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Americana Restaurants International (AMR.AD), a fast food restaurant operator in the Middle East and Kazakhstan, on Thursday reported a net profit of $58.1 million in the first quarter, down 19.2% from the same period a year ago, according to a bourse statement.
The company, which is the franchisee of Pizza Hut and KFC in the Middle East, among others, raised $1.8 billion in an initial public offering and a subsequent dual listing in Abu Dhabi and Riyadh last year.
Most Gulf central banks increased key interest rates on Wednesday after the U.S. Federal Reserve raised its target interest rate by a quarter of a percentage point, in line with expectations.
The Fed raised its rate by 25 basis points on Wednesday, its 10th consecutive increase since March 2022, but signalled it may pause further increases.
Oil and gas exporters of the Gulf tend to mirror the rate moves of the Fed as most regional currencies are pegged to the U.S. dollar.
The central banks of Saudi Arabia and the United Arab Emirates, the region's two largest economies, followed the Fed in increasing rates by 25 bps, as did Bahrain and Qatar.
The Saudi central bank, known as SAMA, increased its repo rate by 25 basis points to 5.75% and its reverse repo rate also by 25bps to 5.25%, it said in a statement, while the UAE central bank said it would raise the base rate on its Overnight Deposit Facility to 5.15% from 4.90%.
Bahrain raised all of its key interest rates by 25 bps, taking the one-week deposit facility rate to 6% from 5.75%.
Qatar increased its repo, lending and deposit rates by 25 bps to 5.75%, 6.0% and 5.5% respectively after initially releasing a statement maintaining rates; it later posted a new statement with the upwards revision to rates.
The impact of rising rates on regional credit growth and non-oil business activity has so far been limited, although those indicators would probably be a little stronger if rates were lower, says Justin Alexander, director of Khalij Economics.
"Another 25 bps won't make a big difference; the rates outlook is more important and it's looking like we might be near the peak," Alexander, also Gulf analyst at GlobalSource Partners, said.
Aldar Properties (ALDAR.AD) will hold off any further investments in Egypt until conditions there stabilise, a senior executive said, as the Abu Dhabi real estate developer reported a 22% jump in first quarter profit on Wednesday.
Aldar, along with Abu Dhabi fund ADQ, acquired about 85.5% of The Sixth of October for Development and Investment (SODIC) (OCDI.CA) shares in 2021 for 6.1 billion Egyptian pounds ($198 million), which at the time was worth about $387 million.
The investment in SODIC was to serve as a platform to expand the company's real estate portfolio in Egypt.
On Tuesday, SODIC reported a 17% decline in net profit in the first quarter from the same period in 2022, and said it had cancelled 21% of gross contracted sales in the quarter.
"We are taking a very cautious approach to launching projects," Faisal Falaknaz, Aldar's acting chief finance and sustainability officer, said in a media call.
Most stock markets in the Gulf ended lower on Wednesday, ahead of an expected Federal Reserve interest rate hike later in the day, with the Saudi index registering its biggest intraday fall in nearly two months.
In their efforts to tame inflation, the U.S. Federal Reserve is expected to hike rates by an additional 25 basis points on Wednesday, while the European Central Bank is also expected to raise rates at its regular policy meeting on Thursday.
Most Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates and Qatar, have their currencies pegged to the U.S. dollar and follow the Fed's policy moves closely, exposing the region to a direct impact from monetary tightening in the world's largest economy.
Saudi Arabia's benchmark index (.TASI) declined 1.3% with Al Rajhi Bank (1120.SE) losing 1.5%, while Alinma Bank (1150.SE) retreated 5.7% as the lender missed market expectations for the first quarter.
In Abu Dhabi, the index (.FTFADGI) dropped 0.3%, with the country's biggest lender First Abu Dhabi Bank (FAB.AD) losing 0.9%.
Oil prices - a catalyst for the Gulf's financial markets - extended losses after plunging 5% in the previous session, as investors fretted about the health of the U.S. economy ahead of the expected Federal Reserve rate hike.
Dubai's main share index (.DFMGI) edged 0.1% higher, helped by a 3.7% jump in Tecom Group (TECOM.DU) after the business park operator reported a 34% rise in first-quarter net profit.
The Qatari benchmark (.QSI) advanced 1.5%, extending gains for a sixth session, with telecoms company Ooredoo (ORDS.QA) climbing more than 5%.
Outside the Gulf, Egypt's blue-chip index (.EGX30) finished flat.
Egypt's non-oil private sector activity shrank for the 29th consecutive month in April as import and currency restrictions and surging prices caused business confidence to hit an all-time low, a survey showed on Wednesday.
The S&P Global Egypt Purchasing Managers' Index (PMI) improved to 47.3 in April from 46.7 in March, but remained below the 50.0 threshold that marks growth in activity.
Dubai-based Rasmala Investment Bank has launched a $2 billion, five-year strategy to create a portfolio of residential properties in the UK to cater to growing interest from GCC investors.
The strategy targets the UK multifamily market through a Sharia-compliant investment vehicle, with an initial focus on the serviced apartment and build-to-rent subsectors in and around London, Rasmala said on Tuesday.
It has been seeded by the Rasmala Group and has an active investment pipeline over the next 12 to 18 months.
“Our UK multifamily strategy builds on Rasmala’s track record of matching GCC investors with real estate opportunities in the UK,” said Eric Swats, chief executive at Rasmala.
Oil plunged for a second day, dipping below $70 a barrel in New York as the prospect of a US recession triggered a flight from riskier assets and threatened to curb fuel demand.
Just days after OPEC+ began cutting production in an effort to stabilize crude markets, there was little indication that the group was having any success. Oil futures fell to the lowest since March, when the first tremors of a banking crisis were sending prices into a tailspin. There was renewed anxiety on Wednesday over financial stability in the US as well as signs of a cooling labor market.
“Fears of a wider economic slowdown” are driving the market, Joe DeLaura, senior energy strategist at Rabobank, said in a note. Brent crude, which was trading near $80 a barrel on Tuesday, will be the next to test $70, he said.
Digital City, where the PIF offices are located, Riyadh in January
Photographer: Jeremy Suyker/Bloomberg
Even as the global financial community contends with layoffs and lower bonuses, banking jobs remain plentiful and salaries are surging in one unexpected corner of the world: Saudi Arabia.
It’s a pay boom driven by the expansionist zeal of Crown Prince Mohammed Bin Salman who is flush with cash from oil sales and determined to make the economy a financial powerhouse. State vehicles like his Public Investment Fund, with more than $600 billion of assets, are hiring at breakneck speed, often recruiting staff from foreign firms based in the country. Wall Street banks are also desperate to expand, drawn by the promise of deals linked to an outsized attempt at economic reform.
But on the ground, hiring is proving to be a challenge. While MBS, as the de facto ruler is known, has eased many social regulations, alcohol is still banned and extramarital relations and homosexuality remain punishable as ‘moral crimes.’ The severe rules and the prospect of a monotonous lifestyle in Riyadh often make expats reluctant to move. Meanwhile, experienced local employees are in short supply. That’s fueling a fight for talent and boosting salaries, bankers and headhunters say.
Recruiter Hays Plc estimates that most banking professionals in Saudi Arabia can earn roughly 20% more than their counterparts in Western financial centers. Those expat executives willing to relocate to the kingdom from neighboring Dubai can ask for 20% to 35% extra, according to headhunting firm Mark Williams. Senior hires are able to command even higher amount.
The UAE developer Aldar Properties posted a 22% increase year-on-year (YoY) in Q1-2023 net profit to 836 million dirhams ($228 million), and said it expects "robust real estate market dynamics" to sustain through 2023.
The net profit easily topped analysts’ mean estimate of AED747.7 million, according to data compiled by Refinitiv's Eikon.
Group revenue for the quarter rose 14% on year to AED3.1 billion, the developer said in a statement on the Abu Dhabi Securities Exchange on Wednesday.
Group sales more than doubled to AED 4.5 billion, its highest-ever quarterly sales, driven by strong demand from a growing base of overseas and resident expat buyers in the UAE.
It has a development revenue backlog of AED 18.8 billion "providing revenue visibility over the next 2-3 years," it added.
Abu Dhabi’s biggest listed developer, which has been on acquisitions drive last year, said it has "significant dry powder for disciplined capital deployment to drive earnings growth, build scale, and enhance diversification."
The company had AED 6.1 billion of free cash and AED 4.4 billion of committed undrawn facilities. It is "well placed to capture attractive growth opportunities".
Government-led reforms and the growth of private investment in new sectors will help support non-oil economic growth in Saudi Arabia amid an expected sharp slowdown in overall growth this year, a senior IMF official said.
The Saudi economy grew 8.7% last year, as high oil prices boosted revenue and led to the kingdom's first budget surplus in almost 10 years.
The IMF projects that Saudi GDP growth will more than halve, to 3.1%, this year, in line with the forecast for Middle East oil exporters. The forecast, however, is higher than the 2.6% growth rate that the IMF projected in January.
Several OPEC+ member states, led by Saudi Arabia, the world's top crude exporter, recently announced surprise cuts to oil production from May, initially driving up global prices, although global worries and an uncertain demand outlook are weighing on prices.
Major stock markets in the Gulf were mixed in early trade on Wednesday, ahead of an expected U.S. interest rate hike later in the day, while the Qatari index advanced on broad-based gains.
In their efforts to tame elevated inflation levels, the U.S. Federal Reserve is expected to hike rates by an additional 25 basis points on Wednesday, while the European Central Bank is also expected to raise rates at its regular policy meeting on Thursday.
Most Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates and Qatar, have their currencies pegged to the U.S. dollar and follow the Fed's policy moves closely, exposing the region to a direct impact from monetary tightening in the world's largest economy.
Saudi Arabia's benchmark index (.TASI) dropped 0.8%, dragged down by a 4% slide in Alinma Bank (1150.SE) as the lender missed market expectations for the first-quarter.
Among other losers, oil giant Saudi Aramco (2222.SE) retreated 1.1%.
Oil - a key catalyst for the Gulf's financial markets - extended losses after plunging 5% in the previous session.
In Abu Dhabi, the index (.FTFADGI) edged 0.1% higher.
An acceleration in the growth of new orders led to a surge in non-oil business activity in the United Arab Emirates in April, a business survey showed on Wednesday.
The UAE, the second-biggest economy among GCC members, will grow 3.7% in 2023 and 4.0% next year, significantly lower than 7.6% last year, according to the latest Reuters poll of 16 economists.
The Qatari benchmark (.QSI) advanced 1.4%, as all the stocks on the index were in positive territory including telecoms firm Ooredoo (ORDS.QA) jumping 4.5%.
