Turkish banking links weigh on Gulf markets

Gulf markets sunk as investors shied away from banks with links to Turkey’s deepening economic turmoil. (AFP)
Updated 13 August 2018
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Turkish banking links weigh on Gulf markets

DUBAI: Saudi Arabia’s stock index touched its lowest level in more than three months on Monday, with regional markets sinking as investors shied away from banks with links to Turkey’s deepening economic turmoil.
Attracted by its large population and surging economy, several Gulf banks have expanded into Turkey in recent years, most recently Dubai’s largest bank Emirates NBD, which in May agreed to buy Turkey’s Denizbank in a $3.2 billion deal.
But investor confidence in the economic outlook has been shattered by the lira tumbling on worries over President Tayyip Erdogan’s increasing control over the economy and deteriorating relations with the United States.
Emirates NBD slumped by 4.6 percent. Emaar Properties , which has projects in Turkey, was down 2.3 percent.
The main Dubai index slipped by 1.5 percent, while he main Saudi index lost 2.4 percent.
National Commercial Bank (NCB), Saudi Arabia’s largest bank by assets, fell by 3.7 percent. NCB’s exposure to Turkey is estimated by Arqaam Capital as 8 percent of its assets and 12 percent of its loans.
Other Saudi blue-chip stocks were also down. Saudi Basic Industries Corp. (SABIC) fell by 2.4 percent, while Al Rajhi Bank slipped by 2.6 percent.
The Middle East and North Africa’s largest bank, Qatar National Bank, retreated by 2.6 percent. Around 15 percent of the bank’s assets and 14 percent of its loans relate to Turkey, according to Arqaam Capital.
Qatar’s Commercial Bank, which owns Turkey’s Alternatifbank, edged down 0.6 percent. The wider index shed 0.8 percent.
In Kuwait, Kuwait Finance House and Burgan Bank , both of which have loans and other assets in Turkey, declined by 1.3 percent and 1.4 percent, respectively.


OECD warns of global economic slowdown

Updated 21 November 2018
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OECD warns of global economic slowdown

  • ‘We urge policy-makers to help restore confidence in the international rules-based trading system’
  • Trade tensions have already shaved 0.1-0.2 percentage points off global GDP this year

PARIS: The global economy has peaked and faces a slowdown driven by international trade tensions and tighter monetary conditions, the Organization for Economic Cooperation and Development warned Wednesday.
The OECD, which groups the top developed economies, said it had trimmed its growth forecast for 2019 to 3.5 percent from the previous 3.7 percent.
The 2018 estimate was left unchanged at 3.7 percent.
For 2020, the global economy should grow 3.5 percent, it said in its latest Economic Outlook report.
“The shakier outlook in 2019 reflects deteriorating prospects, principally in emerging markets such as Turkey, Argentina and Brazil,” it said.
“The further slowdown in 2020 is more a reflection of developments in advanced economies as slower trade and lower fiscal and monetary support take their toll.”
OECD chief Angel Gurria highlighted problems caused by trade conflicts and political uncertainty — an apparent reference to US President Donald Trump’s stand-off with China which has roiled the markets.
“We urge policy-makers to help restore confidence in the international rules-based trading system,” Gurria said in a statement.
Trade tensions have already shaved 0.1-0.2 percentage points off global GDP this year, the Economic Outlook report said.
If Washington were to hike tariffs to 25 percent on all Chinese imports — as Trump has threatened to do — world economic growth could fall to close to three percent in 2020.
Growth rates would drop by an estimated 0.8 percent in the US and by 0.6 percent in China, it added.
For the moment, the OECD puts US economic growth at 2.9 percent this year and 2.7 percent in 2019, unchanged from previous estimates, but trimmed China by 0.1 percentage point each to 6.6 percent and 6.3 percent.
It warned that “a much sharper slowdown in Chinese growth would damage global growth significantly, particularly if it were to hit financial market confidence.”
Laurence Boone, OECD Chief Economist, said “There are few indications at present that the slowdown will be more severe than projected. But the risks are high enough to raise the alarm and prepare for any storms ahead.”