Global Markets Update:
Tax plan optimism propels Wall Street to record highs, while in Asia Japan’s Topix reclaims 26- year high; Dollar sags and bond yields head higher; Oil trades near $57: Wall Street hit record closing highs on Monday as optimism increased about the likelihood of lower corporate tax rates as the Republican tax bill moved closer to passage. Last week US stock indices scored another set of all time records in the wake of positive economic data, dovish Fed remarks after the FOMC meeting and lingering optimism on the tax reform. Wall Street pulled up emerging markets, however European and Asian indices lost ground dragged down by the bank sector. Regional markets were mostly mixed, but the Qatari bourse stood out raising almost 5% on the announcement of an expansionary state budget (see the Regional Development Section). Conversely, a similar fiscal impulse in Saudi Arabia failed to lift investors’ mood and share prices. In currency markets, the dollar was mildly propped up by the Fed’s rate hike, while the yen was under pressure due to the risk-off attitude prevailing in global markets. Oil prices hovered around the high levels prevailing since the Opec agreement on production cuts were announced, supported also by another large drawdown of US inventories. Gold prices, in the absence of geopolitical tensions, were almost unchanged near the lower bound of the trading range in place since Sep, despite a jump after the Fed press conference.
Lebanon approves offshore oil and gas exploration bids, with exploratory drilling expected to start at the beginning of 2019.
The number of tourists coming to Lebanon is expected to reach 1.9 million at end-2017, compared to 1.68mn last year, according to the Hotel Owners Association.
Oman’s government has announced plans to introduce in Jan a new fuel subsidy scheme for low-income citizens who will receive 200 litres per month of M91 petrol at a capped price of 180 baisa per litre.
Saudi Arabia will revise upwards the prices of gasoline, diesel, as well as electricity tariffs, effective from Q1 next year. New electricity tariffs for households and commercial establishments would be applied from Jan. 1, with tariffs for all but the largest residential users to more than triple, albeit from a very low base. A cash handout system is planned for low- and middle-income citizens to offset the impact of the changes.
Saudi Arabia lifted a 35-year-old ban on cinemas, thereby opening up the cultural and entertainment sector for greater private sector participation and employment opportunities.
The UAE is working with Saudi Arabia’s central bank to issue a digital currency based on blockchain that would be accepted in cross-border transactions between the new nations – to be used among banks, not by individual consumers – according to the former’s central bank governor.
UAE officials clarified that VAT will be implemented for the banking and insurance sector beginning next year: for the banking sector, services with margins or interests will be exempt, while other services will be subject to VAT
The Dubai Economy Tracker eased to 55.3 in Nov from 55.6 in Oct, with the retail sector the strongest category; job creation gained for the ninth consecutive month.
Dubai’s 2018 budget, which disclosed a 19.5% increase in state spending to AED 56.6bn, focuses heavily on the infrastructure development related to Expo 2020. State salaries and wages are projected to increase 10% next year, accounting for 30% of total spending. A budget deficit of AED 6.2bn (1.56% of GDP) is estimated next year in 2018, versus a deficit of AED 2.5bn this year
Dubai Roads and Transport Authority plans to complete key infrastructure projects worth AED 3.2bn (USD 871mn) next year including the upgrade of the roads network around Dubai Expo site and Route 2020 Project.
Digital transformation in the UAE will generate AED 33.8bn (USD 9.2bn) over the next three years, according to the DG of the Smart Dubai office. Open data is estimated to add AED 10.4bn to Dubai’s GDP by 2021, while blockchain technology in public services will add AED 5.5bn by 2020, stated the DG.
Bilateral trade between China and UAE surpassed USD 35bn in Jan-Sep 2017, and is expected to cross 2016’s USD 46.3bn mark this year.
The UAE pharmaceutical sector is estimated to grow to AED 14.11bn in 2020, supported by increased healthcare expenditure, mandatory health insurance, and growing medical tourism.
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Global Markets Update: