Low Oil Prices Emphasize on Fiscal Discipline and Liquidity Management

Doha Bank hosted a knowledge sharing session on “Changing dynamics and market opportunities” at Jumeirah at Etihad towers, Abu Dhabi on 11th May, 2016. The key speakers at the event include Mr. Talal Touqan, Head of Research & Advisory at Al Ramz Capital, Mr. Padmanabha Acharya, Partner at Deloitte, Ms. Huda Al Matroushi, Executive Board Member of Abu Dhabi Business Women Council, and Mr. Mohan Jashanmal, owner, Jashanmal National Co, Chairman of Indian Business and Professional Group, Abu Dhabi The event was also attended by well-known Abu Dhabi Businessmen, Professionals, Senior Abu Dhabi Bankers and Leaders from key Corporates in Abu Dhabi.

Dr. R. Seetharaman, CEO of Doha Bank gave insight on Global economy and regional economies. He said “The recent IMF outlook had given forecast for global growth at 3.2 percent in 2016. Growth in advanced economies is projected to remain modest, in line with 2015 outcomes at 1.9 percent this year. Emerging and developing economies are expected to grow at 4.1 percent this year. The Global economy was increasingly vulnerable to downside risks including further market turmoil in the wake of this year’s China-led downturn. Growth in GCC is now expected to decline from 3.3 percent in 2015 to 1.8 percent in 2016. In 2016 Saudi economy expected grow by 1.2 percent, Qatar economy at 3.4 percent, Oman economy at 1.8 percent and Bahrain economy at 2.1 percent respectively.”

Dr. R. Seetharaman gave insight on UAE and Abu Dhabi economy. He said “According to IMF April 2016 outlook, UAE economy expected to grow by 2.4 percent this year. Abu Dhabi is projected to grow at 1.7 percent in 2016. In real terms non-oil activities accounted for 50.2 percent of the GDP at constant prices in 2014. As part of Abu Dhabi’s Economic Vision 2030, the contribution of the non-oil sector is aimed to be 64 percent of GDP. Domestic and government credit demand has risen, up 8.1 percent y-o-y in February 2016, while demand from government-related enterprises (GREs) climbed by 5.5 percent. Lower oil revenues are driving tightening of liquidity. Government deposits were down 13.9 percent year-on-year in February 2016. Combined government and public sector deposits, meanwhile, had fallen by 5 percent year-on-year in February 2016. The trade balance between Qatar and Abu Dhabi had reached $6-7bn. Recently Abu Dhabi has issued benchmark dual-tranche 5 and 10 years bonds worth $5 billion. The low oil prices have emphasized on fiscal discipline and liquidity management. ”

Mr. Talal Touqan, Head of Research & Advisory at Al Ramz Capital spoke on “Oil paradigm leads to different investment themes”. He gave insight on oil price trends in 2014 and 2016 and its impact on various stocks. He highlighted the factors which are responsible for oil prices to drive equity markets. Economic growth, Oil exporting countries tapping SWFs, Oil and gas companies’ retrenchment and lending to oil and Gas companies are some of the factors impacting equity markets. He also highlighted the impact on Regional and UAE Banking due to low oil prices.

Mr. Padmanabh Acharya, Partner at Deloitte gave insight on Market overview and key Business issues. He said “The focus for many companies is survival, We expect pragmatism to win over optimism. The companies will do what needs to be done to survive in a lower price environment. Most have at least one of three critical attributes: 1) flexibility, 2) near-term liquidity or 3) continued access to capital markets. Slowing Chinese economy, Sluggish growth in the Eurozone economies and Lower oil revenues are likely to drive lower bank deposit levels and greater withdrawals to support potential.” He also highlighted the impact of tax reforms in Middle East.

Ms. Huda Al Matroushi, Executive Board Member of Abu Dhabi Business Women Council (ADBWC) spoke on “Changing Dynamics and Market Opportunities” from the perspective of Business Women “. She spoke on the vision of UAE towards women empowerment and UAE leadership in developing Women entrepreneurs. Equal opportunities are being created for women in what is traditionally believed as Man’s world in various business segments. She also highlighted the services, projects and initiatives of ADBWC. She briefly touched upon the objectives, vision and mission of ADBWC, its leadership and programmes created to support the women in Abu Dhabi to enter various business segments.

Mr. Mohan Jashanmal spoke about the history of business environment in UAE from 1960’s to current era and the support given by UAE leadership. This resulted in building the current UAE and achieve tremendous growth in 50 years, where other countries have taken over 300 years to achieve the similar growth levels. He shared his personal experiences from the early years of Jashanmal, how the country developed over the years and what are the difficulties by the business community.