MENA and Global Markets

Our Take on the Hot Topics

OIL – Which Way Is Up?

28 September 2016

"Since January this year we have been warning about the growing risk of a potential oil price spike in the near to medium term. As we remain within the minority to hold this somewhat contrarian view we have been asked by some of our clients to clarify the reasons behind our thinking (...)"

Glenn Wepener, Geo-Political Analyst, Middle East & Africa

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Tunisia Awaiting a Miracle

24 August 2016

Hailed as a success story following the peaceful “Jasmine” revolution of 2011, Tunisia now struggles to replicate its political achievements on the economic front. With unemployment rising and a very youthful population becoming restive, urgent structural reforms are needed but time is running short.

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Views on the news

MSCI: Nigeria on the list for possible reclassification

Abu Dhabi, 2 October 2016
Morgan Stanley has announced that it will keep Nigeria within its MSCI Frontier Markets Index for now, but warned that it has put the country on the list for possible reclassification to standalone status at its annual review next year, if the FX liquidity and accessibility situation for investors worsened and/or new EXCON restrictions were implemented. Morgan Stanley has kept Nigeria on watch since April, when it first threatened to remove it from its benchmarks due to a lack of liquidity in the local FX market, making it difficult for foreign investors at the time to buy and sell securities - the CB abandoned its US$-peg and instituted a more flexible FX regime in June. Other countries currently holding standalone status include Ukraine and Jamaica.

As mentioned in our previous commentaries, sharply reduced oil and gas revenues has been the primary cause behind the squeeze on hard currency availability with this sector accounting for 87.6% (2014) of the country’s total exports, and 95% of its foreign exchange earnings followed by incoming remittances from Nigerians living overseas. On top of low oil prices, Nigeria is still struggling to maintain reasonable crude production levels due to ongoing separatist activity in the Niger Delta and infrastructure issues, both the primary causes behind a plunge in output over the past 9 months. Meanwhile many potential foreign investors continue to sit on the fence due to expectations that the Naira will weaken further in the near term.

USD/NGN hit a fresh high of 490.00 in the unoffical parallel market last Friday before recovering somewhat to close around 475.00. Conversely the official spot rate remained steady at 305.00 due to CB intervention. Meanwhile the country’s FX reserves fell to US$24.59 bio at the end of September against US$25.45 bio in August. We continue to expect the official interbank market rate to be allowed to edge towards our near term target of 350.00, a level which may just be enough to start attracting more foreigners seeking yield and local equity market opportunities.

Glenn Wepener
Executive Director & Geopolitical Analyst - Middle East & Africa

Reports and updates from around the region

GCC Fixed Income Chart Book: Q1-Q3 2016 Review

The latest edition of NBAD’s review of the GCC fixed income markets has just been released. This text-light report provides a useful overview of the GCC bond and sukuk markets covering key aspects such as new issuance, secondary trading levels, spread movements, GCC sovereigns and their CDS levels - from 31st December 2015 to 30th September 2016.

A must read for those who are interested in or actively investing in GCC fixed income instruments.

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MENA Economic Reports