Let’s build on the positive vibes in the Gulf
As businesses re-open in the Gulf, positivity is widely reflected the region. Flight bans are lifted and curfews put to an end; hotels are ready to host their guests coming for a liberating vacation. And most important, crude oil prices are crawling back to more acceptable levels of $40 a barrel.
Oil prices are the main economic faith indicator in the Gulf, even with the ambitious plans and projects to diversify the economy as much as possible. Oil revenues are still too significant to be matched by other sectors, especially when three of the world’s Top 10 producers are from this region. Today’s oil prices were last seen during the first week of March before they stumbled to a record low in mid-April. The slow recovery since has been watched with intent, and hopes were mounting during the recent period.
Kuwait’s Export Blend on July 7 was selling at $43.26, whereas on April 29, its selling price was less than $13.66. This recovery along with the government ending the isolation of two main commercial and residential districts has given businesses a much needed boost.
On schedule
Dubai announced the launch of a new metro line - Route 2020 - that will transport passengers to the Expo 2020 site, with a total investment of Dh11 billion, signalling the government’s continued commitment towards delivering milestone projects on time.
Another indicator of investor faith in the region’s markets is the latest IPO in Saudi Arabia, that of Amlak International, a real estate financing company that attracted more than 266,000 investors who injected 2,690 per cent more than the required capital. This shows the positive vibes in the region continue to spread.
Kuwait’s stock exchange witnessed on July 9 the listing of Boursa Kuwait Securities Company, as part of the government’s initiative to increase private sector involvement. It has offered to privatize the stock market, and its share reached a record 735 fils before the market closed and up from the IPO price of 100 fils. The substantial 7.35x gain in value and a generous 25 per cent cash dividend after only seven months has created a larger appetite among Kuwaiti investors to participate in government privatization plans regardless of the pandemic.
Flying high
The launch of Air Arabia Abu Dhabi and the code sharing agreement announced with Etihad represents positives for the tourism sector in the UAE. The expansion of Air Arabia to serve Abu Dhabi airport will also reflect well on the Sharjah airline and its stock price. The management shows great commitment towards expansion plans after announcing two new destinations for the Abu Dhabi joint venture.
The Vision 2030 projects of Saudi Arabia has had a share of success, as two privatization projects were successfully awarded to the highest bidders with a value exceeding 2.75 billion riyals. The projects consist of major flour mills, which are being privatized for the first time in the Kingdom. Investment groups such as Al-Rajhi and Al-Ghurair took part and this confirms the availability of numerous such opportunities in the region.
The GCC business community is thirsting for a more rewarding 2021. Before that they will need to see signs of a recovering second-half this year - and yet, it seems to be a closer target than expected.
- Feras Al-Salem heads the Kuwait Business Council.