PIF: Saudi Aramco may sell more shares if market conditions are right

Yasir Al-Rumayyan, governor of Saudi Arabia’s Public Investment Fund (PIF) hold a press conference to provide more details of the fund’s new strategy. (Screengrab)
Yasir Al-Rumayyan, governor of Saudi Arabia’s Public Investment Fund (PIF) hold a press conference to provide more details of the fund’s new strategy. (Screengrab)
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Updated 26 January 2021

PIF: Saudi Aramco may sell more shares if market conditions are right

PIF: Saudi Aramco may sell more shares if market conditions are right
  • Kingdom’s sovereign wealth fund has set out a plan to increase assets to $400 billion
  • The Saudi government sold over 1.7 percent of Aramco in an initial public offering (IPO) in 2019

RIYADH: Saudi Aramco may consider selling more shares in the oil giant if market conditions are right, the head of the Kingdom’s sovereign wealth fund, Yasir Al-Rumayyan, said on Tuesday in a televised news briefing.

The Saudi government sold over 1.7 percent of Aramco in an initial public offering (IPO) in 2019 that raised a record $29.4 billion.

The listing has triggered more IPOs in the Kingdom, which is also seeking to deepen its capital markets under reforms aimed at reducing its reliance on oil.

Al-Rumayyan asserted that there is no direct relationship between the balance sheet and finances of Aramco and Saudi Arabia’s Public Investment Fund (PIF) and any listing would depend “if they see the right market is in the right condition.”

The fund’s governor also told reporters the PIF plans to increase its assets from SR570 billion ($152 billion) to SR1.5 trillion ($400 billion).

The fund has become a fundamental pillar for the sustainability of the Saudi economy and is directly related to the Kingdom’s Vision 2030, he added.

Al-Rumayyan said that the PIF was currently developing the eight basic pillars of the fund’s strategy for the years 2021-2025, and would focus on local investments within the PIF’s new strategy, which was announced by Crown Prince Mohammed bin Salman last week.

He added that they would allocate four portfolios for local investment and two portfolios for foreign investments, with plans to also invest SR1 trillion ($267 billion) in new projects in the next five years

Al-Rumayyan said that financing new investments from the fund’s money and assets would be granted by the government, and it would rely on profits generated by their current companies to fund future projects, adding that the PIF has launched more than 30 new companies.

In 2017, the fund announced it would invest $45 billion in Softbank’s inaugural $100 billion technology fund. “Softbank is reaching an all-time high,” Al-Rummayan said. “The higher the risk the higher the returns. We always look to diversity in our bets and investments in different sectors and geography.”

Another high profile PIF-backed company is Lucid Motors, the Californian electric vehicle carmaker the fund backed with a $1 billion investment in 2018. Media reports have claimed the carmaker is in talks with the PIF to build an electric vehicle factory in the
Kingdom, reportedly near Jeddah.

“We are always open for any good ideas,” the governor said. “One of the things that we would like to provide for the investor, is how we can open up many opportunities for them,” he added.

Al-Rumayyan said the fund has started talks with a number of other potential companies for investment, but declined to give any specific details.

“We are at very advanced stages, but you know how complicated these contracts can be with all the terms, conditions and negotiations. But we are at very advanced stages with many companies and during this year we will see many companies coming in.”


Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy

Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy
Updated 12 min 37 sec ago

Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy

Riyals, euros or dollars: Women money changers at heart of Djibouti’s street economy
  • The informal sector drives around two-thirds of economic activity in Djibouti

DJIBOUTI: They are a familiar sight on the busy streets of Djibouti: women clutching handbags bulging with dollars, euros, riyals and rupees, the money changers keeping the informal economy ticking over.
Perched on plastic chairs, feet propped on wooden steps, these “sarifley” as they are locally known are vital to the global cast of migrants, traders and soldiers passing through this tiny nation at the crossroads of Africa and Arabia.
Trading in money offers a safe, reliable way especially for women to feed their families, in a conservative country where they lag men in education and literacy.
“I have it all. Euros, English pounds, Turkish lira, dollars, Indian rupees, anything,” said Medina, who offered just her first name, flashing a purse she estimated held the equivalent of one million Djiboutian francs ($5,600/€4,700) in multiple currencies.
Customers and traders alike say that economic life would suffer a lot more friction without the money changers.
Camped at Rimbaud Square, overlooked by a grand mosque in the heart of Djibouti city, Medina and three other sarifley scan the bustling crowds for customers.
Before long a young man from Yemen, the war-torn country across the Bab-el-Mandeb strait from Djibouti, approaches in a flowing white tunic and turban, wanting to change Saudi riyals.
Medina exchanged a few words with the foreigner, tapped some calculations into her phone, then counted out a wad of crumpled Djiboutian francs retrieved from the depths of her bag.
“We bring Saudi riyals with us (to Djibouti) because our currency, with the war, keeps fluctuating all the time,” said the Yemeni, slipping away into the crowd as a police car crawled by.
Refugees from Yemen, migrants en route to the Gulf, foreign troops stationed in naval bases, Ethiopian truck drivers — Djibouti is a melting pot of cultures, and currencies, on the Horn of Africa.
“We also deal with Djibouti businessmen going abroad for their work, as well as foreigners and tourists,” said Noura Hassan, another sarifley in the capital.
When her husband died a decade ago, the mother-of-three started out with just her savings in francs, before acquiring more currencies.
Every day, Hassan refers to a printout from the local bank to gauge exchange rates and determines what to offer customers for the major currencies.
“It is a good job, and I am proud of it,” said the money changer, wearing a blue veil and black abaya, the traditional floor-length tunic worn by Muslim women.
In PK12, a busy neighborhood where many Ethiopians live, Ahmed jumped out of his tuk-tuk to change some Ethiopian birr on the roadside.
“The difference might be 10 or 20 francs, it’s not much,” said the rickshaw driver about the street rates compared to those officially on offer.
But those exchange offices are far away — whereas the sarifley are on every corner and marketplace.
“Without them, I would say that trade in PK12 would not be possible,” said Faiza, who sells khat, the popular narcotic plant that is a daily staple in Djibouti and other parts of the Horn.
“They make sure to feed their families ... We help each other like that,” the 25-year-old trader said.
The informal sector drives around two-thirds of economic activity in Djibouti, said researcher Abdoulkader Houssein Mohamed from the Djibouti Center for Studies and Research (CERD).
Of those engaged in the sector, three-quarters are women, he added.
Safety might be a concern, but in a country of just under one million inhabitants, even the capital feels like a village, the sarifley said — a reassurance when your line of work requires carrying bundles of cash on the streets.
Zahra, one sarifley in the city, said of thieves: “They don’t come near us. They are afraid.”
She also wasn’t too concerned about being scammed by a forger or unscrupulous seller trying to palm off counterfeit cash.
“Even if I was asleep and you handed me a forgery, I would know... Counterfeit cash, I’ll know. The real thing, I know. That’s my job isn’t it?“


Musk tweets, doge leaps and bitcoin retreats

Musk tweets, doge leaps and bitcoin retreats
Updated 30 min 21 sec ago

Musk tweets, doge leaps and bitcoin retreats

Musk tweets, doge leaps and bitcoin retreats
  • Markets have gyrated to Musk tweets for months since his interest in dogecoin sparked a hundred-fold rally

SINGAPORE: Bitcoin was pinned near its lowest in more than two months on Friday and headed for its worst week since February, while dogecoin leapt by a fifth as tweets from Tesla boss Elon Musk sent the two cryptocurrencies on a wild ride.
Markets have gyrated to Musk tweets for months since his interest in dogecoin sparked a hundred-fold rally in the previously ignored token’s value this year, while Tesla’s $1.5 billion bitcoin purchase helped it break past $50,000 in February.
Yet in an equally surprising U-turn he dented the world’s biggest cryptocurrency this week after announcing Tesla stopped accepting bitcoin in payment owing to environmental concerns, making investors uneasy about Musk’s influence on crypto prices.
Bitcoin is down nearly 15 percent this week at $49,804.
Dogecoin is down about a third since last Friday, having tumbled after Musk referred to it as a “hustle” on Saturday Night Live. It then jumped 20 percent after his latest comments that he was involved in work to improve its efficiency.
“Working with Doge devs to improve system transaction efficiency. Potentially promising,” Musk said on Twitter, vaulting dogecoin from about $0.43 to $0.52 on the Binance exchange.
It was unclear if Musk was referring to efficiency in terms of energy use, ease of use or suitability as a currency, said Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales business school in Sydney.
Dogecoin consumes 0.12 kilowatt hours of electricity per transaction compared with 707 for bitcoin, according to data center provider TRG, but it is near impossible to use it to buy anything.
Almost worthless in late 2020, dogecoin is the latest darling of a frenzy gripping crypto markets that began last year as institutional investors announced big bitcoin purchases.
It has surged to become the fourth-largest cryptocurrency by market cap, according to CoinMarketCap.com. Second-biggest cryptocurrency ether has also soared more than 400 percent this year. It last sat at $3,865, steady for the week so far.
The huge moves have begun to attract regulatory scrutiny, and a Bloomberg report on Thursday which said major exchange Binance was under Justice Department investigation in the US added to some of the price pressure on cryptos this week.
Musk’s tweets and the market’s response may also invite attention, said Edward Moya, an analyst at brokarage OANDA.
“Tesla is drawing tremendous scrutiny for Musk’s cheerleading of Bitcoin,” he said. “If Tesla unveils a bet on dogecoin, regulators may have their eyes on Musk.”
Others, however, say the market might be more comparable to an old fashioned bubble.
“Dogecoin remains a lesson in greater fool theory,” said David Kimberley, analyst at investing app Freetrade, which posits that buying overpriced assets can be profitable, so long as there is a “greater fool” to buy them at ever higher prices.
“It’s being pumped by people that want to get rich quick (and Elon Musk),” he said.


Egypt’s road building drive eases jams but leaves some unhappy

Egypt’s road building drive eases jams but leaves some unhappy
Updated 52 min 26 sec ago

Egypt’s road building drive eases jams but leaves some unhappy

Egypt’s road building drive eases jams but leaves some unhappy
  • Infrastructure push aims to galvanize economy
  • Experts say structural economic problems remain

CAIRO: At weekends, Egyptian President Abdel Fattah El-Sisi is often driven out to a road construction site in Cairo where he is pictured surveying stretches of recently poured asphalt and being briefed by workers.
The highways and bridges he inspects are the most visible part of a big infrastructure push meant to galvanize Egypt’s economy after decades of rapid population growth and unplanned building.
Led by the government and the military, it includes several new cities and one million low-cost homes and has helped pull Egypt through the economic shock of the pandemic and remain in growth last year.
But there is a cost. Some of those displaced by new roads are unhappy at losing their homes, others at seeing their neighborhoods suddenly transformed. Analysts question how much difference the infrastructure boom can make while structural economic problems persist.
One area of intense activity is eastern Cairo, where new roads and bridges scythe through the urban sprawl toward a futuristic capital under construction in the desert and due to open this year.
In the Ezbet el-Hagana neighborhood, drilling machines and diggers are laying out an intersection that cuts through cheap, informal housing, of which hundreds of units have been demolished to make way for the road.
When El-Sisi visited in February, he met ministers in front of unpainted brick housing blocks and discussed how half Egypt’s population of 100 million lived in similar conditions. Afterwards, El-Sisi announced it would be renamed “Hope City.”
But residents of Ezbet el-Hagana, many of whom moved from rural areas and built apartments and livelihoods, say they worry about the uncertainty.
Ali Abdelrehim, a 52-year-old father of four, said his house was not at immediate risk but others might suffer if authorities carry out the president’s suggestion to widen the area’s narrow streets.
“These changes worry people,” he said, adding that business at his carpentry shop has slowed to a trickle as people stop work on homes that risk demolition.
Hosni Ali, a 34-year-old selling tomatoes from a donkey cart, said a storage room he rented was demolished because of the new roadworks. “Everyone here is scared ... everything is on hold,” he said.
Across eastern Cairo and beyond, long-delayed road projects are racing ahead. As much as 1.1 trillion Egypt pounds ($70 billion) will be spent on transport in the decade to 2024, one third of that on roads and bridges, the transport minister has said.
Officials present the road building as part of efforts to develop informal areas across Egypt, connecting them to transport networks and basic services. They say those displaced will be compensated or resettled.
Some of those moved from Ezbet el-Hagana have been allocated furnished housing in Ahlina, a new district on Cairo’s outskirts with a youth center and playgrounds, and residents say conditions are good. But they have to pay rent and some have lost access to work.
“The problem is money, and life is expensive,” said 75-year-old pensioner Sabri Abdo, whose son is a motor rickshaw driver. “Before this I lived in my own property and didn’t pay rent. No one knows my son here, so things aren’t working for him like they were over there.”
The east Cairo governor’s office, which oversees the area, was not available for comment.
The road building surge – social media posts dub Egypt “the republic of roads and bridges” – has triggered disquiet for other reasons.
Bridge and road building near the pyramids, around Cairo’s “cities of the dead” where people live among old family tombs, and in the genteel neighborhood of Heliopolis, has alarmed conservationists.
Commuting in and out of Heliopolis has become quicker but the character of the neighborhood had changed for residents, said Choucri Asmar, head of volunteer group Heliopolis Heritage Foundation.
“They cannot walk in the street anymore, they can’t cross the street anymore, they cannot see trees from their balconies every afternoon with the birds,” he said.
Asked for a response to complaints about the road and bridge program on TV earlier this year, El-Sisi said no sector – including health, education, agriculture and manufacturing – was neglected.
“We need to do this so we can make people’s lives easier, so we can reduce the amount of lost time, people’s stress and the fuel being used causing more pollution,” he said.
A World Bank study in 2014 estimated the costs of congestion in greater Cairo at 3.6 percent of Egypt’s gross domestic product, far higher than some other big cities – though it warned that building more roads and bridges would not solve the problem.
While tens of billions of dollars are being spent on roads in eastern Cairo, the new capital in the desert and a summer capital on the north coast at El Alamein, roads elsewhere are often under-maintained, mass transit limited and public services patchy.
Like other motorists, Hesham Abu Aya, a 51-year-old taxi driver with three daughters, said new roads had eased the traffic crisis but he had to pay 7,500 Egyptian pounds ($480) to fix his car after hitting a pothole.
“If I want the state to spend on something other than bridges and roads, it would be health care,” he said.
Egypt suffers from lack of research and development and barriers to private sector expansion, said Yezid Sayigh, a senior fellow at the Carnegie Middle East Center. “Behind all the investment in real estate or in infrastructure, there’s very little investment in the rest of the productive economy.”
Those with a record in the sector tend to get contracts from military and other state agencies directing the infrastructure drive and can secure financing from banks, said Shams Eldin Yousef, Chairman of Al-Shams Contracting Company and a board member of Egypt’s construction federation.
His company has picked up business through the road projects but he wonders how long the boom will last.
“If a wheel that is moving at this speed and on this scale stops, it will be a problem,” he said.


Turkey’s Karpowership says it is shutting down power to Lebanon

Turkey’s Karpowership says it is shutting down power to Lebanon
Updated 22 min 23 sec ago

Turkey’s Karpowership says it is shutting down power to Lebanon

Turkey’s Karpowership says it is shutting down power to Lebanon
  • The company provides electricity to Lebanon from two barges
  • Move piles fresh pressure on the battered economy

BEIRUT/ISTANBUL: Turkey’s Karpowership, which provides electricity to Lebanon from two barges, said on Friday it was shutting down supplies over payment arrears and a legal threat to its vessels amid the country’s economic crisis.
The company, which supplies 370 megawatts (MW), or about a quarter of Lebanon’s supply, had told the government this week it would have to shut down in the absence of moves toward a settlement.
The shutdown threatens longer daily power cuts across the heavily indebted nation, which did not have enough capacity to meet demand even before Karpowership’s move on Friday.
Many people rely on private generators or struggle for several hours a day without power.
In a statement, the company, a unit of Kardeniz, said it was shutting down supplies on Friday. A source familiar with the situation said the step was taken at about 8 a.m. (0500 GMT), as the vessels’ fuel had been running down.
The source, speaking on condition of anonymity, said arrears exceeded $100 million, and added that the government had not reached out for talks or to try and resolve a legal case, despite the firm’s repeated appeals meant to avert a shutdown.
Lebanon’s Finance Ministry said it had been notified by the Turkish firm and cited a lawmaker saying that the country could face “total darkness” in case of a shut-off. It has made no public statement about any talks.
A Lebanese prosecutor threatened this month to seize the barges and fine the firm after Lebanese TV channel Al-Jadeed reported corruption accusations over the power contract.
The firm denies the charges.
At the weekend, it said it had not been paid for 18 months, a period coinciding with the financial crunch, and added that it sought a “reasonable solution” to maintain generation.
Each of its barges has capacity of 202 MW, against a contract to supply a total of 370 MW.
An industry source said Lebanon’s total capacity was about 2,200 MW, including the barges, but was only generating a total of 1,300 MW, including the Turkish supplies of 370 MW. Lebanon’s peak demand in 2020 was 3,500 MW, the source said.

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Oil extends loss on India COVID-19 cases, US pipeline restart

Oil extends loss on India COVID-19 cases, US pipeline restart
Updated 14 May 2021

Oil extends loss on India COVID-19 cases, US pipeline restart

Oil extends loss on India COVID-19 cases, US pipeline restart
  • Raising rates typically boosts the US dollar, which in turn pressures oil prices because it makes crude more expensive for holders of other currencies

SINGAPORE: Oil prices fell on Friday after dropping about 3 percent a day earlier as coronavirus cases remained high in major oil consumer India and as a key fuel pipeline in the United States resumed operations after being shut due to a cyberattack.
Brent crude oil futures were down 10 cents, or 0.2 percent, at $66.95 a barrel by 0518 GMT, while West Texas Intermediate (WTI) was down three cents, or 0.1 percent, at $63.79 a barrel. Both prices are heading for their first weekly loss in three weeks.
“The commodity super cycle rally just hit a hard stop and the energy market doesn’t know what to make of Wall Street’s fixation over inflation and the slow flattening of the curve in India,” said Edward Moya, senior market analyst at OANDA. India is the world’s third biggest oil consumer.
“The crude demand story is still upbeat for the second half of the year and that should prevent any significant dips in oil prices,” he added.
Prices came under pressure as a broader surge in commodity prices and stronger-than-expected US consumer prices data this week stoked inflation concerns that could force the Federal Reserve to raise interest rates.
Raising rates typically boosts the US dollar, which in turn pressures oil prices because it makes crude more expensive for holders of other currencies.
India on Friday reported 343,144 new coronavirus cases over the past 24 hours, taking its overall caseload past the 24 million mark, while deaths from COVID-19 rose by 4,000.
In the United States, President Joe Biden reassured motorists that fuel supplies should start returning to normal this weekend, even as more filling stations ran out of gasoline across the Southeast nearly a week after a cyberattack on the nation’s top fuel pipeline.
Colonial Pipeline said late on Thursday it had restarted its entire pipeline system and had begun deliveries in all of its markets.
Traders were also watching the situation in the Middle East after Israel fired artillery and mounted more air strikes on Friday against Palestinian militants in the Gaza Strip amid constant rocket fire deep into Israel’s commercial center.