Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
OPEC/NOPEC Comments & Demand Rise Keeps Crude Prices Firm.
Crude prices were firmer across the board this morning on the back of a number of factors including; a rise in demand from Asia, a drop in the number of US drilling rigs, ongoing concerns over Iraqi supplies, another reported high compliance rate by signatories to the OPEC/NOPEC output cut agreement and a recent statement by the committee responsible for monitoring such compliance (the JMMC), suggesting that “all options” were on the table “to ensure every effort is made to rebalance the market.” Asian demand was particularly significant with China’s imports averaging 8.50 mio bpd and Indian demand hitting a record high of 4.83 mio bpd last month according to Reuters. On top of this there is talk doing the rounds that the quality of oil from Venezuela is falling making its exports which have already been shrinking for months less attractive to foreign buyers.
Tensions High As Re-run Of Kenyan Election Approaches.
Kenyans are preparing to vote this coming Thursday in the controversial re-run of August’s presidential elections which were won by the incumbent, Uhuru Kenyatta, but later nullified by the country’s highest court due to a number of “irregularities.”Tensions are already high especially after the opposition candidate announced he was planning to boycott the poll alleging that it would not be a free and fair process, (although his name remains on the ballot list and he may yet decide to stand at the last minute). Concerns over the ability of the country’s electoral commission (IEBC) to handle another vote so soon after the last one is also being questioned, and reports that a senior official of the IEBC had recently fled Kenya over worries for her own safety does not help. However despite this unhealthy political environment, most foreign investors appear to be cautiously optimistic over the medium and longer term prospects for the Kenyan economy and its ability to weather this current storm. Admittedly GDP growth remains pretty steady at around 5%, and yields are still attractive for local bonds, although the Kenyan Shilling has been under pressure since August requiring active and regular intervention by the Central Bank to prevent the local currency from falling too sharply. USD/KES has thus been grinding higher, touching 103.75 so far while technical analysis wise the next resistance lies around 104.00. Looking further out, the local currency remains overvalued in general and there is potential for USDKES to continue to press upwards and challenge the previous all-time high of 106.67 achieved back in September 2015. Thus in conclusion our view remains the same: stay short KES through NDFs in the 3-12 months tenors.
Saudi Arabia To Ease Restrictions On Foreign Investors Further.
Saudi Arabia is continuing to work on amending its investment framework in order to make it easier for foreign investors to conduct business in the Kingdom. This was highlighted recently by the signing of a collaboration agreement between the Saudi Arabian General Investment Authority (SAGIA) and the Capital Market Authority (CMA) covering the opening up of the country’s stock exchange to strategic non-resident investors. This in turn should see such foreigners allowed to own more than a 10% stake in a listed firm and will follow other reforms already initiated such as internationally standardized settlement cycle, and the introduction of short-selling. “These directives will serve to set up an agreed upon regulatory framework, through which strategic foreign partners who enjoy the required experience and expertise, and who will contribute to transferring knowledge and technical know-how are attracted; thereby opening up new markets for companies listed on the exchange, and allowing them to realize their full potential. The CMA further indicated that the planned directives will be different from its notable QFI Rules in terms of scope and application, as they will be catered for strategic foreign partners looking forward to owning 10% or more in a listed company’s share capital, and this arrangement, through the planned directives, will not be exclusive to financial institutions,” a statement issued by SAGIA and published by the UAE’s National newspaper read yesterday.
KSA & Iraq Discuss Ways To Boost Ties.
Saudi Arabian and Iraqi officials attending the first meeting of the joint ‘Coordination Council’ yesterday have reportedly agreed to begin implementing a number of policies in order to improve and broaden relations between their two countries. These steps include the opening of border access points, the resumption of flights and the opening of a Saudi consulate. According to the Saudi Gazette, the two sides also agreed to boost cooperation in the private sector and allow each-others businessmen and entrepreneurs to identify new trade and investment opportunities. The two sides would also seek to encourage the exchange of technical and scientific expertise.
Increase Of FDI Flows Into Tunisia.
According to a report published by Tunisia’s ‘Foreign Investment Promotion Agency’ yesterday, the country experienced a 13.60% increase in FDI related inflows during the first nine months of this year compared to the same period in 2016. FDI flows totaled US$659.4 mio with the service and manufacturing sectors apparently receiving the bulk of these inflows.
FITCH Affirms Kuwait Ratings.
FITCH ratings agency has affirmed its AA sovereign ratings for Kuwait and kept a stable outlook. In a statement following the announcement, FITCH said; “Kuwait’s key credit strengths are the sovereign’s exceptionally strong fiscal and external metrics and, at a forecast USS50.00 per barrel, one of the lowest fiscal breakeven Brent oil prices amongst Fitch-rated oil exporters. These strengths are tempered by Kuwait’s heavily oil- dependent economy, geopolitical risk, weak governance and a poor business environment."
Dubai Records Real Estate Transactions Worth AED 204 Bio In 2017.
According to Dubai’s land department the Emirate saw 52,170 real estate transactions during the first nine months of this year with an overall value of AED204 bio. "The data clearly shows an increasing demand across all property categories, including land plots for various forms of real estate development, as well as buildings and residential units, which means that we are attracting a wide variety of investors. We expect the market to remain on this upward trajectory of sustained growth, and to see demand continuing to diversify across various real estate categories. The momentum of the market is being driven and sustained by several factors but particularly the upcoming launch of Expo 2020 Dubai," the Director-General of the DLD was reported as saying by the UAE’s WAM media outlet.
Aramco & PIF To Create Construction Firm.
According to an article published on the ME Construction news website, Saudi Aramco and the Public Investment Fund, together with a number of local and offshore partners are reportedly preparing to set-up a construction firm within the Kingdom which would concentrate on building non-oil related infrastructure.
Tanzania Appoints New CB Governor.
Florens Luoga is set to become Tanzania’s next central bank governor when the incumbent Benno Ndulu’s term expires at the end of this year. Luoga is a professor in tax law and is currently chairman of a committee appointed by the government to investigate the country’s mining sector which President Magufuli claims has been exploited by a number of firms who have managed to avoid paying their fair share in taxes.
PCCC Wins Power Contract In Egypt.
The Power Construction Corporation of China has said it has signed an EPC contract on a US$2 bio power project in Egypt.
Did you know that Africa has the most extensive biomass burning in the world, yet only emits about 4% of the world’s total carbon dioxide emissions?
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