Gulf economies explode in 2021


Last year, in the throes of the energy crisis, the Gulf countries led by Saudi Arabia have consistently touted the strength of their economies, claiming they could withstand any scale of shocks. But the truth is that most of the Gulf economies were in dire straits due to their excessive dependence on oil.

With oil prices stuck at around $ 40 a barrel, only Qatar managed to balance its books, while Saudi Arabia’s balanced budget price at $ 76.10 meant it was facing a deficit. blatant. Indeed, S&P Global Ratings has estimated that the central government deficits of the GCC (Gulf Cooperation Council) will reach 100 billion dollars in 2020 and nearly half a trillion dollars in cumulative between 2020 and 2023.

But as fate willed it, the remarkable recovery of the global energy sector means that the GCC countries are now in a much better position than expected.

Indeed, the GCC stock markets have been in tears this year thanks to the recovery in oil prices. From energy and petrochemicals to chemicals and banking stocks, stock markets in the Middle East are booming even as some central banks in the region begin to withdraw their stimulus measures – a sign of their confidence in the strength of the market. reprise.

Here is an overview of the main players in the GCC area.

Budget deficit

Gulf

Source: Reuters

Saudi Arabia

The benchmark index of the Saudi stock market, the Tadawul All Share Index (TASI), has been a standout performer this year, climbing 32.3% year-to-date and 42.2% in the past 12 months.

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The heavyweight of the market is in the lead Al Rajhi Bank (1120.SE), up 67.0% since the start of the year; Saudi telecommunications company (7010.SE) gained 19.3% while chemical manufacturers Sahara International Petrochemicals (2310.SE) and Saudi Basic Industries (2010.SE) grew by 152.6% and 26.1% respectively.

Surprisingly, the oil giant Saudi Aramco (TADAWUL: 2222) has lagged behind, managing only a 3.3% gain since the start of the year.

Bloomberg reported that Saudi Aramco is in advanced talks to buy approximately 20% stake in the oil and chemicals refining business of Reliance Industries for $ 20 billion to $ 25 billion in shares, with a deal slated for in the coming weeks. Based on Aramco’s market valuation of $ 1.9 billion, a deal would give the Indian company a roughly 1% stake in the world’s largest energy company.

United Arab Emirates

The General Dubai Financial Market Index (.DFMGI) is up 14.2% year-to-date, with financials providing the most support. Amanat Holdings (LOVER OF), an integrated health and education investment company, is up 35.0%, while Islamic Bank of Dubai (DISB.DU) has gained 8.7% year-to-date.

the Abu Dhabi stock market index, ADSM all stocks index (.ADI), was the UAE’s top performer after climbing 51.6% year-to-date. Abu Dhabi’s leading bank (FAB.AD) gained 35.9% year-to-date; Emirates Telecommunications Group (ETISALAT.AD) is up 41.0%, while Dana gaz (DANA.AD) climbed 49.2% over the period.

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Last month, the central bank of the United Arab Emirates (CBUAE) announced that it would begin to phase out stimulus measures introduced last year to mitigate the economic impact of the COVID-19 pandemic. However, the bank said the lowering of reserve requirements for banks will remain unchanged, meaning the UAE economy is not yet fully out of the woods.

Qatar

The Qatari index (.QSI) is up 10.0% year-to-date, with industrials and financials stocks the strongest support for the index.

Qatar business sectors (IQCD.QA), a Qatar-based company that acts as a holding company active in petrochemicals, fertilizers and steel, climbed 41.2%, while Commercial bank (COMB.QA) gained 40.4%.

Here is how other GCC stock markets performed this year:

  • Bahrain All Share Index (.BAX) – + 15.1% year-to-date

  • Oman Index (.MSI) – + 7.0% YTD

  • Kuwait’s premier benchmark (.BKP) – + 6.9%

  • CAIRO INDEX SE EGX30 (.EGX30) – minus 0.29% YTD

By Alex Kimani for Oil Octobers

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