GCC Economy

COVID-19 may force GCC companies to cut dividend payout

Dividend payments have been an important tool to get investors to buy shares of companies as dividends provide a return on investment even during periods when the markets are down. GCC Companies listed on stock exchanges have provided consistent dividends in recent years. Due to Covid-19, many GCC Companies may be forced to cut dividend payouts due to fall in earnings and need to preserve cash. We examine the impact on dividends due to the pandemic and its ramifications for...

COVID-19: GCC has mostly resorted to monetary measures

The COVID-19 led health and economic crisis has pushed many governments around the world to respond with a wide armor of fiscal and monetary actions that far exceed the measures taken in the past when the Global Financial Crisis happened in 2009. The measures were announced in a quick and concerted manner across the developed countries, emerging countries, and less developed countries. GCC countries also acted with alacrity in providing stimulus measures: to meet the COVID-19 Impact that hit them...

10 million and counting: COVID -19 breaches a grim milestone

As 2020 began with new hopes, little did the world know about an emerging threat coming out of the most populous country on Earth, a virus which spread like a wildfire in no time. The contagious nature of the virus made it more so difficult to contain it. The World Health Organization (WHO) declared the outbreak a Public Health Emergency of International Concern on 30 January 2020, and a pandemic on 11 March. On 28th June 2020, the global confirmed...

Saudi Arabia’s move towards a cash less economy propelled by COVID-19

Let us look at the usage of cash in Saudi Arabia, the largest economy in the GCC. The question is whether usage of cash is going up or going down, are people moving towards a cash less economy as is being talked about by some of the influential thinkers who believe in the digital economy. Digital technologies have brought about great ease of investing in financial securities and quick conversion to cash of such assets. With such technological developments, it...

Kuwait Sector Indices: Comparison of declines due to COVID-19 and 2014-16 Oil Price Crash

The 2020 market crash has been fast and short, if the trough of March 2020 holds. Lockdown to prevent the spread of COVID-19 brought about an uneven impact on sectors. While some sectors like airlines came to an absolute standstill, some sectors like technology stand to gain from the lockdown. These differences have reflected in the performance of equities too. A sector-wise comparison with the previous market crash of 2014-16 highlights the difference in COVID-19’s impact on sectors and what...

Fund houses revise their long-term capital market expectations – What has changed?

The unprecedented turn of events in recent times has drastically changed the outlook of the global economy in the near term. The economic disruption caused by COVID-19 has triggered global central banks and governments to act, changing the whole landscape for financial and real assets both in the short and long term. Things look much different now as compared to the end of 2019. Several asset classes witnessed a sharp sell-off and a subsequent recovery in recent months. Everything from...

Will COVID-19 reduce the appetite for renewable energy projects in the GCC?

The outbreak of COVID-19 has deeply impacted global economies, pushing them into a recession. As health and economic concerns continue to mount, the near-term outlook for renewable energy projects look weak. GCC countries have taken a strong hit in the revenue side of their books due to the sharp fall in oil prices during 2020. The shortfall in revenue and rise in deficits are expected to have a strong near-term impact on project awards in the renewable energy space. GCC...

Implications of COVID-19 on GCC Asset Classes

COVID-19 has rendered economic outlook and companies’ performance projections for 2020 meaningless in a single stroke. Heightened uncertainty has become an everyday reality in the current times. As the coronavirus scare continues, the world is faced with multidimensional issues and tough questions, be it finding an effective treatment for the virus, zeroing in on an optimal quantum of stimulus or deciding the right time to lift lockdowns. With measures like social distancing and lockdowns affecting day-to-day lives of people, asset...

Impact of Covid-19 on GCC REITs

The GCC has seen a number of Real Estate Investment Trusts (REITs) listed in stock exchanges in the past few years. This accelerated after Saudi Arabia’s أسواق المال Authority (CMA) approved the listing of REITs in 2016 as a part of the National Transformation Program (NTP) and Saudi Vision 2030. Due to the economic crisis in the wake of the covid-19 pandemic, many of the listed REITs have seen a steep decline in their share prices and market capitalisations. Saudi...

How to improve the Secondary Market for Sukuk Bonds

This article was first published in Islamic Finance news Volume 17 Issue 22 dated the 3rd June 2020 Sukuk bonds have been gaining in popularity since their first issuance in 1990. According to the International Islamic Financial market (IIFM), Global Sukuk Issuances with maturity over 18 months totalled USD 42 billion in 2019, a growth of 6% over 2018 and nearly 40% over 2009. However, in-spite of the rise in issuances, the secondary market for Sukuk Bonds has remained illiquid...