Saudi Arabia reaps $53bn dividend from emerging market status

Saudi Arabia reaps $53bn dividend from emerging market status
Saudi Arabia and the broader GCC region are tapping into emerging markets in more ways than one. (Shutterstock)
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Updated 21 February 2020

Saudi Arabia reaps $53bn dividend from emerging market status

Saudi Arabia reaps $53bn dividend from emerging market status
  • The country finalized its entry into the JP Morgan suite of emerging market (EM) indices

In September 2019, Saudi Arabia reached an important milestone in its Saudi Vision 2030 reform plan, which aims to diversify the Kingdom’s economy away from its petrochemical revenue base.
The country finalized its entry into the JP Morgan suite of emerging market (EM) indices. It was the finale in a series of announcements by the major indexes, including MSCI, S&P and FTSE, confirming that Saudi Arabia met their inclusion criteria.
This is a testimony to the work of The Capital Markets Authority and Saudi Arabia’s stock exchange, Tadawul, which have driven the effort to modernize the Kingdom’s capital markets infrastructure and make it more investor friendly.
Saudi’s inclusion as an EM allows its entry to ETF’s, opening the country to billions of dollars-worth of outside investment, which would be otherwise closed to it.
An example, $1.9 trillion tracks the MSCI EM Index alone of which 80 percent is active and 20 percent passive. Given this, Saudi Arabia’s 2.8 percent country weighting represents an additional $53 billion in foreign capital flows to the country.
Looking into 2020, there are several considerations investors should bear in mind. Foremost among these are oil prices and a concurrent slowdown in growth, regional geopolitical tensions and — a potential boon for investors — the rise of fintech in the region.
Oil prices have swung between $55 and $75 a barrel this year against a backdrop of slowing global growth, trade tensions and geopolitical risks. Steep oil production cuts — undertaken in a bid to push up prices — have acted as a further drag on growth, in addition to weak external demand.
As a result, Saudi gross domestic product (GDP) growth is forecast to slow from 2.4% percent in 2018 to 0.2 percent this year. Across the GCC as a whole, GDP is expected to decelerate to 0.7 percent from 2 percent in 2018.
The region’s volatile geopolitics was highlighted in September when drone attacks targeted Saudi Arabia’s oil industry. Indeed, a recent “Future of Wealth” report by UBS, which canvassed investor opinion from around the world found that 83 percent of investors in the UAE), one of the GCC’s six members, think geopolitics is driving markets more than business fundamentals.
Despite the challenging geopolitical backdrop, globally, investors in the UAE are most optimistic about returns in the next decade: 85 percent versus 69 percent in the US, 65 percent in Asia and 72 percent in EMEA.
A potential bright spot for GCC investors heading into 2020 is the rise of the technology sector. Global groups, including Amazon, which chose Bahrain to launch its first data hub in the region, are flocking to service the region’s youthful, tech-savvy populations.
The development of a financial technology ecosystem is also a significant component of Saudi Arabia’s Vision 2030 economic diversification strategy. It is seen as essential for broadening the country’s investment base and a transition toward a cashless digital economy. To this end, the Saudi Arabian Monetary Authority launched Fintech Saudi in April 2018 to catalyze the development of the industry.
The GCC is also at the forefront of innovation in the digital assets space. Earlier this year, the Abu Dhabi Securities Exchange approved a digital currency trading platform, and the country’s sovereign wealth fund has invested in the venture.
Saudi Arabia and the broader GCC region are tapping into emerging markets in more ways than one. The Kingdom has a very ancient past — the prehistory of the country shows some of the earliest traces of human activity in the world — but its society and business infrastructure are undergoing rapid transformation. From welcoming in outside capital to being an eager adopter in the digital assets and fintech space, whatever lies beyond 2020 for the Kingdom and the region, it promises to be innovative, fast-moving and creative. However, it is vital for the long-term
health of the profession that the innovation and transformative energy in such obvious evidence are underpinned by sound professional standards.
We have a vital role to play in the development of the region’s capital markets via the provision of such standards, and crucially, education. The Kingdom is one of the fastest growing markets in MENA and we welcome its commitment to greater transparency and putting the interests of investors first. We also encourage more countries in the region to promote fairness, transparency and ethics in the investment profession.


Vodafone towers unit set for 14.7-bn euro valuation

Vodafone towers unit set for 14.7-bn euro valuation
Updated 2 min 39 sec ago

Vodafone towers unit set for 14.7-bn euro valuation

Vodafone towers unit set for 14.7-bn euro valuation

LONDON: British mobile phone giant Vodafone on Tuesday announced the price range for the upcoming German stock market flotation of its towers business, valuing the unit at up to 14.7 billion euros ($17.4 billion).
The float of up to one-quarter of Vantage Towers comes amid increasing demand for mobile telecommunications connectivity across Europe, driven by data growth, 5G roll-out and regulatory coverage obligations.
Mobile phone giants are also floating or selling off their tower businesses in order to slash debt.
German-headquartered Vantage Tower will have its first day of trading on the Frankfurt stock market on or around March 18, with a price-per-share range of between 22.5 euros and 29 euros, Vodafone said in a statement.
The initial public offering (IPO) “implies a total market capitalization for Vantage Towers of 11.4 billion euros to 14.7 billion euros,” it added.
Digital Colony, a digital infrastructure investor and operator based in the US, has agreed to be a cornerstone investor in the IPO, alongside RRJ, a global equity fund based in Singapore, with commitments of 500 million euros and 450 million euros, respectively.
“The Vantage Towers IPO is moving ahead at pace,” Vantage chief executive Vivek Badrinath said in the statement.
“Today’s price range announcement is accompanied by the news that two leading global investors have committed to cornerstone our IPO with the purchase of 950 million euros of shares at the offer price.”
Vantage Towers’ portfolio includes 82,000 macro sites — towers, masts and rooftops — across 10 European countries.
“Demand for data and connectivity across Europe is powering growth in the towers sector,” Badrinath said.
“Our superior grid and leading market positions mean we are well placed to benefit from this growth and our recent financial results highlighted the good commercial and operational momentum across the business,” he added.
Vodafone said it was targetting proceeds of up to 2.8 billion euros from the IPO, helping to reduce its debt pile.
Earlier this year, heavily-indebted Telefonica agreed to sell its telephone masts in Europe and Latin America to US-based telecom infrastructure firm American Towers for 7.7 billion euros.
The Spanish group said it would use the proceeds to cut debt by 4.6 billion euros.
Vodafone meanwhile rebounded into profit during the first half of its financial year, or six months to September.
During the same period a year earlier, the group had suffered a hefty loss after India’s Supreme Court ordered telecoms companies to pay long-standing licensing fees.


UAE-based venture builder eyes Saudi startup market

UAE-based venture builder eyes Saudi startup market
Updated 7 min 54 sec ago

UAE-based venture builder eyes Saudi startup market

UAE-based venture builder eyes Saudi startup market
  • Hatch and Boost has launched two tech startups in the UAE, with three more in the pipeline

DUBAI: Hatch & Boost, an Abu Dhabi-based venture builder (VB), was officially launched this week to spur further growth in the region’s hyperactive startup scene, particularly supporting homegrown “impact-driven business models.”

The venture builder will co-create startups alongside entrepreneurs – from concept stage to market introduction – and help to reduce costs by offering a shared pool of resources to participants.

“Our mission at Hatch & Boost is to bridge the gap between ideation and growth through our unique venture building model, which offers hands-on support from a startup’s early-most stages,” Faris Mesmar, the VB’s co-founder and managing partner, said.

Hatch and Boost has launched two tech startups in the UAE, with three more in the pipeline.

“The startup scene in the UAE has evolved considerably in recent years, and today it is a hotspot for startup activity, supported by an excellent entrepreneur-friendly infrastructure,” Mesmar added.

This startup outlook also applies to Saudi Arabia, he told Arab News, adding that they plan to bring the venture builder to the Kingdom to capitalize on its potential.

“KSA is on our radar, predominantly because it is a flourishing market with an ecosystem that’s suitable for startups,” he said.

“The PIF (Public Investment Fund) is a great example of this, as it continues to move the needle on supporting the startup ecosystem and creating a successful SME infrastructure,” Faris explained.

He added: “We have our eyes on the market, as do investors, on the rising talent and wave of entrepreneurship in the Kingdom.”


As travelers seek post-pandemic pampering, Emirates adds more Maldives and Seychelles flights

As travelers seek post-pandemic pampering, Emirates adds more Maldives and Seychelles flights
Updated 18 min 56 sec ago

As travelers seek post-pandemic pampering, Emirates adds more Maldives and Seychelles flights

As travelers seek post-pandemic pampering, Emirates adds more Maldives and Seychelles flights
  • Remote location demand on the increase
  • Gulf carriers respond to emerging travel trends

LONDON: Emirates is increasing services to the Maldives and Seychelles as travelers seek out space and luxury after a year of travel restrictions.
It comes as the region’s big carriers position themselves for an upswing in demand for travel as vaccine programs are rolled out and flying restrictions eased.
Such routes are expected to become more important amid a much slower anticipated return of premium travel, where Gulf airlines including Emirates and Qatar Airways have a strong market presence.
Both Emirates and regional hub rival Qatar Airways are seeing strong demand for Maldives getaways as the pair gradually resume flying to more destinations.
“Space is becoming the sought after commodity for many travelers and there has already been capacity added to destinations such as these by several airlines,” aviation consultant John Strickland told Arab News. “Such destinations can support a price premium too for similar reasons and when demand is broadly so weak any opportunity for airlines to tap into higher margin traffic will be welcome.”
Starting March 28, the Dubai carrier will increase services to both destinations ahead of the Easter break. It will increase its weekly Maldives service to 28 flights from the current 24. At the same time the Seychelles route will move to seven-times-a-week from the current five.
A recent report from the World Travel Tourism Council highlighted rising anticipated demand for remote destinations and beach vacations post-pandemic.
Aileen Clemente, CEO of Rajah Travel Corporation, predicted there would be “an emergence of new destinations in isolated locations as consumers veer away from ‘massification.’”
All travelers to the Maldives, excluding Maldives citizens, must present a negative COVID‑19 PCR test result, conducted within 96 hours prior to departure. Passengers must also complete an online Immigration and health self‑declaration form within 24 hours prior to arrival. Meanwhile travelers to the Seychelles will still be required to present a negative PCR test taken 72 hours prior to departure.


Bahrain bank waives loan fees for customers having had COVID-19 vaccine

Bahrain bank waives loan fees for customers having had COVID-19 vaccine
Updated 24 min 21 sec ago

Bahrain bank waives loan fees for customers having had COVID-19 vaccine

Bahrain bank waives loan fees for customers having had COVID-19 vaccine
  • Al Salam Bank is also offering a range of financial services, such as those related to the Mazaya social housing program

DUBAI: A Bahraini bank has waived loan fees for customers vaccinated against the coronavirus disease (COVID-19), part of the country’s bid to encourage people to have the jab.

Al Salam Bank is also offering a range of financial services, such as those related to the Mazaya social housing program, which all come with no administration fees if customers can produce an official medical certificate showing they have had a COVID-19 vaccine.

Mohammed Buhijji, Al Salam Bank’s head of retail banking, said: “We are proud to launch the Al Salam initiative, which aims to encourage all eligible members of the Bahraini community to take the vaccine against COVID-19, as a crucial step toward protecting themselves as individuals as well as the greater community.

“Granting a waiver of administrative fees on all financing facilities to all our customers who have been vaccinated is a reflection of our ongoing support to the public during the current circumstances.”

In late February, Bahrain’s National Health Regulatory Authority announced it had authorized the use of Johnson and Johnson’s vaccine, making it the fifth vaccine authorized in the island nation.

Bahrain was also one of the first countries to introduce a digital COVID-19 vaccine passport, which includes the user’s name, date of birth, nationality, and information on which vaccine they received.


UAE-based car-servicing platform raises $10m funding, eyes Gulf expansion

UAE-based car-servicing platform raises $10m funding, eyes Gulf expansion
Updated 09 March 2021

UAE-based car-servicing platform raises $10m funding, eyes Gulf expansion

UAE-based car-servicing platform raises $10m funding, eyes Gulf expansion
  • Oman’s Bahwan is a prominent family-owned group with interests in the automotive sector

DUBAI: Online car service and repair booking company, Service My Car, has raised $10 million during its first round of seed funding, as technology-driven companies continue to attract investors amid the pandemic.

Oman’s Bahwan, a prominent family-owned group with interests in the automotive sector, announced it was investing in the UAE-based company.

“It is an emerging time for the automotive ecosystem as investors are noticing the benefits of technology and digitization in the industry,” Ozair Puda, chief executive of Service My Car, said in a statement.

The region’s automotive industry has seen a wave of digital-focused companies setting up, including pay-by-minute car rentals. Service My Car was launched in 2018, and has since recorded growth.

“With the infusion of this capital, we are looking forward to extending this convenience, affordability and transparency to all GCC car owners,” Puda said.

The company will also use the fund to expand its service offerings, eventually including roadside assistance, car detailing, and car insurance.