IMF Meeting and Financial Markets

Posted on by raju
Press Release
19 Sep

The IMF meeting is going to be held on 23rd and 25th of this month at Washington. Also we are witnessing significant trends in Financial markets and in this regard would like to hear from you on this.

  1. What could be the major discussions in IMF?

    The Major discussions in IMF will be

    • World economic outlook – Growth has slowed down and risks increased.
    • Commodity price volatility and inclusive growth in low-income countries.
    • How to achieve inclusive growth in low-income countries.
    • Youth dialogue: Where are the Jobs? Generation Y asks.
    • Debate on global economy.
    • New growth path for Euro zone.
    • Role of Financial reform in transforming China’s Growth Model.
    • Shadow banking : Data needs for financial stability.
    • Relaunching Japan after earthquake.
    • Future of trade policy.
    • Beyond the arab spring.
    • Towards a New Social Contract in Arab World.
  2. How had Global Capital markets performed recently?

    The Global markets went up due to following factors this week.

    • Asian stocks rose as France and Germany stated Greece will stay in Eurozone.
    • The European Central Bank and its US, Japanese, Swiss and British counterparts announced on Thursday they would act in concert to lend dollars to banks facing a shortage of the American currency. This mainly supported European banks.
    • US consumer sentiment improves.
    • India’s benchmark stock index advanced, gaining for a third straight week, after the nation’s central bank increased interest rates in line with forecasts.
    • Investors hoped from the meeting of European finance ministers in Wroclaw, Poland on Friday for clues as to how they intend to tackle region’s ongoing debt crisis.
    • However in the meeting decided that “The eurozone governments would “decide on the disbursement of rescue loans or eight billion euros (about 11 billion U.S. dollars), of the Greek bailout package in October ( which had been blocked during audit of greek reforms).
    • Geithner pressed for the €440bn European Financial Stability Facility (EFSF) to be scaled up to give greater capacity to combat the problems infecting Greece, Portugal, Italy and other states.
    • IN FORTHCOMING WEEK- Moves by Euro and Fed Meeting.
  3. How had GCC Capital markets performed recently?
    • Arab stock markets closed in the red last week mainly due to persistent negative fallout from the euro debt crisis and fears that the world economy could sink in a fresh recession.
    • Prices of Saudi petrochemical products to be affected by retreating global demand resulting from recession fears.
    • Oman benchmark has slumped about 15 percent this year, making it the worst performing Gulf market.
    • Kuwaiti shares were the sole gainers last week mainly due to the shift of the market’s supervision to a new management.
    • Saudi market rose by 101 points on Saturday.
    • ADX and Dubai dropped during the month by 2%.
  4. How had Qatar Capital markets performed recently?
    • The Qatar Exchange (QE) fell a marginal 0.22% in the week on sell-off by foreign institutions. The 20-stock benchmark settled 19 points lower at 8,347.74.
    • The industrial and services stocks were among the hard hit in the week.
    • Maximum selling was seen in the insurance sector whose index pared 1.61%, followed by industry (0.32%), services (0.23%) and banks (0.14%).
    • Market capitalisation eroded by 0.23% or QR1bn to QR438.13bn in the week.
    • Foreign institutions continued to be profit-takers.
    • Domestic institutions’ bullish grip eased.
    • Local retail investors turned marginally bullish.
    • Non-Qatari individual investors were also bullish.
  5. How are the GCC Bond yields reacting?
    • Qatar 5 year CDS (Basis points) 103.59, Highest – 119.93 (17th March 2011).
    • Bahrain 5 year CDS (Basis points) – 312, Highest – 359.42 (15th March 2011).
    • Saudi 5 year CDS (Basis points) – 111, Highest – 142.77 (21st Feb 2011).
    • Dubai 5 year CDS (Basis points) – 420 Highest – 460 (28th Feb 2011).
    • GCC sovereign yields have softened a bit in recent times after the regional tensions in 1st quarter 2011.
    • However GCC yields are rising in August – Sept 2011 due to global tensions.
  6. What is the recent in GCC bond markets?

    GCC BONDS

    • Conventional Corporate Bonds – 11.8BUS$ (Till Date) however $3.7B (1st Q 2010), $5.24B (2ND Q- 2010) The total issues in 2010 amounted to 32.1 B US$.
    • Major deals in 2011in conventional – International petroleum Investment company – $4.3B, Mubadala – Development company-$1.5B, Investment corporation of Dubai – USD 1.3Bn and Emmar properties – $0.5B.
    • Islamic Corporate Bonds – 3.73BUS$ (Till date) however 0.45B US$ (1st Q-2010), $2B(2nd Quarter -2010) Major deals in 2011 in Islamic.- First Gulf Bank – 0.650B , Emmar properties (0.5B US$.), HSBC holdings (0.5B US$) , Saudi International petrochemical (0.5B US$)and Sharjah Islamic Bank (0.4B US$).
    • The refinancing requirements of regional corporations in the coming years is expected to increase,.
    • Improvement in business sentiments such as UAE restructuring etc..
  7. What are the recent currency market trends?
    • US dollar index gained the most this month with Swiss action and is currently at 76.599. Monthly gain is close to 3.35%. It dropped 1% from last week of 77.61 after ECB dollar action.
    • The euro strengthened 1 percent to $1.3796, from $1.3656 Sept. 9. It reached a seven-month low of $1.3495 Sept. 12.Euro rose against the dollar for the first time in three weeks after the European Central Bank said it will lend dollars to euro-area banks, tempering liquidity concern amid the region’s sovereign debt crisis.
    • The British pound fell for a fourth week against the dollar on speculation a deteriorating economic outlook will spur the Bank of England to introduce additional monetary stimulus. The pound dropped 0.6 percent to $1.5791, from $1.5883 last week .
    • The Federal Open Market Committee may decide to replace holdings of shorter-term Treasuries with longer maturities at its two-day policy meeting starting Sept. 20 in an effort to keep borrowing costs low and support the economy.
    • An area of concern is yen is gaining strength Japan last intervened in the currency market, selling yen to try to curb its climb, on Aug. 4, when it touched 76.97 to the dollar.
  8. What are the recent trends in oil?
    • Oil slipped on concern that European plans to solve the region’s debt crisis may founder, threatening economic growth.
    • Both WTI and Brent fell this week by 1% and 2% respectively.
    • The IEA has reduced its estimate for 2011 global oil demand by 0.2 mb/day to 89.3 mb/d It also lowered its 2012 estimate by 0.4 mb/day to 90.7 mb/d, as the agency reduced its global economic growth assumption.
    • OPEC revised downwards its estimate for 2011 global oil demand growth by 0.15 mb/d to 1.1mb/day. addition, oil demand in China was weaker-than expected in the high season in the third quarter of the year.
    • Global economic uncertainties have also taken their toll and as a result, OPEC has marginally lowered 2012 oil demand growth estimate to 1.3 mb/d.
  9. What are the recent trends in other commodity market trends?
    • Gold prices arose on Friday by 1.3% to 1,811.
    • Silver also shot up and closed at around $41 per ounce.
    • Natural gas price also fallen due to concerns of recovery.