Business Cycle Index 2013 1st
The index showed an increase in the quarterly rates of change in 2013; especially during the fourth quarter of 2013 compared to the third quarter of the same year. The rate of change in the third quarter of 2013, was also higher than the second quarter of the same year, registering (14.3%) and (-4.1%), respectively.
Statistics indicated that trading and the crafts activities captured more licenses compared to other activities. The city of Abu Dhabi acquired the largest number of new licenses by 4,958 licenses in 2013, compared to 5,348 licenses in 2012 lower by 7.3%, followed by the city of Al Ain, with 1,865 new licenses in 2013 compared to 1,626 licenses in 2012 up 14.7%. The Western Region experienced a drop in the number of new licenses by 9.9% over the same period.
The boom in licensing movement during that period, was due mainly to the high optimism of investors and businessmen about the policies of expansionary spending announced by the Government of the Emirate of Abu Dhabi at the end of 2012 and early 2013, and the improvement in the pace of the economy’s performance during the first half of 2013; in addition to the government policies and actions aimed at enhancing the business environment, encouraging investment, exempting companies from waste fees in the first year of activity and developing systems in place to facilitate and ease procedures required for practicing activities in general.
The same period witnessed cancellation of licenses by some companies. Activities with the highest number of cancelled licenses were the commercial enterprises, followed by crafts and professional establishments.
Regarding the Abu Dhabi Murban crude oil prices sub-indicator, Murban crude price dropped during the months of October and November 2013 reaching $112.45 /barrel and $112.2/barrel respectively, which were higher compared to the period (March-August 2013).
Oil prices were affected by the trends of the world oil market, amid rising global demand for oil compared to 2012, coupled with the geopolitical tensions in the Middle East, and increasing speculations.
The International Energy Agency (IEA) revised up its estimates for global oil demand growth by 145,000 bpd to 1.2 million bpd for 2013 and by 110,000 bpd to 1.2 million bpd for 2014.
Brent crude rose above $ 110 a barrel as a result of the increased consumption of China, as well as the continued disruption of oil supplies from Libya. Manufacturing in China grew to its highest level in 18 months since November 2013, as a result of the increased domestic demand.
The sub index of the individual financial conditions, climbed up 9 points in 2013 compared to 2012, registering (131) and (122) points on average respectively.
The results reflected the optimism of individuals from different nationalities, about current and future economic conditions in the Emirate of Abu Dhabi, as well as the availability of real job opportunities, salary increases and improved living conditions. Respondents’ views and answers were positive for 2013, as they expressed more optimism about jobs opportunities and the appropriate time for purchasing durable consumer goods.
The findings of the sub index for the current situation of economic establishments, revealed high level of optimism among economic establishments operating in all activities (services, industrial, construction and trade) in general; and services and construction activities in particular.
This came naturally, in view of the business results achieved by various economic sectors during the quarterly periods of the year, particularly the banking and real estate sectors; in addition to the revival of the tourism sector, which resulted in spurring demand in the Emirate of Abu Dhabi.
The indicator showed low levels of optimism among small enterprises, compared to large establishment due to a series of challenges, most importantly the financing issues, which were fraught with conditions, considered by some small enterprises as hampering access to investment. This is a normal condition, since big companies are more able to withstand shocks than the smaller ones.
As for Abu Dhabi Securities Market Index (ADSMI), the recovery continued and market performance improved, especially in view of the profits made by listed companies and banks during the third quarter of 2013.
Preliminary data indicated the companies listed on ADX reaped high profits especially banks and real estate establishments. For example Aldar Properties net profits during the third quarter of 2013, rose by 98% to AED 407.5 million compared to the same period in 2012; which contributed significantly to the ADX closing at the end of 31 December 2013 at (4290.30) points compared to (2630.86) points at the end of 2012.
It is expected that the revival of shares movement in Abu Dhabi Securities Exchange will continue through 2014, particularly in view of the profits that are expected to accrue to the companies listed on ADX, in addition to the rising rents, improvement of the real estate market in the Emirate of Abu Dhabi, as well as the abundant liquidity, which will contribute significantly to the revival of buying and selling transaction.
Source : WAM news agency