Global Financial Markets suffer their worst day since 1987’s Black Monday...

UAE News:
The UAE Central Bank announced a stimulus package worth AED 100bn to support the economy amidst Covid-19: the Targeted Economic Support Scheme includes AED 50bn from Central Bank funds through collateralised loans at zero cost to all banks in the UAE and AED 50bn funds freed up from banks’ capital buffers (as banks will be allowed to tap into a maximum of 60% of the capital buffer). To support financing for SMEs, the amount of capital banks must hold for loans to SMEs has been reduced by 15% to 25%. To support the real estate sector, the loan-to-value for first time home buyers has been increased by 5 ppts and the maximum exposure banks can have to the real estate sector will be allowed to rise to 30% from current 20% (but banks will need to hold more capital).
Dubai announced a AED 1.5bn stimulus package to support businesses: this includes a freeze on the 2.5% market fees levied on all facilities operating in Dubai, a refund of 20% on the custom fees imposed on imported products sold locally in Dubai markets, fees imposed on submitting customs documents of companies will be reduced by 90%, ability to renew commercial licenses without mandatory renewal of lease contracts, reduction of municipality fees imposed on sales at hotels to 3.5% (from 7%) as well as a 10% reduction in utility bills for a period of three months (among others).
UAE announced ‘remote work’ system for public sector employees for two weeks; this follows similar announcements from the Dubai and Abu Dhabi governments. The UAE will temporarily stop issuing new visas from 17th March.
Dubai PMI declined to a 4-year low of 50.1 in February (January: 50.6) as a result of weaker sales, slowing demand and lower inventories. New orders decreased for the first time since February 2016, confidence for future activity dropped to a 31-month low and stocks of purchases fell to the greatest extent since October 2010.
Abu Dhabi’s non-oil foreign trade increased by 7.7% YoY to AED 30.9bn (USD 8.41bn) in Q4 2019 while the value of imports grew by 1.5% to AED 28bn.
Dubai’s Department of Economic Development (DED) announced the issuance of 4,459 new licenses in Februry 2020, creating 11,877 jobs. Real estate, leasing and business services accounted for 50% of the economic activities licensed during the month.
The Dubai International Financial Centre (DIFC) announced a 14% YoY increase in its number of firms to 2437 in 2019, with 727 active financial firms (29.8% of total). The total workforce in the Centre grew by 9% YoY to 25,600. Banking assets booked in DIFC grew by 13% YoY to USD 178bn, with an additional USD 99bn of lending arranged by DIFC firms.
Dubai Jebel Ali Free Zone’s (Jafza) registration, licensing and related administrative fees have been reduced by 50-70%, announced DP World. Furthermore, a host of online services would also be offered free of cost.

MENA News:
The oil war heats up: after initially announcing plans to increase oil production to 12.3mn barrels per day (BPD) in April, Saudi Aramco later announced plans to raise capacity to 13mn BPD. UAE will follow Saudi Arabia in increasing its oil output to a record high of more than 4mn BPD in April. Together Riyadh and Abu Dhabi will add a combined 3.6mn BPD of extra oil in April. Russian oil firms might boost output by up to 300k BPD and could increase it by as much as 500k BPD.
GCC nations have introduced measures to combat Covid-19: this includes cancellation of flights to infected areas, asking individuals returning from countries with high cases to self-isolate for 14 days as well as suspending the issuance of new visas in addition to closing schools.
Bahrain central bank cut its overnight lending rate to 2.45% from 4% to ensure “smooth functioning of the money markets”, while also assuring “further necessary actions” if required.
To support businesses during the Covid-19 outbreak, MPs in Bahrain approved measures including reduction of commercial registration fees as well as labour and utility charges for 6 months; this proposal has been forwarded to the Cabinet for approval. Furthermore, the central bank asked banks to not freeze customers’ accounts in case of job loss or retirement.
Women account for 29% of total investors at Bahrain Bourse, revealed the COO, the value of shares held by them is currently BHD 580mn.
Kuwait declared a public holiday from 12th March 12 to 26th March, halted all commercial passenger flights, closed schools, shopping centres, cinemas, wedding halls and children’s entertainment centres to slow the spread of the disease. The central bank announced the set up a KWD 10mn (USD 33mn) fund – to be financed by Kuwaiti banks – for disbursement by the Cabinet on urgent and necessary needs. Further, it suspended fees on point of sales devices and ATM withdrawals and increased the limit for contactless payments to KWD 25 (USD 81.44) from KWD 10, while announcing that it remains ready to support the financial sector further.
Oman is in talks with banks to raise around USD 2bn in loans, to manage its rising fiscal deficit as oil prices plunge. A deficit of OMR 2.5bn (USD 6.49bn), or 8% of GDP, is projected this year; foreign and domestic borrowing is expected to cover about 80% of that amount.
Hotel revenues in Oman fell by 9.2% YoY to OMR 20.64mn at end-January 2020, with occupancy rates declining by 10.4% to 55.9% and the number of hotel guests down by 1.4% to 144,270.
Oman, in a bid to contain the spread of Covid-19, announced that it would suspend the issuance of tourist visas from 15th March for 30 days and would not allow cruise ships to dock at its ports during this period.
Saudi Arabia announced a SAR 50bn stimulus package to support the private sector: among the measures by SAMA are financing support for SMEs (including deferred loan payments, concessional loans) and coverage of points of sale and e-commerce fees.
In addition to closing schools and universities, Saudi Arabia suspended travel to 9 countries – UAE, Kuwait, Bahrain, Lebanon, Syria, South Korea, Egypt, Italy and Iraq – for its citizens and residents to limit the spread of Covid-19. The Capital Markets Authority urged shareholders and invested in listed companies to vote electronically in upcoming meetings.
Saudi Arabia will provide USD 10mn to the World Health Organisation to support its efforts in combating the spread of Covid-19.

Global News:
Friday saw global financial markets suffer their worst day since 1987’s Black Monday: the MSCI all-country world index entered bear market territory while world markets lost nearly USD 18trn from February’s peak. The VIX volatility index and corresponding measure of volatility for the Euro Stoxx 50 hit their highest since the 2008 financial crisis. Equity markets in the region closed in the red last week, with GCC investors losing more than AED 150bn on Sunday (when markets opened after the failure of OPEC+ talks on production cuts). As safe-haven currencies, the JPY and CHF strengthened, the Indian rupee touched a record low, and other emerging market currencies like the Indonesian rupiah, Thai baht and South Korean won lost ground as well. Oil prices continued to decline on news of higher production plans from UAE and Saudi Arabia while the gold price ended the week with a loss of 8.6%, the most since March 1983.

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SOURCES:
Nasser Saidi & Associates