OPEC+ Boosts Output in July and Keeps Market Guessing Beyond - Bloomberg
OPEC+ stuck to its plan to hike oil output in July, but Saudi Arabia’s energy minister kept the market guessing as to whether the group will add more supply later this year to keep pace with the accelerating global recovery.
“The demand picture has shown clear signs of improvement,” Saudi Energy Minister Prince Abdulaziz bin Salman said, in some of his most upbeat comments since the crash last year. But pressed on whether more supply increases will be needed, he said: “I will believe it when I see it.”
With oil prices rising above $70 and demand for gasoline and diesel increasing in the U.S., China and Europe, OPEC+ is now at the center of one of the most pressing debates in markets: the threat of inflation.
OPEC and its allies have spent more than a year rescuing prices from historic lows and only cautiously adding supply. Now the story is shifting: the oil market is heading into deficit.
Letting the market overheat risks undermining the recovery. But the cartel also has to manage the dual risks of Iranian supply coming back online and any resurgence in the virus and its variants.
“Covid-19 is a persistent and unpredictable foe, and vicious mutations remain a threat,” OPEC Secretary-General Mohammad Barkindo said.
Oil settles up after hitting 15-month highs on demand prospects | Reuters
Oil prices settled higher on Tuesday, with Brent hitting above $71 and trading at its highest since March, on expectations for growing fuel demand during the summer driving season in the United States as OPEC+ agreed to boost output.
Brent crude futures for August settled up 93 cents, or 1.3%, to $70.25 a barrel after hitting $71 earlier in the session - its highest intra-day price since March 8.
U.S. West Texas Intermediate crude for July was up $1.40, or 2.1%, to $67.72.
Tracking service GasBuddy said Sunday’s U.S. gasoline demand, coinciding with the Memorial Day weekend, jumped 9.6% above the average of the previous four Sundays. That was the highest Sunday demand since the summer of 2019.
U.S. crude stockpiles were expected to fall by 2.1 million barrels last week, according to a preliminary Reuters poll.
Saudi Tadawul: Foreign investors purchased shares worth $4.1bln in May | ZAWYA MENA Edition
The total value of shares purchased by foreign investors in Tadawul during May amounted to SAR 15.32 billion ($4.09 billion). Foreign investors represent 9.65 percent of the total buying activity, and sales of SAR 13.55 billion, representing 8.54 percent of total selling activity, the Saudi stock exchange said in its monthly report.
The total ownership of foreign investors stood at 2.73 percent of total market capitalization as of 31 May 2021, representing an increase of 0.02 percent compared to April, the Saudi stock exchange noted in its Monthly Stock Market Ownership and Trading Activity report.
However, the total value of shares traded for the month ending 31 May 2021 amounted to SAR 158.72 billion, down by 15.83 percent over the previous month.
Total stock market capitalization reached SAR 9,655.61 billion at the end of this period, down by 0.00002% over the previous month.
The total value of shares purchased by Saudi investors in May amounted to SAR 142.22 billion representing 89.60 percent of total buying activity. Saudi investors sold SAR 142.62 billion worth of shares, representing 89.86 percent of total selling activity.
Total ownership of Saudi investors stood at 96.74 percent of total market capitalization as of 31 May 2021, representing a decrease of 0.02 percent from the previous month, the report said.
The total value of shares purchased by GCC Investors amounted to SAR 1.18 billion representing 0.74 percent of total buying activity. GCC investors sold SAR 2.55 billion worth of shares, representing 1.61 percent of total selling activity.
Nomu-Parallel Market
The total value of shares traded for the month ending 31 May 2021 amounted to SAR 763.06 million, increasing by 146.65 percent over the previous month. and the total stock market capitalization reached SAR 12,052.53 million at the end of this period, decreasing by 3.62 percent over the previous month.
According to the Tadawul report, the total value of shares purchased by foreign investors in May amounted to SAR 72.30 million representing 9.47 percent of total buying activity. Foreign investors sold shares worth SAR 47.87 million, representing 6.27 percent of total selling activity. The total ownership of foreign investors stood at 0.46 percent of total market capitalization, representing an increase of 0.24 percent compared to April.
The total value of shares purchased by GCC investors during this period amounted to SAR 2.61 million representing 0.34 percent of total buying activity. GCC investors sold shares worth SAR 59.05 million, representing 7.74 percent of total selling activity, the report said.
The total value of shares purchased by Saudi Investors during the month of May amounted to SAR 688.15 million representing 90.18 percent of total buying activity. Local investors sold shares worth SAR 656.13 million, representing 85.99 percent of total selling activity in May.
MIDEAST STOCKS Rising oil prices aid Gulf stocks, Dubai outperforms | Reuters
Most Gulf stock markets closed higher on Tuesday, spurred by rising oil prices, with Dubai leading gains with help from its strengthening COVID-19 vaccination drive.
Brent hit $71 and was trading at its highest since March, on expectations of growing fuel demand during the summer driving season in the United States. read more
The stock index in Dubai (.DFMGI) surged 1.4% after three consecutive days of decline, helped mostly by property and financials.
The blue-chip developer Emaar Properties (EMAR.DU) and Emirates NBD Bank (ENBD.DU) climbed 2.5% and 1.5%, respectively.
Dubai, the second-largest member of the United Arab Emirates federation, which has among the world's highest immunisation rates, has started offering the Pfizer-BioNTech (PFE.N), (22UAy.DE) COVID-19 vaccine to 12-15-year-olds. read more
Saudi Arabia's benchmark index (.TASI) was up 0.4% on its sixth consecutive day of gains, with telecom and financial shares rising the most.
Saudi Telecom (7010.SE) increased 3.4%, while Al Rajhi Bank (1120.SE) and Riyad Bank (1010.SE) were up 0.8% and 1.1%, respectively.
The Abu Dhabi index (.ADI) ended 0.8% higher as ADNOC Distribution (ADNOCDIST.AD) jumped 10%, ending a fifth-session losing streak.
Last week, Abu Dhabi National Oil Company (ADNOC) raised $1.64 billion by issuing exchangeable bonds and additional shares to investors in its listed retail unit, ADNOC Distribution. read more
Qatar's index was up 0.3% with Industries Qatar (IQCD.QA) gaining 0.7% and Qatar Electricity and Water (QEWC.QA) rising 2.2%.
Outside the Gulf, Egypt's blue-chip index (.EGX30) fell 0.7%, with most of its constituents closing lower. The largest lender, Commercial International Bank (COMI.CA), led the losers, shedding 1.1%.
Ibnsina Pharma Co (ISPH.CA), which reported a marginal rise in first quarter net profit on Monday, plunged 6.6%.
Mubadala May Part Ways With Rowlands as Partner in Digital Bank - Bloomberg
A digital bank backed by Mubadala Investment Co. is looking to replace the British Rowland family as its founding shareholder, embarking on a rebuild the Abu Dhabi sovereign fund blames on the global pandemic.
Set up in 2018 in Abu Dhabi’s financial hub by Mubadala and a Rowland-owned entity, the Anglo-Gulf Trade Bank was touted as the world’s first digital trade bank, promising to create an online finance platform that would facilitate commerce between the Middle East, the U.K. and Asia. Its headquarters were inaugurated by Britain’s Prince Andrew in 2018 with whom financier David Rowland maintains close ties.
Once planning to open offices in India, Saudi Arabia and elsewhere, the bank never fully took off as disruptions caused by Covid-19 strangled global trade, according to people familiar with the matter, who asked not to be named because the matter isn’t public.
The bank told some of its clients last month that it would “cease to offer corporate accounts to clients” following a strategic review and the decision to restructure, according to a letter seen by Bloomberg.
“As an investor in the company, we are working with the regulator as the business looks to bring in a new partner and goes through the process of restructuring,” a spokesman for Mubadala said.
Representatives for the bank and the Rowland family didn’t reply to requests for comment.
Future in Doubt
The aim of the restructuring is to bring in new money to keep the project solvent, according to the people. Should the bank fail to find a new partner, it could eventually be wound down, they said.
Rowland made a fortune buying and selling real estate before moving onto shipping, timber and chemical companies and establishing a family office to manage his wealth and investments for his friends.
His ties with Mohammed bin Zayed, the crown prince of Abu Dhabi and de facto ruler of the United Arab Emirates, go back decades. The relationship has been subject to controversy, with Bloomberg News reporting last year that some of the work done by Rowland and his private bank ranged from scouting for deals in Zimbabwe to devising a plan for an assault on the financial markets of Qatar.
The Rowlands’ latest investment vehicle, Liwathon Ltd., is registered in Abu Dhabi.
OPEC+ Set to Sign off on July Hike as a Tenser Discussion Looms - Bloomberg
OPEC+ looked set to increase production in July as expected, as ministers prepare to tackle the thornier issue of how to handle a tightening oil market for the rest of the year.
The Joint Ministerial Monitoring Committee recommended pushing ahead with the increase for July, when the group stands to add 841,000 barrels per day following hikes in May and June, according to delegates. There’s been no discussion yet on Tuesday of policy beyond that. A full ministerial meeting starts shortly.
Oil demand is accelerating as vaccine programs expand and economies rebound -- and Brent soaring back above $71 is fueling inflation concerns. But the outlook for the cartel, which engineered the recovery in prices from the historic crash of last year, continues to be mired in uncertainty as the focus shifts to how it will manage an increasingly tight market for the rest of the year.
Iran’s potential return to international markets is one factor weighing on ministers’ decision-making. The impact of new variants of Covid-19 is another. And while there’s a wide deficit in the market to fill in the second half of the year, those two considerations could see some producers argue for a pause before further hikes.
MIDEAST STOCKS Gulf stocks gain in morning trade as oil prices rise | Reuters
Major Gulf stock markets rose in morning trade on Tuesday, as Saudi Arabian stocks, spurred by rising oil prices, led gains.
Brent oil futures topped $70 to reach their highest since March, as expectations grew for increased fuel demand during the summer driving season in the United States, the world's top oil consumer.
Saudi Arabia's benchmark index (.TASI) rose 0.5% for its sixth consecutive day of gains, supported by financial and material shares. Al Rajhi Bank (1120.SE) was up 0.8%, while Saudi Arabian Mining (1211.SE) increased 2.9%
Saudi National Bank (SNB) (1180.SE) added 0.8% after saying it had received capital market authority approval for the merger of its unit NCB Capital with Samba Capital. SNB completed a merger with Samba Financial Group earlier this year.
The index in Abu Dhabi (.ADI) traded 0.2% higher. The largest operator of petrol stations and convenience stores in the United Arab Emirates, ADNOC Distribution (ADNOCDIST.AD)ADI jumped 5.8% and Emirates Telecommunications Group (ETISALAT.AD) gained 0.5%.
The Dubai index (.DFMGI) was also up 0.2% as the sharia compliant lender Dubai Islamic Bank (DISB.DU) and Air Arabia (AIRA.DU) advanced 0.6% and 1.5%, respectively.
Gains were partially capped by Dubai Investments (DINV.DU), which dropped 1.8%.
The Qatari index (.QSI) edged up 0.1% as Industries Qatar (IQCD.QA) gained 0.5% and Masraf Al Rayan (MARK.QA) lost 0.5%.
Abu Dhabi Stocks Extend Record Run After Flurry of Deals: Chart - BloombergAbu Dhabi stocks have just wrapped up their eighth month of gains, the longest winning streak on record. While high vaccination rates in the United Arab Emirates have helped sentiment, a flurry of mergers aimed at bolstering the economy has been key, according to Joice Mathew of United Securities in Muscat. Relaxed foreign ownership limits and positive earnings results have also kept the ADX General Index on the rise, he said.
Dubai Left Behind as World’s Prime Property Hotspots Bloom Again - Bloomberg
A supply glut that’s held down Dubai’s property prices for over half a decade will likely keep it on the sidelines of a global upswing in values of prime residential real estate.
Fast emerging from the pandemic slump, the construction industry will deliver an estimated 62,000 homes in the emirate this year and nearly 63,500 in 2022, which would be the most since 2009, according to consultancy firm Knight Frank LLP.
The burst of supply will probably leave Dubai, alongside Buenos Aires, as the only two cities in Knight Frank’s selection of 25 prime locations to witness a decline in values for their top-end residential properties.
“The supply-demand imbalance has been a defining feature of Dubai’s residential market ever since the Great Recession of 2008-09,” said Faisal Durrani, head of Middle East Research at Knight Frank. “Looking at the next few years, this looks set to persist.”
While the wealthiest home buyers who fled virus lockdowns for Dubai have helped spur demand for luxury homes earlier this year, the improvement hasn’t been uniform. Much of the city’s real estate is still working through an oversupply that drove down values by over a third since 2014.
The pandemic compounded the pressures from job losses and departures of foreign workers, chipping away at demand for rentals. The booming residential pipeline suggests that chronic oversupply will remain a key vulnerability for Dubai, one of seven sheikdoms that make up the United Arab Emirates.
Still, the outlook also means that Dubai will be a relative bargain for buyers with deep pockets. A million dollars can buy 165 square meters (1,776 square feet) of space in Dubai, around five times more than in London or New York, according to Knight Frank. Dubai has 42,356 homes valued at $1 million, second only to the U.K. capital.
The values of prime homes, worth 3.6 million dirhams ($1 million) or more, are forecast to decline 2% in 2021 after dropping 6% in 2020, Knight Frank estimates.
Home prices overall are set to fall 2% to 3% while single-family properties -- known locally as villas and making up about a third of the city’s residential supply -- are likely to climb 3% to 4%, Durrani said.
Still, Knight Frank forecasts prices will decline at a slower pace thanks to easing travel restrictions and plans to stage the postponed Expo 2020 later this year.
With “an improved economic outlook, business confidence is rising and that is filtering through to the property market in the form of heightened interest and rising deal volumes,” Durrani said.
UAE's ADCB receives $41.5mln offer for stake in Alexandria Medical | ZAWYA MENA Edition
The UAE-based Abu Dhabi Commercial Bank (ADCB) received a binding offer from TAT for Medical Services, a subsidiary of Alexandria Healthcare Investments, to acquire the bank's 51.54 percent stake in Alexandria Medical Services - Alexandria New Medical Center.
TAT for Medical Services has submitted the binding offer to acquire the bank’s stake through a mandatory tender offer (MTO) for up to 100 percent of Alexandria Medical Services' shares at a total value of EGP650 million ($41.5 million), according to an ADCB filing on the Abu Dhabi Exchange on Tuesday.
The price per share is EGP45.53, which will be decreased in case the issued capital increase of the bonus shares has been executed before the MTO is completed, according to the statement.
This binding offer is subject to obtaining the required regulatory approvals for the MTO.
In December 2020, ADCB acquired a 51.54 percent stake in Alexandria Medical Services - Alexandria New Medical Center’s capital for 64 million dirhams ($17.4 million) as a settlement for the bank's dues with B.R. Shetty, the founder of NMC Health.
The UAE-based lender, which is NMC Health’s biggest creditor, had an exposure of $981 million to the company. ADCB also had an exposure of $182 million to payments group Finablr, whose majority shareholder was also Shetty.
ADCB started marketing its stake in the company on 8 March 2021, according to a company's disclosure to the Egyptian Exchange (EGX) then.
Abu Dhabi economy to recover to 2019 levels in 2023: S&P | ZAWYA MENA Edition
Abu Dhabi’s economy will improve this year on the back of increased business activity and higher oil prices, but the actual recovery will happen only in 2023, according to S&P.
The ratings agency has affirmed its outlook on the UAE capital to AA/Stable/A-1+, reflecting S&P’s expectation that, despite oil price pressures, the emirate’s fiscal position will remain strong over the next two years.
“We expect a modest economic recovery in 2021 due to increased economic activity as the effects of the pandemic abate and also due to higher oil prices, which indirectly support real GDP growth. However, real GDP will only recover to 2019 levels by 2023,” S&P said.
The agency said it could consider raising its ratings if Abu Dhabi makes further institutional reforms and improve transparency on data and fiscal assets.
If the emirate implements measures to boost its monetary policy, such as developing domestic capital markets, the ratings could also improve .
The downside scenario would be that Abu Dhabi’s government balance sheet and net external asset position deteriorate.
“Downward pressure on the rating could also arise if domestic or regional events compromised political and economic stability in Abu Dhabi,” S&P said.
Impact
The Abu Dhabi economy slowed last year due to the coronavirus pandemic, coupled with the decline in oil prices and production output. The UAE capital is heavily dependent on the hydrocarbon sector, with 50 percent of its real GDP directly coming from the oil sector.
Abu Dhabi’s oil production fell to an average of 2.8 million barrels per day in 2020, from 3.1 million in 2019.
According to S&P, oil production output could return to their levels in 2019 by 2024. As a result, the hydrocarbon sector will grow by about 2.7 percent every year over the forecast period.
As for the non-oil sector, S&P has forecast an annual growth of 1.7 percent.
Brent hits $70, highest since March, on demand prospects | Reuters
Oil prices rose on Tuesday, with Brent topping $70 and trading at its highest since March, as optimism grew over the fuel demand outlook during the summer driving season of the United States, the world's top oil consumer.
Prices were also boosted after data from China showed that factory activity expanded at its fastest this year in May.
Brent crude futures for August gained 94 cents, or 1.4%, to $70.26 a barrel by 0610 GMT. U.S. West Texas Intermediate crude for July was at $67.66 a barrel, up $1.34, or 2% from Friday's close, with no settlement price for Monday due to a U.S. public holiday.
Brent earlier hit a session-peak of $70.34, the highest intra-day price since March 8.
"While there are concerns over tighter COVID-19 related restrictions across parts of Asia, the market appears to be more focused on the positive demand story from the U.S. and parts of Europe," analysts from ING Economics said in a note on Tuesday.
