FOCUS: GCC economies badly affected by COVID 19 amid tumbling oil price and lockdown

FOCUS: GCC economies badly affected by COVID 19 amid tumbling oil price and  lockdown
Short Url
Updated 02 April 2020

FOCUS: GCC economies badly affected by COVID 19 amid tumbling oil price and lockdown

FOCUS: GCC economies badly affected by COVID 19 amid tumbling oil price and  lockdown

What happened:

Germany and Italy extended their lockdown until after the Easter holiday and April 19 respectively. Eighty percent of the US economy is in lockdown. President Trump reiterated that the next few weeks would be very difficult.

While the worst is still to come for the US, the trajectory seems to be improving in some European countries. This has shifted the debate from lockdown to when and how economies can be restarted.

The first day of the second quarter looked grim across all major markets in response to the devastating first quarter.

GCC economies were also heavily affected by the impact of the virus, as most of them went into lockdown during March and suspended air travel.

Why it happened:

GCC economies still depend heavily on oil, which had its worst quarter ever. Tourism airlines and retail also were decimated.

Real estate is another important sector that was badly impacted by the shutdown of economies. The real estate sector in the UAE reached lows last seen in 2010. Emaar Properties is a good indicator, its share price retracting by 48 percent in the year to date. The situation looks similar for many in its peer group. This will reverberate in the construction sector as the economies resume economic activity.

Banks are exposed to all the aforementioned sectors, which has a big impact on the sector. Troubled hospital operator NMC defaulting on a $980 million loan has hit the portfolios of Abu Dhabi Commercial Bank and Commercial Bank of Dubai, as well as others. Expect the portfolios of banks throughout the region to deteriorate further as the outlook on the economies worsens.

Bahrain is the smallest of the GCC economies and by far the worst affected by the downturn. Its saving grace is that it usually has received help from its bigger neighbors. Oman is the second-worst affected.

The stimulus packages run at 30 percent of GDP for Bahrain and Oman, 10 percent of GDP for Kuwait and UAE and 4 percent of GDP for Saudi Arabia. The UAE were the first to announce a bailout package for the Emirates, which makes sense given that travel and tourism accounted for 13 percent of the country’s GDP.

If the crisis proved anything, it is that the strategy of Vision 2030 weaning the Saudi economy off its dependency on oil was correct, timely and important.

While the dollar peg of the currencies may be expensive to maintain amid the greenback's status as a haven currency, it does provide stability and investor confidence, especially as all GCC economies will need to look at foreign investment as oil prices remain lower for some time to come.

Brent was up 9 percent on the day, reflecting China replenishing its stocks and hopes that Saudi Arabia and Russia might resume talks: $27 per barrel is still way too low to balance any GCC budget.

Where we go from here:

Bank of America Chairman and CEO Brian Moynihan told Bloomberg that he was optimistic about a V-shaped recovery in the US, because he felt that the stimulus package targeted the right parts of the economy aiming to keep as many Americans as possible employed. This may be on the optimistic side.

The release of the US jobless claims at 8:30 EDST will probably send the next shockwaves through the system.

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairman and CEO of business consultancy Meyer Resources.

Twitter: @MeyerResources


Mueller hails Bayern Munich’s ‘phenomenal’ ninth league title in a row

Mueller hails Bayern Munich’s ‘phenomenal’ ninth league title in a row
Updated 3 min 3 sec ago

Mueller hails Bayern Munich’s ‘phenomenal’ ninth league title in a row

Mueller hails Bayern Munich’s ‘phenomenal’ ninth league title in a row
  • Bayern were confirmed champions before kick-off after Borussia Dortmund's 3-2 win at home to second-placed RB Leipzig earlier in the day
  • "Nine titles in a row, that's crazy. And I was there each time," said Mueller

MUNICH: Thomas Mueller hailed Bayern Munich’s “phenomenal” achievement after they were confirmed Bundesliga champions for the ninth season in a row on Saturday.
Robert Lewandowski grabbed a hat-trick in a 6-0 thrashing of Borussia Moenchengladbach at the Allianz Arena in Munich.
Bayern were confirmed champions even before kick-off after Borussia Dortmund’s 3-2 win at home to second-placed RB Leipzig earlier in the day sent the title to Munich.
“Nine titles in a row, that’s crazy. And I was there each time. I’m very grateful for that,” said Mueller, 31, who now holds the joint record of 10 Bundesliga titles with team-mate David Alaba.
“It shows the development of this club over the years.
“It’s phenomenal, it’s a huge amount of work every year with a great team.”
Head coach Hansi Flick has now won seven titles in 18 months, but will leave to be replaced by RB Leipzig boss Julian Nagelsmann next season.
“That performance was worthy of champions,” said Flick.
Mueller scored Bayern’s second goal while Kingsley Coman and Leroy Sane also got on the scoresheet alongside Lewandowski, who now has 39 league goals this season, one short of Gerd Mueller’s all-time Bundesliga record.
“We wanted to show on the pitch that we are German champions,” said Lewandowski, who insisted he will “keep stepping on the gas” as he chases Mueller’s record with two games left.
Flick says Lewandowski is writing himself into the club’s folklore.
“Gerd Mueller was my idol when I was young, but what Gerd Mueller was in my youth, Lewandowski is today,” he said.
“If he manages the record, it will have been more than deserved.”
Club captain Manuel Neuer admitted it was a “bizarre situation” to be crowned champions while still warming up.
“We were just getting ready, there are a few TVs in the dressing rooms,” said the Germany goalkeeper.
“We realized that we had become champions and started congratulating each other.”
Thomas Mueller, a one-club wonder who won his first Bundesliga title with Bayern back in 2009/10, said he never dreamed of such success when he joined the Bavarian giants as a schoolboy.
“When you play here as a little boy, you don’t think you’ll ever play in the first team at FC Bayern. You’re just happy when you get tickets for home games,” he quipped.


China moves to bring order to online environment

China moves to bring order to online environment
Updated 9 min 33 sec ago

China moves to bring order to online environment

China moves to bring order to online environment
  • Tightens regulations governing media-related mobile apps to protect citizens

SHANGHAI: China’s internet watchdog said on Saturday that it will ban some mobile app notifications and tighten regulations as the government ramps up a campaign to rein in the growing influence of internet companies over its citizens’ daily lives.

The Cyberspace Administration of China (CAC) will strengthen guidance and control of mobile app information sources, and restrict notification volumes as part of what it terms a “people’s war” aimed at bringing order to the online environment, Xie Dengke, a CAC spokesperson told a State Council press conference.

Global Times also reported that CAC aimed to check illegal online behavior, including chaotic phenomena relating to the entertainment sector and irrational behaviors of fan groups.

“Regulations on online behaviors of institutions or official fan groups behind entertainment celebrities will also be shored up,” and action will be taken against online bullies, the report said.

The CAC will ban media-related mobile applications from sending notifications from independent social media accounts operating in violation of regulations, and will filter what it sees as harmful and undesirable information, Xie said.

Xie did not name specific mobile applications or social media accounts affected by the new rules.

The CAC will also work with financial regulators to “rectify” self-published financial accounts that have spread rumors, Xie said, to bring the dissemination of financial information under control.

China has in recent months sought to curb the economic and social power of its once loosely regulated internet giants, in a clampdown. Greater scrutiny and a strengthening of antitrust regulatory powers mirror an increasingly tough approach to the tech sector in the US and Europe. Following a “self-inspection” period to give mobile application operators an opportunity to address problems, the regulator will punish those not meeting certain requirements with penalties including fines and service suspensions, Xie said.

He did not say how long the self-inspection period would last.Earlier this week, the internet watchdog found that 33 mobile phone apps broke data privacy rules by collecting data without consent, among other issues.


India, EU to build joint infrastructure projects in Asia, Africa

India, EU to build joint infrastructure projects in Asia, Africa
Updated 19 min 15 sec ago

India, EU to build joint infrastructure projects in Asia, Africa

India, EU to build joint infrastructure projects in Asia, Africa
  • EU-India trade talks were frozen in 2013 over differences including tariff reductions, patent protection, data security and the right of Indian professionals to work in Europe

NEW DELHI: The EU and India will build joint infrastructure projects in Africa, Central Asia and the Indo-Pacific, an Indian Foreign Ministry official said on Saturday, after the conclusion of bilateral talks. 

India and the EU also revived stalled free trade negotiations, while also seeking closer cooperation to combat climate change, as concerns about China bring Brussels and New Delhi closer.

EU-India trade talks were frozen in 2013 over differences including tariff reductions, patent protection, data security and the right of Indian professionals to work in Europe.

A 2020 study by the European Parliament put the benefits of a trade deal for the EU with India at up to €8.5 billion ($10.2 billion), although the estimate was made before Britain’s departure from the bloc.

“It is no coincidence that items on the Europe-India agenda — maritime security in the Indian Ocean, alternatives to the BRI, emerging technologies, 5G — all have elements of competition with China,” said Garima Mohan, an Asia expert at the German Marshall Fund think tank.

The India-EU Connectivity collaboration also calls for developing a “joint vision and an aligned roadmap for beyond 5G technologies” and fostering “open, more secure, sustainable, interoperable, environmentally friendly and fair access to cloud services,” the Indian media reported.

There was also provision for “resilient, secure and standards-compliant networks, stepping up collaboration on mitigating network risks and increasing joint efforts to promote an open, free, stable and secure cyberspace.”

Creating an environment for boosting digital investments between India and the EU, leveraging opportunities for improving cross-border payments including remittances, between the EU and India is also accounted for under the terms of the India-EU connectivity cooperation.

The EU accounted for €96 billion ($117 billion) of trade in goods and services in 2020, 11 percent of India’s total, just behind China and the US, according to the European Commission.

Alongside the trade talks, the sides also agreed to launch negotiations on two separate agreements on investment protection and on geographic indications — those that protect products that have a specific place of origin.

Still, EU officials warn that even though there is willingness to re-engage in trade negotiations, progress is still scant on a lot of key areas including Indian tariffs for goods — especially cars — and intellectual property rights.


King Salman issues royal order to promote members of Public Prosecution Office

Saudi Arabia’s King Salman issued a royal order to promote a number of members of the Public Prosecution Office. (SPA)
Saudi Arabia’s King Salman issued a royal order to promote a number of members of the Public Prosecution Office. (SPA)
Updated 08 May 2021

King Salman issues royal order to promote members of Public Prosecution Office

Saudi Arabia’s King Salman issued a royal order to promote a number of members of the Public Prosecution Office. (SPA)
  • Attorney General Sheikh Saud bin Abdullah Al-Mujib praised the issuance of the royal order

RIYADH: Saudi Arabia’s King Salman issued a royal order to promote a number of members of the Public Prosecution Office, Saudi Press Agency (SPA) reported on Saturday.

Attorney General Sheikh Saud bin Abdullah Al-Mujib praised the issuance of the royal order, and said that it came within the framework of the king and crown prince’s support for the Public Prosecution, and their “interest in promoting the principle of universal sufficiency for all its needs,” SPA said.

The attorney general said this included stimulating the administrative system in a way that contributes to fulfilling its duties to the fullest.

Sheikh Al-Mujib urged employees of the Public Prosecution to redouble their efforts to meet the expectations of the leadership and society.


Valencia fans protest against Singaporean owner Peter Lim

Valencia fans protest against Singaporean owner Peter Lim
Updated 08 May 2021

Valencia fans protest against Singaporean owner Peter Lim

Valencia fans protest against Singaporean owner Peter Lim
  • Supporters of Valencia club called for the wealthy businessman to sell his shares and leave the club he has owned since 2014
  • Fans have been upset with recent comments by owner Peter Lim that belittled the supporters and downplayed their importance

MADRID: Thousands of Valencia fans gathered outside the team’s Mestalla Stadium to protest against Singaporean owner Peter Lim on Saturday.
Supporters of the Spanish club called for the wealthy businessman to sell his shares and leave the club he has owned since 2014.
The fans, who displayed banners saying “The future is ours,” have been upset with recent comments by Lim that belittled the supporters and downplayed their importance.
Valencia fans have been unhappy with Lim’s administration and often accuse him of running the club solely as a business.
The protests came a few days after Manchester United fans protested against American owner Joel Glazer, forcing the postponement of the team’s English Premier League game against Liverpool. The protests prompted Glazer to publish a letter in which he pledged to accelerate discussions with fans about supporters being able to have a greater say at the club.
Valencia plays a Spanish league match against Valladolid at home on Sunday. The club sits 14th in the 20-team standings, six points above the relegation zone.