GCC Market

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 Capital Markets 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...

Impact of Oil Price Volatility on GCC economies, markets and businesses

Closely intertwined with economic growth, oil has been vulnerable to global growth outlook. The recent collapse in oil prices caused by demand destruction on account of COVID -19 was exacerbated by the OPEC+ disagreement, pushing prices down to historically low levels. In the current dynamic scenario, where the world is controlled by COVID-19, while news on OPEC+ agreement, stimulus etc. causes some increase in prices, news on extension of lockdowns and filling up of oil storage causes a steep fall...

GCC policy interventions to mitigate the economic impact of COVID-19

The Coronavirus has spread across the GCC countries, besides its immediate impact on the public health and the well-being of the residents and citizens, the outbreak will likely have significant economic consequences across the region. As the key economic activities in the region’s critical non-oil sectors like tourism, transportation is curtailed, we can expect a greater macroeconomic implication. In response to the crisis, the gulf region has introduced number of new economic measures to mitigate the impact of the coronavirus...

The importance of Circuit Breakers in curbing volatility

Stock markets around the world and the GCC have responded to the COVID-19 pandemic with massive volatility, as traders have been panic selling out of fear driving the indices down. The Boursa Kuwait All Share Index (BKAT) saw huge falls on March 8 and March 9 when the BKAT fell 9.1% and 9.4% respectively due to the oil price crash and coronavirus fears. Due to this, Boursa Kuwait has announced that from March 15, the security circuit breaker would be...

The oil price war – Saudi Arabia and Russia adding more fuel to the fire

At a time when economies worldwide have been put under stress and are contemplating the negative impact of COVID-19, the last thing they would have wanted was a price war between two of the world’s largest oil producers. Coming into the year 2020, the overarching theme was a dip in global oil demand that would need strict supply restrictions to balance the Oil markets. However, with Russia’s non-cooperative stance and Saudi Arabia’s subsequent retaliation, oil prices have tumbled down to...

Visualizing a post Covid-19 World: What to expect?

Consumer behavior will change in terms of tourism, investment, e-commerce etc; Public health care spending will improve drastically even post covid-19; Maturity of government leadership and bureaucracy will deepen; Massive fiscal stimulus can trigger stagflation; Capex by oil producers will see a significant decline impacting future oil prices; Low oil price will slow down electric vehicle penetration especially in emerging economies; Currency volatility will peak; World will prepare to depend less on China for supply chain support; Climate control will...

3 reasons why GCC automotive market is facing slump

Automobile is an essential part of the lifestyle of middle east citizens and hence forms an important component of GCC’s annual imports. The region enjoys higher ownership of automobiles primarily attributable to per capita income above the world average. Middle East imports, often fluctuates with oil prices and so is the case with automobile imports too. But what is noteworthy is the sharp decline in imports of automobiles by value and more particularly by number of vehicles during 2016 and...

Islamic Liquidity Management – The Journey So Far

This article was first published in Islamic Finance news dated December 2019. Globally, the assets under Islamic finance industry have surpassed the USD 2.4tn mark. Digitalization which has emerged as a revolutionary trend in financial system is becoming popular in Islamic finance industry as well. Islamic banks account for over 70% of industry’s total assets, as of latest available. Islamic liquidity management instruments are still at their infancy, and there are very few instruments that meets the industry needs and...

Secondary Market of Sukuk: An Overview

This article was first published in Islamic Finance news Volume 17 Issue 1 dated the 8th January 2020 Sukuk are useful instruments, both for issuers as well as investors. They can be an alternative source of funds for governments and conventional institutions, a liquidity management tool for Islamic banks and institutions whose investments must be Shariah compliant and a source of portfolio diversification for conventional institutions. However, in order to benefit from the advantages of Sukuk, the primary and secondary...