Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
USAF Has Close Encounter With Iranian Drone.
An FA-18 fighter jet serving from the US aircraft carrier Nimitz had to reportedly take a last minute evasion measure yesterday after an Iranian remote-controlled UAV flew to within 100 feet of the aircraft. According to a US official quoted by the Navy Times “There were repeated radio calls to stay clear of the active fixed wing operations, as the two aircraft closed in, the Super Hornet did a roll over the drone to avoid collision. If the F/A-18 had not done the maneuver, the two aircraft would have collided,” the official stated adding that at their closest, the two aircraft were 100 vertical feet and 200 lateral feet apart from each other. The Pentagon said later that this was the 13th “unsafe” or “unprofessional” interaction between US and Iranian forces this year. Meanwhile the head of Iran’s Atomic Energy department. Ali Akbar Salehi, warned via a state media channel yesterday that if the US tried to overturn the JCPOA nuclear accord then “all options were on the table” in terms of an Iranian reaction. “Iran’s response will be proportionate to the way the US deals with it, the European Union, China, Russia and other countries have approved of the JCPOA, so Washington’s withdrawal from the deal will have no bearing on its implementation,” Salehi was quoted as saying. His comments come on the back of last month’s decision by Washington to implement fresh sanctions on Tehran with regards to the latter’s missile program, and on growing speculation that the Trump administration (encouraged by a number of Republican senators) may refuse to certify Iran’s compliance with the JCPOA agreement at its next 3-monthly review in October. President Trump was quoted as saying earlier this year that Iran was “not living up to the spirit of the agreement.’
Incumbent Looks Set To Win Kenyan Election.
The latest results released this morning by Kenya’s electoral commission showed that the incumbent, Uhuru Kenyatta, currently holds a significant lead ahead of his opponent, Raila Odinga, in the country’s Presidential race. Kenyatta had received 54.80% and Odinga 44.40% of the vote after the results from 35,000 of the 40,833 polling stations were made public. In response Odinga has claimed that these numbers are fake. "We have our projections from our agents which show we are ahead by far," Odinga said and alleging that the published results were not accompanied by scanned copies of forms signed by all party agents in polling stations. Meanwhile Kenyatta yesterday called on whoever lost to concede the race.
"In the event that they lose, let us accept the will of the people. I am willing myself to accept the will of the people, so let them too," he was quoted as saying by Reuters.
Main Libyan Oilfield Back In Operation After Protests Disrupt Production.
Libya’s largest oil field, Sharara, was operating normally again yesterday after reports that protestors had occupied a control room at the site in Zawiya, and disrupted loading operations at the nearby refinery and export terminal on Sunday. There have been no official comments by the National Oil Company yet on who the protestors were or what their grievances may have been. Sharara currently produces around 270,000 bpd of crude oil.
KSA To Allow 100% Foreign Ownership Of Engineering Firms.
Saudi Arabia’s Commerce & Investment Ministry is reportedly close to finalizing proposals which would allow foreigners to hold a 100% stake in locally based engineering firms. There will however be two conditions; 1) The relevant foreign entity must have a 10-year track record in operations and 2) it must already have a presence in at least four other countries. This announcement follows on from the decision last year to allow 100% foreign ownership of retail and wholesale businesses, and also highlights the government’s ongoing attempt to attract fresh foreign investment into the Kingdom, and diversify the economy away from its current heavy reliance on energy related revenues.
Moodys Amends Outlook On Qatar’s Banking Sector.
Moodys Investor Service adjusted its ratings outlook on Qatar’s banking sector from stable to negative earlier this week due in part to funding pressures exacerbated by the ongoing diplomatic dispute. In a statement the agency said that its decision was taken because of, “Weakening operating conditions and continued funding pressures facing Qatari banks. The outlook also captures the potential weakening capacity of the Qatar government to support the country's banks,” the statement read adding, "Qatari banks' reliance on confidence-sensitive external funding has increased in recent years due to a significant decline in oil-related revenues, while a prolonged regional dispute could trigger some outflows of foreign deposits and other external funding (which represents around 36% of total banking system liabilities as of May 2017). Against this backdrop, Qatari banks' profitability will likely decline, with return-on-assets declining to around 1.40% for 2017, from 1.60% in 2016, driven by increases in funding and provisioning costs.” You can read the entire Moodys press release here: https://www.moodys.com/research/Moodys-Changes-outlook-on-Qatars-banking-system-to-negative-from--PR_370513
Egypt’s Budget Deficit Falls – Saudi Prince To Invest US$800 Mio.
In a statement released by the Egyptian President office late yesterday, the country’s budget deficit for the 2016/17 fiscal year has fallen to a five-year low of 10.90% of GDP from the previous year’s 12.50%. GDP growth in Q4 was 4.10% from 4.30% and foreign investment in Egyptian T-Bills had risen to US$13 bio in 2016/17 compared to just US$1 bio during the previous 12 months. The country’s Finance Minister, Amr El Garhy said last night that his government expects GDP growth to reach 4.60-4.80% in 2017/18. Meanwhile according to Egypt’s Investment Minister, Saudi Arabia’s Prince Alwaleed Bin Talal is set to invest up to US$800 mio in expanding the Four Seasons resort complex in Sharm el Sheikh. This investment will reportedly include the construction of two new hotels in the town of El Alamein.
ADNOC In Talks Over Offshore Oil Concession.
Abu Dhabi National Oil Company announced this week that it is in advanced discussions with a number of international firms interested in buying a stake in ADNOC’s offshore oil operations. The state-owned company reportedly plans to split its offshore concessions into two or more separate operations but will retain a 60% stake in the fields. Meanwhile following a meeting of a technical monitoring committee yesterday, OPEC has said that the UAE, Iraq, Kazakhstan and Malaysia have affirmed their commitment to keeping crude production in line with each states respective targets as laid out by the recently extended production agreement.
Bahrain Selects Banks For Upcoming Issuance.
The Kingdom of Bahrain has reportedly selected five banks to manage its next US$ bond issuance via conventional and Islamic bonds. There has been no announcement yet of the potential overall size of the issue but expectations are for between US$2-3 bio. Bahrain is currently rated at B1 (Moody's), BB+ (FITCH) and BB- (S&P). A Reuters report suggests that the sale could come as early as September.
Dubai’s Non-Oil Related Activity Remains Steady.
According to the Emirates NBD economic tracker index, non-oil related activity in Dubai dipped slightly last month to 56.30 from 56.50 in June. However readings above 50.0 still means that the economy is expanding. The wholesale and retail sectors were the best performers followed by travel and tourism.
Following last year’s devaluation and float of the Egyptian pound, a Cairo based entrepreneur has begun assembling a ‘mini-car’ to compete in both price and quality with the domestically popular but Chinese made ‘Tuk Tuk.’ The 4-wheeled ‘minicar’ has a 300cc engine compared to the 3-wheel Tuk Tuk's 175cc. Its body is 4mm thick against the Tuk Tuk’s 0.75mm, and the ‘minicar’ is also apparently more fuel efficient than its Asian competitor.
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