Global Markets Update:
Over 80% of the companies included in the S&P 500 have reported Q1 profits above estimates, and profits are at their highest in 7 years. Nevertheless, investors on Wall Street are not encouraged by such bullish signals and feel that the cycle is coming to an end. Already, last week, it took some disappointing earnings reports combined with worrisome inflation data and lackluster payroll figures to send the main indices down. All other bourses in Asia, and in emerging markets followed the US lead, except Europe, where for the second week in a row stock prices advanced significantly despite the S&P 500 slide. Almost all regional markets ended in the red, with contagion from emerging market blues and uncertainty over the Iran nuclear deal. Tensions pushed up the USD, with Dollar Index hitting a high for the year and exceeding the 200-day moving average for first time since May 2017. Oil prices continued their relentless climb, Brent crude was at $74.87/barrel, mainly thanks to OPEC production compliance being helped by weakening Venezuelan output and outages in Libya, including expectations that the US will scrap the nuclear deal.Counter-intuitively, the gold price lost ground again despite higher inflation in the US and geopolitical risks. In essence, gold prices lately have been negatively correlated with the USD’s fluctuations.
The IMF forecasts growth in the MENA region at 3.2% this year, from an estimated 2.2% in 2017. The region is yet to benefit from the global recovery, and for oil-exporting countries, more effort and reforms are needed to diversify away from oil. Accelerating structural reforms – improve the business environment, labour market and education reforms, strengthening governance and transparency etc. – are key for stronger recovery.
Saudi Arabia’s investments in Egypt touched USD 6.3bn in 2017 (from over 4274 projects) amounting to over 22% of total Arab investments in the country. According to Egypt’s trade and industry minister, Egypt has invested about USD 1.1bn in Saudi Arabia (over 1043 projects) last year.
Saudi Arabia plans to become one of the top 20 nations in ease of doing business by 2020 (it currently ranks 92 out of 190 countries in the World Bank’s Doing Business report). The head of SAGIA highlighted the new arbitration and insolvency laws, the efficiency of the Kingdom’s ports, and the ease and speed of getting a business visa as steps towards achieving this goal.
MENA IPO activity was relatively slow in Q1 this year, with 6 deals (-45.5% YoY) raising USD 629.6mn (+57.1%), according to EY. Of the six deals, five were real estate investment trusts (REITs) in Saudi Arabia, while Egypt had one IPO in the financial services sector.
Spending on blockchain solutions in Middle East and Africa is predicted to more than double to USD 80.8mn by end-2018 from USD 38.9mn spent in 2017, according to a report from IDC.
Two Dubai free zones – Dubai Airport Free Zone Authority (DAFZA) and Dubai Silicon Oasis Authority – are considering a reduction in fees and other costs to be more competitive and attract more foreign companies.
The value of retail sales in Dubai is expected to reach USD 43.8bn by 2021, while the retail market is projected to grow at an average 5.6% over the 2018-2021 period, reported UAE news agency WAM.
Global investment holding company, Dubai Holding has announced it will invest up to AED 1 billion over a five-year period to launch a next generation digital bank for the UAE, adding that it has plans to expand its services across the MENA region.
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Global Markets Update: