The net income of 64 companies listed on the Abu Dhabi Securities Exchange totaled AED20.2bn, or $5.5bn, in the first half of 2018, constituting an increase of 5.6% from AED19.2bn or $5.2bn in the first half of 2017. Listed banks generated net profits of $3.2bn and accounted for 59.2% of the total earnings of publicly-listed firms in the first half of 2018. Telecommunication companies followed with $1.4bn (25.5%), then real estate companies with $313.8m (5.7%), insurers with $132.8m (2.4%), services firms with $104.1m (1.9%), energy companies with $98.9m (1.8%), investment & financial services institutions with $70.3m (1.3%), industrial firms with $67.2m (1.2%) and consumer goods firms with $51.1m (0.9%). In parallel, the cumulative net income of 62 companies listed on the Dubai Financial Market totaled AED20bn, or $5.4bn, in the first half of 2018, constituting an increase of 42.4% from AED14.1bn or $3.8bn in the same period of 2017. Listed banks generated net profits of $2.8bn, or 51% of total net earnings in the covered period. Real estate & construction companies followed with $1.9bn or 35.1% of the total, then telecom firms with $259.5m (4.8%), transportation companies with $242.1m (4.5%), investment & financial services institutions with $120.1m (2.2%), insurers with $105.4m (2%), industrial firms with $91.7m (1.7%) and services firms with $63.5m (1.2%).  
Source: KAMCO

Citi indicated that there are rising concerns about a generalized sell-off in emerging market assets, rather than an idiosyncratic sell-off in a limited number of countries. It noted that these concerns have started to materialize in Africa, as reflected in the selling of Egyptian and Nigerian assets. It said that the Egyptian pound and the Nigerian naira have remained stable despite outflows of foreign portfolio investments from their domestic debt markets. But it indicated that the foreign currency reserves of Egypt and Nigeria have started to come under pressure, which, along with a stronger US dollar, could raise concerns about the countries' currency stability. Further, it expected both countries to continue to face high inflation rates in coming years, which increases the possibility of a revaluation of both currencies. But it anticipated the policy response of the Central Bank of Egypt (CBE) and the Central Bank of Nigeria (CBN) to be different.

First, Citi noted that the period of portfolio outflows from Egypt coincided with strong remittance inflows, which contributed to the ongoing stability of the pound. It added that although some of the outflows were transferred through the interbank foreign exchange market, which would put pressure on the pound, a portion of the outflows was channeled through the CBE's existing repatriation mechanism, which limited the pressure on the interbank market. It considered that the CBE has significant capacity to meet further outflows from its Tier II foreign currency reserves that reached $13bn at end-June 2018. But it expected the CBE to remain committed to a cautious easing of its monetary policy amid signs of economic improvement. Second, Citi pointed out that the CBN used portfolio inflows to rebuild its foreign currency reserves. It estimated portfolio inflows in Nigerian debt securities in the 12 months ending June 2018 at $12.6bn. It added that the CBN resorted to open market operations (OMO), rather than to raising its official policy rate. It considered that the CBN has two advantages over the CBE, which are the higher oil prices and a greater willingness to continue to tighten monetary policy by allowing a sharp rise in interest rates through its OMOs.  
Source: Citi Research

The McKinsey Global Institute (MGI) indicated that emerging markets (EMs) in the Middle East & North Africa (MENA) need to overcome several challenges to achieve sustained high economic growth. The MGI assessed the long-term growth patterns of 71 EMs and classified them into four categories that are the ''long-term outperformers'', ''recent outperformers'', ''middling performers'' and ''underperformers''. It noted that Algeria, Egypt, Iran, Jordan and Morocco came in the ''middling performers'' category, while it classified Lebanon as an ''underperformer'' in terms of long-term growth. In parallel, it indicated that the six MENA economies have negative total factor productivity, limited income and demand growth, as well as the lowest improvement in education spending among all EMs. 

The MGI pointed out that opportunities exist for the six MENA economies to accelerate their pro-growth agenda. It considered that the main priorities for policy-makers are to translate the region's relatively high savings rates into productive investments, as well as to promote innovation and technological adoption. It added that other pressing priorities include improving education in order to increase productivity, and enhancing the quality of public institutions and reducing bureaucracy in order to ensure the successful implementation of policies. Further, it indicated the six MENA countries have the potential to increase consumption and demand, given their favorable demographic trends. Also, it considered that there are opportunities to further diversify the six countries' export portfolio, as well as to improve the value-added of exported goods.
Source: McKinsey Global Institute