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Middle East & African Monitor - 06 January 2017

  • Large crude inventory draw in the US
  • Iranian hardliners face-off against President Rouhani
  • Turkish Lire hits record low
  • Egypt’s FX reserves rise
  • Mubadala may invest up to US$15 Bio in tech fund
  • Tanzania plans Eurobond issuance
  • BPI reduces stake in Angola’s BFA
  • QIIB receives approval to begin operations in Morocco

REGIONAL COMMENTARY

Large crude inventory draw in the US
The EIA released its latest inventory report yesterday showing that US commercial stockpiles had fallen by 7.1 mio barrels last week against expectations of a 2 mio barrel draw. This news combined with announcements from a number of producing countries yesterday, including Saudi Arabia, Iraq, Kuwait and Oman that they had reduced their output in line with last year’s agreement, and that Nigerian production has dropped by 310,000 bpd in December due to strike action and unplanned maintenance issues, helped oil prices maintain most of their recent gains. Meanwhile OPEC’s Secretary General, Mohammad Barkindo, has claimed that discussions will be held between the respective producers during an oil conference in Abu Dhabi next week, over a proposed “compliance mechanism” to ensure that the agreed OPEC and Non-OPEC output reductions are monitored properly.

Iranian hardliners face-off against President Rouhani
According to various Iranian media outlets which were quoted by the ‘criticalthreats’ website, over forty hardline MPs in Iran’s parliament have called for the detention and investigation into Hossein Fereydoun, the younger brother of President Rouhani, on allegations of corruption. This is not the first time conservative parliamentarians have raised the issue, but this latest call comes at the same time as the President had called on the country’s judiciary to be more transparent and responsive to the public. In direct response to his comments a judicial spokesperson was alleged to have said that the judiciary was already transparent and that President Rouhani “should also tell the public how much he has spent during the presidential elections and from which sources and people he has received money.”

Turkish Lire hits record low
Economic contraction combined with ongoing political and security concerns continue to hurt the Turkish Lire which hit fresh lows against the US dollar yesterday, and although on a technical charting basis the currency is now looking very oversold any short-term recovery is still likely to be short-lived in this environment. Despite the consequent inflationary pressures from a much weaker currency the CB kept its benchmark rates on hold at its December MPC meeting against expectations of a hike, a decision which some analysts suggest was due in part to political demands. Turkey’s GDP shrank by 1.80% in Q3 of last year and a similar contraction is expected to be revealed for Q4, meanwhile there is growing concerns over the estimated US$207 bio of foreign currency liability carried by the country’s private sector, a situation which will be further exacerbated by a soft Lire.

Egypt’s FX reserves rise
Egypt’s Central Bank said yesterday that the country’s net foreign reserves rose to US$24.26 bio last month against US$23.05 in November. The increase is due to a 1-year US$2 bio Repo arranged with a group of international banks and the disbursement of a US$1 bio tranche from the World Bank in December, which all countered the effect of a partial repayment of Egypt’s oil import debt to international suppliers, as well as the government’s purchase of wheat, sugar etc from overseas. A later CB statement also highlighted a rise in the country’s external debt position to US$60.15 bio in September last year from US$55.76 bio in July. Meanwhile the government has said it will makes its regular payment of US$720 mio to its Paris Club creditors this month.

Mubadala may invest up to US$15 Bio in tech fund
Abu Dhabi’s Mubadala Development Company may invest between US$10-15bio in the SoftBank Vision Fund according to a Bloomberg report yesterday. The fund which will be capped at US$100 bio has already received US$45 bio in commitments from Saudi Arabia and US$1 bio from Apple Inc.

Tanzania plans Eurobond issuance
Tanzania’s government has said it hoped to conduct its debut Eurobond issue this year in order to help fund a series of infrastructure projects. In preparation the Finance Ministry said it had concluded talks with FITCH for a sovereign credit rating late last year and will hold similar discussions with Moodys soon in order to pave the way for such an issuance. Meanwhile the country is also reportedly looking to seal a US$300 mio loan from Credit Suisse.

BPI reduces stake in Angola’s BFA
The Portuguese banking group BPI has sold 2% of its overall stake in Banco de Formento Angola to the African country’s largest phone operator Unitel. The sale was reportedly driven by new European banking laws and concerns by the ECB over the size of the Portuguese bank’s exposure to Angola.

QIIB receives approval to begin operations in Morocco
Qatar International Islamic Bank has received the green light from Morocco’s Central Bank to open an Islamic banking operation in the North African country in conjunction with Credit Immobilier et Hotelier.

06-01-2017

AND FINALLY…
Etihad Airways is the national airline of the UAE, but did you know that roughly translated the Arabic word ‘Etihad’ means ‘union’ or ‘join as one’?

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
MarketInsights&Strategy@nbad.com
Tel: +971 2 6110 127

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NBAD Middle East & African Monitor - 06 January 2017

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