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UAE, GCC stocks plunge; investors to take wait-watch approach

Most of the Gulf stock markets fell on Wednesday in line with a decline in global markets, after Iran launched a missile attack on US military bases in Iraq.

Analysts expect the volatility to linger in the equity market in the coming session, but said that it could subside as there were no causalities in the attack. However, investors still remain cautious and are most likely to take a wait-and-watch approach.

After the launch of the missile attack, Tehran said that it doesn’t want war and that its strikes “concluded” its response to the US air strike, helping settle down surges in oil and gold prices.

The Dubai Financial Market General Index declined 1.2 percent, with its largest lender Emirates NBD shedding 2.3 percent, and Emaar Properties losing 1.2 percent. In Abu Dhabi, the index retreated 0.7 percent, driven down by a 1.1 percent fall in the country’s largest lender First Abu Dhabi Bank, and a 0.6 percent ease in telecoms firm Etisalat.

In Saudi Arabia, Tadawul fell 0.9 percent, driven down by banking stocks. Saudi Aramco also fell for the fourth consecutive session on Wednesday by 0.4 percent to 34.2 riyals. Its shares have fallen nearly 12 percent from a high of 38.70 riyals on December 12, 2019. But the share price is still above the IPO price of 32 riyals, which valued the company at $1.7 trillion.

Among other regional indices, the Qatari index fell 0.4 percent, Oman slipped 0.1 percent, and Bahrain dipped 0.4 percent. However, Egypt bucked the trend and jumped 2.5 percent.

World Bank slashes UAE, GCC, Mena growth forecast

The World Bank, on Wednesday, slashed the growth forecast for the UAE, GCC, and Middle East and North Africa (Mena) region for 2020 and 2021, due to geopolitical tensions and lower oil demand amidst a weakened global growth.

It slashed the UAE’s growth estimates for 2019, 2020, and 2021 by 0.8 percent, 0.4 percent, and 0.2 percent respectively, from its June 2019 forecast. In its January 2020 Global Economic Prospects report, released late on Wednesday, the World Bank predicted the UAE’s growth at 1.8 percent for 2019, but said that it will pick up over the next three years and expand at 2.6 percent in 2020 and 3.0 percent for 2021 and 2022.

Growth projections for Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain were also lowered by the World Bank. Overall, GCC countries are set to grow for 2019, 2020, and 2021 by 1.3 percent, 1.0 percent, and 0.1 percent, respectively. Similarly, the Mena region’s growth rate has also been slashed by the World Bank for 2019 and 2020, but 2021’s rate remains unchanged.

“Geopolitical and policy constraints on oil sector production slowed growth in oil-exporting economies, despite support from public spending. Risks are tilted firmly to the downside-geopolitical tensions, escalation of armed conflicts, slower-than-expected pace of reforms, or weaker-than-expected growth in key trading partners could heavily constrain activity,” the World Bank said in its outlook.

The key reason for the slowdown in growth of the Mena region is blamed on a sharp contraction in the Iranian economy. The World Bank said that public spending has been roust in some oil-exporting countries, while non-oil activity has also shown supportive signs, but these developments were insufficient to offset the weak activity in the oil sector.

Oman convention centre strengthened economy

The Oman Convention and Exhibition Centre promotes economic diversification and put the Sultanate as an important destination for events in the world.

The centre has succeeded in receiving more than 800,000 visitors from more than 100 different nationalities around the world. In 2019, the centre hosted about 13 live events and 27 international conferences. This reflects the vision of ‘Omran’ as an active executive factor to advance the tourism sector.

Ukraine and Oman intend to boost economic cooperation

President of Ukraine Volodymyr Zelensky met with H.E. Yusuf bin Alawi bin Abdullah, the Minister Responsible for Foreign Affairs of the Sultanate of Oman, on Sunday, January 5, the President’s Office has reported. “During a trip to Oman, President of Ukraine Volodymyr Zelensky met with the Sultanate of Oman’s Minister Responsible for Foreign Affairs, H.E. Yusuf bin Alawi bin Abdullah. The parties discussed issues of strengthening relations between the two countries, in particular, they stressed the importance of expanding trade and economic cooperation,” the statement reads. In addition, the parties noted the growth of trade, which increased by 10percent last year, reaching USD 80 million, and the intensification of cooperation at the level of chambers of commerce. “The sides agreed to continue the practice of Ukrainian-Omani business forums, given the success of the last two such events in Kyiv in 2019, which were attended by dozens of businessmen from Oman,” the report says. The president stressed that “Ukraine is interested in direct investment from Oman, focusing on such promising sectors as energy and heavy industry, construction, agriculture, information technology and innovation, infrastructure development, healthcare, and tourism.”

 

Australia tops Qatar as world’s biggest lng exporter

Australia has overtaken Qatar to become the world’s top exporter of liquefied natural gas, shipping 77.5 million tonnes in 2019 with an export value of $49 billion as the fuel becomes increasingly important in the global energy mix. The figures, released on Monday by energy consultancy EnergyQuest, show Australia’s liquefied natural gas (LNG) shipments for the 2019 calendar year increased 11.4 percent on the previous year’s exports, primarily due to the growth in the Ichthys project operated by Japan’s INPEX in the Timor sea. The surge follows a succession of massive LNG projects to begin production in Australia in the past decade including by ASX-listed Woodside Petroleum and Santos and other global operators such as Royal Dutch Shell and Chevron. “We have previously achieved the global title in some individual months,” EnergyQuest chief executive Graeme Bethune said. “But 2019 is the first time Australia has topped global LNG export performance on a sustained annual basis.” While Qatar’s final production figures for 2019 are yet to be released, the country’s output is forecast to be 2.5 million tonnes lower at 75 million tonnes, according to EnergyQuest’s analysis. Dr Bethune said Australia’s production capacity was 88 million tonnes while Qatar’s was 77 million tonnes. “There is still room to grow,” he said. Western Australia was the nation’s dominant LNG export region, accounting for 57 percent of shipments, with the Woodside-managed North West Shelf project the largest single contributor.

Kuwait: banking on growth

Kuwait is back on track economically. After a historic and wrenching 3.5percent contraction in GDP in 2017, due mainly to the global fall in oil prices, the tiny Persian Gulf emirate is poised to turn around with an uptick to 0.6percent growth for 2019, according to International Monetary Fund (IMF) data; rising to 3.1percent in 2020.

“Kuwait’s economy has continued to demonstrate resilience, notwithstanding a challenging economic environment,” says Mohammad Y. Al-Hashel, governor of the Central Bank of Kuwait (CBK). To be sure, there are negative countercurrents: growing tensions between Iran and Saudi Arabia, an economic blockade of Qatar and a continuing war in Yemen. “The political situation in the region is affecting investments,” says Mohammad Al Duaij, CEO of Alea Global Group, a family-owned private equity and real estate investment conglomerate based in Kuwait City. While Kuwait has absorbed the jolts from both falling oil prices and regional turmoil, these shocks have goaded the government to take up long-neglected reforms aimed at diversifying sources of growth. The IMF views the country as well-equipped to handle the changes. “Ample financial assets and low debt allow Kuwait to undertake the needed reforms from a position of strength,” the agency argues in its latest Article IV consultations on Kuwait.

Kuwait’s Jazeera airways reveals plan to move to all-economy fleet

Kuwaiti budget carrier Jazeera Airways has revealed plans to move to an all-economy fleet configuration with the launch of three new fare categories from January 8. The move to economy will apply to all routes, except flights to Cairo, while the three categories include Economy Class: Light, Value and Extra. Passengers of Economy Class Light, the lowest fare category, are allowed a carry-on and a small bag, and can add services they require for their travel itinerary. Those travelling Economy Class Value are allowed an additional 20 kilograms in checked-in baggage; while passengers of Economy Class Extra are allowed 30kg in checked-in baggage, priority check-in and the ability to choose from the preferred seats located on rows four to 10. A new priority service gives passengers access to priority check-in, priority baggage and priority boarding. Charges will be KD10 one-way and will be available at all airports – passengers on connecting flights will pay KD15 for the one-way service for both flights. Jazeera Airways chief executive officer, Rohit Ramachandran, said: “As we continue to expand and offer our customers more places to visit, we are focusing as well on enabling them to choose how they want to travel. Our new fare categories and services have been designed to make their journey with Jazeera Airways all the more personalised and enjoyable. We will be the first airline in the Middle East to offer a Priority Service they can pre-purchase online.”

Bahrain announces 1.6percent economic growth in q3 2019

Bahrain’s economy grew by 1.6 percent in the third quarter of 2019, up by 0.57 percent compared to the same period last year. According to the Q3 2019 Bahrain Economic Quarterly report from the Ministry of Finance and National Economy, the private sector grew by 1.6 percent in the third quarter of 2019 from a (revised) 0.3 percent in Q2, while the oil sector contracted by 0.1 percent as production held steady. The transportation and communication sector, supported by Gulf Air’s route expansion, led growth at 6.4 percent year on year (YoY). The hotels and restaurants sector also grew strongly at 6.3 percent YoY, as did the manufacturing sector at 4.1 percent YoY, bolstered by the launch of Alba’s Line 6. The report also revealed that the total number of visitors arriving through Bahrain’s International Airport saw a 2.9 percent increase to just over 800,000, while the occupancy rate at 5 and 4 star hotels reached 51 percent and 48 percent, respectively. The average number of stay nights rose to 63 percent. In terms of infrastructure investments, in Q3 Bahrain welcomed the launch of a national broadband network ‘BNET’, the signing of a $2.9 billion contract with Saudi Arabia for the transitional phase of the King Hamad Causeway, as well as the approval of electricity and water network expansion projects valued at $1.6bn. The report also highlights the progress made by Bahrain towards accelerating investment-driven development, as outlined in the World Bank’s Doing Business 2020 report, which placed the kingdom among the top 10 improvers globally and second among the Arab states – advancing 19 places to 43rd out of 190 economies.

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