Economy

Top GCC Risks for 2016 & Beyond

Oil: When will this slide end? With the oil price hovering around $35 per barrel the question remains as to how much longer can OPEC continue with its current policy of pumping as much oil as it can in a quest to win more market share and drive out high cost producers. OPEC member countries produce around 37% of the global crude oil, and disagreements over production ceilings have already affected some of the members. Some of the big producers,...

Kuwait Economic Themes & Investment Implications 2016

Acording to Marmore’s Kuwait economic themes report, Kuwait continues to be extremely reliant on oil for revenues. On an average, hydrocarbon revenues accounted for c.80% of overall revenues in the past five year period (2009-2014). While part of the oil revenue is saved as sovereign wealth fund, most is channelled to the local economy in the form of wages for public sector employees, large scale subsidies (energy, electricity and water), capital transfers and generous grants for its citizens.     ...

Qatar Economic Themes & Investment Implications 2016

With the second lowest fiscal breakeven oil price (USD 57.8 per barrel) and the presence of ample fiscal reserves and buffer (172 per cent of GDP), Qatar is expected to withstand the current environment of low oil prices better than its regional peers. According to Marmore’s Qatar Economic Themes report,the country plans to spend USD 200bn on infrastructure as part of its 2030 development plan and this  has lured foreign contractors to what promised to be big profits, but project...

UAE Top Economic and Investment Themes for 2016

According to Marmore’s UAE economic themes report, Hydrocarbon sector is expected to contribute positively to real growth in 2016 as the phased increase in oil production happens. UAE had earlier set a target to raise its production capacity by 30% in 2020. Non-hydrocarbon growth is expected to be moderate in 2016, amid the lower oil price environment, as government expenditures are reined in. Diversified & Competitive Economy United Arab Emirates (UAE) has been the forerunner in implementing reforms to strengthen...

KSA Economic Themes & Investment Implications – 2016

Energy Prices Reform The government of KSA over the past few decades used perks such as lower energy prices, food & water subsidies and absence of taxes for individuals and domestic corporations to distribute the oil wealth to its citizens. The subsidized energy prices translate into significant costs for the government, estimated at USD 107bn or 13.2% of the gross domestic product in 2015. However, the low oil price environment calls for prudent assessment and reforms in these subsidies to...

Why Research Matters for the Economy

From the above table, it is evident that only Kuwait and Qatar are estimated to enjoy a surplus in 2015. Plotting the GCC surplus/deficit from 2004 through 2015 against the average dollar price of crude Brent shows the deep correlation. Thus, diversifying the economy is an imperative for the GCC, on building a competitive knowledge economy and promoting innovation, research, and development (R&D). However, for building a knowledge economy, reliable access to data and information is required, which should be...

Corporate governance in the GCC: How current practices can be further enhanced and how existing challenges can be overcome

CORPORATE GOVERNANCE By M R Raghu   Companies that have effective corporate governance mechanisms can instill a sense of accountability and transparency in organizational leaders. In an age of dynamic technological developments that are empowering various stakeholders to monitor and question organizational actions, a functioning corporate governance setup will help in building deeper public trust. There are several factors, both international and regional, that are pushing companies in the GCC toward more proactive corporate governance practices. There is now intensified...

Fiscal Measures Worry Markets

According to Marmore’s recently released Monthly Market Review, MENA markets ended mostly in red during the month of October 2015. Abu Dhabi (-4.0%) suffered the most, followed by Saudi Arabia (-3.8%), Dubai (-2.5%) and Bahrain (-2.0%). Despite the increase in oil prices during October, the lower-than-expected oil prices continue to strain the MENA markets. The regional markets are also responding to instability in the global economy and anticipated monetary tightening in response to low oil prices.  KSA is contemplating spending...

Oil prices now go beyond the supply/demand equation

Interview with Mr. Raghu, Head of Research, Markaz by Peter Duke, Sales Director, Fidelity Worldwide Investment. 2015 has seen oil prices drop to a new low amid a glut of supply in the region. But how will this affect the GCC and MENA economies? Will there be an end to the current situation? And will the prices stabilise before the end of the year or do they have further to drop? Peter Duke: Good morning welcome to the Fund Forum...

Bitcoins – What’s the story now?

Last year we had published a report (Disruptive Technology: Bitcoins) on the emerging technology of bitcoins. At the time of writing that report, the value of one bitcoin had reached an all-time high of $979 against the US dollar and was touted as an important tool in the future of finance. However, one year down the line, things are not looking bright for bitcoins. It started with the closure of Mt.Gox; one of the biggest bitcoin exchanges and  was followed...