Fed Pulls Saudi Arabia in Tiny Club With Positive Real Rates - Bloomberg
Saudi Arabia only partially matched the US Federal Reserve’s biggest interest-rate increase since 1994, but it was enough for the kingdom to become only the third major economy with official borrowing costs above zero when adjusted for prices.
The world’s largest oil exporter largely moves in lockstep with the US to protect its currency peg to the dollar. On Wednesday, its central bank raised the repo rate by half a percentage point to 2.25%, compared with the Fed’s 75-basis-point increase.
With the decision, Saudi Arabia joins China and Brazil in having a positive real rate. Neighboring Gulf countries including Kuwait and Qatar also didn’t follow the Fed in full.
Oil rebounds as new Iran sanctions fuel more supply concerns | Reuters
Oil prices rose on Thursday in topsy-turvy trading after the United States announced new sanctions on Iran, and as energy markets stayed focused on supply concerns that have sent prices soaring this year.
The market slipped earlier as interest rate hikes in the United States, Britain and Switzerland fed worries about global economic growth.
Brent crude futures settled at $119.81, up $1.30, or 1.1%, while West Texas Intermediate (WTI) crude futures ended up $2.27, or 2%, at $117.58.
After the early selloff, buyers jumped back into the market as most forecasters expect supply to remain tight for several months.
Morocco seeks Saudi financial support for its investment fund | Reuters
Morocco invited Saudi Arabia on Thursday to contribute to a fund to spur investments, seeking economic gains from its close political alliance with the Gulf monarchy.
The Moroccan economy is expected to slow to 1.5% this year from 7.9% last year on the back of drought and imported inflationary pressures.
"We invite relevant bodies in Saudi Arabia to support Morocco's large-scale reforms and priority development projects," Foreign Ninister Nasser Bourita said at the opening session of a joint Moroccan-Saudi committee on bilateral cooperation.
He urged Saudi Arabia in particular to contribute to Morocco's planned $4.5 billion investment fund that aims to boost its post-pandemic economic recovery.
Oil prices fall after rate hikes, but tight supply still in focus | Reuters
Oil prices erased early gains to fall to two-week lows on Thursday on the back of inflation concerns highlighted by interest rate hikes in the United States, Britain and Switzerland, though tight oil supply limited losses.
Brent crude futures were down $1.02, or 0.9%, to $117.49 a barrel by 1330 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell $1.17 to $114.14, off 1%.
Prices slipped more than 2% overnight after the Federal Reserve raised its key interest rate by 0.75%, the biggest hike since 1994.
On Thursday, European stocks tumbled after a surprise rate hike from Swiss National Bank. This was followed by a rate hike by the Bank of England. read more
Most Gulf bourses in red after rate hikes | Reuters
Most stock markets in the Gulf ended lower on Thursday, after the U.S. Federal Reserve delivered an aggressive rate hike and cut its growth projections.
The U.S. central bank on Wednesday approved its biggest interest rate hike since 1994, lifting the target federal funds rate by 75 basis points to a range of between 1.5% and 1.75%. Fed officials also see further steady rises this year, targeting a federal funds rate of 3.4% by year-end. read more
Dubai's main share index (.DFMGI) slid 1.7%, underperforming the region, with sharia-compliant lender Dubai Islamic Bank (DISB.DU) falling 3.6% and blue-chip developer Emaar Properties (EMAR.DU) retreated 1.3%.
The Central Bank of the United Arab Emirates said on Wednesday it increased its base rate by three-quarters of a percentage point to 3%, moving in parallel with the U.S. Federal Reserve's hike as its currency is pegged to the dollar.
In Abu Dhabi, the index (.FTFADGI) fell 0.8%, hit by a 0.9% decline in the country's biggest lender First Abu Dhabi Bank (FAB.AD).
Saudi Arabia's benchmark index (.TASI) dropped 1.3%, falling for a fifth consecutive session, dragged down by a 3.7% fall in the Al Rajhi Bank (1120.SE).
The Saudi stock market continued its decline while the Fed's decision added more pressure on the market, said Farah Mourad, Senior Market Analyst of XTB MENA.
"The market could find some support if oil prices stabilize."
Oil prices, a key catalyst for the Gulf's financial markets, erased early gains to fall to two-week lows on the back of inflation concerns, though tight oil supply limited losses.
The Saudi Central Bank said on Wednesday it increased its key interest rates by 50 basis points after the Fed move. read more
The Qatari index (.QSI) lost 0.5%, with petrochemical maker Industries Qatar (IQCD.QA) retreating 2.3%.
Outside the Gulf, Egypt's blue-chip index (.EGX30) finished 1% lower, as most of the stocks on the index were in negative territory including top lender Commercial International Bank (COMI.CA), which was down 1.8%.
Oman's Sultan replaces oil minister in cabinet reshuffle | Reuters
Oman's ruling sultan replaced the Gulf Arab state's long-serving oil minister Mohammed bin Hamad Al-Rumhi on Thursday with Salem al-Aufi who was appointed to the post in a cabinet reshuffle announced on state television.
Rumhi had been oil minister for over two decades. Oman is not in the Organization of the Petroleum Exporting Countries but is a member of the OPEC+ alliance of OPEC and non-OPEC nations.
Aufi, whose appointment was the most notable change in the cabinet reshuffle, was previously undersecretary at the energy and minerals ministry.
Sultan Haitham bin Tariq al-Said on Thursday also issued a decree establishing a higher justice council.
Qatar Airways swings to annual profit | Reuters
Qatar Airways on Thursday reported an annual profit 5.6 billion Qatar riyals ($1.54 billion), compared to a loss of 14.8 billion riyals in the previous year.
The airline made 52.3 billion riyals in revenue in the year to March 31, compared to 29.4 billion riyals a year ago, it said in a statement.
Watch Gulf Central Banks partially Follow Fed - Bloomberg
Waleed Mohsin, managing director for MENA at Goldman Sachs, discusses the latest rate move by Gulf central banks and why he favors the Saudi banking sector. He speaks with Yousef Gamal El-Din on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)
Pakistan’s TPL Picks Alkhawaja to Oversee Abu Dhabi Expansion - Bloomberg
A unit of Pakistan’s TPL Corp. has hired Racha Alkhawaja to oversee their expansion into the United Arab Emirates, as more hedge funds look to attract Middle East money.
The banker has been appointed chief executive officer of TPL Investment Management -- a fund manager specializing in environmental, social and governance-focused and sustainable development goals-linked funds in emerging and frontier markets. It’s registered in the financial center known as the Abu Dhabi Global Market.
TPL’s first fund is a development impact one which develops sustainable and green buildings in Pakistan. The fund raised $100 million in its first round of investment.
“The fund is the first and only development impact fund in Pakistan,” Alkhawaja said in written responses to questions from Bloomberg. It enables “international investors to tap into the Pakistani real estate market via a vehicle that has all the components of international market practice in terms of governance and oversight,” she said.
The UAE is becoming more appealing to global firms given its geographic location and well-developed infrastructure. Veteran emerging markets investor Mark Mobius moved his base permanently to Dubai from Singapore after the Asian nation put in strict travel restrictions during the pandemic.
“TPL chose to expand to the UAE, as it has excelled as a financial center, servicing both east and west,” Alkhawaja said.
Tecom IPO: Dubai Royal Backing of Business Park Share Sale Keeps Asset in Family - Bloomberg
The initial public offering of Dubai’s Tecom Group is in some ways a royal family affair.
The owners of the business park operator are looking to raise as much as $454 million from the share sale, which already has demand for all stock on offer. Tecom’s parent firm is Dubai Holding, an investment conglomerate owned by the emirate’s ruler Sheikh Mohammed bin Rashid.
Two cornerstone investors have committed to buy shares worth $77.3 million. One of them is a relatively unknown entity called Shamal Holding LLC -- the personal investment arm of Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, according to a Tecom spokesperson.
Tecom described Shamal as an “investment firm that manages a diversified portfolio of investments strategically aligned with Dubai’s economic growth ambitions.” The company oversees several well-known assets in the emirate, including a luxury hotel on the Palm Jumeirah, burger chain Five Guys, seafront district Dubai Harbour and Skydive Dubai.
The listing is the second of 10 planned privatizations in Dubai, aimed at deepening the city’s capital markets. Sheikh Maktoum bin Mohammed, one of the ruler’s sons, is the driving force behind that plan. Sheikh Maktoum is also Dubai’s deputy ruler and the finance minister of the United Arab Emirates.
Dubai's Tecom Group sets price for IPO of up to $454 mln | Reuters
Dubai business park operator Tecom Group set price guidance on Thursday for its initial public offering that showed it could raise up to 1.67 billion dirham ($454.7 million) in the listing.
Tecom Group, owned by the investment vehicle of Dubai's ruler, plans to sell 625 million shares, or 12.5% of issued share capital, at a price range of 2.46 dirham ($0.66) and 2.67 dirham ($0.72) per share.
That implies a market capitalisation of between 12.3 billion dirhams and 13.4 billion dirhams, said the group, which operates ten business parks and districts across the emirate of Dubai.
UAE Strategic Investment Fund and Shamal Holding will be "cornerstone" investors in the listing, with a combined commitment of 283.75 million dirhams.
Most Gulf shares decline after Fed rate hike; Saudi gains | Reuters
Most Gulf markets fell in early trade on Thursday, after the U.S. Federal Reserve lifted interest rates to curb surging inflation, reigniting fears over economic growth.
The U.S. central bank hiked interest rates on Wednesday by 75 basis points, its biggest raise since 1994. read more
In Abu Dhabi, equities (.FTFADGI) fell 0.3%, with the Emirate's largest lender First Abu Dhabi Bank (FAB.AD) dropped 0.5%.
Abu Dhabi National Energy (TAQA.AD), however, gained 2.4% after Abu Dhabi Securities Exchange approved listing of multi-tranche $8.25 billion bonds, starting June 23.
Dubai's benchmark index (.DFMGI) eased 0.1%, with Emirates Integrated Telecommunication (DU.DU) losing 1%.
Dubai business park operator Tecom Group set price guidance for its initial public offering between 2.46 dirhams ($0.66) and 2.67 dirham ($0.72) per share, implying a market capitalisation ranging from 12.3 billion dirhams to 13.4 billion dirhams. read more
The Qatari index (.QSI) edged 0.3% lower, hit by a 1.7% drop in Commercial Bank (COMB.QA).
Saudi Arabia's benchmark index (.TASI), however, rose 0.6%, boosted by a 0.6% gain in Al Rajhi Bank (1120.SE) and a 1.6% increase in Riyad Bank (1010.SE).
Oil giant Saudi Aramco (2222.SE) gained 0.6%, as the company is likely planning to merge Motiva Trading with Aramco Trading ahead of a potential initial public offering of the business, people familiar with the matter said. read more
Oil prices fall after U.S. rate hike, but tight supply still in focus | Reuters
Oil prices erased early gains to head lower on Thursday, a day after a fall triggered by a U.S. interest rate hike, though tight supply limited losses.
Brent crude futures were down 45 cents, or 0.4%, to $118.06 a barrel by 0906 GMT while U.S. West Texas Intermediate (WTI) crude futures fell 44 cents to $114.87, also off 0.4%.
Both contracts broadly stayed within the previous session's range.
Prices slipped more than 2% overnight after the Federal Reserve raised its key interest rate by 0.75%, the biggest hike since 1994.
Gulf central banks raise rates as U.S. Fed lifts to 75 bps | Reuters
Most Gulf central banks followed the U.S. Federal Reserve on Wednesday, lifting their key interest rates by three-quarters of a percentage point, while Saudi Arabia made a smaller hike after the latest data showed inflation there slowing slightly.
The U.S. central bank projected a slowing economy and rising unemployment in the United States in the months to come after raising its interest rate by its biggest hike since 1994.
The Gulf Cooperation Council (GCC) countries have their currencies pegged to the U.S. dollar, except Kuwait.
The Saudi Central Bank lifted its repo and reverse repo rates by 50 basis points (bps) to 2.25% and 1.75%, respectively. Saudi inflation edged down to 2.2% in May from 2.3% in April.
The Central Bank of Kuwait raised its discount rate by 25 bps to 2.25%. Its peg to a basket, the composition of which is undisclosed, gives it more room to diverge from Fed policy if domestic economic conditions call for that.
