Finance

UAE pullout won't derail FX union, Saudi cbank says

The United Arab Emirates' withdrawal from a Gulf monetary union will not derail the region's single currency plan, Saudi Arabia's central bank governor said. "I don't believe that the withdrawal will affect it (monetary union) because there are still four countries that are excited about it," Muhammad al-Jasser said at a meeting in the Red Sea port city of Jeddah.

GCC sees no FX union delay after UAE pull out

Gulf Arab states are not likely to delay their monetary union plan after the United Arab Emirates abandoned the project, the Gulf Cooperation Council (GCC) secretary-general said. The UAE, the second-largest Arab economy, broke ranks with Saudi Arabia, Kuwait, Qatar and Bahrain by withdrawing from the single currency plan in protest of a May 5 decision to base the joint central bank in the Saudi capital, Riyadh.

Profits of GCC companies plunge 20%

According to a recent report of the Kuwait-based Global Investment House (Global), the total net income of GCC companies dropped by 19.8% to $45.6 billion in 2008 compared to $56.9 billion in 2007. The study covers 466 locally listed companies, of which 153 are from Kuwait, 96 from Saudi Arabia, 88 from UAE, 52 from Oman,39 from Qatar and 38 from Bahrain. Out of the total companies, 283 companies suffered a decline in their annual earnings, while 109 firms incurred losses. Saudi Arabia's corporate profits fell by 8% to $20.4 billion in 2008,as compared to $22.2 billion in 2007. Out of 96 companies, 13 companies incurred losses, while 45 companies suffered a fall in their profits.

Saudi Q1 project spending doubles to $10.8 bln

Saudi Arabia said it had more than doubled its capital spending on development projects in the first quarter, awarding contracts worth 40.6 billion riyals ($10.83 billion) to spur the non-oil sector. The world's top oil exporter said late last year it would invest $400 billion in the coming five years mainly to build infrastructure in the country of 26 million people. The government of the largest Arab economy faces a budget deficit this year as it seeks to shore up its domestic economy which some economists say could contract this year due to the global recession.

CBE narrows the gap between lending and deposit rates

The Central Bank's (CBE) Monetary Policy Committee has narrowed the band between interest rate on deposits and on loans to 1.5 per cent from 2 per cent for the first time since the corridor rates were launched in 2005. The decision was a clear signal to local banks to adopt measures to stimulate credit to the corporate sector and to invest their excess liquidity, taking into account the declining loan/deposit ratio to 55.9 per cent last March from 56 per cent in September of last year.

Mena equity markets grow stronger in April as global investor sentiment rebounds

Following on from a decent March, April was a very strong month across most Mena equity markets and the broad regional index gained just over 15% to take 2009 performance into positive territory. All regional equity markets recorded gains, with Egypt and Saudi Arabia gaining 24% and 20%, respectively, to lead the pack for the month and the year. The Kuwaiti market showed some signs of recovery after a difficult economic and political period, gaining 12% over the month, while gains in the UAE were amongst the lowest in the region.

Turmoil hits lending

Bahraini retail bank lending to businesses eased slightly in the first quarter, posting its worst performance in more than five years as caution prevails in a Gulf banking system hit by the global financial crisis. Outstanding consumer loans by banks in the smallest Gulf economy also declined in the first quarter while annual money supply growth fell to 14.2 per cent in March, its slowest rate of growth in two years, the Central Bank of Bahrain said in a monthly report.

Standard & Poor's Publishes Islamic Finance Outlook 2009

Standard & Poor's announced the release of Islamic Finance Outlook 2009, its latest annual compendium of topical research and commentaries on Islamic finance. While total global sukuk issuance more than halved to $14.9 billion in 2008 from $34 billion in the previous year, Standard & Poor’s believes the outlook for Islamic finance remains strong. Sharia-compliant assets now total about $700 billion after growth exceeding 10% annually during the past decade.

Arab equities look cheap, resilient, says Morgan

It's time to buy more Arab stocks, according to analysts at Morgan Stanley, who said beaten-down share prices and resilience to a global downturn make companies in Saudi Arabia, Qatar and Egypt particularly attractive. "We recommend investors increase exposure to the MSCI Arabian Markets again," wrote analysts led by Michael Wang and Jonathan Garner in a report. In October they had advised reducing exposure to the region. Offsetting the drop in oil revenues, which has cut real economic growth to an estimated 2.5% this year, the region is positioned to weather the global downturn, thanks to strong domestic demand, central bank stimulus, and low external debt levels, they said.

Shariah-Fortune report shows Middle East leads region for Islamic banking and finance

Shariah-Fortune announces the release of its report that aims at providing information on the Global Islamic Financial Industry. Recent research conducted by Shariah-Fortune screened around 810 companies in 50 countries worldwide offering Shariah compliant financial services. The Middle East covers more than half (around 56%) of the Islamic Finance market. Around 450 companies are located in this region. Leading countries are the UAE, Bahrain, Kuwait, Iran and Saudi Arabia. Asian companies compound to a market share of about 20%. In particular. Malaysia is one of the key players, not only in Asia, but also globally.

EFG-Hermes and Bank Audi sae launch Money Market Mutual Fund

Investors looking for a safe haven amid the ongoing economic global turmoil can turn to a new mutual fund launched by EFG-Hermes, the leading investment bank in the Arab world, in partnership with Bank Audi sae, a member of Audi Saradar Group with operations across the Mena region. The open-ended Bank Audi Money Market Fund will target institutional as well as retail investors looking to preserve and grow their capital in these challenging times by investing in Egyptian fixed-income securities including Treasury bills, Treasury bonds, bank deposits and corporate bonds.

UAE Exchange ties up with Egypt bank

UAE Exchange and National Bank of Egypt (NBE) have entered into an agreement by which UAE Exchange would provide remittance service to the Egyptian community in UAE through its branches. "This new partnership would benefit expatriates from Egypt with facilities to remit money conveniently from UAE to Egypt. The availabilty of NBE's network throughout Egypt and our quality of service will help customers benefit from inward remittances," said Zeineb Hashim, Senior General Manager - Treasury and Financial Institution of NBE.

Despite losses, GCC government assets remain a valuable buffer against the global downturn

While the credit crunch has hit the liabilities side of Gulf Cooperation Council (GCC) countries' balance sheets, Standard & Poor's Ratings Services believes the fall in global asset valuations, including in domestic GCC capital and real estate markets, has had a significant and detrimental effect on the value of their assets, resulting in lower net asset positions and higher contingent liabilities for GCC sovereigns. GCC countries are well placed to shield their economies from the turbulence, thanks primarily to their exceptional capacity to pursue counter-cyclical expansionary fiscal policy.