Ample liquidity in UAE banking as deposits rise
Deposits with the UAE banks increased while credit growth remained flat in July, indicating ample liquidity in the local banking sector, according to the Central Bank’s monthly data.
The month-on-month rise in deposits was driven by both the non-resident segment (up Dh6 billion in July) and the resident (up Dh4.6 billion). Non-resident deposits were up 2.3 per cent year-to-date in July 2018 despite domestic liquidity improving across the system this year, supported in large part by higher government deposits (up 28.5 per cent year-on-year).
Non-resident deposits accounted for 11.6 per cent of the total in July, moderately lower than its 11.8 per cent share in December 2017; this was due to the stronger growth in domestic deposits, revealed an analysis conducted by Abu Dhabi Commercial Bank. It was third consecutive monthly increase in deposits, said Monica Malik, chief economist, Abu Dhabi Commercial Bank. The increase in domestic deposits was driven by the private sector after falling in the previous two months. Government deposits were flat month-on-month in July whilst government-related entities deposits contracted by 0.9 per cent month-on-month, Malik said. Gross loan-to-deposit ratio moderated to 95.8 per cent in July, pointing comfortable and improving liquidity conditions in the banking sector this year.
“The ample liquidity conditions are helping to limit the positive spread between the Eibor and Libor rates from historical levels, though they have widened from the narrow differential seen in early-2018 (sometimes negative), which was unsustainable,” Malik said in the note.
Actis bids for Abraaj’s emerging market funds: sources
Actis, a leading emerging market investor, has bid to buy the bulk of the private equity funds’ business of stricken Dubai-based Abraaj, two sources familiar with the matter said.
Actis’ joins other potential buyers such as Kuwait’s Agility, which has teamed up with New York-based Centerbridge Partners for its bid, York Capital and Abu Dhabi Financial Group.
Abraaj received bids this week to manage the funds and is expected to close the deal with the successful bidder by the end of the year, one of the two sources said.
Abraaj filed for provisional liquidation in the Cayman Islands in June after months of turmoil related to a row with investors over the use of their money in a $1 billion healthcare fund.
Colony Capital had initially emerged as the frontrunner for the business, but its offer to buy Abraaj’s fund management business that runs Abraaj’s Latin America, Sub Saharan Africa, North Africa and Turkey funds ran into difficulties after some investors wanted a review of Abraaj’s handling of funds, according to a report by Abraaj Holdings’ provisional liquidators, PwC.
Actis, which was founded in 2004, has raised $13 billion since inception and employs over 200 people, including a team of 100 investment professionals. It operates in growth markets across Africa, Asia and Latin America, according to its website.
Abraaj has also received interest from other potential buyers to run some of its emerging market business, but that did not include the whole platform, the sources said.
The sources declined to be identified because the information is not public.
Gold inches down, 24k priced at dh146 in Dubai
Gold prices inched lower on Thursday amid expectations of higher U.S. interest rates, but managed to hold above a key psychological level of $1,200 which acted as a strong support.
Spot gold was down 0.2 per cent at $1,203.86 an ounce at 0329 GMT, after rising nearly 0.5 per cent in the previous session.
While 22k priced at Dh137.25 in Dubai, shoppers can opt for 24k for Dh146.
US gold futures were down 0.1 per cent at $1,209.90 an ounce.
Spot gold has been trading in an $8 range for the past two sessions, with investors keenly watching the $1,200 level after the metal broke below that and hit a 1-1/2-year low of $1,159.96 early this month.
“There is certainly some ambiguity following last week’s Jackson Hole symposium where (Federal Reserve Chair Jerome) Powell was a little bit dovish in investors’ point of view,” ANZ analyst Daniel Hynes said.
“Investors are grappling amid positive data coming through (from the United States) and that’s why prices are stuck just above $1,200 at the moment without any sort of clear outlook, especially around the rates for 2019.”
Data showing a higher-than-expected annualised growth in second-quarter U.S. gross domestic product cemented expectations for a rate hike next month, with a 96 percent probability, according to Fed funds futures.
Higher rates dent the appeal of non-interest-yielding gold, boosting the dollar in which the yellow metal is priced.
The dollar index against a basket of six major currencies stayed above a four-week low of 94.434 hit on Tuesday.
The greenback has been on the defensive this week with safe-haven demand for the currency diminishing in the wake of improving risk sentiment in broader markets following promising NAFTA negotiations.
Indian rupee hits fresh record low, touches 19.27 against uae dirham
The Indian rupee plunged to a fresh record low of 70.81 to a US dollar during the morning trade session on Thursday.
Around 10am (India time) the rupee was pegged at 70.68 after it touched 70.81 to a US dollar – the lowest ever mark – against the greenback.
Against the UAE dirham, the rupee was trading at 19.27 at 8:00am (UAE time), according to XE.com.
It opened the day’s trade at the Interbank foreign exchange market at 70.58 to a US dollar and soon surpassed its record low of 70.65 to a greenback on Wednesday.
According to analysts, continuous outflow of foreign funds, along with caution ahead of key macro-economic data, coupled with volatile global crude oil prices pulled the Indian rupee to a fresh low.
“Importers month-end US dollar demand and high crude oil prices have pulled the rupee lower,” Anand Rathi Shares and Stock Brokers research analyst Rushabh Maru told IANS.
On Wednesday, the Indian rupee had plunged to 70.65-66 – the lowest ever mark – against the greenback.
Meanwhile, the key Indian equity market indices on Thursday opened higher despite a muted trend in global markets.
The Sensitive Index (Sensex) of the BSE, which had closed at 38,722.93 points on Wednesday, opened higher at 38.796.98 points.
Minutes into trading, it was quoting at 38,753.10 points, up by 30.17 points, or 0.08 per cent.
At the National Stock Exchange (NSE), the broader 51-scrip Nifty, which had closed at 11,691.90 points on Wednesday, was quoting at 11,693.15 points, up marginally by 1.25 points or 0.01 per cent.
The equity indices closed in the negative territory on Wednesday as the rupee slumped to an all-time low, while weak global cues further subdued the sentiments, according to analysts.
The Sensex was down by 173.70 points or 0.45 per cent at the Wednesday’s closing. In the day’s trade, the barometer 30-scrip sensitive index had touched a high of 38,989.65 points and a low of 38,679.57 points. The Nifty, was down by 46.60 points or 0.40 per cent.
On Thursday, Asian indices were showing a mixed trend. Japan’s Nikkei 225 was quoting in green, up by 0.06 per cent while Hang Seng was down by 0.66 per cent, South Korea’s Kospi was up 0.06 per cent. China’s Shanghai Composite index was trading in red, down by 0.79 per cent.
Overnight, Nasdaq closed in green, up by 0.98 per cent while FTSE 100 was down by 0.71 per cent at the closing on Wednesday.
UAE residents warned of card fraud after information leakage
The Central Bank of the UAE (CBUAE) has reminded consumers of their responsibility to protect their credit information and credit/debit cards from fraud and unauthorized use.
CBUAE also directs consumers not to disclose their PIN to any persons or institution. If somehow this information is disclosed, it is the consumer’s responsibility to immediately contact their bank to freeze the card and change the PIN.
CBUAE advised consumers to take caution when using their cards and ATM machines in order to avoid any leakage of information that may expose their accounts to possible fraud.
Petrol prices in uae to increase in September
Motorists in the UAE will have to continue to dig into their wallets at petrol stations, as the Ministry of Energy and Industry announced that fuel prices for the month of September would see a slight increase.
Super 98 petrol will now cost Dh2.59 a litre, up from Dh2.57 in August; while Special 95 will cost Dh2.48 a litre, up from Dh2.46 the previous month. E-Plus 91 will cost Dh2.40 a litre, up from Dh2.38 the previous month. Diesel will cost Dh2.64 per litre, up from Dh2.63 in August.
The new prices for September are inclusive of the value added tax (VAT). Residents have noted that there is little relief concerning fuel prices, which have seen a steady increase since the beginning of the year; except for the month of July, when prices in the UAE slightly dipped.
Oil prices slipped on Wednesday, pulled down by a rise in US inventories and hopes that new investment could halt a plunge in Venezuela’s output. Benchmark Brent crude oil was down at $75.75 a barrel, and US light crude was 10 cents lower at $68.43 a barrel.
According to the American Petroleum Institute, US crude inventories rose by 38,000 barrels to 405.7 million barrels in the week to August 24. The Bank of America Merrill Lynch predicted that global supply could climb towards the end of the year.
“Heading into the fourth quarter of 2018, we expect rising non-Opec oil production as supply outages abate and greenfield projects ramp up. Non-Opec supply outages are at a 15-month high of 730,000 bpd. However, nearly half of these volumes are in the process of being restored,” the US bank said.
Dubai rolls out red carpet to new tourist base
Dubai is seeing a bigger tourist inflow from tier 2 and 3 cities from China and the Subcontinent, which, in turn, is fuelling demand for more affordable hotels, according to industry analysts.
According to Richard Stolz, head of corporate development, grmc Advisory Services, Dubai is witnessing more tourist inflow from tier 2 and 3 cities in China, India and other countries and their preference is for mid-tier hotels. Their budgets are not as high as those coming from tier 1 cities and staying in luxury hotels.
Since the number of tourists is on the rise, spending is also expected to remain steady.
Laurent A. Voivenel, SVP, operations and development for Middle East, Africa and India for Swiss-Belhotel International, says India and China are not only very significant source markets for the UAE, especially Dubai – ranking first and fourth respectively, but also the emirate’s fastest growing demand-generating nations.
“In H1 2018, we have already seen an increase of nine per cent of visitors from China and three per cent from India to the destination compared to the same period last year. The number of overnight Chinese visitors has increased by 119 per cent since 2014 while an increase of 41.4 per cent was recorded from 2016 to 2017,” says Voivenel.
He said visa on arrival for Chinese nationals, increase in air capacity by budget carriers from China and India, increased business opportunities, landmark partnerships and strategic marketing tie-ups and promotional activities by Dubai’s Department of Tourism and Commerce Marketing have all resulted in this growth.
By 2021, the average percentage of Indian visitors to the UAE is expected to be 10.8 per cent compared to 9.8 per cent in 2016.
“In both countries, this outbound travel growth is driven by tier 2 and 3 middle-income households and millennial travellers rather than higher-income groups. Both Chinese and Indian tourists prefer group and family travel, especially from second, third and fourth-tier cities and regions,” adds Voivenel.
Most tourists are coming from China’s tier 2 and 3 cities such as Yinchuan, Zhengzhou, Hangzhou, Chengdu, Nanging, Tianjin, Daqing, Weifang, Changzhou, Zibo, Zhuzhou and others. From India, more tourists are flocking to this region from South, North and Western cities such as Kochi, Ahmedabad, Chandigarh and Mangalore, etc.
The growing middle class and cheaper flight options are transforming the outbound travel landscape for these nations. They prefer more affordable hotels and alternative accommodation with lifestyle experiences as compared to luxury and indulgence. This requires a new approach to hotel concepts, layouts and facilities.
According to STR data, 98 properties with 29,599 rooms are in the pipeline, adding 25,470 keys between 2018 and 2020 in Dubai and Abu Dhabi. This includes properties in the midscale, upper midscale, upscale and luxury segment, which would be most akin to 3, 4 and 5-star properties.
Alex Anstett, marketing content executive, STR, says that for Dubai, mid-tier properties have been coming online in recent years compared to a previous period when the market was more represented by the luxury and upper-tier hotels.
“This change in the market landscape is making it more affordable for travellers on different budgets, but there is a high amount of supply coming across the board. Despite this high rate of supply growth, all Dubai hotel classes have continued to see demand growth, which is likely being driven by the market’s continued development of new attractions as well as the more affordable price spectrum,” Anstett adds.