Turkish Lira in Crisis

Global Markets update:
The summer lull on equity markets is a thing of the past. At the beginning of the week sentiment seemed to favour the positive aspects over the ongoing trade policy tensions and doubts on valuations. Then the Turkish crisis erupted and sent shockwaves throughout the markets, starting from Europe (with epicenter in the banking sector) and emerging markets. Wall Street ended a 5-week positive streak but contained the losses, while Japan, Europe and Emerging Markets suffered substantial losses. Regional markets were mixed, reflecting country specific factors which in some cases offset the contagion from other emerging countries. In currency markets, movements on main crosses benefitted the flight to safety towards the USD, while emerging market currencies felt the contagion from the sinking Turkish lira. Oil markets are fidgety: the effects of sanctions on Iran are uncertain while the demand from refineries in China is clearly declining. Gold prices were little changed near a multiyear low.

MENA News:
The US re-imposed sanctions on Iran. Sanctions are to be imposed on: purchase or acquisition of US banknotes by Iran’s government; Iran’s trade in gold and other precious metals; graphite, aluminium, steel, coal, and software used in industrial processes; transactions related to the Iranian rial; activities relating to Iran’s issuance of sovereign debt; Iran’s automotive sector (Iran will also be barred from buying US and European aircraft).
Moody’s downgraded Bahrain’s long-term issuer ratings to B2 from B1 and maintained the negative outlook, citing a further rise in Bahrain’s external and government liquidity risks thereby constraining access to market financing. The B2 rating however assumes that the nation will continue to receive financial support from its peers.
Egypt’s proposal to grant residency to foreigners in lieu of property purchases is likely to be issued within a month. The draft law provides that foreigners earn the right to stay 1, 3 and 5 years for buying properties worth USD 100k, 200k and 400k respectively.
Saudi Arabia froze all new business and investment transactions with Canada, and suspended flights, after the latter nation called for releasing civil society activists detained in the country. Separately, the Saudi energy minister disclosed that oil supplies would not be affected by this row. Bahrain, Egypt and Jordan have publicly announced their support for Saudi Arabia in this row.
 
UAE News:
The UAE Securities and Commodities Authority published a proposal to setup a secondary market for listed companies which report losses of 50% or more of their total capital. Additionally, listed companies that report losses will have “to immediately disclose that to the authority and the market”.
Investors from EU and US accounted for 66% of the total number of projects launched in Dubai during the period 2015 – Q1 2018, and contributed 45% to the total FDI flows into Dubai, and created 28,241 new jobs, according to DED, citing FDI Market Data. Dubai was also ranked first globally in the share of FDI in technology transfer.
The UAE launched a new amnesty initiative which enable applicants to receive a six-month temporary residency without the need for a sponsor.
About 103.29mn passengers used the Dubai Metro in H1 this year, up 2.7% YoY. Dubai Metro has accounted for the lion share of public transport ridership accounting for 37.17% of the total during this period.

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SOURCES:
Nasser Saidi & Associates