Middle East & African Monitor – 06 November 2017

  • Crackdown On Corruption Heralds “New Era Of Transparency” – Saudi Finance Ministry.
  • Bahrain Warns Citizens Over Travel To Lebanon As Political Crises Deepens.
  • As Monetary Conditions Begin To Tighten S&P Lists New “Fragile Five.”
  • Oil Prices Up Again As Venezuelan Debt Repayments Loom.
  • Moodys Expresses Positive Outlook On Morocco.
  • DP World Looks To Expand Its African Footprint.
  •  Jacobs Engineering Wins FEED Contract In Kuwait.
  • Qatar Airways Buys Stake In Cathay Pacific.
  • Tunisian Inflation Inches Higher.
  • UAE PMI Rises.


Crackdown On Corruption Heralds “New Era Of Transparency” – Saudi Finance Ministry.
A new Saudi Arabian “anti-corruption” committee has been formed by Royal decree and will be headed by the Kingdom’s Crown Prince, Mohammed bin Salman. The formation of this new body was described by the Ministry of Finance as the beginning of “a new era of transparency and accountability,” and follows the recent detention of eleven Princes, a number of senior businessmen as well as certain former and serving ministers on allegations of corruption. According to the UAE’s National newspaper, some of those detained reportedly include; a former head of the Royal Court, a previous finance minister, a navy commander and the head of the Saudi National Guard. The new committee will not only be tasked with investigating potential offences, it also wields significant powers such as the ability to issue arrest warrants, travel bans, and seize assets. Following the weekend news of these high profile arrests the Saudi stock market dropped by more than 2% on Sunday, although the index eventually recovered and ended yesterday’s session 0.30% higher as some began to view this event as potentially positive for Saudi Arabia’s challenging economic and social reform process currently underway. In the FX market the offshore USD/SAR forward curve has edged to the right this morning with the 1Y swap pips now trading around 180/210 compared to 125/155 at the end of last week. Meanwhile a senior Saudi military official has accused Iran of supplying Houthi militia groups with sophisticated weaponry such as the ballistic missile that was fired from Yemen on Saturday and which was heading towards the international airport in Riyadh before it was successfully intercepted. The Saudi-led coalition has also shut Yemen’s air sea and land borders since the failed missile attack.

Bahrain Warns Citizens Over Travel To Lebanon As Political Crises Deepens.
Bahrain’s Foreign Ministry issued a new travel advisory on Lebanon yesterday and called on any of its citizens currently in that country to leave as soon as possible. “Due to the current conditions and developments in Lebanon, the foreign ministry asks citizens present in Lebanon to leave immediately and exercise extreme caution,” an official statement published by Gulf news read, adding that "all citizens should not travel to Lebanon at all, for the sake of their safety, in order to avoid encountering any risks as a result of these developments,” although officials did not disclose the details behind any potential threat. This advisory came just a day after the Lebanese Prime Minister,  Saad Hariri, announced his surprise resignation during a visit to Riyadh, claiming that his life was in danger. "We are living in a climate similar to the atmosphere that prevailed before the assassination of martyr Rafik al-Hariri. I have sensed what is being plotted covertly to target my life," Hariri stated, accusing Hezbollah of "directing weapons" on Yemenis, Syrians and Lebanese and added in a thinly veiled threat towards Iran, that the Arab world would "cut off the hands that wickedly extend to it". The most immediate question facing Lebanon’s ‘unity’ government now is who will be prepared to take Hariri’s place as Prime Minister, a role which according to the country’s ‘power-sharing’ constitution must be filled by a Sunni and following consultation by MPs. However two potential candidates, Najib Mikati and Fouad Siniora, both former Prime Minister’s themselves have reportedly already indicated that they would not be available for consideration.

As Monetary Conditions Begin To Tighten S&P Lists New “Fragile Five.”
S&P today unveiled a list of countries which it suggests could be most at risk from an impending normalization in global monetary conditions, and measured this using seven variables; current account balance/GDP, current account balance/receipts, usable reserves, gross external financing requirements, narrow net external debt, short-term external debt and government linked foreign currency debt. These countries are; Argentina, Egypt, Pakistan, Turkey and Qatar, with Turkey the only one included from the agency’s previous watch list.  “Turkey is always among the most vulnerable, regardless of the variable chosen,” S&P was quoted by Bloomberg as saying.  Conversely the agency’s report claims that China, Russia, Saudi Arabia and Thailand “appear to currently be the most resilient.”

Oil Prices Up Again As Venezuelan Debt Repayments Loom.
Foreign holders of Venezuelan debt must have been more than just a little unnerved by a speech made by that country’s President last week in which he announced the creation of a commission to study the “refinancing” and “restructuring” of his government’s US$60 bio bond related debt (including that of the national oil company) following the last repayment on the 2nd of November 2017. Another US$1.6 bio in payments is due before the end of this year and an estimated US$9 bio of servicing is slated for 2018. A potential default would most likely be the last nail in the coffin for its oil sector and according to the US energy analyst, Nick Cunningham, could potentially remove between 300,000 – 600,000 bpd of crude from the market. Venezuela’s total foreign debt is currently estimated to be around US$143 bio. This situation together with regional geopolitical events, and more importantly ongoing signs that global demand is improving have all helped to support the oil market’s current upward momentum.

Moodys Expresses Positive Outlook On Morocco.
In its latest review, Moodys suggests that the current stable policy environment in Morocco as well as ongoing economic diversification supports the agency’s current positive outlook on the country’s domestic banking sector, which Moodys says will benefit from an expansion in lending and higher fees.  The report also covers Morocco’s delayed adjustment to its FX regime, and suggests that the change once initiated will be “orderly.”

DP World Looks To Expand Its African Footprint.
The MD of DP World, Mohammed Al Muallem, was quoted by the Khaleej Times newspaper saying that his firm was planning a significant investment into new Africa based projects. "Africa is our focus, there are projects in pipeline that we are looking at. We have grown from 5 to 7 locations over the last 2 years. We see huge potential in Africa and we can be the right partner because of the experience and knowledge that we have. We have long-term commitments to make sure that we are part of the growth in Africa," Al Muallem stated adding, "We are in Mozambique, Senegal, Egypt, Algeria and Somaliland, It's not just that our focus is on marine side, but we also want to be there in countries that are landlocked."

Jacobs Engineering Wins FEED Contract In Kuwait.
US based Jacobs Engineering has been awarded the front-end engineering and design contract for a polypropylene plant in Kuwait.

Qatar Airways Buys Stake In Cathay Pacific.
Qatar Airways has reportedly agreed to acquire a 9.60% stake in Cathay Pacific for US$660 mio.

Tunisian Inflation Inches Higher.
Tunisia’s inflation rate rose to 5.80% y/y last month, its highest level since 2015 and up from 5.50% in September. The primary driver was a jump in food and clothing prices.

UAE PMI Rises.
The UAE’s purchasing managers index came in at 55.90 last month from 55.10 in September as activity in the country’s non-oil sector increased.


Did you know that around 50% of Saudi Arabia’s population are under the age of 25 ?

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