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Country Risk Weekly Bulletin 522

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February 01, 2018
Country Risk Weekly Bulletin 522

Performance of Arab Stock Markets in January 2018 (% change)

Source: Local Stock Markets, Capital Markets Authority, Byblos Bank

  • Arab stock markets up 5% in January 2018

    Arab stock markets improved by 5.1% and Gulf Cooperation Council equity markets rose by 5.5% in January 2018, relative to an increase of 1.6% each in the same month of 2017. In comparison, global equities increased by 5.3%, while emerging market equities improved by 6.8% in January 2018. Activity on the Khartoum Stock Exchange jumped by 9.1% in January 2018, the Qatar Stock Exchange grew by 8%, the Beirut Stock Exchange rose by 6.5%, the Saudi Stock Exchange expanded by 5.9%, the Casablanca Stock Exchange improved by 5.5%, the Abu Dhabi Securities Exchange increased by 4.6%, the Boursa Kuwait grew by 4.4%, the Amman Stock Exchange rose by 3.1%, the Tunis Bourse expanded by 2.8%, the Iraq Stock Exchange improved by 1.7%, the Bahrain Bourse expanded by 1.4%, the Dubai Financial Market increased by 0.7%, the Egyptian Exchange grew by 0.2% and the Palestine Exchange rose by 0.1%. In contrast, activity on the Muscat Securities Market dropped by 1.9% and the Damascus Securities Exchange regressed by 1.1% in the covered month. In parallel, activity on the Tehran Stock Exchange increased by 2.7% in January 2018.
    Source: Local stock markets, Dow Jones Indices, Byblos Research

     

  • Outlook depends on economic policies and reforms
    The International Monetary Fund expected Egypt's growth outlook to be favorable, provided that authorities maintain their prudent macroeconomic policies and continue to implement growth-supportive reforms. It noted that the authorities’ reform program and the IMF support have helped stabilize the economy, restore market sentiment, strengthen the growth momentum, narrow the fiscal and external deficits, reduce inflationary pressure and replenish foreign currency reserves. It projected Egypt's real GDP growth to accelerate from 4.2% in the fiscal year that ended in June 2017 to 4.8% in FY2017/18 and to reach 6% in the medium term, in case of a recovery in consumption, private investment and net exports. It forecast the average inflation rate to decline from 23.5% in FY2016/17 to 13.7% in FY2018/19, supported by tight monetary policy. It noted that the main risks to the outlook are a slowdown or reversal of reforms that could weigh on investment activity and reduce growth. It said that other risks consist of a sustained increase in oil prices that would weaken the external balance and increase the fuel subsidy bill, and a deterioration in security conditions that would weigh on tourism, among others.
    Source: International Monetary Fund

  • Negative outlook on Sub-Saharan sovereigns
    Moody’s Investors Service indicated that the outlook on the sovereign ratings of Sub-Saharan African (SSA) countries is 'negative' over the next 12 to 18 months due to the region's subdued growth prospects, fiscal consolidation challenges and increased political risks. It projected growth in the SSA region to accelerate from an estimated 2.6% in 2017 to 3.5% in 2018, supported by a stronger global economy and a modest rise in commodity prices. Still, it noted that low commodity prices, domestic structural bottlenecks and the challenging business environment would continue to weigh on economic activity in SSA economies. It added that the economic recovery is fragile, is uneven across countries and is below the region's potential. In parallel, Moody’s expected the fiscal deficit in most SSA-rated sovereigns to stabilize in 2018, but to be wider than the pre-2014 levels. In this context, it indicated that the public debt levels of SSA economies would increase this year, but at a slower pace, due to fiscal consolidation challenges, high debt servicing costs and subdued growth in the region.
    Source: Moody’s Investors Service

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