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Thursday, 22 December 2016

Saudi Arabia’s Energy Minister Sees Oil Recovering on OPEC Cuts - Bloomberg

Saudi Arabia’s Energy Minister Sees Oil Recovering on OPEC Cuts - Bloomberg:
"Oil prices are set to recover next year as OPEC fulfills its agreement to cut output, halting the slump that battered the global oil industry, Saudi Arabia’s energy minister said.

The kingdom sees no need for additional production cuts on top of the curbs pledged in recent weeks by OPEC and 11 other oil-producing countries, Khalid Al-Falih said at a ceremony to announce the annual budget in Riyadh. The intervention is intended only to “nudge along” the re-balancing of an oversupplied global oil market, he said in a Bloomberg interview.

“I’m very optimistic that next year will see economic recovery and a recovery of oil markets,” Al-Falih said. Prices, unsustainable at current levels, will also need to rise to encourage investment in the new supplies needed in coming years, he said. Crude will balance somewhere between $50 and $100 a barrel, he said."

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Saudi to gradually raise fees to employ foreign workers: finance minister | Reuters

Saudi to gradually raise fees to employ foreign workers: finance minister | Reuters:
"Saudi Arabia will gradually increase the monthly fees paid by companies in the kingdom to employ foreign workers, starting from 2018, Finance Minister Mohammed al-Jadaan told a press conference on Thursday.

The level of fees will depend on the proportion of foreigners in each company's workforce, the minister added."

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MIDEAST STOCKS-Saudi edges up before budget, Egypt's rise slows | Reuters

MIDEAST STOCKS-Saudi edges up before budget, Egypt's rise slows | Reuters:
"Saudi Arabia's stock market edged up on Thursday before the release of the kingdom's state budget for 2017, while Egypt's uptrend slowed. Other Gulf markets were mixed in modest trading volumes.

The Saudi stock index added 0.4 percent. Much activity focused on second-tier stocks such as Saudi Printing and Packaging, which jumped 10 percent.

Saudi Electricity climbed 0.7 percent. Its profits rose in the wake of the 2016 state budget, which raised utility fees as well as domestic fuel prices. The company reported a 50.8 percent jump in third-quarter net profit."

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Saudi Arabia's Economic Overhaul Bears Fruit as Deficit Narrows - Bloomberg

Saudi Arabia's Economic Overhaul Bears Fruit as Deficit Narrows - Bloomberg:
"Saudi Arabia vision to wean itself off of oil is promising to show green shoots.

In the most detailed budget in its history, the kingdom outlined on Thursday a strategy to balance its books by 2020 by bolstering revenues from non-oil industries to 50 percent and containing growth in spending. The plans are a culmination of a year that saw the biggest overhaul Saudi history, as the world’s biggest oil exporter pledged to boost the role of private businesses and reduce some state safety nets.

Austerity measures including cutting fuel subsidies and lowering wages of public employees helped the kingdom narrow its budget deficit in 2016 to 297 billion riyals ($79 billion), below official forecasts, the Finance Ministry said in a statement on its website. Next year, the shortfall will drop another 33 percent to 198 billion riyals even as government spending increases by a projected 8 percent, to 890 billion riyals.
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U.A.E. Expects Oil Prices to Rise More on Global Production Cuts - Bloomberg

U.A.E. Expects Oil Prices to Rise More on Global Production Cuts - Bloomberg:
"Oil prices may rise even more once investors see that OPEC and other major producers are fulfilling an agreement to cut production to curb the global glut, United Arab Emirates Oil Minister Suhail Al Mazrouei said.

OPEC is committed to the decision to reduce output and it’s too early to talk about any additional steps it may take, Al Mazrouei told reporters in Abu Dhabi. Eleven non-OPEC nations said Dec. 10 they will reduce output by 558,000 barrels a day, adding to a Nov. 30 OPEC pledge to cut 1.2 million starting in January.

“When the market sees the agreement is being implemented, and we hope it will be an effective agreement that will be implemented, and when they see the reduced supply in the market, I am sure this will be positive” for prices, Al Mazrouei said."

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Exclusive: Commerzbank joins peers in paring back services to Gulf | Reuters

Exclusive: Commerzbank joins peers in paring back services to Gulf | Reuters:
"Commerzbank (CBKG.DE) has told customers in the Gulf it will no longer process their transactions in euros, four Gulf banking sources say, joining other big banks that cut such services after being fined for dealings with Iran.

Major U.S. and European peers have been tightening risk controls in the region after U.S. regulators imposed billions of dollars of penalties on banks in recent years over lapses relating to money laundering and terror financing.

The Gulf, as a close neighbor of Iran and Syria which are subject to U.S. sanctions, has come under close scrutiny from regulators at the same time as an oil price slump has made doing business in the region less profitable."

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Factbox: Major economic policies and targets detailed in Saudi 2017 budget | Reuters

Factbox: Major economic policies and targets detailed in Saudi 2017 budget | Reuters:
"Following are major economic policies and targets described in Saudi Arabia's 2017 state budget.

ENERGY SUBSIDIES: The government plans to gradually phase out subsidies on energy, although needy citizens will receive "direct cash support" to help them manage, the budget statement said without specifying when this would happen.

DEBT: Over the next four years, Saudi Arabia plans to diversify its debt sales, both domestically and internationally, to include sukuk. It will also seek to sell instruments denominated in different currencies, depending on market demand and conditions.

PRIVATISATIONS: The National Center for Privatization will determine in 2017 the possibility of privatizations in various sectors including public utilities, sports, health, education, transport and municipal services."

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There are reasons for investors to cheer ETFs

There are reasons for investors to cheer ETFs:
"So, is the smart money with ETFs? This month we have done our best — in the Age of the ETF series — to lay out the pros and cons of the most successful investment innovation of our time. Being journalists, and with a need to act as watchdogs, we have tended to err on the side of the negative and ask, “What could possibly go wrong?” There are no apologies for that.

But let us take a look at what ETFs do offer. They provide all the benefits of passive management. They allow much more trading. And that greater trading has created jobs for a whole ecosystem around them: brokers who sell them to the public, stock exchanges, and the market-makers and brokers who ensure they stay in line with their benchmark.

That trading is excessive. In aggregate, those who trade heavily give themselves a worse deal. As shown by Jack Bogle, the Vanguard founder and a lasting sceptic of ETFs, the average investor in ETFs does worse than the fund itself. This is because the trading, usually mistimed, generally succeeds only in sparking value."

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Dubai budget: emirate to boost infrastructure spending for Expo 2020 | The National

Dubai budget: emirate to boost infrastructure spending for Expo 2020 | The National:
"Dubai plans to increase infrastructure spending next year as the emirate unveils a Dh47.3 billion budget to create thousands of jobs.

The construction sector will receive a major boost from a 27 per cent jump in spending as the emirate prepares for Expo 2020.

The budget shows a 3 per cent rise in Government expenditure, state news agency Wam reported yesterday, while revenues will be lower owing to the restructuring of the budget. It anticipates a deficit of Dh2.5bn, representing 0.6 per cent of GDP."

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Saudi Arabia Said to Consider Sale of Islamic Bonds Next Quarter - Bloomberg

Saudi Arabia Said to Consider Sale of Islamic Bonds Next Quarter - Bloomberg:
"Saudi Arabia has met with banks to discuss the potential sale of shariah-compliant bonds in the first quarter to help plug its budget deficit, according to five people familiar with the matter.

The country is considering selling sukuk, or Islamic bonds, with different maturities to the five-, 10- and 30-year debt it sold in October, one of the people said, asking not to be identified as the information is private. This could include tenors of seven and 16 years, the person said. No final decisions on the size or timing have been made, the people said.

Saudi Arabia raised $17.5 billion in October in the biggest ever emerging market bond sale, attracting $67 billion of bids, people familiar told Bloomberg at the time. The kingdom is turning to debt markets to help fill a budget gap estimated by the International Monetary Fund to reach 13 percent of economic output this year, before dropping below 10 percent in 2017. Former Finance Minister Ibrahim al-Assaf said in October that the country might follow its first international debt issuance with an Islamic bond sale."

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MIDEAST STOCKS-Gulf barely moves before Saudi budget | Reuters

MIDEAST STOCKS-Gulf barely moves before Saudi budget | Reuters:
"Gulf stock markets barely moved in quiet, early trade on Thursday before the announcement of Saudi Arabia's 2017 state budget, expected in the afternoon.

The Saudi stock index edged up 0.1 percent in the first 40 minutes. Much activity focused on second-tier stocks such as Saudi Printing and Packaging, up 4.9 percent, although Saudi Electricity rose 0.9 percent.

Saudi Electricity's profits rose in the wake of the 2016 state budget, which raised utility fees as well as domestic fuel prices. The company reported a 50.8 percent jump in third-quarter net profit."

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