Markets respond to US Government Shutdown...

Global Markets Update:
Equity investors almost totally ignored the US government shutdown - with the S&P500 closing last week at yet another all-time high, its 10th record closing high of 2018. The US House of Representatives had passed a stop-gap measure on Thursday to keep Federal agencies funded until 19th February, but Senate Democrats and a few Republicans wouldn’t agree to the deal voted upon after Friday’s market close. Despite the squabble on the US budget, Wall Street hit fresh records supported by upbeat data in particular industrial production and initial jobless claims. The optimism spread to European bourses whose indices were boosted by the IT and industrial sectors, although the FTSE 100 suffered from a stronger pound. In Asia, stock markets were supported by corporate earnings and China’s GDP growth. Emerging markets and regional markets also benefited from the upbeat mood. In currency markets the major crosses were rather stable with the dollar losing some ground due to the government shutdown. Despite another large drawdown in US inventories, oil prices pulled back from the record highs, as the IEA forecasted a sharp increase in US crude production (see Media Review). Gold prices remained essentially stable.

MENA News:
Egypt’s President has announced that he will run for a second term in office in the upcoming election in March. A run-off vote will be held on April 24-26 if no candidate wins more than 50% in the first round.
Tourism revenues in Egypt grew by 123.5% yoy to USD 7.6bn in 2017, according to an unnamed government official. The number of tourists also increased by 54% yoy to 8.3mn during last year.
UAE’s Masdar, Japanese investment firm Marubeni Corp, and Egyptian manufacturing company Elsewedy Electric have agreed to develop 800 megawatts of wind power in Egypt. This will support Egypt’s goal of generating 42% of its electricity from renewables by 2025.
Jordan’s tourism revenues increased by 12.5% yoy to USD 4.6bn in 2017, thanks to a 8.7% increase in number of tourists, according to the central bank.
Saudi Arabia’s Aramco is ready to IPO in H2 this year, according to the company’s CEO. The one decision that the government needs to finalise in the meanwhile is the listing venue. The CEO also reaffirmed the plan to list the whole company rather than creating a subsidiary to IPO.
Start-ups in Saudi Arabia, incubated by Badir program, raised over USD13.07mn in 2017 (up 64% yoy) from 15 funding deals.
Saudi Arabia lifted its ban on cinemas by holding its first public cinema screening last week after 35 years. Purpose-built cinemas are set to open from March.

UAE News:
The UAE Federal Tax Authority has announced some exceptional amendments to the first tax period for businesses subject to VAT: this includes extending the accounting tax period by one to three months for some businesses and amending the quarterly tax period to end on the second tax period; businesses with a three-month tax period ending in March will not be affected by the amendments.
Online purchases would also be subject to 5% VAT, if the goods are received in the UAE, disclosed the Federal Tax Authority.
The average value of FDI received by the UAE touched USD 9bn in 2016, according to the Minister of Economy, while outgoing FDI was USD 15.7bn; this makes UAE the largest receiver of FDI in the Arab region and the largest Arab investor abroad.
S&P affirmed its ‘AA’ long-term and ‘A-1+’ short-term foreign and local currency sovereign credit ratings on the Emirate of Abu Dhabi, also maintaining a stable outlook.
Dubai Economy issued 19,877 new business licenses last year, while there were 128,965 transactions for renewal of licenses. Commercial and professional licenses accounted for 64.3% and 33.8% respectively of new licenses issued last year.
Over one-third of vehicles will be electric by 2040, compared to a total of 3mn electric passenger vehicles on the road today, according to a new report from Masdar launched at the Abu Dhabi Sustainability Week.

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SOURCES:
Nasser Saidi & Associates