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Tuesday, 31 January 2017

The Saudi riyal/dollar peg: time for a change?

The Saudi riyal/dollar peg: time for a change?:

"The Gulf Cooperation Council countries’ currencies have been pegged to the US dollar (Kuwait’s is pegged to a dollar-dominated basket of currencies) for nearly three decades and the dollar peg has served these countries well. It has provided a credible anchor of stability, reduced transactions costs and simplified the conduct of macroeconomic policy. Meanwhile, despite some progress in diversification, GCC countries remain dependent, to varying degrees, on oil and gas and related activities.

With the oil price plunge since mid-2104, conditions changed in fundamental and possibly irreversible ways. As a result, GCC countries have had to call into question the appropriateness of policies that had been in place for decades. The issues are especially pressing for Saudi Arabia, with the largest and most complex of the six economies in the region and, appropriately, with the most ambitious plans to overhaul its economy.

The far-reaching transformation plan announced by Deputy Crown Prince Mohammad bin Salman last year challenged tradition by proposing partial privatisation of Aramco, the ‘jewel in the crown’ of the Saudi industrial structure, reducing subsidies, introducing domestic taxation in the form of a VAT from 2018 and, most critically, altering the structure of the labour market for Saudi nationals, including women."



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Oil prices won't reach 'desired level' before 2018, Iraq says | Reuters

Oil prices won't reach 'desired level' before 2018, Iraq says | Reuters:

"Oil prices will not reach "levels desired" by Iraq before the end of 2018 or 2019, Iraqi Prime Minister Haider al-Abadi said on Tuesday in Baghdad. "Demand has increased and this has helped raise the prices but it won't return to the level of 2013" when crude exceeded $100 a barrel, he told a news conference. "Oil will not reach a desired level before 2018 or 2019," he added, without indicating Iraq's desired price."



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UPDATE 1-Contrasting results for merging Abu Dhabi lenders NBAD and FGB | Reuters

UPDATE 1-Contrasting results for merging Abu Dhabi lenders NBAD and FGB | Reuters:

"Abu Dhabi lenders First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD), which are merging to create one of the largest banks in the Middle East and Africa, posted contrasting fourth-quarter results on Tuesday.

FGB, Abu Dhabi's third-largest lender by assets, reported an 11 percent fall in net profit for the three months to Dec. 31, narrowly beating analysts' expectations but was outshone by a 28 percent profit jump at NBAD.

The two banks, which are due to combine as a single entity from April 1, will disclose combined results from the second quarter onwards, NBAD Chief Financial Officer James Burdett said on an analysts' call on Tuesday."



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UPDATE 1-Abu Dhabi Commercial Bank Q4 profit drops 16 pct on impairments | Reuters

UPDATE 1-Abu Dhabi Commercial Bank Q4 profit drops 16 pct on impairments | Reuters:

"Abu Dhabi Commercial Bank on Tuesday posted a 16 percent drop in fourth-quarter profit, in line with analysts' forecasts, as impairments for doubtful loans weighed on its bottom line.

The emirate's second-largest bank by assets made a net profit attributable to shareholders of 1.0 billion dirhams ($272 million) in the three months to Dec. 31, compared to 1.19 billion dirhams in the same period a year ago.

Three analysts polled by Reuters had on average forecast a net profit of 979 million dirhams."



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Changing U.S. Immigration Rules Loaded With Economic Baggage - Bloomberg

Changing U.S. Immigration Rules Loaded With Economic Baggage - Bloomberg:

"President Donald Trump spent his first week making good on even his most controversial campaign promises when it comes to immigration, leaving business leaders questioning what comes next and what it could mean for the U.S. economy. 

Last week, the new commander in chief suspended visa issuance in seven majority-Muslim countries — Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen — for 90 days as visa vetting rules are reviewed. Trump's team is also drafting an executive order aimed at overhauling the work-visa programs, pushing companies to hire Americans first and giving priority to more highly paid foreign recruits. And there's more to come, White House Press Secretary Sean Spicer told reporters on Monday. 

"You'll see both through executive action and through comprehensive legislative action a way to address immigration as a whole, and the visa program," Spicer said."



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MIDEAST STOCKS-Markets exposed to foreign funds underperform in reaction to Trump | Reuters

MIDEAST STOCKS-Markets exposed to foreign funds underperform in reaction to Trump | Reuters:

"Stock markets in the Middle East fell on Tuesday as the travel curbs ordered by U.S. President Donald Trump hit sentiment towards equities globally. Middle Eastern bourses most exposed to foreign fund flows underperformed the region. Egypt's blue-chip index dropped 2.0 percent as foreign funds were net sellers of shares, bourse data showed. It was one of only a few days of foreign net selling since the Egyptian pound was floated on Nov. 3. Fund managers believe that in the worst case, flows of U.S. trade, aid and investment could be hit by Trump's policies. Companies favoured by foreign funds were hit hard on Tuesday with investment firm EFG Hermes down 5.4 percent."



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Kuwait Unveils Economic Plan - Bloomberg

Kuwait Unveils Economic Plan - Bloomberg:

"Kuwait has taken a page out of Saudi Arabia's playbook and is seeking to steer its economy away from the heavy reliance on oil. Bloomberg's Zainab Fattah reports on "Bloomberg Markets: Middle East." (Source: Bloomberg)"



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Oil Braces for Trump Ban Fallout as Halliburton Says Stay Put - Bloomberg

Oil Braces for Trump Ban Fallout as Halliburton Says Stay Put - Bloomberg:

"Oil-services giant Halliburton Co. told employees to stay put. Another global oil company is reconsidering whether to place a crude trader in Houston. And universities that train energy workers across the country estimated that hundreds of students may be affected. Of all the energy sectors that may feel the pain of President Donald Trump’s order to temporarily ban people from seven majority-Muslim countries, oil and natural gas companies -- industries he vowed to help during his election campaign -- stand to be hit the hardest. On Monday, energy companies led declines in the Standard & Poor’s 500 Index as investors weighed Trump’s first week in office. “Oil and gas is going to have the most heartburn from this,” Michael Webber, deputy director of the Energy Institute at University of Texas at Austin, said by phone Monday. “Other parts of the energy sector, like the electricity sector, are more domestically situated with its workforce and its assets.”"



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RPT-Visa row overshadows Iranian investment drive and plane deals | Reuters

RPT-Visa row overshadows Iranian investment drive and plane deals | Reuters:

"A row over U.S. visa bans may further weaken Iranian President Hassan Rouhani's efforts to attract foreign investors to Iran, particularly if it slows the implementation of deals for Western aircraft, officials and analysts said.

The deals for 80 Boeing jets and 100 from Europe's Airbus struck last year are seen by Western investors as a crucial test as they seek business in Iran in the wake of the nuclear deal that led to the lifting of most sanctions.

People involved in the airline deals say it is too early to assess the impact of the U.S. visa ban but worry that hardening rhetoric in Tehran and Washington can only add to a list of complications that could slow, if not endanger, the jet sales.

"



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UPDATE 1-Vodafone Qatar posts narrower Q3 loss as revenue rises | Reuters

UPDATE 1-Vodafone Qatar posts narrower Q3 loss as revenue rises | Reuters:

"Vodafone Qatar, an affiliate of Vodafone Group, reported a narrower third-quarter loss on Tuesday. The telecoms operator made a net loss of 31 million riyals ($8.3 million) in the three months to Dec. 31, the company said in a release. That compares with a loss of 72 million riyals in the prior-year period. Vodafone Qatar, whose financial year starts on April 1, has yet to make a quarterly net profit since ending state-controlled Ooredoo's domestic monopoly in 2009 as the latter has fought hard to bolster its revenue share."



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UPDATE 1-UAE's EITC to launch Virgin Mobile brand in country | Reuters

UPDATE 1-UAE's EITC to launch Virgin Mobile brand in country | Reuters:

"Emirates Integrated Telecommunications Co (EITC), the holding company for United Arab Emirates phone service provider du, will launch Virgin Mobile as a new brand in the UAE, EITC's chief executive Osman Sultan said on Tuesday. EITC will have full ownership, management and operation of the Virgin Mobile brand in the country, Sultan told a news conference, adding that services under the brand would start "within weeks" and focus on a consumer customer base. Virgin Mobile will use EITC's network and infrastructure in the same way that du does, and EITC has created an internal business unit to handle the brand in the UAE, he said. Karim Benkirane has been appointed managing director of Virgin Mobile UAE's operations, reporting to Sultan."



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MIDEAST STOCKS-Gulf slips in line with weak global shares, oil prices | Reuters

MIDEAST STOCKS-Gulf slips in line with weak global shares, oil prices | Reuters:

"Gulf stock markets fell in early trade on Tuesday in line with global equities after investor sentiment was soured by the travel curbs ordered by U.S. President Donald Trump. Kuwait's index pulled back a further 1.6 percent after dropping 1.5 percent on Monday. Two-thirds of the 15 most valuable shares on the exchange fell, with Gulf Bank dropping 3.7 percent. The market had risen sharply since the start of the year partly in anticipation of Monday night's briefing by government ministers on economic development plans. But the ministers announced very little in the way of new policy initiatives, efforts to accelerate economic development or policies to boost economic growth. "



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