Global Markets Update:
The US midterm elections delivered a split Parliament with a Democratic regaining a majority in the House of Congress and Republicans boosting their majority in the Senate (which presides over key appointments such as the Supreme Court). On Wall Street the positive reaction to the midterm elections lifted up equity prices. Then on Friday the oil price slump depressed energy stocks and the tech stocks sell off rekindled. So by end of the week the S&P500 lost half of the post election gains. In emerging markets, the Shanghai composite again recorded losses, influencing the entire MSCI EM index. Regional markets however did not feel the contagion with the exception of KSA. The reaction to the US elections and the moderately hawkish Fed statement sustained the dollar on all major crosses. Oil prices entered bear territory with the Brent falling below USD 70/b. A weaker economic outlook, especially in China and other emerging markets, has shifted the focus on oversupply. Moreover, US crude oil inventories rose by 5.8 mn barrels smashing all predictions. Long-dated futures underscore that investors expect markets to be awash in oil over the coming months as Russia, KSA and US have all increased production in the past few months. However, this might not be a forgone conclusion: after caving in to US pressure to boost output, OPEC and Russia might be inclined to cut back once again. In any case, for major OPEC producers further increase are unlikely. Gold price retreated slightly in sluggish trade.
The number of tourists into Egypt increased by around 40% YoY as of end-September, as per the tourism minister, who also expects annual tourists numbers to surpass 10mn this year (for the first time since 2012).
US has given Iraq a 45-day waiver to continue importing natural gas and electricity from Iran; the waiver is conditional on Iraq not paying Iran for imports in dollars.
Jordan and Lebanon are committed to keeping their currencies pegged to the US dollar, stated the respective central bankers at a recent panel debate.
Lebanon is expected to start gas exploration by the end of 2019, and this will take three to four years further, stated a vice-governor of the central bank.
Saudi Arabia’s PMI ticked up to 53.8 in October (September: 53.4), thanks to an increase in employment (51.3 from September’s 50.7) and new orders growth. Output however rose at the slowest rate since April.
Saudi Arabia launched 402 projects, covering 12 sectors and worth SAR 12.15bn and also laid the foundation stone for another 199 projects costing SAR 4.2bn.
The bank merger between Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank – that could result in a lender with USD 113bn in assets – is at an “early stage”, according to the central bank governor.
Though the “positive list” of sectors/ activities allowing 100% foreign ownership has not been issued following the issuance of UAE’s new FDI law, the following 14 industries have been revealed to be in the “negative list”: this includes oil exploration and production; investigation, security, military; banking and financing activities; insurance; pilgrimage and Umrah services; certain recruitment activities; water and electricity provision; fishing and related services; post, telecommunication and other audio visual services; road and air transport; printing and publishing; commercial agency; medical retail (including pharmacies); and blood banks, quarantines and venom/poison banks.
Dubai’s non-oil foreign trade grew to AED 965.3bn in January-September this year, with re-exports growing by 13% to AED 299.2bn. China remained the emirate’s biggest trading partner with AED 102.9bn worth of trade, followed by India (which posted a 16% increase to AED 86.2bn) and US (AED 59.6bn).
Real estate brokerage commissions in Dubai touched AED 842mn from 18,121 transactions in January-September, according to the Dubai Land Department.
The first investment from DIFC’s USD 100mn Fintech fund launched last year will be made “shortly”, according to a senior official. He also stated that the fund “is in the process of being seeded and structured as we speak”.
UAE telecom subscriptions increased to 22.8mn by end-August; mobile phone subscribers touched 19.154mn – amounting to 217 lines per 100 inhabitants.
The UAE passport is now the third most powerful in the world: UAE citizens can enter 113 countries visa free and another 50 countries provide visa-on-arrival.
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Global Markets Update: