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Middle East Daily
SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +44(4)387 5031
E: soojin.kim@ae.mufg.jp
MUFG Bank, Ltd. and MUFG Securities plc
A member of MUFG, a global financial group
Middle East Daily
COMMODITIES / ENERGY
Oil prices slip amid Ukraine ceasefire diplomacy. Oil prices slipped as traders assessed the implications of intensifying diplomatic efforts toward a Ukraine ceasefire, with Brent falling toward USD66/b and WTI near USD63/b, retracing after recent gains. US President Trump urged Russian President Putin to prepare for a direct summit with Ukraine President Zelenskiy following high-level talks in Washington, signalling the most concrete push yet toward peace. While any ceasefire could pave the way for higher Russian oil exports, fuelling oversupply concerns at a time when OPEC+ is already restoring production, persistent conflict risks remain evident as Ukraine targeted Russia’s pipeline, temporarily disrupting flows critical to Central Europe. With oil still down over 10% YTD on trade policy uncertainty and rising output, investors are also watching sanctions closely, as Trump tightened penalties on India for Russian oil purchases while sparing China, the largest buyer.
Gold steady as Fed meeting and Ukraine diplomacy take center stage. Gold held near USD3,336/oz, little changed as traders balanced the US push for a Ukraine ceasefire with anticipation of the Fed’s Jackson Hole symposium, where Chair Powell’s speech on Friday could cement expectations of rate cuts. While gold has traded in a tight range after hitting a record above USD3,500/oz in April, it remains up 27% YTD, supported by robust central bank demand, strong ETF inflows, and haven buying amid economic cooling signs and geopolitical tensions. Markets now await Powell’s tone for confirmation of monetary easing, while diplomatic moves by President Trump, urging a Putin-Zelenskiy summit after talks in Washington, add further uncertainty to global risk sentiment.
MIDDLE EAST - CREDIT TRADING
End of day comment – 18 August 2025. Markets closed on average 2/3bp tighter today. But overall summer trading continues and technicals become more and more the main price driver. That said whilst buyers slightly outnumbered sellers today the UST weakness brought some sellers of 10y-30y bonds out in the afternoon. QATAR long end was active today and closed weaker than its peers. The index exit still seem to provide some supply, 49s was most active closing -0.75pt/+2bp. Overall the grind tighter in spreads is still alive and not getting tested. However with 30y UST approaching 5% again, long end bonds are starting to be for sale. ETFs are also flipping to selling. Still feels though that the real test will only come with meaningful new issuance which is probably another 2 weeks away.
MIDDLE EAST - MACRO / MARKETS
Saudi Arabia tightens foreign investment rules with new CMA regulations. Saudi Arabia’s Capital Market Authority (CMA) has rolled out comprehensive rules to regulate foreign investment in listed securities, introducing clear ownership caps, investors eligibility categories, and stricter compliance requirements. The framework sets an aggregate 49% cap on foreign ownership per listed company, while non-resident individuals face a 10% cap. Strategic investors are exempt from the 49% ceiling but must hold shares for at least two years. Eligible foreign investors fall into six categories, including Qualified Foreign Investors (QFIs), GCC residents, former residents, and swap beneficiaries. Beyond this, institutions must update client data every five years or risk account freezes. These measures come alongside broader reforms, such as revising fund rules, expanding GCC retail access, launching Saudi Depositary Receipts, and exploring mortgage-backed securities platforms, reflecting the Kingdom’s push to open markets while ensuring long-term stability, oversight, and institutional maturity in line with its economic transformation agendas.
UAE banking and monetary sector expands in May 2025. The Central Bank of the UAE (CBUAE) reported a broad-based expansion across the banking and monetary system. Gross banks’ assets rose by 2.7% to AED4.88 trillion (USD1.33 trillion), while gross credit increased 1.5% to AED2.29 trillion (USD625bn), driven by gains in both domestic and foreign lending, particularly to the government and private sectors. Bank deposits grew 1.8%, reaching AED3.02 trillion (USD822.6bn), with resident deposits up 1.9% and non-resident deposits up 0.6%. Monetary aggregates also strengthened reflecting higher deposits and government balances. The monetary base expanded by 2.2% to AED836.7bn (USD228bn), supported by increased reserves, currency issuance, and Islamic certificates, despite a sharp decline in overnight bank deposits at the central bank. These trends point to robust liquidity and continued credit momentum in the UAE’s financial system.
