Interpreting Middle East Economic News and Analyzing Market Trends

Category: News

Gulf banks go shopping in the MENA region

After four years of slow growth or no growth, banks in the Gulf are looking for ways to expand their market reach.  Banks in cash-rich Qatar can only grow so much in their tiny home market, whereas banks in the UAE have a larger customer base to work on.  However, banks in the UAE have been revering from the property bubble and per Central Bank statements, need to reduce their exposure to the government (see older post).

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UAE Central Bank holds off on tougher regulations stating banks are in a good position

Is the headline confusing?  Don’t worry, it confused me too.  Allow me to elaborate.  On January 1, 2013, the UAE Central Bank was supposed to begin enforcing new capital and liquidity ratios for banks in the country.  However, on December 17, 2012, the Central Bank postponed these new regulations until further notice.  In a country where the media is hungry for local news, this story was barely covered and wasn’t even mentioned by international media outlets.  Here’s more from the local paper Khaleej Times:

“The UAE Central Bank has postponed new regulations that limit commercial bank lending to governments and their related entities for further review in a move that is expected to give lenders sufficient time to come to grips the requirements.

The regulator also has put off the implementation of another rule on banks’ liquidity ratios. The rules, originally scheduled to come into effect on January 1, had been designed to help banks withstand market disruptions and avoid a concentration of debt payments.

  

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World Unemployment to Hit Record in 2013, Outlook for the Middle East Looks Grim

The International Labour Organization (ILO), which is a United Nations agency, recently came out with its outlook for world employment. The forecast is not good. Nearly five years since the global financial crisis, the global economy continues to struggle. Stock markets around the world are breaking five-year highs as optimism drives up prices, yet economic fundamentals remain poor. Has the EU solved its debt problems? Has the US solved its fiscal crisis? Has Japan escaped its deflationary death spiral? Are economies growing at healthy rates?

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Emerging Market Debt Issuance Hits Record and Spills Over into Sukuk Market as Investors Worldwide Hunt for Yield

The funny thing about unintended consequences is that they pop up regardless of your original intentions, good or bad. I’m sure central bankers’ in the US and EU had good intentions for keeping interest rates near zero for so long, but their efforts to stimulate their economies and help them recover from a bubble collapse have led to the creation of another bubble. Record low yields in developed markets are pushing investors to search for higher yields.

 

For 2012, issuance of emerging-market bonds denominated in the U.S. dollar soared to about $375 billion, marking a record high since data provider Dealogic began tracking the data in 1995. Issuance far outpaced the previous year, when emerging-market issuers sold $235.5 billion in new debt.

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