Macro Snapshot — Bank of England raises rates after US increase; China’s services activity falls sharply 

Macro Snapshot — Bank of England raises rates after US increase; China’s services activity falls sharply 
The Bank of England raised interest rates to their highest since 2009 (Shutterstock)
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Updated 06 May 2022

Macro Snapshot — Bank of England raises rates after US increase; China’s services activity falls sharply 

Macro Snapshot — Bank of England raises rates after US increase; China’s services activity falls sharply 

RIYADH: The central banks of the UK and Brazil have raised their rates by a full percentage point, following the US Fed’s half-point hike on Wednesday.

Saudi Arabia, the UAE, Qatar and Bahrain have also raised their key rates by 0.5 percentage points, while Kuwait's central bank increased its discount rate by 25 basis points. 

Norway has resisted any rise, keeping its rates on hold, and the European Central Bank board member Fabio Panetta has also advised against a hike in rates. 

Bank of England raises rates to 1 percent despite looming recession risk 

The Bank of England raised interest rates to their highest since 2009 at 1 percent on Thursday to counter inflation now heading above 10 percent, as it sent a warning that Britain risks falling into recession.

The BoE’s nine rate-setters voted 6-3 for the quarter-point rise from 0.75 percent. But Catherine Mann, Jonathan Haskel and Michael Saunders called for a bigger increase to 1.25 percent to stamp out the risk of the inflation surge getting embedded in the economy.

Economists polled by Reuters had forecast a more dovish 8-1 vote to raise rates to 1 percent, with one policymaker opposing a hike.

The BoE’s move represented its fourth consecutive rate hike since December — the fastest increase in borrowing costs in 25 years — and it hardened its message about further increases, despite its worries about a sharp economic slowdown.

British consumer price inflation hit a 30-year high of 7 percent in March, more than triple the BoE’s 2 percent target, and the central bank revised up its forecasts for price growth to show it peaking above 10 percent in the last three months of this year.

It had previously said it expected inflation to peak at about 8 percent in April.

The BoE kept its forecast for economic growth this year at 3.75 percent, but slashed its forecast for 2023 to show a contraction of 0.25 percent from a previous estimate of 1.25 percent growth. It cut its growth projection for 2024 to 0.25 percent from a previous 1.0 percent.

Brazil central bank raises rates by 100 bps as expected

Brazil’s central bank on Wednesday raised interest rates by a full percentage point, due to persistent double-digit inflation and evidence of price expectations drifting further from official targets.

The bank’s rate-setting committee, known as Copom, raised its benchmark Selic interest rate to 12.75 percent, a five-year high. All 32 economists polled by Reuters had forecast the decision after policymakers made an increase of 100 basis points in March and signaled the same for this month.

Gulf central banks raise rates as Fed hikes by 50 bps 

The central banks of Saudi Arabia, the United Arab Emirates, Qatar and Bahrain have raised their key rates by 50 bps. 

The Central Bank of Kuwait said it increased its discount rate by 25 basis points to 2 percent, in a move less hawkish than the Fed’s.

All Gulf countries have their currencies pegged to the US dollar, except Kuwait, which pegs the Kuwaiti dinar to a basket of currencies that includes the dollar.

The Saudi Central Bank raised its repo rate and reverse repo rates by 50 bps each to 1.75 percent and 1.25 percent, respectively.

The Central Bank of the UAE said its base rate would increase by 50 basis points, which would take it to 2.25 percent, effective from Thursday.

The bank said it would maintain the rate on borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 bps above the base rate.

The Central Bank of Qatar said it would raise, effective on Thursday, its deposit and repo rates by 50 bps to 1.5 percent and 1.75 percent, respectively. Its lending rate will increase by 25 bps to 2.75 percent.

The Central Bank of Bahrain said it raised its key policy rate, on its one-week deposit facility, by 50 bps to 1.75 percent, in lockstep with the Fed’s hike.

The CBB also increased its overnight deposit rate and lending rates by 50 bps to 1.5 percent and 3 percent, respectively, and its four-week deposit rate was increased by 75 bps to 2.5 percent.

The Central Bank of Oman — the other member of the Gulf Cooperation Council — is widely expected to follow with a similar move.

Norway keeps rates on hold, remains on track for June hike

Norway’s central bank kept interest rates on hold on Thursday, as widely expected, and reiterated its plan to raise the cost of borrowing in June amid rapidly rising inflation.

Norges Bank’s monetary policy committee unanimously agreed to keep the rate on hold at 0.75 percent for now, as expected in a Reuters poll of economists. 

ECB should not raise rates in July before Q2 GDP data: Panetta 

The European Central Bank should not raise interest rates in July, even though the inflation outlook suggests it can gradually reduce support for the economy, ECB board member Fabio Panetta told Italian newspaper La Stampa.

While an increasing number of ECB policymakers are making the case for a rate hike at the July 21 policy meeting, Panetta pointed to the availability after it of data on the euro zone’s second-quarter economic growth.

“It would be imprudent to act without having first seen the hard numbers on GDP for the second quarter and to discuss further measures without a full understanding of how the economy could develop,” La Stampa on Thursday quoted Panetta as saying.

“It does not make much of a difference whether it is two or three months earlier or later,” he said in the interview with the newspaper.

Spain’s inflation peaked, to start falling in second half of 2022, minister says

Spain’s Economy Minister Nadia Calvino said on Thursday inflation has peaked in the country and is likely to start falling in the second half of this year.

The 12-month inflation rate in Spain had increased to a three-decade high of 9.8 percent in the period through March though the most recent data in April showed a slight decrease to 8.4 percent.

Calvino added her government had to prepare itself for an upcoming interest rate increase. She said her ministry has already reduced risks by extending the maturity of its outstanding debt to more than eight years.

Turkey’s inflation surges to 70 percent, putting Erdogan in bind 

Turkey’s annual inflation jumped to a two-decade high of 69.97 percent in April, according to data on Thursday, fueled by the Russia-Ukraine conflict and rising energy and commodity prices after last year’s lira crash.

The surge in prices has badly strained households just over a year before presidential and parliamentary elections that could bring the curtain down on President Tayyip Erdogan’s long rule.

Erdogan first came to power as prime minister in 2003 before switching the country to a presidential system, and the unorthodox interest rate cuts made last year under pressure from him have been blamed for lighting a fire under inflation.

Month-on-month, consumer prices rose 7.25 percent, the Turkish Statistical Institute said, compared to a Reuters poll forecast of 6 percent. Annually, consumer price inflation was forecast to be 68 percent.

“It’s about food and energy price increases but also the spectacular failure of monetary policy in Turkey — and it’s about the abject and total failure of Erdogan’s unorthodox monetary policy,” said strategist Timothy Ash at Bluebay Asset Management.

Presidential and parliamentary elections are due by June 2023 and opinion polls show Erdogan’s support declining.

Swiss inflation rises to 2.5 percent in April

The Swiss consumer price index rose 0.4 percent in April versus March and advanced 2.5 percent year on year, the highest since 2008 and taking inflation further above the Swiss National Bank’s definition of price stability. 

The 0.4 percent month-on-month increase reflected several factors including rising prices for heating oil, new cars and air transport, the Federal Statistics Office said.

China’s services activity falls at second sharpest rate on record — Caixin PMI

China’s services sector activity contracted at the second-steepest rate on record in April, as COVID curbs halted the industry, leading to sharper reductions in new business and employment, a private-sector survey showed on Thursday.

The Caixin services purchasing managers’ index stood at 36.2 in April, the second-lowest since the survey begun in November 2005 and down from 42 in March. The index hit a record low of 26.5 in February 2020 during the onset of the pandemic.

The 50-point mark separates growth from contraction on a monthly basis.

The pessimistic findings from the survey, which focuses more on small firms in coastal regions, are in line with the government’s official PMI, pointing to the fast deterioration in a key sector that accounts for about 60 percent of the economy and half of the urban jobs.

The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.


NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May

NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May
Updated 03 July 2022

NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May

NRG Matters: DEWA expands its energy production capacity; Germany cuts natural gas consumption by 35% in May

RIYADH: On a macro level, Germany reduced consumption of natural gas by 35 percent in May. Zooming in, Dubai’s DEWA added 700MW of energy production capacity, to reach a total of 14,117 MW. 

Looking at the bigger picture

  • Germany has reduced its consumption of natural gas by 35 percent during the first five months of 2022, compared to the same period last year, Bloomberg reported citing an industry lobby group. Only part of the drop was due to a milder winter, it added. 

Through a micro lens:

  • Dubai Electricity and Water Authority has added 700 MW of energy production capacity, to reach a total of 14,117 MW, according to the Dubai Media Office. 

This includes 600 MW from the Hassyan Power Complex, which runs on natural gas, and 100 MW from photovoltaic solar panels at the 5th phase of the Mohammed bin Rashid Al-Maktoum Solar Park, which DEWA is implementing.

  • The Egyptian Nuclear and Radiological Regulatory Authority has issued a construction license to build the first reactor at Al Dabaa Nuclear Power Plant, according to a statement.

On Egypt’s Mediterranean coast, the El Dabaa site is 320 km west of Cairo. The plant will comprise four VVER-1200 units, like those already in operation at the Leningrad and Novovoronezh nuclear power plants in Russia, and the Ostrovets nuclear power plant in Belarus.


TRSDC signs first JV worth $400m with Al Mutlaq Group

TRSDC signs first JV worth $400m with Al Mutlaq Group
Updated 03 July 2022

TRSDC signs first JV worth $400m with Al Mutlaq Group

TRSDC signs first JV worth $400m with Al Mutlaq Group

RIYADH: The Red Sea Development Co. has signed a joint venture agreement worth SR1.5 billion ($400 million) with Almutlaq Real Estate Investment Co., a subsidiary of the Al Mutlaq Group. 

Under the agreement, the two companies will develop the Jumeirah Red Sea, a 159-key luxury resort situated on The Red Sea destination’s hub island, Shura, currently under construction and expected to open in early 2024. 

The island forms part of the first phase of development, and will comprise 11 luxury, premium and lifestyle hotels and resorts, residential units, a championship golf course, 118 berth marina, and a comprehensive retail, dining, and entertainment offering.

The strategic partnership marks the first JV established by TRSDC.

“This joint venture investment reinforces the private sector’s alignment with our commitment to regenerative tourism and sustainable development. Our project naturally lends itself to promising business opportunities, with the ability to leverage the Kingdom’s key strategic assets, and drive economic growth and diversification as outlined by Vision 2030,” said John Pagano, CEO of TRSDC. 

“We are extremely pleased to partner with TRSDC and its best-in-class management team on this exciting and compelling project. We have been studying the giga-projects for some time, and the Red Sea is achieving its vision. The destination is coming to life, and we look forward to welcoming our first guests in 2024,” said Tariq Almutlaq, chairman of AREIC.

Investors’ interest

TRSDC is in discussions with several other investors under a similar framework to invest in The Red Sea Project’s commercial assets, including hotels and resorts, leisure, and retail and dining experiences. Moreover, AMAALA and additional soon-to-be-announced projects in the developer’s expanding portfolio bring with them additional opportunities for investors.

“We are attracting an abundance of third-party investment interest, particularly those focused on ESG who are confident that this is an exciting opportunity and one that they do not want to miss out on,” said Jay Rosen, chief financial officer at TRSDC.

Green financing

The announcement follows TRSDC achieving financial close on its SR14.120 billion ($3.76 billion) green financing earlier this year with four leading Saudi banks (Banque Saudi Fransi, Riyad Bank, Saudi British Bank, and Saudi National Bank). As the first-ever riyal denominated green financing, TRSDC was acknowledged with an award for Project Finance Deal of Year in the Capital Markets Saudi Arabia Awards 2021 plus the Best New Green Loan Financing Project Award at the International Finance Awards 2022.

The Red Sea Project has demonstrated significant progress on the ground, with Phase-1 now more than 50 percent complete and several key assets already fully operational, including a four-star management hotel, on-site offices, and the largest landscape nursery in the region.

TRSDC and AMAALA have awarded over 1,000 contracts worth in excess of SR25 billion. Work is on track to welcome the first guests in early 2023, when the first hotels will open, with the balance of phase one set to complete by early 2024.


Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023

Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023
Updated 03 July 2022

Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023

Fuel, feedstock prices for Saudi industrial sector to be adjusted from Q4 of 2023

RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources has decided to adjust the fuel and feedstock prices for the industrial sector from the fourth quarter of 2023, according to a ministry statement to companies.

The prices will be reviewed annually until 2030, it stated.

Price adjustment policy will be applicable to natural gas products, Arab heavy crude oil, ethane, heavy fuel oil, and Arab light crude oil.


UAE-Based Filipino businesswoman receives Presidential Award

UAE-Based Filipino businesswoman receives Presidential Award
Updated 03 July 2022

UAE-Based Filipino businesswoman receives Presidential Award

UAE-Based Filipino businesswoman receives Presidential Award
  • Pamana ng Pilipino Award, given to Dr. Karen Remo, is awarded to Filipinos overseas who have brought honor to the country through the excellence of their work

LONDON: Dr. Karen Remo, a business leader based in the UAE, has received the Presidential Award, the highest honor bestowed by the Philippine government on Filipinos overseas.

Dr. Remo is the CEO and Managing Director of The Filipino Times and New Perspective Media Group.Founded by Dr. Remo in 2013, The Filipino Times has become the Middle East's largest digital news portal for Filipinos and the UAE's largest free newspaper.She was one of 17 recipients chosen for the "Pamana ng Pilipino Award".  It is given to Filipinos overseas who, by exemplifying Filipino talent and industry, have brought honor and recognition to the country through the excellence of their work.

The award was presented by the Secretary and Chairperson of the Commission on Filipinos Overseas, Justice Francisco Acosta, on behalf of President Rodrigo Roa Duterte.

“In conferring the Pamana ng Pilipino Award to Dr. Karen Remo, the President recognizes her ability to lead, inspire, and influence Filipinos from all over the world while proving that women can be a pioneer in the field of business,” according to the Presidential Awards for Filipino Individuals and Organisations (PAFIOO) Awards Committee.

“Dr. Remo continues to be an inspiring entrepreneur and community leader in the Middle East. She has not only earned the respect of Filipinos and the multinational expat professionals in Dubai but also inspired many women to pursue their careers in business,” the statement continued.

A report by the Commission on Filipinos Overseas (CFO) also commended Dr. Remo's contribution to strengthening economic and social ties between the UAE and the Philippines. “Playing such an important role in the media industry, she fosters a positive relationship between the UAE and the Philippines. Her position has also allowed her to put Filipinos on the center stage.” it noted

The Philippine Ambassador to the UAE, Hjayceelyn Quintana also endorsed the nomination. “Dr. Remo comes from a community of an estimated one million Filipinos in the UAE. To be a cut above the rest means that the impact of her achievements in the host country is a source of pride for Filipinos not only in the UAE but in the Middle East region as a whole.” Quintana said.

"It is an honor to receive such a prestigious recognition and I am very grateful to the Office of the President, CFO, and the PAFIOO Awards Committee for this award. I have been privileged to work with and help many clients – both in the government and private sectors – in the Mena and Asia-Pacific regions” Dr. Remo said.

“I am very thankful to our readers and followers who always support and challenge us to do better. It was their trust and support that gave me this opportunity to showcase the passion and dedication of every team member in the NPM Group of companies to be of service and to make a difference.” she continued.


Egypt In-Focus — Startups raise $269.1m in H1; Abu Dhabi Ports Group acquires 70% equity stake in Egyptian firms

Egypt In-Focus — Startups raise $269.1m in H1; Abu Dhabi Ports Group acquires 70% equity stake in Egyptian firms
Updated 03 July 2022

Egypt In-Focus — Startups raise $269.1m in H1; Abu Dhabi Ports Group acquires 70% equity stake in Egyptian firms

Egypt In-Focus — Startups raise $269.1m in H1; Abu Dhabi Ports Group acquires 70% equity stake in Egyptian firms

RIYADH: Egyptian startups succeeded in raising a total of $269.1 million in funding in the first half of 2022, according to local media reports.

As of June 2022, around 35 startups in Egypt pulled together $269.1 million in the fintech and ecommerce sectors this year, Daily News Egypt reported.

During the first two months, Brimor and Thunder were responsible for the bulk of funds attained in January and February respectively.

March saw the highest volume when 9 startups raised $78.95 million.

In addition, three considerable deals further added to March’s ranking where Khazna, Lucky and Naqla raised $38 million, $25 million and $10.5 million respectively.

April saw a drop in finances, whereas May regenerated the funds with PayMob’s $50 million deal leading the way and June saw three deals worth $4.5 million.

Abu Dhabi Ports Group acquires stake in two firms 

Abu Dhabi Ports Group reached an agreement to acquire a 70 percent equity stake in International Associated Cargo Carrier BV, which wholly owns two Egypt-based maritime companies, Transmar International Shipping Company and Transcargo International, Asharq Alwsat reported.

The total purchase consideration of this transaction amounts to 514 million  dirhams ($140 million).

The acquisition will be fully funded from AD Ports Group’s existing cash reserves, which stood at over 3 billion dirhams as of March 31.

It is the first international acquisition realized by AD Ports Group.

Transmar is a regional container shipping company that operates across the Middle East, Red Sea, Arabian Gulf and Eastern Coast of Africa. In 2021, Transmar handled 109,000 twenty-foot equivalent units.

TCI is a terminal operator and stevedoring company, mainly operating out of the Adabiya Port, where it is the exclusive container operator. Its two lines of business are container and bulk cargo services. In 2021, TCI handled 92,000 TEUs and 1.2 million tons of bulk cargo.