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October 19, 2020
Secular trends underline long-term growth for Islamic asset management
This article was first published in Islamic Finance news Volume 17 Issue 41 dated the 14th October 2020 S&P global ratings expects Islamic finance industry (USD 2.4trillion) to witness subdued growth in low single digits for 2020/21 after registering strong growth of 11.4% the previous year, on the back of robust issuance and strong performance of Sukuk. We expect Islamic funds, which accounts for 4% of the overall Islamic finance industry, to fare better than industry as the demand for...
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October 15, 2020
Flurry of Bond issuances – How are GCC countries placed?
The year 2020 has seen bond issuances totaling USD 42billion so far by GCC governments as they try to raise funds in the market to plug record deficits due to the oil price crash and the COVID-19 crisis. GCC Sovereign yields have come down since the market selloff in March at the height of the crisis. As on October 6, 10-year yields for Kuwait Government bonds stands at 1.48% (a fall from 2.37%, 2020-start) while that of Saudi Arabia, Abu...
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October 12, 2020
How deep is the impact of COVID-19 on the GCC aviation industry?
Tourism has been one of the focus areas of GCC countries’ diversification agenda and aviation sector in the region has been an attendant beneficiary. Closure of borders and travel restrictions were one of the first measures taken by countries around the world to curtail the spread of COVID-19. These measures had brought the aviation industry to standstill. According to IATA, revenue of airlines in GCC region is expected to decline by 56% in 2020 and while the passenger numbers are...
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October 8, 2020
Boursa Kuwait’s stock surges on its trading debut – Has privatization been a success?
Boursa Kuwait Securities Company has surged more than 10 times since it debuted on the Kuwait Premier Market index on September 14th when it became only the third stock exchange in the MENA region to be listed after the Dubai Financial Market and Tel Aviv Stock Exchange. Share prices rose as high as 1,210 fils and closed the day at 1,055 fils after being priced at 100 fils during the IPO last year. As part of the IPO, 50% of...
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October 8, 2020
Will COVID-19 increase the Cost of Capital in the GCC?
Cost of Capital represents the opportunity cost of all financial capital, primarily debt and equity, invested in an enterprise. ‘Opportunity cost’ also referred to as ‘hurdle cost’ or ‘discount rate’, is of primary importance in valuation and helps investors in arriving at the correct price of a company’s stock. Given the importance of this metric in creating value for shareholders, it is essential to compare the cost of capital for the GCC countries over the years. Key Points to be...
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July 21, 2020
Estimating Corporate CapEx in Saudi Arabia
COVID-19 has been a double whammy for the Saudi Arabian economy. First, the lockdown and curfew measures has affected the economic activity. Second, because of global lockdown, oil prices fell with the demand for oil falling sharply. Therefore, the output of Saudi corporate sector is also expected to be very much low for the year 2020 if not beyond. Average Fixed Capital Assets held by Saudi Listed Companies(2015-2019) Saudi listed companies held fixed capital assets measured by the average outstanding...
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July 20, 2020
Defensive sectors in GCC-A great bet in today’s times
The 2020 stock market crash due to Covid-19 has been fast and short, if the markets do not fall to the lows of March 2020 again. The Oil price crash and social distancing measures to prevent the spread of Covid-19 has impacted sectors in the GCC in different ways.This can be observed in the current level of GCC Sector Indices. We make a comparison of the current levels of GCC sector indices with that of 52-week high and 52-week lowto...
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July 14, 2020
How has liquidity in Saudi Tadawul fared during COVID-19?
Liquidity is one of the key indicators of a stock market and is a fundamental requirement for market efficiency. In recent years, Saudi Arabia’s equity market has implemented reforms, such as relaxation of foreign ownership and has achieved milestones such as inclusion in key indices including the MSCI Emerging Market Indices. With the listing of Saudi Aramco, it has also become one of the top 10 markets globally, by market capitalization. Given the market’s importance in GCC and globally, the...
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July 12, 2020
COVID-19 brings to the fore GCC’s Fiscal Vulnerability
Revenue from oil forms significant portion of overall revenue for GCC countries, with 20-year(2000-2019) average at 74%. This dependence on oil as revenue source has long been a pain point for GCC’s fiscal position, surfacing during periods of low oil prices and receding during periods of high oil price.In the backdrop of fall in oil prices due to COVID-19, building a sustainable fiscal policy in GCC has resumed higher importance. Ascend to Prosperity Referred to as black gold, oil has...
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July 9, 2020
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...