Hot Topics

This past year has been another rather mixed one for crude prices, with geopolitical risks and OPEC+ cuts providing support, whilst ongoing uncertainty on the outlook for global demand especially with China’s economic recovery continuing to look tepid at best, combined with a strong US dollar has kept the upside limited too. In this piece we briefly summarize the current state of the oil market and what may lie ahead in 2025 and beyond.

Oil prices had a mixed performance during the first half of this year, as traders attempted to digest various factors including geopolitical risks, OPEC+ actions, US output, a strong US dollar and demand uncertainty. In this note we analyze the current state of the crude market and its near-term outlook.

The US midterm elections are now less than one week away and although they do not involve the Presidency directly, they will have an effect on the direction of the country as well as influencing the playing field for the 2024 general election. Historically the party of the incumbent in the White House usually loses seats to the opposition in Congress at this halfway point of their term, but will this trend repeat itself in 2022? In this piece we take a look at the current polling statistics and discuss the potential outcome.

Our latest update on Egypt in which we recap some its major economic achievements since 2016 and consider the new challenges it now faces.

The lingering impact of COVID-19 continues to disrupt supply logistics which, combined with climate change and more recently the Ukraine crisis, has led to record energy and food prices. In this attached note ‘Food Insecurity & Political Risks’ we outline the scale of this problem and why it poses a serious risk to socio-economic and political stability around the globe.

The greatest health crisis that the world has faced since 1918 severely disrupted everyone’s lives as well as the global economy in 2020/21. Admittedly this crisis is not over yet and it remains a key risk in 2022, but there are hopeful signs that it is now moving towards becoming an epidemic rather than a pandemic. Looking at the year ahead there are several other more man-made concerns to bear in mind and in this piece we try to highlight some of these.

As the old-world order continues to fade and a far more polarized one appears to be taking its place, in this piece attached we discuss five of the major risks facing us in the year ahead. While US-China relations and Climate Change, which were listed in our ‘Key Risks for 2023’ publication feature again, we also discuss a few additional challenges to focus on in 2024.

In this piece, we have tried to briefly outline the serious risks that climate change poses to our planet. However, the transition to cleaner energy also needs to be well-planned and stable, otherwise it could put humanity at an even greater risk in the near term. Therefore whilst acknowledging the fact that climate change is a real and present danger, we also suggest that that the world will need certain fossil fuels such as oil and gas for some time to come in order to manage this energy transition correctly.

The UAE has been a pioneer in planning and implementing a clean energy program within the hydrocarbons industry, a journey that began over 16 years ago. In this piece, we look at the UAE’s various achievements in this area so far and its long-term plans to achieve net zero.

As the next general election in Angola approaches, we take a fresh look at the current state of the nation and whether any progress has been made in recent years to diversify the economy away from its decades long and heavy reliance on crude oil.

In this publication, we discuss the latest developments in the oil market and review the outcome of the recent OPEC+ meeting.

In this publication, we consider the risk COVID-19 still poses to the world and list a number of other potential geopolitical risks to keep an eye on this year

Our MIS team gives their latest macro overview and outlook for Egypt.

As the countdown towards the most hotly debated US election in decades gathers pace and following on from our previous analysis in May: ‘A Viral Election’, we take a fresh look at the chances of both candidates and whether or not their political fortunes have shifted since then..

In our latest ‘Flash note on oil’, we discuss the recent slow but steady recovery in demand and potential risks going forward, as well as two new benchmarks and our current price forecasts.

Our geopolitical piece in which we discuss the difference between ‘Black and Grey Swan’ events, and suggest a few potential global flashpoints that should be watched over the coming year.

Our brief analysis of the latest key developments in the crude oil market.

Let’s face it, global rates and equities today are nowhere near where we generally thought they would be by the end of Q1 back at the start of the year. At the turn of 2020 the growing hope and assumption was that a gradual improvement in global growth conditions would fuel a modest uptick in yields during the year, albeit with monetary policy perhaps on hold through the year. BUT… COVID-19 has rapidly turned all such forecasts upside-down.

The sudden oil price ‘war’ between Saudi Arabia and Russia looks set to continue for months to come and this situation, combined with the global health crisis, will keep crude prices low for the rest of this year and probably into 2021 too. However, there is hope that a medical solution will be found sooner than later, and in our opinion this should kickstart demand again relatively quickly.

Despite a significant rise in the number of geopolitical, geo-economic and environmental events across the globe in recent years, the financial markets as a whole have continued to react with a somewhat complacent tone to such developments thus far, but history teaches us that things can change quickly. The year ahead still contains many of these existing risks (i.e. climate change) as well as a few new ones. So in this our first ‘Hot Topics’ publication for 2020 we list (in no particular order), ten important issues that we feel should be watched this year and beyond.

Saudi Arabia is currently undergoing momentous change, and whilst a number of the ‘Vision 2030’ reforms have already made the headlines, we wanted to highlight what else is actually taking place on the ground both socially and economically, which many external viewers may not be aware of.

Our macro strategy reaction and outlook to the U.K. General Election results. We hope you will find it informative and useful.

In the aftermath of the shocking attack on the oil processing plant in Saudi Arabia, FAB’s Market Insights team is of the opinion that negativity about the GCC bonds and sukuk market is overdone. In this brief commentary we provide our views on this asset class in the context of recent events.

We have long held the view that given the split, divisive nature of the Brexit polemic that a hard, no-deal result would likely be the only feasible outcome. We see no way for a compromise to be achieved in time and of late, with the installation of the new Boris Johnson pro-Brexit administration, the market seems to be increasingly in agreement with us.

Our newly inaugurated publication, First Abu Dhabi Bank’s ‘house view’ on U.S., Eurozone and U.K. interest rates. For each central bank (Fed, ECB and BOE) we discuss current macroeconomic conditions, challenges and opportunities facing policy makers and set out our 12-month outlook expectations for rates.

Saudi Aramco has executed its inaugural bond issue with a blockbuster transaction that generated an order book close to $100 billion. In this report our Market Insights team provides an initial analysis of the transaction as well as some interesting charts that highlight the true scale of Aramco.

Our suggestions on which potentially major geopolitical and market related risks investors should be keeping an eye on in 2019.

More than just the pure economic arguments, for and against Brexit, that have driven the narrative over the past two years, it is now political uncertainty that is weighing most heavily on U.K. risk asset, and currency, sentiment. We believe that the Brexit polemic is about to get even more interesting.

The Brexit process, or lack thereof, in the U.K. is currently raising more questions among investors than it is answering. What we do know is that the U.K. will exit the EU on March 29th 2019, with or without a ‘deal’. If there is a ‘deal’ then a two year transition period will follow for settling all the minutiae. With the deadline for reaching a deal between Westminster and Brussels – the need to agree terms on the future trading, economic and political relationship between the two regions – becoming ever closer, investors want clarity. In this latest research paper, we attempt to offer some answers to investors’ current concerns and questions over Brexit, as well as to offer some clarity on where the Brexit story and the direction of U.K. risk sentiment may go from here.

With Bahrain’s current fiscal situation under the media spotlight recently, we conducted an analysis of the issue and conclude that the economic picture may not be as bad as it appears on the surface.

In our latest review of UAE real estate, “Foundations for Optimism” we find that a soft, but nonetheless cautiously optimistic tone continues to characterize the UAE property market. After the correction seen in real estate prices during 2014/2015 the market is now showing some encouraging signs of underlying price support, although with evidence of extensive incentives being used by landlords to retain incumbent tenants or entice new ones, market conditions are still far from strong.

Trading between the UAE and India go back centuries. In this piece we look briefly at the UAE’s more modern history and how its relations with India became so intertwined.

The Kingdom of Bahrain is in the market with its first deal of 2018, a 7.5 year sukuk transaction. Given the country’s budget deficit, recent ratings downgrades, etc, this sukuk deal is one that needs to succeed. Furthermore, given the magnitude of the country’s funding requirements, we don’t see today’s deal as being the Kingdom’s only transaction for 2018 and hence expect further issuance during the year.

The announcement of a joint venture between two of the UAE’s leading property developers - Aldar and Emaar – is more significant than may first meet the eye. We believe the collaboration is of huge strategic importance to Abu Dhabi, Dubai and the country as a whole

Global remittances have undergone substantial transformation and growth over the past 50 years, and furthermore it is likely that this transformation will be even more pronounced in the coming years as a result of technological advances. In this report FAB’s Market Insights & Strategy team provides a broad overview of Global Remittances and highlights some of the key factors aspects of this market.

There is an ancient Arabic proverb which literally translated into English reads: “You cannot change the wind, but you can adjust the sail.” Although having originated a long time ago it could still be used today to highlight Saudi Arabia’s recently unveiled and unprecedented program of social and economic change. While foreign media headlines and investors may currently be focused on the discussion over where and when Aramco will be listed, other equally important events are either already underway or due to take place this year, thus we try and discuss these in the following piece.

Italy has long been a country characterised by a fragmented political landscape and unstable governments. The latest elections are unlikely to yield anything different. From a financial markets perspective, the results of this latest election could be even further reaching, carrying the potential to create a sharp spike in market volatility and to call into question the future of the eurozone project.

Since the appointment of only the second Angolan President in 38 years a series of important policy actions have been initiated. We take a brief look at these and the potential outlook for this important oil producing country.

The annual 4-day World Economic Forum (WEF) begins in Davos-Klosters, Switzerland tomorrow (January 23) and investors will be watching carefully for market-moving headlines. With India’s Prime Minister Modi and US President Trump expected to book-end the proceedings, and with a diverse range of debates in between, there should be plenty to interest the market. In this brief overview we highlight what we believe will be the key areas to watch.

Global financial markets are facing a potentially more challenging environment in 2018/2019 as central banks begin to pare back monetary and fiscal stimulus and embark on the (hopefully gradual) process of balance sheet normalization. The velocity of this normalization process will be key to how global markets react. To avoid adverse reaction across the risk asset space, central banks need to convey ‘dovish tightening strategies’. Time will tell.

The Sultanate of Oman is currently marketing a 3-tranched bond deal. FAB’s Market Insights team has provided some initial thoughts on this transaction.

Digital currencies have become all the rage this past year, but could another ‘bubble’ market be forming and will the technology itself change the way we do business in the future?

Those of you who have been following our oil market commentaries for the past 12 to 18 months will already be aware of our optimistic outlook for crude prices since WTI dipped briefly below US$30 a barrel back in February 2016, and which we suggested was likely to be the bottom for this latest major cycle. Since then the market has staged a pretty respectable recovery but is there room to go further?

Following the Kingdom of Bahrain’s announcement of initial price talk for its 3-tranche bond and sukuk transaction, FAB’s Market Insights & Strategy team provides a quick overview of the deal along with some relative value analysis.

Smaller Sub-Saharan countries such as Djibouti, Mauritius and Rwanda have made significant advances both politically and economically over the past few years, but do not quite get the same degree of limelight as the larger countries in Africa. While facing numerous and ongoing challenges, these economies highlight the true potential and hope for the world’s largest continent as well as dispel some of its myths.

While a number of major geo-political events such as the ongoing investigation into Russian meddling of the US elections, sabre-rattling by North Korea, Brexit and the more recent Qatar dispute, continue to take-up much of the global media headlines and analysis, Egypt has quietly been making progress on the economic front since it floated the pound and signed up to an IMF program late last year.(...)

A quick primer on the VAT implementation in the GCC. There is of course much more information yet to come in terms of VAT – such as the granular details about how and when it will be implemented in each of the Gulf states. Please watch this space for further updates in this regard.

Following on from its successful bond issue in March, the Sultanate of Oman is now back in the debt capital market – this time selling a debut 7-year sukuk transaction. NBAD’s Market Insights team has published its initial thoughts and relative value analysis in the attached document.

In 1962 the world came the closest it’s yet been to a nuclear war, fortunately cool heads eventually prevailed both in the White House and Moscow as diplomacy overcame sabre-rattling and the rest of humanity breathed a huge sigh of relief. Now in 2017 are we facing another ‘missile crisis’ which, with very different personalities making decisions in Washington and Pyongyang compared to Kennedy and Khrushchev, has the potential to lead us down a road where diplomacy takes a back seat this time round?

The King of Saudi Arabia, Salman bin Abdulaziz, issued a number of decrees this past weekend including a reversal of certain austerity measures and a minor cabinet reshuffle.

Over the past few years, the primary focus for the Iraqi government – in tandem with its local and foreign partners – has been and remains working to defeat ISIS. They now appear close to achieving this goal. Reconstruction, dealing with the humanitarian crises and establishing political stability across the country will then be their next and probably even greater challenge.

Asia was the prime destination for Saudi Arabia’s oil sales last year taking just under 70% of the country’s total crude exports. As the Kingdom adjusts its domestic and foreign strategic goals, a number of factors including King Salman’s three-week long tour of Asia and Saudi Aramco’s recent energy related acquisitions, suggest an increased focus on that region.

Following the successful issuance of $8 billion of bonds by the State of Kuwait, NBAD’s Market Insights team has published this report with their initial take on the transaction and brief relative value analysis versus other GCC sovereign debt.

The State of Kuwait has released initial details for its much anticipated jumbo bond issue. In this report our Market Insights team discusses the transaction and also provides some relative value analysis versus other GCC sovereigns.

Despite an ongoing challenge by Ethiopia and Tanzania, Kenya has thus far managed to cling onto its spot as East Africa’s largest economy displaying a robust performance over the past few years, with 2016 proving to be no different as the country’s GDP expanded by 5.90%. However the year ahead could be a much more difficult one especially on the financial and political side.

Oman not only joined the new issue party but made quite an entrance with its $5bn transaction yesterday – the largest ever single deal printed by the Sultanate. In this report we summarise details of the issue and provide some relative value comparisons versus other GCC sovereign paper.

The Sultanate of Oman has today announced initial price target information for its forthcoming 3-tranche bond deal. In this report we look at the key comparables within the GCC sovereign space and provide some relative value observations.

With rumours of another possible Naira devaluation doing the rounds following the latest foreign exchange policy actions by the Nigerian Central Bank, we discuss the potential effect these changes may have and whether or not they will be enough to restore liquidity and confidence in the local currency.

With most of the North African region continuing to face severe political and economic challenges, one country in the Maghreb has managed to overcome some of its own domestic issues and markedly outperform its neighbours over the past few years. But after a relatively lacklustre 2016 will Morocco be able to move forward again this year?

The US presidential election results took forecasters by surprise. Let’s try and analyze what a Trump administration could mean for the Middle East.

The news this past Sunday that Egypt had finalized a US$2.7 bio currency swap agreement with China was a welcome development!

Saudi Arabia’s blockbuster sovereign bond issue truly conquered the emerging markets fixed income space last week!

The Kingdom of Saudi Arabia yesterday announced its much awaited super jumbo bond issuance. FAB’s Market Insights and Strategy team provide their initial take on the deal.

Saudi Arabia needs cash as part of its attempt to deal with substantial budget deficit. The indication that it may be done across 5, 10 and 30 year tenors shows that the Kingdom is thinking longer term.

"Since January this year we have been warning about the growing risk of a potential oil price spike in the near to medium term (...)"

Following the peaceful “Jasmine” revolution of 2011, Tunisia struggles to replicate its political achievements on the economic front.

S&P downgraded Turkey further into junk status; Moodys & Fitch have put the country’s ratings under review.

The reason we believe Clinton will win over Donald Trump is based on basic numbers.

The Saudi Council of Economic and Development Affairs approved the National Transformation Plan (NTP), a pivotal element of the Vision 2030.

The latest raft of ministerial changes is another step in the direction of diversification. Reforms promised are unprecedented.

The Kingdom’s “Vision 2030” plan involves a series of major economic and social reforms with ambitious targets.

Abu Dhabi authorities have announced additional levies that are likely to generate material incremental revenues for the Government.

Saudi Arabia has substantial assets, financial reserves, and a host of options in its ‘tool kit’ to get through the current challenges.

Egypt’s economy has suffered a severe downturn since the 2011 revolution as foreign investors and tourists deserted the country due to the subsequent social instability (...)

Africa’s second largest oil producer relies almost entirely on crude oil sales which account for more than 75% of government revenues and 95% of the country’s foreign exchange inflows (...)

There has been a lot of excitement and comment this past year about Iran’s full return to the oil and gas markets as sanctions are lifted and blocked overseas funds released.

Nigeria’s Central Bank will no longer sell hard currency to the Bureaux de Change firms and allow commercial banks to resume accepting US dollar deposits.