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Monday, 30 Mar 2020

IMF Officially Declares Global Economic Recession


Insights MENA

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Economic Outlook

Economic Outlook

  • The International Monetary Fund (IMF) officially declared last Friday that the global economy has entered recession as a result of the spread of the new coronavirus, which has shut down economic activities across the world. Noting that the global economy will only recover if countries succeed in containing the virus. The world had last experienced recession between 2008 and 2009, when countries like the US and those in Europe experienced a rise in unemployment, company profits fell, financial markets tumbled, and the housing sector collapsed.
  • According to the IMF, Emerging Markets countries need at least 5 TR USD in emergency funding to survive the crisis. 81 countries have so far approached the IMF to ask about emergency funding, including 50 low-income and 31 middle-income countries.
  • The US has enacted a 2 TR USD stimulus package as Donald Trump signed it into law shortly after it was approved by the House of Representatives late last week. The bill is the largest relief package in US history, designed to support citizens struggling in the face of the covid-19 pandemic by offering direct payments and expanded unemployment insurance.
  • S&P has lowered its crude price forecasts by 10 USD/bbl for 2020 as the price war between Saudi Arabia and Russia continues to bring down prices and covid-19 hits global demand. The ratings agency now sees Brent averaging 30 USD/bbl in 2020 and US crude trading at 25 USD/bbl until the end of 2020.
  • The Central Bank of Egypt (CBE) set maximum limits for cash deposits and withdrawals as part of precautionary measures to counter the novel coronavirus (COVID-19). Adding that the daily limit for deposits and cash withdrawals in bank branches is 10,000 EGP for individuals and 50,000 EGP for companies.
  • Minister of Transport Kamel al-Waziry issued super jet buses to transport passengers arriving at Cairo through Cairo-Aswan trains during curfew hours for free. The minister worked in cooperation with Interior Minister Mahmoud Tawfek to help transport the passengers to Cairo, Aswan and Giza’s main squares.
  • The CBE has expanded its 100 BN EGP industry stimulus initiative to include companies in agriculture and agricultural production, including export terminals and packaging plants.
  • Fish, poultry and livestock companies with annual revenues between 50 MM EGP and 1 BN EGP can also access the financing package through soft loans.
  • Banks operating in Saudi Arabia has raised its investments in government bonds by 67% in January 2020. Bank investments in governmental and semi-governmental bonds amounted to 386.69 BN SAR (102.8 BN USD) in January 2020 compared to 320.46 BN SAR (85.25 BN USD) in January 2019.
  • The Central Bank of UAE removed 3 BN AED (3.9 BN USD) out of excess liquidity in the market in four months, bringing to 164.1 BN AED (40.97 BN USD) the value of cumulative certificates of deposit at the apex bank by the end of February 2020.
  • S&P Global affirmed Saudi Arabia's sovereign credit ratings at 'A-/A-2' with a stable outlook, saying its estimate of the Gulf nation's strong net asset-stock position on its fiscal and external balances continues to be a key ratings support.
Political Events

Political Events

  • The growing number of coronavirus cases arriving in China from abroad have increased the likelihood of a second outbreak in the country. China already has an accumulated total of 693 cases entering from overseas, which means the possibility of a new round of infections remains relatively big.
  • Lebanese Parliament Speaker Nabih Berri threatened to suspend his support for Prime Minister Hassan Diab’s government if it did not act to bring home expatriates stranded abroad during the coronavirus pandemic.
Stock Market

Stock Market

  • The EGX30 ended Thursday’s session up 5%. CIB, the index’s heaviest constituent, ended down 0.1%. EGX30’s top performing constituents were GB Auto up 8.0%, Kima up 7.9%, and Pioneers Holding up 5.0%. Thursday’s worst performing stocks were Eastern Company down 1.3%, and CIB down 0.1%. The market turnover was 674 MM EGP, and local investors were the sole net buyers.
  • Emirates Refreshments Company's accumulated losses amounted to 304 MM AED (4.3 MM USD) in 2019, representing 54.35% of its capital, according to a disclosure to the Dubai Financial Market (DFM). To tackle the accumulated losses, the company has added new trading products in Q4-2019 to increase its revenues and margins.

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

Companies Transactions

Companies Transactions

  • The general meeting of Ghabbour Auto (GB Auto) approved a recommendation to retract its decision to merge with RG Investments (RGI). The company’s shareholders also decided to cancel all the effects resulting from the merger decision, including the approval of amendments to articles six and seven of the company’s articles of association.
  • Egyptians invested 30 BN EGP into the new 15% fixed rate savings certificates launched by Banque Misr and the National Bank of Egypt (NBE). The new certificates are part of government efforts to shore up the currency against a potential move by savers into the USD in response to the market turmoil caused by the covid-19 pandemic.
  • Mobile game developer and publisher Scopely has raised 200 MM USD in its latest funding round. The company’s total Series D funding stood at 400 MM USD, bringing its valuation to 9 BN USD.
  • B Investments Holdings announced that a total of 275 MM EGP of its capital raise subscription proceeds amounting to 27 MM EGP has been used. The amount has been used to increase the capital of Ebtikar for Financial Investment and Gourmet Egypt Dot Com Foods. The remaining amount of the subscription proceeds stands at 183.2 MM EGP.
  • Kuwait Foundry Company has reached a profit amounted to 894,912 KWD (2.86 MM USD) in 2019 compared to a loss of 15 M KWD (3.68 MM USD) in 2018. In Q4-2019, the company registered 149,145 KWD (476,121 USD) worth of earnings compared to a loss of 9,500 KWD (30,327 USD) in Q4-2018.
  • Nasdaq Dubai has welcomed the listing of five-year Sukuk issued by Islamic Development Bank (IsDB) at a value of 2 BN USD. The Sukuk makes IsDB the leading Sukuk issuer on the exchange by a total of 64 BN USD, priced at a profit rate of 1.809%, payable on a semi-annual basis.
  • Fawaz Abdulaziz Alhokair Company has signed a Murabaha and revolving credit facility agreements with a number of banks. Al Rajhi, NCB, Samba, ANB, Mashreq, and ADCB will provide a credit facility with a total value of 3 BN SAR (800 MM USD).
  • The Bahraini GFH Financial Group rang Nasdaq Dubai’s market opening bell for listing 300 MM USD Sukuk. The five-year Sukuk issuance was oversubscribed 5 times with a total book value of over 750 MM USD.
  • Dar Al-Arkan Real Estate Development Company announced the closing of the seventh tranche Sukuk issuance under its US dollar denominated Sukuk Program, with a size of 5 BN SAR (400 MMUSD).
Sports and Culture

Sports and Culture

  • Walt Disney Co stated that the spread of the coronavirus could lead to changes in consumer behavior, resulting in further disruption to its business. The company has already closed its theme parks, suspended cruises and theatrical shows, delayed film distribution, and took a hit to its supply chain and ad sales. Shares of the company were down 3% at 30 USD in early trading.
  • The International Olympic Committee (IOC) and Japanese organisers are in final stages of talks to set the opening date for the Tokyo Games in July 2021 due to the coronavirus pandemic. It will most likely have its opening ceremony in 2021 on July 23 and closing ceremony on August 8.

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