- Brent crude held at around $78 amidst ongoing conflict concerns.
- Iran reportedly warned Gulf states of retribution if they facilitate an Israeli attack.
- UK investments: PIF buys 40% of Selfridges, ADIA writes down 10% stake in Thames Water and QIA sells 4% of Sainsbury’s. [see (1) below]
- PIF has launched a new subsidiary to invest at least $10bn in hydrogen projects and companies.
- Al Majed for Oud stock soared by 79% in the first week of trading after its IPO.
- The UAE’s federal budget plans a 12% increase in expenditure in 2025.
- The UAE signed two more Cepa trade deals, with Jordan and Malaysia.
- Sharjah issued a $750m 10.5-year sukuk at +140bp.
- Abu Dhabi is now estimated to have the?world’s largest concentration of sovereign wealth ($1.7bn, see GlobalSWF
).
- Wynn Resorts was awarded the region’s first gambling license for its Ras Al Khaimah resort.
- Qatar’s PMI eased back to 51.7, although business confidence for the coming year improved.
- The IMF Article IV statement for Kuwait urged it to use the window of opportunity for reforms. [see (2) below]
- Hafeet Rail, which will link Oman and the UAE, secured $1.5bn in financing from regional banks.
- Bahrain’s GDP growth slowed to 1.3%, with non-oil growth of 2.7%, although transport and hospitality were strong.
- Deaths in Gaza topped 42,000 on the anniversary of the 7 October attacks. Israeli troops advanced into Lebanon and fired on UN peacekeepers.
These headlines are taken from a 4,200-word report from my economic research service with GlobalSource Partners, a leading source of independent emerging market intelligence. Click on any report
to get guest access and contact me or GlobalSource’s sales team for more information about the service, which also includes the most extensive comparative GCC Databank available (updated weekly) and direct analytical support. Clients include banks, asset managers and governments spanning the GCC, Asia, Europe and the Americas.
Here are two brief samples from the report:
(1) GCC investors remain interested in the UK despite disappointments
- There were three notable developments with Gulf sovereign investments in the UK this week.
- Saudi Arabia’s PIF
is buying a 40% stake in the UK department store chain Selfridges, alongside Thailand’s Central Group (BB
). Qatar Investment Authority’s purchase of another iconic London department store, Harrods, back in 2010, has proved extremely profitable although it has recently been caught up in controversy related to the former owner, Mohamed al-Fayed (BBC
).
- However, another QIA investment, in the?British supermarket chain Sainsbury’s has been less successful and it sold a 4.1% stake for ￡269m, at a -49% discount to the price it paid in 2007. It still holds a 10.1% stake (BB
).
- Meanwhile, ADIA’s investment in Thames Water has been even less successful and it has written off the entire ￡263m value of its 9.9% stake, bought in 2011. Adia also owns a ￡580m 16.7% stake in another UK utility, Anglia Water (FT
).
- Despite these ups and downs, Gulf investors continue to be attracted to blue chip companies and real estate in the UK, where they have disproportionate asset allocation. This is likely in part due?to the historical and personal connections to the UK, the former colonial power in the region and the place where a large number of the elite in many of the Gulf states have studied.
- Efforts continue to negotiate a UK-GCC free trade agreement which would provide a further boost.
(2) The IMF urges Kuwait to seize the opportunity for reform
- The concluding statement of the IMF
Article IV consultation with Kuwait was published. The full report will be out in a few months after review by the Executive Board.
- The deficit is expected to widen to -5.1% of GDP this fiscal year, vs -3.1% in 2023/24. Under current policies, the Fund anticipates that the deficit will widen further by about 1% of GDP each year, with risk to the downside.
- It argues that the suspension of parliament in May provides a “window of opportunity to implement needed fiscal and structural reforms”, which had been held back by political deadlock. However, so far we haven’t seen any signs of significant reforms and nor has there been visible progress on the plan to revise the Constitution and then reinstate parliament.
- The IMF recommends fiscal consolidation of 1-2% of GDP each year until intergenerational equity goals are achieved. Among the policies to achieve that, it proposes a public sector hiring cap and a wage-setting mechanism to steadily reduce the 41% premium over private sector wages. Subsidies are the highest in the GCC and should be phased out.
- At the same time, public investment has “plummeted” to near the bottom of the GCC and should be increased.
N.B. You can choose to receive email or push notifications for newsletters like this: https://www.dhirubhai.net/mypreferences/d/notification-subcategories/newsletters
