The FED raised interest rates with more expected over the year…

Global Markets Update:
Three notable events shaped the markets last week. The Federal Reserve, as widely expected, raised US interest rates by 25 basis points on steady economic growth, strong job gains and confidence that inflation is rising towards the central bank's target. This had an immediate impact on the region as within hours, Saudi Arabia, UAE, Kuwait and Bahrain raised their respective rates. Secondly, the UK Prime Minister, Theresa May, was given the approval to trigger ‘Article 50’ thus beginning the Brexit. Finally, the Dutch Elections bucked a recent trend with the liberals defeating the anti-euro populists. After the rate announcement US stock and bond prices rose. Regional markets were mixed but the main ones KSA, UAE and Kuwait benefitted from the euphoria in EM and the resilience of oil prices. In currency markets, the USD had a lacklustre week but GBP (up 2%) was buoyant, despite the news on the imminent Brexit negotiation. Oil prices recovered from three-month lows after data showed an unexpected drawdown in U.S. Stockpiles.

MENA Update:
UAE’s President is expected to issue the VAT law within the next two to four months, according to a source familiar with the procedures. The Federal National Council already approved a draft law regarding the introduction of taxation procedures last week. The UAE finance ministry announced that a series of workshops would be organised from this month onwards to educate the business community on the management of the VAT system. Businesses that meet the requirement criteria will be able to start registering for VAT in either end of Q3 or beginning of Q4 this year i.e. roughly three months before the new tax is launched.
Saudi Arabia and China inked MoUs and letters of intent worth almost USD 65bn (across investment, energy, space and other areas) during the Saudi King’s visit to Beijing.
In a meeting with Saudi Arabia’s Deputy Crown Prince, the US President pledged support for the development of a new US-Saudi program focused on energy, industry, infrastructure and technology that would provide potentially more than USD 200bn in investments in the next four years.
Moody’s raised its outlook for Saudi Arabia’s banking system to “stable” from “negative”, on the economy’s gradual recovery supported by government spending which is, therefore, likely to improve banks’ liquidity and funding conditions.
Saudi Arabia’s “work from home” program is expected to generate about 141k jobs by 2020; the ministry of labour and social development forecasts that the women in the workforce will increase to 28% by 2020.

Sector News:
Bahrain and Saudi Arabia have signed agreements to carry out projects in the former nation worth SAR 1bn (USD 266mn). The projects cover multiple sectors like housing, roads, electricity and water as well as infrastructure.
Business volume in Egypt’s construction, building materials, and investment sectors touched EGP 160bn recently, according to the minister of housing, who expects to attract more than EGP 1 trillion into these sectors in the next 5 years.
Dubai’s non-oil trade touched AED 1.276trn (USD 347.4bn) in 2016; China, India and the US were the top bilateral trade partners, accounting for 13%, 7.4% and 6.7% of total trade respectively. Saudi Arabia maintained its position as the top Arab and GCC trading partner and fourth globally with AED 52bn (4.1%) of total trade. While free zones accounted for 32% of Dubai’s trade, the biggest items traded overall were mobile phones (AED 167bn, 13%), gold (12%), diamond (7.6%), jewellery (4.9%) and cars (4.7%).

SME News:
DED launches ‘e-Trader’ to licence business activities across social networking accounts. ‘e-Trader,’ which will allow Emiratis and GCC citizens in Dubai to conduct business activities on social networking site, has been launched by the Business Registration & licencing (BRL) sector in the Department of Economic Development (DED), Dubai. The initiative is part of enhancing transparency and regulating the practice of offering products and services for sale on social media. e-Trader provides an added marketing channel and e-commerce platform to the business community in Dubai and underlines DED’s commitment to enhancing ease of doing business as well as overall competitiveness and sustainability in Dubai. The e-Trader licence can be registered under the name of a single owner only and the owner must be an Emirati or GCC citizen aged 18 or above and residing in Dubai. The e-Trader cannot open a shop or issue visas and in case of a legal dispute, the licensee alone will be held responsible.

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SOURCES:

Nasser Saidi & Associates

CPI Financial