UAE establishes gaming regulator

The UAE has established a new regulator for the gaming industry, which will establish a framework for and have oversight of a national lottery and commercial gaming. The board will be chaired by Jim Murren, former CEO of MGM Resorts International. A new regulatory framework could be a first step towards licenses for casinos being issued in the UAE.

Separately, the UAE has also approved an alternative end-of-service benefit scheme that would allow private sector and free zone employees to have their employer contributions invested in funds and savings accounts. The scheme will be optional for employers. No time frame for the introduction of the alternative scheme was indicated. 

China’s Caixin services PMI came in lower than forecast at 51.8 in August, down from 54.1 in July and the lowest reading since December 2022 when zero-Covid measures were still in place. The Caixin composite PMI also softened slightly to 51.7 from 51.9 in July. While still in growth territory, the services index indicates a slowdown in growth momentum since March 2023. The Caixin survey focuses on smaller, more export-oriented firms than the official PMI survey.

Turkish CPI inflation came in at 58.9% y/y in August, up from 47.8% in July and exceeding consensus predictions of 55.9%. Prices were 9.1% higher than the previous month, a modest slowdown from 9.5% previously but well above the predicted 6.5%. Annual core inflation also accelerated as it rose to 64.9% y/y, from 56.1% in July and beating the predicted 61.7%. The renewed rise in inflation, driven by higher energy and food costs and a weaker lira, leaves real rates in Turkey more deeply negative at -33.9%, despite the 750bps hike to the one-week repo at the central bank’s latest MPC meeting.

The Egyptian cabinet announced that the UAE’s Global Investment Holding Co. has bought a 30% stake in Eastern Co., Egypt’s largest tobacco products firm, for USD 625mn. Global Investment Holding will also provide the Egyptian company with USD 150mn for the purchase of raw materials. As part of its IMF-sponsored economic reform programme the Egyptian government has pledged to sell stakes in 32 state-controlled companies in a bid to boost private sector participation, but progress has been fairly slow so far.

Today’s key economic data and events

• 08:30 Reserve Bank of Australia rate decision, forecast 4.1% (no change)
• 12:00 Eurozone composite PMI (Aug, final) forecast 47.0
• 12:30 UK composite PMI (Aug, final) forecast 47.9
• 18:00 US factory orders (Jul) forecast -2.5% m/m
• 18:00 US durable goods orders (Aug, final) no forecast

Fixed Income

• US Treasury markets were closed overnight because of a US public holiday. Both the 2yr and 10yr UST have opened softer in early trading today. European bonds closed weaker across the board overnight despite there being little material catalyst. Bund yields added 3bps to 2.574% while the 10yr gilt yield added more than 3bps to 4.457%.
• In local currency markets, Turkey 10yr bonds sold off sharply with yields up 55bps at 21.2% while South African yields were also higher, up 8bps at 11.793%. Egypt’s CDS pulled tighter by about 22bps while Turkey’s CDS closed near flat.

FX

• The US dollar closed weaker against most peers to start the week even as there was no economic catalyst to push markets one way or the other. EURUSD ended the day up 0.2% at 1.0796 while GBPUSD gained 0.3% to 1.2625. USDJPY added 0.2% to close at 146.47, trending against most of the rest of the market.
• USDCAD closed near flat while AUDUSD edged slightly higher at 0.6461 and NZDUSD dropped 0.1% to 0.5939.

Equities

• Asian markets got the trading week off on the front foot, with signs that the steady drop of new Chinese stimulus measures is starting to boost sentiment. The Shanghai Composite closed up 1.4%, while the Hang Seng added 2.5%.
• The China story initially lifted indices in Europe also, with luxury brands performing strongly. However, sentiment changed later in the session. The composite STOXX 600 ended the day 0.04% lower with the DAX and the CAC closing down 0.1% and 0.2% respectively.
• Locally, the ADX lost 0.4% and the DFM 0.5%.
• US markets were closed yesterday for the Labor Day holiday.

Commodities

• Brent markets added 0.5% overnight to close at USD 89/b as markets look to whether Saudi Arabia will extend its voluntary production curbs into October. We expect that they will, helping to contribute to a meaningful deficit in oil markets for the second half of the year.