Tadawul earnings surge in ‘pivotal year’ for Saudi stock market

The Saudi Stock Exchange, Tadawul, is a key element of the Vision 2030 strategy to diversify the Saudi economy away from oil dependency. (Reuters)
Updated 31 July 2018
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Tadawul earnings surge in ‘pivotal year’ for Saudi stock market

  • Tadawul has published its annual report for 2017 — showing a 543 percent increase in net profits to SR130 million
  • Chairperson of the Tadawul board Sarah Al-Suhaimi: ‘This was a year in which the Tadawul cemented its role at the heart of Saudi Arabia’s economy’

DUBAI: The Saudi Stock Exchange, Tadawul, enjoyed a surge in revenue and profit last year, boosted by increased interest by foreign institutIons, greater diversification of the range of services offered to investors and cost controls.

Tadawul yesterday published its annual report for 2017 — under the theme “expansion and diversification” — showing a 543 percent increase in net profits to SR130 million, on consolidated revenues 74 percent ahead at AR545.4 million.

Earnings before interest, tax, depreciation and amortization (ebitda) rose nearly 300 percent to SR72.5 million.

Sarah Al-Suhaimi, chairperson of the Tadawul board, called the year a “pivotal” one for the exchange’s long-term strategy.

“This was a year in which the Tadawul made important strides toward the achievement of its strategy for growth, and cemented its role at the heart of Saudi Arabia’s economy.

“The overall strategic aim of Tadawul is to become a widely recognized global exchange. To support this goal, we embarked on a comprehensive program to raise standards and achieve parity with our emerging market peers,” she added.

Tadawul is a key element of the Vision 2030 strategy to diversify the Saudi economy away from oil dependency.

“Tadawul’s core objectives stem from its role in the reform agenda. The exchange is central to the ‘economy’ pillar of the Vision, which aims to create a thriving economy through investing for the long-term, with diversification of income vital for its sustainability. The fast pace of reform is both inspiring and challenging, and we are committed to its successful delivery,” Al-Suhaimi said.

Khalid Al-Hussan, chief executive, said that the results confirmed Tadawul’s position as the leading stock market in the Arabian Gulf region, with a market capitalization three times greater than its nearest rival.

“Tadawul’s status as the leading regional exchange is demonstrated by the fact that 72 percent of the value traded across the Middle East and North Africa is carried out in Saudi Arabia,” he said.

Reforms set in place in 2017 enabled Tadawul to clinch three upgrades to “emerging market” status from global index providers this year.

“Our most important avenue for growth is globalization. Tadawul aims to become the first choice for investors seeking exposure to the assets of a rapidly growing region. This will be achieved by the exploitation of three key value drivers: the development of a diversified and integrated exchange; enabling and capitalizing on Saudi social and economic growth; and the delivery of a truly regional exchange platform,” Al-Hussan said.

Operational highlights of last year included spinning off the security and depository center (Edaa), the launch of the parallel equity market Noms, and the adoption of a new global industry classification standard.

Al-Hussan also underlined the adoption of new fee structure for trading, listing and membership; the transition to a T+2 settlement and clearing system; and the registration of government bonds enabling the development of a bigger debt market in the Kingdom.


US eases restrictions on China’s Huawei to keep networks, phones operating

Updated 21 May 2019
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US eases restrictions on China’s Huawei to keep networks, phones operating

  • The company is still prohibited from buying American parts and components to manufacture new products without license approvals
  • Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms
WASHINGTON: The US government on Monday temporarily eased some trade restrictions imposed last week on China’s Huawei, a move that sought to minimize disruption for the telecom company’s customers around the world.
The US Commerce Department will allow Huawei Technologies Co. Ltd. to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.
The company is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied.
The US government said it imposed the restrictions because of Huawei’s involvement in activities contrary to national security or foreign policy interests.
The new authorization is intended to give telecommunications operators that rely on Huawei equipment time to make other arrangements, US Secretary of Commerce Wilbur Ross said in a statement.
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.
The license, which is in effect until Aug. 19, suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences for its customers.
“The goal seems to be to prevent Internet, computer and cell phone systems from crashing,” said Washington lawyer Kevin Wolf, a former Commerce Department official. “This is not a capitulation. This is housekeeping.”
Huawei, the world’s largest telecommunications equipment maker, declined to comment.
The Commerce Department said it will evaluate whether to extend the exemptions beyond 90 days.
On Thursday, the US Commerce Department added Huawei and 68 entities to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States.
The government tied Huawei’s addition to the “entity list” to a pending case accusing the company of engaging in bank fraud to obtain embargoed US goods and services in Iran and move money out of the country via the international banking system. Huawei has pleaded not guilty.
Reuters reported Friday that the department was considering a temporary easing, citing a government spokeswoman.
The temporary license also allows disclosures of security vulnerabilities and for Huawei to engage in the development of standards for future 5G networks.
Reuters reported Sunday that Alphabet Inc’s Google suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, citing a source familiar with the matter.
Google did not immediately respond to a request for comment on the new authorization.
Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms including Qualcomm Inc. , Intel Corp. and Micron Technology Inc.
“I think this is a reality check,” said Washington trade lawyer Douglas Jacobson. “It shows how pervasive Huawei goods and technology are around the globe and if the US imposes restrictions, that has impacts.”
Jacobson said the effort to keep existing networks operating appeared aimed at telecom providers in Europe and other countries where Huawei equipment is pervasive.
The move also could assist mobile service providers in thinly populated areas of the United States, such as Wyoming and eastern Oregon, that purchased network equipment from Huawei in recent years.
John Neuffer, the president of the Semiconductor Industry Association, which represents US chipmakers and designers, said in a statement that the association wants the government would ease the restrictions further.
“We hope to work with the administration to broaden the scope of the license,” he said, so that it advances US security goals but does not undermine the industry’s ability to compete globally and remain technology leaders.
A report on Monday on the potential impact of stringent export controls on technologies found that US firms could lose up to $56.3 billion in export sales over five years.
The report, from the Information Technology & Innovation Foundation, said the missed opportunities threatened as many as 74,000 jobs.
Wolf, the former Commerce official, said the Huawei reprieve was similar to action taken by the department in July to prevent systems from crashing after the US banned China’s ZTE Corp, a smaller Huawei rival, from buying American-made components in April.
The US trade ban on ZTE wreaked havoc at wireless carriers in Europe and South Asia, sources told Reuters at the time.
The ban on ZTE was lifted July 13 after the company struck an agreement with the Commerce Department that included a $1 billion fine plus $400 million in escrow and replacement of its board of directors and senior management. ZTE, which had ceased major operations as a result of the ban, then resumed business.
(Reporting by Karen Freifeld in New York and David Shepardson in Washington; Additional reporting by Diane Bartz in Washington and Angela Moon; Editing by Lisa Shumaker and Cynthia Osterman)