Sector

GCC Companies: High Cash Holdings and Shareholder Returns

Investors look at various parameters to understand and evaluate a company’s attractiveness. One such item in the balance sheet is the level of cash that a company holds. If the cash balance has been consistently growing, it is generally considered to be a good indicator that the company is performing well and is therefore able to accumulate cash reserves on its balance sheet. However, it is essential to determine the cause behind growth in cash flow and reason for holding...

The Impact of VAT on Key Kuwaiti Sectors

This article was originally published in Kuwait Times. Decrease in oil prices have led the member countries of GCC in search for alternative means of revenue. One way was to introduce a common tax called Value Added Tax (VAT) in the region. On July 09, 2017 two members of GCC, Saudi Arabia and UAE ratified the VAT framework agreement for the introduction of VAT in the region. With a tax rate of 5%, it will be applicable in the entire...

KSA Insurance: Is it ripe for consolidation?

In Saudi Arabia, there are more than 35 companies that are licensed to provide insurance services, further there are 150+ companies that offer insurance support services and allied activities. Together, they generated business, as measured by gross written premium, worth USD 9.9bn last year. However, the profitability of the sector remains low and inadequate. Almost half of the companies reported losses and even among those that reported profits, less than half of them were able to earn higher returns than...

GCC Petrochemical Industry: Move beyond cheap feedstock

The main source of current GCC feedstock is ethane which, along with methane, is naturally found in associated gas. Other significant feedstocks includes propane and butane, both of which are derived from LPG. Lastly, there is naphtha, which is a product of crude oil refining. In contrast it is important to highlight that Naphtha’s contribution in Global feedstock consumption is around 70% in the year 2015, according to Platts. GCC has a significant cost advantage in feedstocks as compared to...

Saudi Arabia Insurance: Untapped Potential offers Fast Paced Growth Opportunities

Despite Saudi Arabia’s huge population and the growth witnessed over the past few years, the penetration levels of were lower than UAE and Bahrain. Lower penetration and favourable government policies would serve as strong growth factors. Market Size of Insurance Industry Saudi Arabia Insurance has a penetration rate of mere 1.5% in 2015 and compared with the developed nations is grossly under insured. With a large population of 32 Mn and strong GDP growth of over 3% there is a...

Are GCC businesses leveraging social media enough?

This increasing reach, twinned with the growing presence of young people on social media, has opened up new avenues for companies to interact with their customers of the industries that are currently active on social channels across the region, the retail industry leads engagement on Facebook in almost all of the GCC countries, with over seven million active followers. This is followed by the telecommunications industry at close to five million users. While the remaining top five industries in the...

Sectors with high E-commerce potential

Sectors with high E-commerce potential People in Dubai and Saudi Arabia love to shop in malls. Dubai has two shopping festivals in a year and the number of malls in GCC is growing, as more companies prefer brick and mortar stores. In the GCC, e-commerce is still at its nascent stage. According to BQ Doha, while 90% of global e-commerce sales come from Asia-Pacific, North America and Western Europe; while GCC accounts for a mere 2% of total retail sales....

Crowdfunding in the GCC

KEY QUESTION 1: What is Crowd funding? How is it gaining at the global level? Officially, Crowdfunding stands for “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure”. Here, a venture is funded by a large number of people, via the Internet, and this concept has gained massive popularity world-over. According to a report by The Crowd Data Center, in 2014, each metric in crowdfunding is doubling every two months thanks to disruptive shifts in capital formation. This trend has...

Impact of social media on GCC businesses

KEY QUESTION 1: How far have the GCC countries ventured into social media? The social media has offered the population in GCC countries an opportunity to express themselves and access more information. According to the Arab Social Media Report, 2012, the Gulf States are now more tolerant of different points of view and are more aware of events happening globally because of their growing presence in social media. They are taking to the new medium as a duck would take...

Telecom Charges in the GCC-Are they too high?

What is the structure of the telecom market in the GCC? How has it changed over the years? The telecom market in the GCC has one of the highest penetration rates in the world with 170% mobile penetration and 77% internet penetration. The large number is attributable to ever rising population in the region and increasing number of expatriates. The number of subscribers grew from 87.97 million in June 2014 and is expected to reach 100 million by 2020. There...