Weekly Economic Update Sunday, 13 May 2012 1
Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 % US$ Bn Weekly Economic Update Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 Sunday, 13 May 2012 Recent Macroeconomic Developments Global China s trade growth continues to lose momentum China, the world s second richest nation, continues to experience sluggish growth in trade, with both imports and exports growth rates decelerating in recent months, caused largely by the economic crisis in Europe China s biggest trading partner. Exports grew at barely 5% in April, compared with 9% and 18% in March and February respectively, while imports remained flat in April as opposed to 5% and 40% growth rates in March and February, respectively. Despite the unsatisfactory trade performance, the overall trade balance in April remained positive, at $18.4 billion, due to the stagnation in imports. In contrast, domestic retail sales in China grew by 14.1% in April, reflecting policy makers determination to rebalance the economy away from external demand and towards internal demand. Even so, the growth rate of retail sales in April was lower than the 15.2% expected by analysts. Consequently, inflation eased to 3.4% in April, close to the monetary authorities target of 3.3%. More policy intervention may be needed to stimulate domestic demand if it is to play a leading role in driving China s future economic growth which has recently been slowing down. 60 40 20 0-20 China's Trade Data Trade Balance (RHS) Exports (LHS) Imports (LHS) Source: Thomson Reuters 40 30 20 10 0-10 -20-30 -40 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 21 20 19 18 17 16 15 14 13 12 11 Chg Y/Y (LHS) China Retail Sales, Chg Y/Y (%) China's Inflation (%) Chg P/P (RHS) 2 1.5 1.3 1.1 0.9 0.7 0.5 0.3 0.1-0.1-0.3
Weekly Economic Update Sunday, 13 May 2012 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 % % Recent Macroeconomic Developments GCC Saudi Arabia: Central Bank continues to keep rates unchanged The Saudi Arabia Monetary Agency (SAMA), the Kingdom s central bank, kept its repo and reverse repo rates unchanged in May, at 2% and 0.25% respectively. The repo rate is the discount rate at which banks borrow money from the central bank, while the reverse repo rate is the opposite, i.e. the rate at which the central bank borrows money from the banks in a bid to control money supply in the economy. Interest rates in the Kingdom have been at very low levels since 2009 and are expected to remain so for the foreseeable future, due to the dollar peg exchange rate system of Saudi Arabia. As a result, changes in SAMA s interest rates directly depend on changes in the US Federal Reserve s monetary policy rate, which is expected to remain at close to zero percent until 2014. The low interest rate in Saudi Arabia is a welcome development given the low inflation environment largely caused by the rapid decline in global food prices since 2009 and the recent recession in Europe which has weakened the demand for non-oil commodities. Inflation in the Kingdom marginally fell to 5.3% in April, from 5.4% in March, due to lower food price inflation which dipped to 4.3% in April from 5.1% in March (Jadwa). 6 5 4 3 2 1 0 Saudi Arabia Policy Rates and Inflation Rate 2% 0.25% 5.6 5.4 5.2 5.0 4.8 4.6 4.4 4.2 Saudi Arabia's Inflation Rate (ChgY/Y) Repo Rate Reverse Repo Rate Source: Thomson Reuters and Gulf One 3
Weekly Economic Update 11-Apr-12 13-Apr-12 15-Apr-12 17-Apr-12 19-Apr-12 21-Apr-12 23-Apr-12 25-Apr-12 27-Apr-12 29-Apr-12 01-May-12 13-Apr-12 15-Apr-12 17-Apr-12 19-Apr-12 21-Apr-12 23-Apr-12 25-Apr-12 27-Apr-12 29-Apr-12 01-May-12 Sunday, 13 May 2012 COMMODITIES 122 Brent Oil Price (US$/barrel) 1670 Gold Price (US$/ounce) 120 118 116 114 112 1650 1630 1610 1590 110 1570 As May 11 (US$) Current Week Ago Weekly Change Brent Oil (barrel) 112.89 112.21 0.61 Gold (ounce) 1579.44 1642.42-3.83 Silver (ounce) 28.85 30.18-4.41 Copper (pound) 3.67 3.78-2.78 Aluminium (kilo) 1.99 2.05-2.95 Source: Thomson Reuters 4
Weekly Economic Update Sunday, 13 May 2012 11-Apr-12 12-Apr-12 13-Apr-12 14-Apr-12 15-Apr-12 16-Apr-12 17-Apr-12 18-Apr-12 19-Apr-12 20-Apr-12 21-Apr-12 22-Apr-12 23-Apr-12 24-Apr-12 25-Apr-12 26-Apr-12 27-Apr-12 28-Apr-12 29-Apr-12 30-Apr-12 01-May-12 11-Apr-12 12-Apr-12 13-Apr-12 14-Apr-12 15-Apr-12 16-Apr-12 17-Apr-12 18-Apr-12 19-Apr-12 20-Apr-12 21-Apr-12 22-Apr-12 23-Apr-12 24-Apr-12 25-Apr-12 26-Apr-12 27-Apr-12 28-Apr-12 29-Apr-12 30-Apr-12 01-May-12 Currencies Current ( 11 May 2012) Week Ago Weekly Change International $1 $1 (%) Euro 0.774 0.764 1.309 GBP 0.622 0.619 0.485 Yen 79.870 79.850 0.025 CNY 6.314 6.306 0.127 INR 53.630 53.480 0.280 CHF 0.930 0.918 1.307 GCC AED 3.670 3.670 0.000 BHD 0.380 0.380 0.000 0.83 0.80 0.77 0.74 0.71 0.68 0.65 0.62 0.59 81 Euro, Yen & Pound vs Dollar Euro (LHS) Pound (LHS) Yen (RHS) The Dollar Index 84.5 83.0 81.5 80.0 78.5 77.0 75.5 74.0 KWD 0.278 0.278 0.000 80 OMR 0.390 0.390 0.000 79 QAR 3.640 3.640 0.000 SAR 3.750 3.750 0.000 78 Source: Thomson Reuters 5
Weekly Economic Update Sunday, 13 May 2012 Stock markets 13300 13200 13100 13000 12900 12800 12700 3360 3330 3300 3270 3240 3210 3180 3150 3120 3090 DowJones 1.67% 12,821 CAC40 1.02% 3,130 3040 3020 3000 2980 2960 2940 2920 2900 5800 5770 5740 5710 5680 5650 5620 5590 5560 5530 5500 NASDAQ 11.21% 2,934 FTSE100 1.41% 5,576 1400 1390 1380 1370 1360 1350 1340 9480 9410 9340 9270 9200 9130 9060 8990 8920 8850 S&P500 Nikkei225 1.14% 1,353 4.55% 8,953 Source: Thomson Reuters 6
Weekly Economic Update Sunday, 13 May 2012 01-May-12 Stock markets Abu Dhabi 0.91% 2510 2505 2,478 2500 2495 2490 2485 2480 2475 2470 Kuwait 0.39% 6500 6490 6,447 6480 6470 6460 6450 6440 6430 8710 8680 8650 8620 8590 8560 8530 5900 5880 5860 5840 5820 5800 5780 5760 5740 5720 5700 Doha 1.40% 8,548 Muscat 1.72% 5,746 1600 1590 1580 1570 1560 1550 1540 1530 1520 1510 1500 7640 7590 7540 7490 7440 7390 7340 7290 7240 7190 7140 Dubai 4.23% 1,515 Saudi 3.07% 7,222 Source: Zawya 7
Weekly Economic Update Sunday, 13 May 2012 Stock markets Stock Exchange Current A Week Ago Weekly Change (11 May) (%) Dow Jones (US) 12,821 13,038-1.67 Nasdaq (US) 2,934 2,638 11.21 S&P500 (US) 1,353 1,369-1.14 CAC40 (FR) 3,130 3,162-1.02 FTSE100 (UK) 5,576 5,655-1.41 Nikkei225 (JP) 8,953 9,380-4.55 Abu Dhabi 2,478 2,501-0.91 Bahrain 1,160 1,162-0.17 Doha 8,548 8,670-1.40 Dubai 1,515 1,582-4.23 Kuwait 6,447 6,472-0.39 Muscat 5,746 5,847-1.72 Saudi Arabia 7,222 7,450-3.07 Source: Thomson Reuters and Zawya 8
Weekly Economic Update Sunday, 13 May 2012 Miscellaneous GULF projects Projects planned or under way Projects planned or under way Change on week (%) Projects planned or under way Change on year (%) 01-May-12 10-May-11 ($m) ($m) ($m) Bahrain 63,874 63,932.00-0.09 62,730 1.82 Kuwait 204,404 204,474-0.03 150,535 35.79 Oman 117,006 117,396-0.33 98,203 19.15 Qatar 229,265 224,693 2.03 222,093 3.23 Saudi Arabia 748,661 747,105 0.21 640,226 16.94 UAE 556,641 556,415 0.04 619,634-10.17 GCC 1,919,851 1,914,015 0.30 1,793,421 7.05 Iran 300,658 306,658-1.96 313,244-4.02 Iraq 315,906 308,656 2.35 254,732 24.02 Gulf Total 2,536,415 2,529,329 0.28 2,361,397 7.41 Source: MEED 9
Weekly Economic Update Sunday, 13 May 2012 Gulf One Investment Bank B.S.C. (c) ( Gulf One ) is a leading knowledge-based investment bank that is focused on providing professional and highquality infrastructure related investments for the MENA (Middle East and North Africa) region. Its mission is to mobilise local and global capital to accelerate the realisation of infrastructure projects and corporatisation through innovative financial solutions. Gulf One was jointly founded in 2006 by Dr. Nahed Taher, Chief Executive Officer (CEO), and Mr. Ziyad Omar, Chief Investment Officer (CIO). Headquartered in Bahrain, Gulf One operates under a conventional wholesale banking licence granted by the Central Bank of Bahrain (CBB), CR 62199. www.gulf1bank.com. This Weekly Economic Update has been prepared by staff in the Research Department of Gulf One under the general direction of Dr. Nahed Taher. The Research team comprises: Dr. Mohammed Salisu Chief Economist Gulf One Investment Bank E-mail: m.salisu@gulf1bank.com Ms. Lobna Bousrih Research Analyst Gulf One Investment Bank l.bousrih@gulf1bank.com Ms. Sana Harrabi Research Analyst Gulf One Investment Bank s.harrabi@gulf1bank.com All comments and enquiries about this Weekly Economic Update should be sent to Dr. Mohammed Salisu at the above e-mail address. Disclaimer This Weekly Economic Update was prepared by Gulf One Investment Bank B.S.C. (c) ( Gulf One ) and is of a general nature and is not intended to provide specific advice on any matter, nor is it intended to be comprehensive or to address the circumstances of any particular individual or entity. This material is based on current public information that we consider reliable at the time of publication, but it does not provide tailored investment advice or recommendations. It has been prepared without regard to the financial circumstances and objectives of persons and/or organisations who receive it. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. In addition, the views expressed in this Economic Update do not necessarily represent the views of the Management or Board of Directors of Gulf One. This Weekly Economic Update or any portion hereof may not be reprinted, sold or redistributed without the prior written consent of Gulf One. 10