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Middle East & African Monitor – 30 August 2017

  • Hurricane Harvey Hammers US Crude Refining Output.
  • “Qatar Is Not Serious” On Finding A Solution To Crises – UAE Ambassador.
  • Saudi Arabia & Kuwait Await FTSE Decision.
  • Foreigners Continue To Buy Egyptian T-Bills.
  • Profitability At UAE Banks Set To “Remain Solid” – Moodys.
  • Egypt Signs Agreement With China’s EXIM Bank.
  • STC May Acquire Majority Stake In Turk Telecom.
  • Nigeria Seals US$590 Mio Aircraft Order.
  • Oman To Issue Development Bond.
  • MENA Currency Non-Clearing Dates.

REGIONAL COMMENTARY

Hurricane Harvey Hammers US Crude Refining Output.
The hurricane which is continuing to wreak havoc across Texas and Louisiana has also had a major effect on those oil refineries situated along the US Gulf coast. This in turn has pushed domestic fuel prices up by almost 3% but crude prices (especially WTI) lower, as a major refinery halt translates into a drop in the overall demand for oil. Goldman Sachs claims that the storm has knocked around 3 mio barrels of US refining capacity offline, and may result in a final property damage bill of up to US$30 bio, which in terms of destruction would make Harvey the 9th worst US hurricane since 1945. Conversely however it has also hit shale operations in the Eagle Ford basin, with a WSJ report suggesting between 400,000-500,000 barrels of daily production have been affected. In terms of the global oil market as a whole the impact is likely to be more limited at this stage, although the price- spread between WTI and Brent for example could widen further.

“Qatar Is Not Serious” On Finding A Solution To Crises – UAE Ambassador.
In a recent interview with the Atlantic magazine, the UAE ambassador to Washington, Yousef Al Otaiba, has accused Doha of “not being serious” in finding a resolution to the ongoing dispute. “We’re three months in now, and I’m more convinced than ever that they are not serious about sitting down and having a conversation about how this gets resolved. We’re ready to sit down and negotiate with the Qataris, provided they are willing to sit down and negotiate with us without preconditions,” Al Otaiba stated adding that, “If they don’t, if they prioritize their relationship with Iran, their relationship with Hamas, and their relationship with Islamist militias in Libya and Syria, if that is more important to them than their relationship with us, then we wish them good luck, but they can’t do that and be our friends at the same time.” You can read the entire transcript of the interview here: https://www.theatlantic.com/international/archive/2017/08/yousef-al-otaiba-qatar-gcc/538206/

Saudi Arabia & Kuwait Await FTSE Decision.
The FTSE will announce its decision regarding the potential re-classification of the Saudi Arabia and Kuwait markets from their current ‘unclassified’ status to ‘secondary emerging,’ on the 29th of September 2017 after the US close. Our view is that the chance of such an upgrade remains highly likely, although their actual inclusion into the FTSE’s EM index would only take place in 2019. According to estimates by EFG-Hermes this inclusion could attract at least US$4.5 bio into both markets. The decision will be published on the FTSE website here : http://www.ftse.com/products/indices/country-classification

Foreigners Continue To Buy Egyptian T-Bills.
Foreign investment in Egyptian Treasury Bills totaled EGP 166.50 bio in the first half of this year, compared to just EGP 329 mio in the same period last year, according to the latest data released by Egypt’s Central Bank.

Profitability At UAE Banks Set To “Remain Solid” – Moodys.
Moodys Investors Service published a second quarter review of the UAE’s banking sector yesterday in which the agency said it believed that profitability at the UAE’s four largest banks (FAB, ENBD, ADCB and DIB) “Will remain solid in the next 12 to 18 months underpinned by solid interest income, despite pressure on fee and commission income,” adding that "Profitability was supported by higher yields on loans and stable funding costs, which drove higher net interest income, despite sluggish economic growth due to current oil prices."

Egypt Signs Agreement With China’s EXIM Bank.
Egypt’s Investment Ministry has signed an MOU with the Export-Import Bank of China in order to help further expand cooperation on major infrastructure projects in the North African country . EXIM has already provided a US$739 mio loan to Egypt to help fund the construction of a fast-transit tram system in Cairo, while other high profile Chinese financial institutions and corporations are continuing to increase their involvement there. In May this year, the Chinese Development Bank agreed to provide the country with a US$500 mio loan to help fund strategic projects, while Egypt’s Banque Misr signed a US$100 mio agreement with ICBC to finance a ‘smart-city’ program in conjunction with Huawei.

STC May Acquire Majority Stake In Turk Telecom.
According to an article on Nasdaq.com the Saudi Telecom Company is planning to purchase a 55% stake in Turk Telecom from Oger for around US$3.9 bio.

Nigeria Seals US$590 Mio Aircraft Order.
The US Pentagon has reportedly approved the sale of 12 Super Tucano A-29 reconnaissance aircraft to Nigeria in a deal worth US$593 mio. The planes, which can also be used in a ground-attack roles, are manufactured by Brazil’s Embraer unit in Florida hence the need for US government approval. The order had previously been held back by the Obama administration over alleged human rights issues.

Oman To Issue Development Bond.
Oman’s Central Bank will be seeking to raise up to OMR 150 mio from a development bond issuance which will be conducted on the 17th of September 2017. The issue will have a tenor of 10 years and carry a coupon of 5.75%.

MENA Currency Non-Clearing Dates.
For those if you who may have missed our alert message yesterday, please note the following official non-clearing dates for the various regional currencies over the Eid Al Adha period:

KWD-JOD-OMR-EGP-SAR (Closed 31 Aug – 4 Sept & limited clearing for SAR on 30th Aug), AED (Closed 31 Aug – 2 Sept), QAR (Closed 31 Aug – 5th Sep), BHD (Closed 1 Sep – 4 Sep), MAD-TND (Closed 1st Sep).

30-08-2017

AND FINALLY…
Did you know that Eid Al Adha translates to “Feast of the Sacrifice?” It is an Islamic holiday, which is observed annually from the 10th day of Dhu Al Hijja, according to the Hijri lunar calendar, and begins straight after Arafat Day which itself marks the 2nd day of the annual haj pilgrimage.

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