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Monday, 20 Apr 2020

IMF: Egypt seen as Sole Arab Nation to achieve GDP Growth in 2020


Insights MENA

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Economic Outlook

Economic Outlook

  • Egypt is expected to be the sole Arab country to achieve economic growth in 2020 in light of the economic disruption caused by the novel coronavirus outbreak, according to the International Monetary Fund (IMF). It is forecasted to reach a real Gross Domestic Product (GDP) growth of 2% in 2020 and 8% in 2021, compared to 5.6% in 2019. Meanwhile, Saudi Arabia, UAE, Kuwait, Oman, and Qatar are projected to achieve negative GDP growth of 2.3%, 3.5%, 1.1%, 2.8%, and 4.3%, respectively.
  • Egyptian non-oil exports achieved a 2% increase in Q1-2020 reaching to 728 BN USD. Which is an increase of 148 MM USD compared to 6.580 BN USD in Q1-2019. Meanwhile, non-oil imports witnessed a 24% decrease, registering 13.814 BN USD in Q1-2020 compared to 18.233 BN USD in Q1-2020 which is a decrease of 4.419 BN USD.
  • Egypt will increase its investments with an additional 10 BN EGP (636.98 MM USD), as part of President Abdel Fattah el Sisi’s directives. This amount will create new job vacancies, pay dues to contractors and suppliers, and improve the service provided to the citizens.
  • A total of 10 million ineligible citizens have been removed from the bread subsidies system in Egypt, according to Ali Meselhi, Minister of Supply and Internal Trade. The filtered names are equivalent to 5 BN EGP (318.49 MM USD) of subsidies and were removed after the ministry discovered fake ration cards and repeated names.
  • The Kuwaiti Ministry of Health last Sunday reported 164 new coronavirus cases and one new death, bringing the country's virus toll to 1,915 infections and seven fatalities until the moment. In the meantime, 25 cases recovered over the past 24 hours to take the count to 305 recoveries.
  • Abu Dhabi issued a 7 BN USD multi-tranche international bond after drawing strong investor demand. The transaction included three tranches, including a 2 BN USD five-year tranche, a 2 BN USD 10-year tranche, and a 3 BN USD 30-year tranche. The issuance was more than 3 times oversubscribed, hitting a new record for the emirate, as the orderbook stood at around 45 BN USD with orders coming from above 100 new accounts.
  • Total assets held by banks in UAE, including bankers’ acceptances, increased by 1% to 3.128 TR AED (199.24 BN USD) in March 2020 compared to 3.095 TR AED (197.14 BN USD) in February 2020.
  • The Saudi government sold to local banks only a small part of 7 BN USD bonds issued last week amid fears of a liquidity squeeze caused by lower oil prices. The three-part bond issuance came after Riyadh last month raised its debt ceiling to 50% of GDP from a previous 30% to finance a widening deficit caused by lower oil prices and the economic downturn caused by the coronavirus outbreak.
  • Visa encouraged the Saudi Arabian Monetary Authority’s (SAMA) move to increase the Card Verification Method (CVM) limit for contactless transactions in Saudi Arabia to 300 SAR compared to 100 SAR. The 200% increase in the PIN-free transaction limit will allow consumers to simply tap-to-pay using their card, mobile phone or contactless wearable device for larger purchases.
Political Events

Political Events

  • Dubai has imposed new restrictions on movement permits in its fight to contain the fast spreading coronavirus. Permits to leave the house to buy essential goods at a grocery store or pharmacy will now be limited to once in every three days. Visiting an ATM to withdraw cash will be limited to once every five days. One can apply for emergency permits only twice a day.
  • Egypt launched the “Ahalena” (Our People) platform to support millions of irregular workers who were affected by the fallout of the coronavirus across the country. Under the slogan of “Together, we can help”, the platform is to allow individuals and the private sector to participate in providing social protection for irregular workers.
Stock Market

Stock Market

  • The Egyptian Exchange (EGX) closed Thursday’s trading session on a mixed note amid local and Arab purchases and foreign selloffs. The benchmark EGX30 index fell by 81%, ending the session at 10,154 points. The market cap value shrank by 4 BN EGP (254.79 MM USD) to 554.32 BN EGP (35.3 BN USD).
  • The Abu Dhabi Securities Exchange’s (ADX) general index closed Thursday’s trading session on a negative note for the second session in a row. The general index tumbled by 93 points or 3.83% to close at 3,969.51 points. A total of 34.62 million shares were traded at a turnover of 158.40 MM AED (10.08 MM USD) through 2,390 transactions.

Note:  Weekly values are calculated on Thursday of each week.

Companies Transactions

Companies Transactions

  • Investment banking fees in the MENA region increased by 11% y-o-y to an estimated 8 MM USD in Q1-2020, with three-figure gains recorded across mergers and acquisitions (M&A) advisory and equity underwriting fees. Advisory fees earned from completed M&A transactions increased by 266% y-o-y and generated 58.4 MM USD, the highest value seen in the first quarter since 2017.
  • Faisal Islamic Bank of Egypt showed a 55% y-o-y decrease in its net profits in Q1-2020 reaching 469 MM EGP (29.87 MM USD) compared to 1.04 BN EGP (66.24 MM USD) in Q1-2019. Meanwhile, revenues dropped to 2.147 BN EGP (136.76 MM USD) in Q1-2020 compared to 2.6 BN EGP (165.61 MM USD) in Q1-2019.
  • Egypt general assembly has agreed to increase Blom bank’ issued and paid capital by 1 BN EGP (63.69 MM USD), meaning its capital now stands at 3 BN EGP (191 MM USD), an increase of 50% over the current capital. The funds come from the bank’s profits.
  • Oilfield services provider Petrofac stated that Abu Dhabi National Oil Company (ADNOC) has terminated the 65 BN USD worth of contracts it had awarded to its Emirati unit for the Dalma gas development project.
  • Nasser Social Bank approved the issuance of a new savings certificate for doctors and nurses. A one-year certificate with a 5% yield will be launched to pay tribute to the medical staff nationwide amid the coronavirus outbreak. The value of these certificates amounts to 1,000 EGP (63.70 USD) and its multiples, not exceeding 1 MM EGP (63,698 USD) for each person.
  • Four banks and a Saudi investor have participated in covering the Sukuk issuance issued by Talaat Moustafa Group Holding’s subsidiary Arab Company for Projects and Urban Development. The Egyptian Financial Group Hermes Holding (EFG Hermes) acted as the financial advisor of the 2 BN EGP (127.39 MM USD) Islamic Sharia-compliant bond issue.
  • Obour Land for Food Industries reported a 3% y-o-y increase in its net profits in Q1-2020 reaching 68.05 MM EGP (4.33 MM USD) compared to 53 MM EGP (3.37 MM USD) in Q1-2019, including minority shareholders’ rights,
  • Elsewedy Electric Co announced that its subsidiary signed a new agreement worth 5 MM AED (34 MM USD) with Dubai Electricity and Water Authority (DEWA). After competing with 11 companies, Elsewedy Power Electrical Contracting LLC Dubai was awarded a contract for the supply, installation, testing, and commissioning of 132 kilovolt (KV) transmission lines extending for 22.5 km on a turnkey basis.
  • The US-based credit rating agency AM Best has revised UAE leading insurer Oman Insurance Company outlook to stable from negative and affirmed its financial strength rating of “A” (excellent) and long-term issuer credit rating of “A”.
Sports and Culture

Sports and Culture

  • India plans to launch a domestic tennis circuit from July to support its players who are struggling financially during the sport's shutdown due to the novel coronavirus outbreak. The tennis season was halted in early March due to the pandemic, leaving players in the lower tiers who depend solely on tournament winnings without the chance to earn a living.
  • UAE could be in line to host more International Cricket Council (ICC) events in the future after the Pakistan Cricket Board (PCB) revealed plans to go in for joint bids with the Emirates Cricket Board (ECB). PCB chairman Ehsan Mani, formerly a president of the ICC, stated that the board will launch joint bids with the ECB, for five to six ICC events in the FTP cycle that runs from 2023 to 2031.

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