#Saudi Bank Stocks Rise to Record Amid Mideast Gains: Inside EM - Bloomberg

Saudi Bank Stocks Rise to Record Amid Mideast Gains: Inside EM - Bloomberg

Banking and petrochemical stocks led gains in Saudi Arabia as rising crude prices and the prospect of faster growth fanned investor confidence ahead of first-half earnings season.

The country’s Tadawul Index rose almost 0.5% on Sunday, snapping two days of declines, as most markets across the Middle East rallied. Abu Dhabi’s main index advanced 0.7%, while Dubai’s retreated 0.4%. Al Rajhi Bank, Alinma Bank and Saudi Kayan Petrochemical Co. were among those that rose the most on Saudi Arabia’s Tadawal Index. A sub-index of banks climbed to all-time high.

The gains came against a backdrop of stalled oil-supply negotiations between OPEC and its allies after a rebellion by the United Arab Emirates over output levels. Saudi stocks pared gains after the UAE said Sunday it rejects a plan by other members of OPEC+ to extend the group’s agreement to curb oil production beyond April 2022. The talks resume on Monday with Brent crude prices at a three-year high.

“The signs of a breakdown in OPEC+ coordination on output are clear but the market is weighing this against optimism that demand growth will outstrip supply growth,” said Hasnain Malik, the head of research at Tellimer in Dubai. “That rests on the assumption that the resurgence in Covid infections does not derail the recovery and that Iranian barrels do not quickly return.”

Elsewhere, stocks in Qatar, Kuwait, Oman, Egypt and Israel also rose.

MIDDLE EASTERN MARKETS:

• “Saudi banks’ price-to-book valuation multiples are edging up” versus Gulf peers this year “driven by a higher oil price and solid growth prospects,” said Bloomberg Intelligence analyst Edmond Christou
• “However, the market looks optimistic on lower provisioning this year but we stay cautious,” he said
• ADX General Index rises as much as 1.2%
• IHC leads gains as market capitalization grows further to 227 billion dirhams ($62 billion)
• Dubai Financial Market General Index declines to lowest since May 31
• Emirates NBD -1.1%; Emaar Malls -1.5%; Dubai Investments -1.2%
• Kuwaiti stocks advance for the fifth day in past six
• Egypt-based TMG Holding surges to highest since February after saying total sales rose to a record 21 billion Egyptian pounds ($1.3 billion) in 1H and total sales guidance was revised upwards to around 30 billion Egyptian pounds for the full year
• MSCI Emerging Markets Index fell 1.8% last week, the most since mid-May

High-Stakes Oil Diplomacy Puts Future of OPEC+ Deal at Risk - Bloomberg

High-Stakes Oil Diplomacy Puts Future of OPEC+ Deal at Risk - Bloomberg

A high-stakes game of oil diplomacy pits Saudi Arabia against long-time ally Abu Dhabi. And the result of their fight will shape not just the price of oil for the next year, but the future of the global energy industry.

The United Arab Emirates on Friday blocked an OPEC+ deal that cartel leaders Russia and Saudi Arabia hashed out to increase output, demanding better terms for itself. After two days of bitter negotiations, and with the UAE the only holdout, ministers halted the discussions until Monday, leaving markets in limbo as oil continued its inflationary surge above $75 a barrel.

Despite diplomatic talks continuing, the standoff appeared to persist on Sunday, with the UAE reiterating its demands.

Abu Dhabi is forcing its allies into a difficult position: accept its requests, or risk unraveling the OPEC+ alliance. Failure to reach a deal would squeeze an already tight market, potentially sending crude prices sharply higher. But a more dramatic scenario is also in play -- OPEC+ unity may break down entirely, risking a free-for-all that would crash prices in a repeat of the crisis last year.

As in all negotiations, there may be an element of bluff. Late last year, Abu Dhabi even floated the idea of leaving OPEC. While this time the UAE hasn’t repeated the threat, no one even at the heart of the talks is sure what could happen if negotiations fail on Monday.

An exit would almost certainly trigger a price war -- and in that scenario everyone loses. The bluff is to show your country is ready to take the pain better than the others.

But there’s also a more subtle poker game playing out, and in that hand, the UAE has some cards. The country wants to pump more oil after spending billions to increase production capacity. At some point, the others in the alliance will probably have to recognize Abu Dhabi’s new status, redrawing the terms of engagement to allow it to pump more.

“The UAE will push hard at this juncture to use this meeting to get their excess capacity recognized and brought back online,” said Roger Diwan, oil analyst at consultant IHS Markit Ltd. “Compromise exists, but it is just how they bring their capacity, not if.”

MIDEAST STOCKS #AbuDhabi extends gains as #Dubai eases | Reuters

MIDEAST STOCKS Abu Dhabi extends gains as Dubai eases | Reuters

Abu Dhabi's stock market ended higher on Sunday, extending gains for a fifth straight session as International Holding (IHC) continued its rise following the listing of a unit, while Dubai's main index slipped.

IHC's market capitalisation hit 201.7 billion dirhams ($54.92 billion) last week, making it Abu Dhabi's most valuable listed company, after the market debut of Alpha Dhabi (ALPHADHABI.AD), in which IHC holds a 45% stake. read more

IHC has risen over 28% since Alpha Dhabi's debut on June 27.

The Abu Dhabi index (.ADI) ended 0.7% higher, boosted by a 1.2% rise in International Holding (IHC.AD).

Saudi Arabia's benchmark index (.TASI) rose 0.5%, with Al Rajhi Bank (1120.SE) rising 1.3%, and Sabic Agri-Nutrient (2020.SE) up 3.8%.

The kingdom plans to target international transit passenger traffic with a new airline, going head-to-head with Gulf giants Emirates and Qatar Airways and opening up a new front in simmering regional competition. read more

The Qatari index (.QSI) closed up 0.2%, helped by a 0.8% gain in petrochemical firm Industries Qatar IQCD.QA.

Dubai's main share index (.DFMGI) lost 0.4%, pressured by a 1.1% fall in Emirates NBD Bank (ENBD.DU) and 1.5% decline in Emaar Malls (EMAA.DU).

Expo 2020 Dubai will start selling tickets on July 18, organisers said on Thursday, in a concrete signal that the world fair set to begin in October after a year-long delay caused by the coronavirus will go ahead. read more

Organisers also expect UAE flight restrictions - such as those on arrivals from India - to have lifted by the time Expo 2020 starts.

Outside the Gulf, Egypt's blue-chip index (.EGX30) gained 0.9%, with top lender Commercial International Bank (COMI.CA) putting on 0.8%.

Egypt's tourism revenues were between $3.5 billion and $4 billion during the first half of 2021 and the country received about 3.5 million tourists from January to June, Ghada Shalaby, deputy minister of tourism, told Reuters. read more

The country's revenues from the vital sector were about $4 billion in 2020 amid the coronavirus pandemic, down by 70% from 2019.

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar close

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar close

Emirate of #Sharjah Said to Hire Banks as Bond Rush Picks Up Pace - Bloomberg

Emirate of Sharjah Said to Hire Banks as Bond Rush Picks Up Pace - Bloomberg

Sharjah’s government has picked banks to raise over $750 million from an Islamic bond offering, drawn by historically low funding costs as its finances come under strain.

A sale could happen as soon as the coming days, people familiar with the matter said, asking not to be identified as the matter is private. A representative for the government of Sharjah declined to comment.

The third-biggest sheikhdom in the United Arab Emirates is facing another year of fiscal deterioration after the coronavirus pandemic cut into revenue and forced the local government to spend more to support the economy. The budget could be in the red through 2024, according to S&P Global Ratings, which forecasts the deficit will surge past 10% of gross domestic product this year.

Developing nations are in a rush to borrow before a summer vacation lull crimps activity and tighter central bank policy lifts yields.

The pace of deals from the Middle East has also quickened, with Qatar Petroleum raising $12.5 billion last week in this year’s biggest emerging-market bond sale. In recent weeks, Saudi Aramco raised $6 billion in a three-tranche bond offering while Turkey, Kenya and Oman also tapped the debt market.

Sharjah carries the lowest investment-grade rating at S&P and Moody’s Investors Service.

S&P in April affirmed the emirate’s debt score with a stable outlook, expecting net general government debt will remain below 60% of GDP through 2024 even as it runs large fiscal deficits. It forecasts Sharjah’s economic growth will rebound by 4% this year after a contraction of about 10% in 2020.

All eyes on QE as Bank of #Israel expected to hold interest rate | Reuters

All eyes on QE as Bank of Israel expected to hold interest rate | Reuters

The Bank of Israel is expected to leave short-term interest rates unchanged this week for its 10th straight policy meeting, as debate continues over inflation gains.

All 16 economists polled by Reuters believe the monetary policy committee (MPC) will keep the benchmark rate at an all-time low of 0.1% when the decision is announced on Monday at 4 p.m. (1300 GMT).

With the rate expected to remain on hold for at least another year and some projecting 2023, analysts are looking to the central bank for decisions on extending government bond purchases and to keep buying foreign currency to add to its record level of reserves in a bid to contain the strong shekel.

In addition to the rates announcement, the Bank of Israel will simultaneously issue updates to its 2021 and 2022 macro forecasts and governor Amir Yaron will hold his quarterly news conference at 1315 GMT.

At the outset of the COVID-19 pandemic, in response to spiking bond yields, the central bank began a quantitative easing (QE) programme in March 2020, saying it would buy as much as 50 billion shekels ($15 billion) of government bonds. In October, the level was raised to 85 billion.

#UAE proposes postponing decision to extend OPEC+ pact, WAM says | Reuters

UAE proposes postponing decision to extend OPEC+ pact, WAM says | Reuters

The United Arab Emirates on Sunday said it supported an increase in oil output from August but suggested deferring to another meeting a decision by OPEC+ on extending its global oil supply pact beyond April 2022, state news agency WAM reported.

The Organization of the Petroleum Exporting Countries and its allies, a group, known as OPEC+, will resume talks on Monday after failing to reach a deal on oil output policy for a second day running on Friday after the UAE opposed some aspects of the pact. read more

The Gulf producer backs an output increase from August as the market "is in dire need of higher production," WAM said, citing an energy ministry statement.

It is willing to extend the agreement further, if required, but asks that baseline production references - the level from which any cuts are calculated - be reviewed to ensure that they are fair to all parties, WAM reported.

"The UAE and its international partners have invested significantly in growing its production capacity and believes that, if/when the agreement is extended, the baseline reference figures should reflect its actual production capacity, rather than the outdated October 2018 production reference," the ministry said in the statement.

The UAE energy ministry said that an OPEC+ ministerial panel, known as the JMMC, which is chaired by Saudi Arabia, had made the output increase conditional on extending the current agreement.

"It makes no sense to attach conditions to an increase in August. We fully support an increase in August," the ministry said.

OPEC+ sources said the UAE said its baseline was originally set too low, an issue it raised before but was ready to tolerate if the deal ended in April 2022 but not if it went on longer.

The UAE has ambitious production plans and has invested billions of dollars to boost capacity. The OPEC+ pact has left about 30% of UAE capacity idle.

Import rebound behind the decline in #Saudi reserves, c.bank chief says | Reuters

Import rebound behind the decline in Saudi reserves, c.bank chief says | Reuters

A recent drop to record lows in Saudi Arabia's foreign reserves, a measure of its ability to support its dollar-pegged currency, was partly due to a lag between import payments and export receipts, the Saudi central bank governor told Reuters.

Net foreign assets at the central bank, known as SAMA, dropped monthly by roughly $8 billion to $436 billion in April, their lowest in more than a decade, and dropped further in May, recent central bank data showed, declining to about $433 billion.

"Reductions in reserves over the past couple of months were mainly to finance a rebound in pandemic-hit import demand, while leads-and-lags in oil income (tax and dividends) cause some degree of fluctuation in SAMA's reserves level," said Fahad al-Mubarak, the governor of the central bank.

The declines appeared counterintuitive given the recent rebound in oil prices, and some analysts said they could be linked to transfers to the Saudi sovereign wealth fund, Public Investment Fund, which last year got $40 billion in reserves to fund investments.

#SaudiArabia plans second national airline - by @Ahmed Al Omran - @RiyadhBureau

Saudi Arabia plans second national airline - by Ahmed Al Omran - Riyadh Bureau

Saudi Crown Prince Mohammed bin Salman has announced plans to launch a second national airline as part of a broader push to turn the kingdom into a hub for transport and logistics to help diversify the economy and decrease dependence on oil revenues. The announcement came Tuesday shortly after the cabinet, chaired by his father the king, approved renaming the “Ministry of Transport” to “Ministry of Transport and Logistic Services”.

Under a new “National Transport and Logistics Strategy”, Saudi Arabia aims to make the kingdom the 5th global air transit passenger route, increase international destination reach to 250 destinations, and double air cargo capacity to more than 4.5m tonnes. Additionally, the strategy plans to develop ports, rail and road networks, and increase the transport sector’s contribution to GDP from 6% to 10% by 2030.

“The comprehensive strategy that aims to solidify the Kingdom’s position as a global logistics hub connecting the three continents, it will uplift and improve all forms of transport services and strengthen the integration of logistical services and future technologies, supporting and enabling the Kingdom’s national development plans,” the crown prince said in a statement, adding that the strategy would also enable adjacent sectors such as hajj and umrah and tourism to achieve targets.

A new Riyadh airport is expected to serve as a base for the new airline that the kingdom’s sovereign wealth fund and other investors are looking to launch, according to a report by local financial news site Maaal last February. The Public Investment Fund appeared to confirm that when it unveiled its 2021-2025 strategy earlier this year, saying it was “studying setting up a new company to support the aviation sector aspirations locally and regionally.”

#Oman’s foreign reserves up by 8.1% in April | ZAWYA MENA Edition

Oman’s foreign reserves up by 8.1% in April | ZAWYA MENA Edition

The Central Bank of Oman on Saturday announced that its total foreign assets increased by 8.1 percent to 7 billion Omani rials ($18.2 billion) in April 2021.

The total private sector deposits with commercial banks and Islamic financial products in Oman increased by 6.8 percent to 17.2 billion rials, compared to 16.17 billion rials last year.

The total loans and financing of commercial banks increased by 3 percent to 27.18 billion Omani rials, compared to 26.39 billion rials in 2020. However, the average interest rate on total loans showed no increase.

Oman’s non-oil economy increased by 5.7 percent during the first quarter of this year 2021, amounting to 5.7 billion Omani rials, Asharq recently reported citing an official statement.

Oil activities contracted by 20.6 percent, reaching 1.9 billion rials, and the total natural gas activities decreased by 10.4 percent to reach 320.8 million rials.

The Omani economy contracted in the first quarter, affected by the negative performance of the oil sector.

#UAE Rejects Extension of OPEC+ Oil Production Deal to End-2022 - Bloomberg

UAE Rejects Extension of OPEC+ Oil Production Deal to End-2022 - Bloomberg

The United Arab Emirates said it rejects a plan by other members of OPEC+ to extend the group’s agreement to curb oil production beyond April 2022, unless it’s allowed to have a higher baseline for its own cuts.

The UAE on Friday blocked an OPEC+ deal that cartel leaders Russia and Saudi Arabia had hashed out to increase supply, demanding better terms for itself. After two days of bitter talks, and with the UAE the only holdout, ministers halted negotiations until Monday, leaving markets in limbo as oil continued its surge above $75 a barrel.

The UAE said it agreed that the 23-nation group should raise output by 400,000 barrels a day each month from August, but that the idea of extending the OPEC+ supply agreement -- reached in early 2020 at the start of the coronavirus pandemic -- should be treated separately.

“The UAE is for an unconditional increase of production, which the market requires,” Energy Minister Suhail Al-Mazrouei told Bloomberg Television on Sunday. Yet the decision to extend the deal until the end of 2022 is “unnecessary to take now. We still have eight to nine months in this agreement, and we’re talking about plenty of time for this to be discussed at a later stage.”

Under the 2020 agreement, the UAE has a baseline production figure of 3.2 million barrels a day.

“That’s totally unfair and unsustainable” given the country now has the ability to pump well above that, Al-Mazrouei said.

What will the #UAE economy look like in the next few years? | Year Of The 50th – Gulf News

What will the UAE economy look like in the next few years? | Year Of The 50th – Gulf News

Coronavirus pandemic pressed pause on the global economy’s progress. The UAE’s open economy hinged on tourism and oil encountered attacks from many directions. As the economy recuperates, its priorities over the next few years are expected to change.

A year into the fight between disease and development, the ramifications of the event are apparent. The Federal Competitiveness and Statistics Centre said the UAE’s economy contracted by 6.1 per cent in 2020. As the world’s air travel hub and an international centre of trade and business, the global restrictions on movement stunted the economy.

A look back

The Arab world’s second biggest economy witnessed the first contraction of its GDP since the financial crisis in 2009 as the pandemic led to a significant slump in rent, trade, foreign investment and energy prices.

The oil reliant Gulf region confronted a double whammy shock with a dip in both price and demand of oil. Prices collapsed with the shock of the virus on economies at large while demand shrank as global energy demand dissipated.

The International Monetary Fund (IMF) said, recovery from the pandemic relies on vaccine rollouts, exposure to tourism and government policy enhancements, in its latest report.

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar mid-session

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar mid-session

Biggest Gulf Wealth Funds Are Faulted for Lagging on Governance - Bloomberg

Biggest Gulf Wealth Funds Are Faulted for Lagging on Governance - Bloomberg

The biggest wealth funds in the Middle East are the worst performers relative to peers when ranked by their commitment to governance and resilience.

A study of sovereign investors published by Global SWF singled out several of the largest entities in the region for insufficient disclosure and their lack of transparency.

“The big three Middle Eastern funds seem to be getting worse at inspiring trust,” it said.

The data provider’s analysis found that Australia’s Future Fund, Norges Bank Investment Management and New Zealand’s NZ Super had the highest levels of governance, sustainability and resilience -- or GSR.

A lack of visibility into government finances in the Gulf and the authorities’ frequent failure to provide timely statistics have long been a source of frustration for investors. Uncertainty around wealth funds only grew after what Global SWF called “significant withdrawals” from some entities in the region during the past year when oil prices fell.

“Most were found to be swimming naked,” it said.

• The GSR Scoreboard, introduced by Global SWF in 2020, is comprised of 10 elements related to governance, 10 concerning sustainability issues, and five on resilience
• The results are converted into a percentage scale for each of the funds
• The annual study covers 70 sovereign wealth funds and 30 public pension funds
• Only four funds in the Middle East exceeded the 50% mark, including Abu Dhabi’s Mubadala Investment Co. and Bahrain’s Mumtalakat Holding Co.

Moody's downgrades Banque #Saudi Fransi and Saudi British Bank | ZAWYA MENA Edition

Moody's downgrades Banque Saudi Fransi and Saudi British Bank | ZAWYA MENA Edition

Moody's Investors Service has downgraded two Saudi Arabian banks, Banque Saudi Fransi (BSF) and Saudi British Bank (SABB).

On BSF, the agency downgraded its local and foreign currency long-term bank deposit ratings to A2 from A1. The bank's Baseline Credit Assessment (BCA) and Adjusted BCA were downgraded to baa1 from a3.

“The outlook on the bank's long-term deposit ratings remains negative, reflecting the negative outlook on the A1 issuer rating of the Saudi government.”

Moody’s said while BSF continues to have strong asset quality, this has deteriorated in recent years. It expects asset-quality risks to persist at a higher level as some borrowers, particularly in the construction and commerce sectors, remain impacted by the coronavirus-induced disruption and the government's spending remains disciplined due to moderate oil prices.

Moody's expects BSF's profitability to rebound going forward but remain below pre-COVID levels.