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Monday, 10 Aug 2020

Saudi Arabia is most attractive GCC destination for FDI in Q1-2020


Insights MENA

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Economic Outlook

Economic Outlook

  • The number of new Foreign Direct Investment (FDI) projects launched by GCC states to other countries went down by 8% in Q1-2020 to stand at 70 projects valued at 9 BN USD. The projects’ investment cost was down by 79.3%. Saudi Arabia was the top GCC state investing overseas with a share of 49%, followed by UAE with 38%, Bahrain with 10%, Qatar with 2%, and Kuwait with 1%, whereas no investments were recorded by Oman.
  • China oil imports from Saudi Arabia grew by 15% on a yearly basis in June 2020 reaching 88 million tons equivalent to 2.16 million barrels per day (b/d) after refiners ordered record volumes during March and April at a time when oil prices collapsed, strengthening the kingdom’s position as the Asian country’s top crude supplier.
  • The Central Bank of Egypt (CBE) reported that Egypt gold reserves resumed its rising trend, increasing by 429 MM USD or 5% to a new record of 4.505 BN USD in July 2020 compared to 4.076 BN USD in June 2020.
  • The Central Bank of Egypt (CBE) announced that Egypt net international reserves increased by 113 MM USD reaching 314 BN USD in July. Noting that the country’s foreign reserves reached 38.201 BN USD in June and 36.003 BN USD in May.
  • The Board of the Central Bank of the UAE (CBUAE) has decided to add measures within the Targeted Economic Support Scheme (TESS) launched initially in March 2020 to further enhance the capacity of the banking sector to support the economy.
  • The fallout from the coronavirus pandemic on domestic demand and international trade will raise EMEA emerging-market government ratios of debt to GDP a median 2 percentage points in 2020, according to S&P Global Ratings. Since the start of 2020, S&P has downgraded 21 sovereigns globally (of the total 135 rated sovereigns). Ten of these downgrades were in emerging EMEA.
  • UAE non-oil private sector registered a further marginal recovery in business conditions during July due to easing lockdown restrictions. However, firms continued to lower employment in an effort to reduce payroll costs, while output charges fell at a sharper pace.
  • S&P Global Ratings revised Kuwait outlook to 'negative' from 'stable', saying it expects that the country's main liquidity buffer, the General Reserve Fund, will be insufficient to cover central government deficit.
Political Events

Political Events

  • The massive blast that quaked the Lebanese capital of Beirut on Tuesday caused between 3 BN USD and 5 BN USD worth of damage. Up to 300,000 people are now homeless as the damage from the explosion in the port area affected half of the city. At least 100 people were killed and above 4,000 were injured in the huge explosion at Beirut port that demolished entire neighborhoods of the city.
  • The Egyptian minister of foreign affairs Sameh Shoukry signed a maritime demarcation agreement with his Greek counterpart Nikos Dendias to set up an exclusive economic zone. The two ministers discussed the possible means to strengthen bilateral relations between the two countries in the region.
Stock Market

Stock Market

  • The Egyptian Exchange (EGX) closed Thursday’s trading session on a positive note on the back of local and Arab purchases. The main EGX30 index climbed by 06%, ending the session at 10,817 points. The market cap value grew by 3.5 BN EGP (218.53 MM USD) to register 597.038 BN EGP (37.277 BN USD).
  • The Tadawul All Share Index (TASI) has kept its upward performance for the fifth consecutive session after rising by around 40% or 29.71 points to end Thursday at 7,499.97 points. A total of 229.077 million shares were exchanged through 259,307 transactions valued at 5.34 BN SAR (1.42 BN USD).

Note: All values are calculated by last Thursday.

Companies Transactions

Companies Transactions

  • The board of directors of Porto Group Holding decided to provide a guarantee to its subsidiary Porto October. The company’s chairman and managing director has been authorized to sign a joint guarantee agreement of 500 MM EGP with Banque Misr. It is worthy to mention that the financial indicators for Q1-2020 showed that Porto Group incurred net losses of 34 MM EGP compared to net profits of 59.59 MM EGP in Q1-2019.
  • Orascom Development Egypt (ODE) signed a land sale agreement with Mangroovy for Hotels. Under the deal, Mangroovy for Hotels will purchase a land plot in El-Gouna over an area of 40,654 square metres for 8 MM EGP (6.6 MM USD).
  • Orascom Investment Holding (OIH) announced the end of negotiations with Qatari Diar Real Estate Investment Company and Bawabet Al Sharq Misr for real estate development. Orascom was eyeing the acquisition of a stake in Bawabet Al Sharq Al Qahira Al Guedida for real estate development, the developer of City Gate project.
  • Alexandria Co. for Pharmaceuticals and Chemical Industries showed a 54% y-o-y growth in its net profits to 173.8 MM EGP (10.85 MM USD) in 2019/2020. The company’s sales increased to 02 BN EGP (63.68 MM USD) in the 12-month period ended on 30 June, compared to 829 MM EGP (51.76 MM USD) a year earlier.
  • Arab National Bank (ANB) reported 65% decrease in net profit in Q2-2020 to 486 MM SAR (129.59 MM USD) compared to 894.2 MM USD (238.39 MM USD) in Q2-2019. The decrease in net profit is due to the decrease in total operating income by 15.2%, which resulted mainly from a decrease in net special commission income, net fee and commission income, and unrealized gains on FVTPL financial instruments.
  • AlJazira Capital raised its target price for Al Rajhi Bank’s stock to 80 SAR (15.41 USD) compared to 51.90 SAR (13.84 USD) and maintained its “neutral” rating on the stock. It is worthy to mention that the lender achieved net profit of 2.436 BN SAR (649.58 MM USD) in Q2-2020 compared to 2.53 BN SAR (674.65 MM USD) in Q2-2019.
  • The net profits of Abu Dhabi National Insurance Company (ADNIC) increased by 9% to 189.7 MM AED (51.64 MM AED) in H1-2020 compared to 118.6 MM AED (32.28 MM USD) in H1-2019. It is noteworthy to mention that in Q1-2020, the company's net profits increased by 133.1% to 122.6 MM AED (33.37 MM USD) compared to 52.6 MM AED (14.3 MM USD) in Q1-2019.
  • Bahrain Kuwait Insurance Company gained 301 MM KWD (6.06 MM USD) in net profits in H1-2020, 11% higher compared to 2.073 MM KWD (5.45 MM USD) in H1-2019. The annual INCREASE in H1 profits is attributed to the significant improvement in underwriting profit, which is the company’s core business.
Sports and Culture

Sports and Culture

  • Egyptian maritime activists on Monday observed and photographed a slow-moving whale shark in the Red Sea off the coast of Hurghada. The whale shark owes its name to its gargantuan size, with the largest adults reaching up to 13 meters in length, making them among the largest species of fish. As they primarily feed on plankton, they pose no danger to humans.
  • Tawazun Economic Council, a defence and security entity in UAE, has collaborated with Airbus and the National Space Science and Technology Center (NSSTC) to build a Satellite Assembly, Integration, and Testing (AIT) Centre.

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