Here’s what you need to know in UAE business and globally on this Monday morning.
• Bank merger to open the floodgates?
NBAD and FGB yesterday confirmed that they are talking about a merger which would create the Middle East's biggest bank. Banking executives have for a long time urged consolidation in the industry with more than 50 banks and financial institutions serving 9 million UAE customers. Will more go down the merger route in the months to come?
• Oil ducking and diving around $50
The rally, for now, appears to be over. Having gained more than 80 per cent since January, oil has reached resistance around the $50 mark, but more volatility could be ahead. “The biggest factor this week may well be currency, particularly given the uncertainty around the Brexit vote,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg. “The widely shared view that the market will be balanced by the end of the year is keeping a bit of support in place. Oil above $50 will tempt the highly agile US shale producers back into action, so that should keep a cap on prices.”
• More austerity needed for Qatar
Qatar's government expects to run a budget deficit for at least three years as low natural gas and oil prices weigh on its revenues, the Ministry of Development Planning and Statistics said. The ministry forecast a fiscal deficit of 7.8 per cent of GDP this year. The ministry's report also said that the nation's US$200 billion infrastructure programme could see higher costs and delays because of the slump in oil prices. Among the major infrastructure projects being built are Doha New Port, a metro system and regeneration of parts of the capital. The 2022 World Cup is expected to cost about $30bn, with stadiums accounting for $10bn of that, organisers have said.
• Governance in focus
The National this week is running a special report on the state of governance in the UAE, looking in particular at the link between good governance and productivity, effective HR and labour practices. You can have your say by taking our poll here.
• Brexit week unfolds
Risk appetite prevailed as trading got under way for the week in Asia, with prospects the UK will vote to stay in the European Union in Thursday’s referendum boosting the pound to Asian stocks, while the yen sank with Treasuries and gold. Sterling soared to its strongest level since June 7 after a poll taken on Friday - the day after pro-Europe British lawmaker Jo Cox’s killing - and Saturday showed the campaign for the UK to remain in the EU ahead by three percentage points. The euro strengthened with high-yielding currencies, while the yen fell for the first time in seven days.
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