Bahrain shares fall from six-week high, outlook uncertain on higher debt . . . . . . . . . . . Bahrain stocks plunged on Tuesday as the ongoing fall in oil prices offset positive news showing the Kingdom grew an annualized 5.1 percent in the third quarter. The main gauge in Bahrain slipped 0.56 percent or 8.01 points to close at 1422.23 points. The Industrial sector lost 2.84 percent, where the biggest loser was Aluminum Bahrain as it fell 2.91 percent. The Banking sector came second, retreating by 0.60%, as Ahli United Bank plummeted by 1.23%. Bahrain Bourse (BHB) dropped today after hitting its highest level in six weeks on Monday, when the index added 4.59 points or 0.32 percent increase. The index is still in a sideway direction since it touched a peak of 13,227.00 points in February 2014. Brent crude for February delivery continued its fall on Tuesday to record a new low of $45.18 a barrel, marking the lowest level in almost six years, where prices have plunged nearly 60 percent from their peak of $115 a barrel posted in June last year. Analysts predict the index may remain under pressure as oil resumes its bearish direction, heading towards the 2008 levels of $35 per barrel. Strong growth The Bahrain economy expanded 5.1 percent calculated by the year-on-year basis, buoyed by the high spending on significant infrastructure projects, where the economy is forecast to record an expansion of 4 percent for 2014 as a whole. In its report released in October, the IMF predicted Bahrain to expand 3.9 percent in 2015, where the fund predict growth to remain on a steady pace through to 2019 with expansion set to be 3.3 percent. The government has allocated up to $4.4 billion for major capital works to bolster growth amid the dwindling global oil prices. Non-oil growth for the current year is likely to remain robust at 4.5 percent, According to the Economic Development Board (EDB). Higher debt The significant fall in oil prices, which almost halved since June, would prompt the government to change its calculations for the 2015 budget, taking into consideration that oil income represents 80 percent of Bahrain’s revenue. “To meet the blueprint we will not just depend on oil revenues,” said Information Affairs Minister and official government spokesman, Isa Al Hammadi. “We have the GCC aid, the private sector and borrowing to help us maintain our promises and ensure people`s lives are not affected negatively.” The high spending will probably yield in higher debt pile, which has already grown in the recent couple of years. Debt levels climbed to $13.2 billion, accounting for 44% of GDP by the end of 2013, compared to 36% in 2012, where the rate could reach up to 50% of GDP this year. Budget deficit totaled $1.1 billion in the 2013 fiscal year, and with plans to widen spending the shortfall would widen further this year and next. Fitch Ratings has revised the outlooks on Bahrain`s Long-term foreign and local currency Issuer Default Ratings to Negative from Stable. #egyptyard
Posted on: Tue, 13 Jan 2015 15:37:36 +0000
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