Arab stock markets improved by 6.3% and Gulf Cooperation Council equity markets rose by 5.9% in the first quarter 2018, relative to decreases of 0.4% and 0.9%, respectively, in the same quarter of 2017. In comparison, global equities declined by 1.3%, while emerging market equities regressed by 0.5% in the covered quarter. Activity on the Egyptian Exchange jumped by 16.2% in the first quarter of 2018, the Tunis Bourse surged by 14.3%, the Khartoum Stock Exchange increased by 9.1%, the Iraq Stock Exchange expanded by 9%, the Saudi Stock Exchange improved by 8.9%, the Beirut Stock Exchange grew by 6.6%, the Casablanca Stock Exchange increased by 5.4%, the Amman Stock Exchange grew by 5%, the Abu Dhabi Securities Exchange improved by 4.3%, the Boursa Kuwait expanded by 3.5%, the Damascus Securities Exchange increased by 2.4% and the Qatar Stock Exchange appreciated by 0.6%. In contrast, activity on the Dubai Financial Market dropped by 7.8%, the Muscat Securities Market declined by 6.4%, the Palestine Exchange decreased by 1.6% and the Bahrain Bourse regressed by 1% in the covered quarter. In parallel, activity on the Tehran Stock Exchange rose by 1.4% in the first quarter of 2018.

Source: Local stock markets, Dow Jones Indices, Byblos Research

S&P Global Ratings assessed as "intermediate" the industry and country risk levels for the property and casualty (P/C) insurance sector in the UAE. The risk scale ranges from "low" to "intermediate", "moderate" and "high". S&P attributed its assessment to the UAE's positive market growth prospects, relatively modest insurance product risks, and weak institutional and regulatory frameworks. It noted that the aggregate gross written premiums of P/C insurers in the UAE grew by 12% in 2017, supported by the introduction of compulsory basic medical insurance for about one million lower-income workers in Dubai, as well as by an increase of between 15% and 25% in motor premiums. It expected the P/C insurance segment’s gross written premiums to increase by an average of 10% annually in 2018 and 2019, and to benefit from accelerated infrastructure spending in the run up to the Expo 2020, as well as from population growth. 

Source: S&P Global Ratings

Moody's Investors Service indicated that Bank of Ghana (BoG) placed Unibank, the third largest bank in terms of assets in Ghana, under administration due to its negative capital and persistent liquidity challenges. It noted that BoG's action is credit positive for Ghanaian banks since it will enhance their long-term financial stability by removing weaker banks from the system. It said that BoG's intervention follows Unibank's failure to restore its capital adequacy ratio to the required 10% level, among several other regulatory breaches. In parallel, Moody's considered that the placement of Unibank under administration and the cancellation of licenses for smaller banks in 2017 reflect BoG's tightened regulatory stance, which will constrain the banks' ability to classify their NPLs and allocate their capital. It expected BoG's actions to lead to consolidation in the sector, which will result in fewer but larger banks. In turn, this would improve bank surveillance and induce other banks to mitigate excessive risk-taking, reduce unsustainable asset growth, or increase capital buffers. Further, Moody’s expected depositor confidence, particularly for smaller banks and other weaker franchises, to be negatively affected over the next quarter, with further transfers of deposits to larger and stronger franchises.  

Source: Moody’s Investors Service