Massive infrastructure development expected in Saudi Arabia, while Bahrain’s geopolitical fate hangs in the balance - IFN

Massive infrastructure development expected in Saudi Arabia, while Bahrain’s geopolitical fate hangs in the balance

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GLOBAL: Saudi Arabia, one of the world’s most ‘water-stressed’ countries, will be spending up to US$133 billion in water and electricity projects over the next 10 years, reported Kuwaiti investment house Markaz. The government of Saudi Arabia has already allocated US$7 billion for such projects this year alone, with desalination and wastewater treatment projects at the forefront; including the US$1.5 billion Ras Al-Khair water desalination plant. A surge in lending and strong economic performance in the hydrocarbon sector led to a record performance in the GCC banking sector, while MSCI’s upgrade for Dubai and Qatar to emerging market status, which is expected to take effect in the second quarter of 2014, is also expected to boost the fiscal positions of these GCC economies luring in more institutional investments. GCC markets were said to see “ample gains” in the first half of 2013, a positive reaction to high fiscal surpluses and infrastructure spending; including a comeback in the real estate market and increased numbers in the tourism sector. As at the end of 30th June 2013, Saudi Arabia’s Tadawul index saw a 10.2% gain, followed by Qatar, Oman and Bahrain who all recorded growth between 10-12%. The stock markets of Dubai and Abu Dhabi saw the highest gains so far, at 40.7% and 36.9% respectively on the back of improvements in corporate profitability. In the second half of 2013, the economies of Saudi Arabia, Kuwait, the UAE and Qatar are expected to maintain its positive momentum, while Oman and Bahrain remain neutral on the growth front. All GCC countries, with the exception of Bahrain are also expected to remain neutral or positive in terms of geopolitical development, with the kingdom’s ongoing political turmoil expected to have a negative impact on this front. All countries are expected to remain neutral and positive in terms of market liquidity and earnings growth potential. In a bid to revive the Bahraini economy, the kingdom’s ministry for industry and commerce has pledged to aid all Bahraini investment initiatives undertaken domestically and internationally.