ahead of budget; Dubai blue chips sell-off | News by Country | Reuters

MIDEAST STOCKS-Saudi mkt positive ahead of budget; Dubai blue chips sell-off | News by Country | Reuters:

"Saudi Arabia's bourse garnered solid gains on Monday ahead of the unveiling of the kingdom's 2016 budget, with investors betting on stocks expected to benefit from new economic policy including subsidy cuts, while other markets were mixed.

Saudi Arabia posted a 2015 budget deficit of 367 billion riyals ($97.9 billion) while spending rose 13 percent above the original 2015 budget plan, according to an advisor to the Council of Economic and Development Affairs, speaking about 30 minutes prior to the market closing.

This deficit was below the expected 400-500 billion riyals that was predicted by Saudi economists, but still makes up around 15 percent of gross domestic product."



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More public borrowings on cards | GulfNews.com

More public borrowings on cards | GulfNews.com:

"In order to bridge its fiscal deficit Saudi Arabia is expected to use a combination of revenues from assets held overseas, official reserves and market borrowings.

This year, the Kingdom tapped into its sizeable reserves. Reserves dropped to under $670 billion (Dh2.4 trillion) in July 2015 from $746 billion in August 2014. The Saudi government also resumed long-term debt issuances for the first time since 2007, with total issuances 95 billion riyals (Dh93 billion) so far. According to recent press reports, the government is planning issuance of local currency bonds worth 20 billion riyals.

The new issues will bring to 115 billion riyals the amount of bonds issued by the government to local banks this year. It resumed issuing bonds to banks in July for the first time since 2007 to cover a budget deficit created by low oil prices.

"



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Spending cuts likely to reduce credit growth | GulfNews.com

Spending cuts likely to reduce credit growth | GulfNews.com:

"The spending cuts announced by Saudi Arabia in its 2016 budget is expected to impact credit growth in the country as non-oil activity continues to slow.

Countercyclical government spending has historically played a key role in the stability and dynamism of private-sector companies in Saudi Arabia, supporting banks’ credit growth.

Following the recent period of robust growth in public expenditure, the government in Saudi Arabia is now planning to moderate the pace of such spending expansion due to the persistent drop in oil revenues. Analysts said a combination of more expensive credit and more frugal governments will result in slow credit demand from the private sector."



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Saudi Arabia’s 840 billion riyal budget slashes spending | GulfNews.com

Saudi Arabia’s 840 billion riyal budget slashes spending | GulfNews.com:

"Saudi Arabia’s economy, hit hard by a sharp decline in oil prices, on Monday an announced 840 billion riyal (Dh822 billion) spending plan for 2016.

The budget deficits for 2015 soared to 367 billion riyals this year. The government plans to cut the deficits to 326 billion riyals (13 per cent of GDP) in 2016 through a combination of spending cuts and augmenting of additional revenue sources other than oil, the finance ministry said, adding that it would review government projects to make them more efficient and ensure they were necessary and affordable.

Next year’s budget projects spending of 840 billion riyals is down from 975 billion spent this year. The original budget plan for 2015 projected a spend of 860 billion riyals. However the actual spending last year was 14.5 per cent less than 2014’s spend of 1.14 trillion riyals."



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Saudi Arabia posts record $98 billion deficit in 2015: ministry | GulfNews.com

Saudi Arabia posts record $98 billion deficit in 2015: ministry | GulfNews.com:

"Saudi Arabia posted a record $98 billion budget deficit in 2015 due to the sharp fall in oil prices, the finance ministry said on Monday.

Revenues were estimated at 608 billion riyals ($162 billion), well below projections and 2014 income, while spending came in at 975 billion riyals ($260 billion), ministry officials announced at a press conference in Riyadh."



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Kazakhstan Looks to Private Equity for Help With Its $93 Billion Cash Pile - Bloomberg Business

Kazakhstan Looks to Private Equity for Help With Its $93 Billion Cash Pile - Bloomberg Business:

"KKR & Co. founder Henry Kravis, Blackstone Group LP Chairman Stephen Schwarzman and Carlyle Group co-founder David Rubenstein were among the guests when Kazakhstan President Nursultan Nazarbayev hosted a dinner in New York.
Apart from the dining at the Four Seasons Hotel, there was access to a possible $93 billion on the table as Nazarbayev, who presides over Central Asia’s biggest energy exporter, seeks to boost returns on the country’s wealth funds. The $64 billion National Fund has struggled to achieve an average of 2 percent annually for the past five years.
After President Nazarbayev, who spoke about investment opportunities in Kazakhstan and institutional reforms the nation embarked on this year, speakers from the U.S. including former Federal Reserve Chairman Ben Bernanke took the floor to talk about global geopolitical and economic challenges."



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Saudis Plan Unprecedented Subsidy Cuts to Counter Oil Plunge - Bloomberg Business

Saudis Plan Unprecedented Subsidy Cuts to Counter Oil Plunge - Bloomberg Business:

"Confronting a drop in oil prices and mounting regional turmoil, Saudi Arabia reduced energy subsidies and allocated the biggest part of government spending in next year’s budget to defense and security.
Authorities announced increases to the prices of fuel, electricity and water as part of a plan to restructure subsidies within five years. The government intends to cut spending next year and gradually privatize some state-owned entities and introduce value-added taxation as well as a levy on tobacco.
The biggest shake-up of Saudi economic policy in recent history coincides with growing regional unrest, including a war in Yemen, where a Saudi-led coalition is battling pro-Iranian Shiite rebels. In attempting to reduce its reliance on oil, the kingdom is seeking to put an end to the population’s dependence on government handouts, a move that political analysts had considered risky after the 2011 revolts that swept parts of the Middle East.
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Oil companies brace for a grim 2016 amid sustained price crash - FT.com

Oil companies brace for a grim 2016 amid sustained price crash - FT.com:

"As a miserable year for the oil industry draws to a close, any relief executives might feel will be tempered by the knowledge that 2016 is shaping up to be even worse.
The collapse in oil and gas prices that began in the summer of last year has already cost hundreds of thousands of jobs, and caused projects worth hundreds of billions of dollars to be cancelled or delayed. Today, the external environment is more challenging than it was a year ago, and the energy companies’ ability to cope with tough conditions is diminished. For oil and gas producers, 2016 will be a year of cost-cutting, restructuring, refinancing when it is possible, and in some cases bankruptcy when it is not. Merger and acquisition activity, which was sluggish this year because of disagreements over valuations, may pick up speed."



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Saudis unveil radical austerity programme - FT.com

Saudis unveil radical austerity programme - FT.com:

"Saudi Arabia on Monday unveiled spending cuts in its 2016 budget, subsidy reforms and a call for privatisations to rein in a yawning deficit caused by the prolonged period of low oil prices.
The Gulf kingdom has kept oil production at high levels in an attempt to force out higher-cost producers, such as shale, and retain its market share. But this year’s deficit ballooned to 367bn Saudi riyals ($97.9bn,) or 15 per cent of gross domestic product, as oil revenues fell 23 per cent to Sr444.5bn. Seeking to ward off future fiscal crises, the ministry of finance confirmed wide-ranging economic reforms, including plans to “privatise a range of sectors and economic activities”."



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Saudi Arabia reveals cuts plan to shrink £66bn budget deficit | World news | The Guardian

Saudi Arabia reveals cuts plan to shrink £66bn budget deficit | World news | The Guardian:

"Saudi Arabia has announced plans to cut government spending and reform its finances after plunging oil prices resulted in a record annual budget deficit of nearly $98bn (£66bn).

The state ran a deficit of 367bn riyals ($97.9bn) in 2015, or 15% of gross domestic product, officials said. The 2016 budget plan aims to cut that to 326bn riyals, reducing pressure on Riyadh to pay its bills by liquidating assets held abroad.

The 2016 budget, released by the finance ministry on Monday, marked the biggest shake-up to economic policy in the world’s top crude exporter for more than a decade, and includes politically sensitive reforms from which authorities previously shied away."



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RPT-Middle East misses out on M&A boom as sellers hold out on prices | Reuters

RPT-Middle East misses out on M&A boom as sellers hold out on prices | Reuters:

"A global boom in mergers and acquisitions has largely bypassed the Middle East where regional deals are stalling as sellers refuse to budge on valuations despite a slumping oil price.

While a flurry of big deals pushed global M&A volume in 2015 to a record $4.6 trillion, transactions between parties in the Middle East totalled just $12.68 billion in the year to Dec. 7, according to Thomson Reuters data.

That would make it the slowest year in value terms since 2011, while the actual number of deals is on course to be the lowest since 2007."



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Six Charts of Christmas: Market breadth - YouTube

Six Charts of Christmas: Market breadth - YouTube: ""



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MIDEAST STOCKS-Saudi Electricity surges before budget on price reform hopes | Reuters

MIDEAST STOCKS-Saudi Electricity surges before budget on price reform hopes | Reuters:

"Saudi Arabia's stock market was generally little changed early on Monday as traders cautiously awaited the release of the kingdom's 2016 state budget, while Egypt recouped some of previous session's losses.

The Saudi index rose in the opening minutes but then came well off its highs and after 80 minutes of trade, was up just 0.2 percent.

However, Saudi Electricity Co (STC) and National Gas and Industrialization Co surged 9.9 and 6.8 percent respectively. The budget may include rises in electricity and natural gas feedstock prices, which could boost the bottom lines of Saudi Electricity while squeezing petrochemical firms."



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MIDEAST STOCKS-Regional investors sell in Dubai; Qatar and Abu Dhabi steady | Reuters

MIDEAST STOCKS-Regional investors sell in Dubai; Qatar and Abu Dhabi steady | Reuters:

"Dubai's stock market slipped early on Monday as regional investors diverted their attention to Saudi Arabia's 2016 state budget announcement, due in the afternoon, while Qatar and Abu Dhabi were steady in lethargic trade.

Late on Sunday, Dubai announced plans to raise state spending by 12 percent in 2016 compared to its 2015 budget plan as it invests in infrastructure to sustain economic growth, while continuing to balance its budget.

This failed to boost Dubai's stock index, which fell 0.9 percent as only one-third of listed stocks traded. Emaar Properties and Arabtec retreated 2.4 percent and 0.7 percent respectively."



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