Saudi non-oil business activity expands at quickest pace since Dec. 2017

Saudi non-oil business activity expands at quickest pace since Dec. 2017
Saudi Arabia’s General Authority for Statistics reported a Y0Y increase in the non-oil economy in Q1. (Argaam)
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Updated 03 June 2021

Saudi non-oil business activity expands at quickest pace since Dec. 2017

Saudi non-oil business activity expands at quickest pace since Dec. 2017
  • Export orders increased at the fastest rate since 2015
  • Hiring was largely flat in May

RIYADH: Saudi Arabian non-oil business activity expanded at its fastest rate since December 2017, as new business and export orders increased, according to a survey released on Thursday.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose for the second month in a row, from 55.2 in April to 56.4 in May. A score above 50 indicates expansion, while below 50 points to contraction.

While activity is recovering from the pandemic slump, the impact has not yet been felt in recruitment; hiring increased for the second month in a row, but the pace slowed.

As pandemic restrictions begin to loosen, 30 percent of companies said they had seen an increase in business activity, and export orders increased at the fastest rate since 2015.

“Most firms continued to operate with unchanged workforce numbers, suggesting a focus on boosting productivity back to pre-COVID levels,” said David Owen, an economist at IHS Markit. “On the plus side, inventories were increased at the quickest pace in a year-and-a-half as firms prepare for a further recovery in demand over the coming months.”

Last month, a “flash estimate” from the Kingdom’s General Authority for Statistics (GAS) showed that the non-oil economy grew by 3.3 percent year-on-year in the first quarter, its first positive outcome on an annualized basis since last March.

Despite the robust performance from the non-oil sector, real gross domestic product was 3.3 percent down year-on-year.

“The year-on-year change was the result of the sharp decrease in the oil activities of minus 12 percent due to ongoing crude oil production cuts agreed by OPEC+ since May 2020,” GAS said.

In addition to cuts agreed by OPEC+, the oil producers’ alliance led by Saudi Arabia and Russia, the Kingdom decided on an extra voluntary cut of one million barrels of oil per day last February.

Jason Tuvey, analyst at London-based Capital Economics, said: “With oil output cuts now being eased and the vaccination program gathering pace, the economic recovery should get back on track over the rest of this year.”


TASI reverses gains to close the week lower: Closing bell

TASI reverses gains to close the week lower: Closing bell
Updated 14 sec ago

TASI reverses gains to close the week lower: Closing bell

TASI reverses gains to close the week lower: Closing bell
  • In the financial sector, the Kingdom’s largest valued bank Al Rajhi edged down 0.11 percent, while Alinma Bank fell 0.13 percent

RIYADH: Saudi Arabia’s main index reversed some of its gains to close lower on the last trading day of the week, as investor concerns shifted over a recession.

As of Thursday’s closing bell, TASI, fell 0.47 percent to reach 12,530, while the parallel market, Nomu, gained 1.14 percent  at 22,272.

Alhokair Group was up 10 percent, leading the market gainers; Wataniya Insurance Co. was down 8.81 percent, leading the fallers since the beginning of the trading session.

The stock price of Ataa Educational Co. fell 1.80 percent, following approval by the Capital Market Authority to raise capital by $112 million to acquire Naba'a.

Among the other gainers, CHUBB Arabia Cooperative Insurance Co. rose 4.08 percent, and Fawaz Abdulaziz Alhokair Co. was up 3.89 percent.

Shares of PIF-owned Elm Co. edged up by 1.98 percent, and shares of Saudi oil giant Aramco fell by 0.73 percent.

In the financial sector, the Kingdom’s largest valued bank Al Rajhi edged down 0.11 percent, while Alinma Bank fell 0.13 percent.

Among the telecom giants, Shares of stc added 0.38 percent, while shares of Zain KSA closed flat.

In the pharmaceutical sector, Aldawaa Medical Services Co. remained unchanged and Nahdi Medical Co. edged up 1.16 percent.

The energy market saw Brent crude trading at $114.45 a barrel and US West Texas Intermediate crude reached $110.95 a barrel, as of 3:19 p.m. Saudi time.


OPEC+ set to stick to modest output hike for July, sources say

OPEC+ set to stick to modest output hike for July, sources say
Updated 11 min 42 sec ago

OPEC+ set to stick to modest output hike for July, sources say

OPEC+ set to stick to modest output hike for July, sources say
  • Oil prices are up 5 percent on the month so far in May, largely on expectations that the European Union will agree an oil embargo on Russian supplies

LONDON/DUBAI: OPEC+ is set to stick to an oil production deal agreed last year at its meeting on June 2 and raise July output targets by 432,000 barrels per day, six OPEC+ sources told Reuters, rebuffing Western calls for a faster increase to lower surging prices.

Western nations, grappling with record inflation rates that are threatening economic growth, have repeatedly asked the group to accelerate its output hikes.

Members from the group maintain that the oil market is balanced and that the recent price hikes are not related to fundamentals.

Under a deal reached in July last year, the Organization of the Petroleum Exporting Countries and allies led by Russia, have been easing record production cuts by increments of about 400,000 bpd every month.

The cuts are set to be fully unwound by the end of September but the group’s oil output has been falling sharply in reality as sanctions and buyer reluctance hit Russian output, and Nigeria and Angola pump well below target.

“Why change what works perfectly?” one of the sources said.

“We will announce that we are going to increase our production by 432,000 bpd even if we are no longer able to do so,” he added

In April, OPEC+ produced 2.6 million bpd below its targets, internal data shows, with Russia accounting for half of the shortfall.

Deputy Russian Prime Minister Alexander Novak said oil and condensate production in the country is expected to drop by more than 8 percent to 480 million — 500 million tons this year.

Oil prices are up 5 percent on the month so far in May, largely on expectations that the European Union will agree an oil embargo on Russian supplies.

Brent crude was trading near $115 a barrel on Thursday.

European Council President Charles Michel on Wednesday said he is confident that an agreement can be reached before the council’s next meeting on May 30.

Russia has been significantly boosting oil sales to China and India as sales to European buyers become more problematic.


Chipmaker Broadcom to buy VMware for $61bn

Chipmaker Broadcom to buy VMware for $61bn
Updated 18 min 27 sec ago

Chipmaker Broadcom to buy VMware for $61bn

Chipmaker Broadcom to buy VMware for $61bn

New York: Chipmaker Broadcom announced Thursday a $61-billion deal to purchase cloud computing firm VMware, which is being called one of the biggest technology acquisitions ever.

“This transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers,” said Hock Tan, president and CEO of Broadcom.


Qatar Airways to revisit IPO plans after World Cup 2022

Qatar Airways to revisit IPO plans after World Cup 2022
Updated 23 min 2 sec ago

Qatar Airways to revisit IPO plans after World Cup 2022

Qatar Airways to revisit IPO plans after World Cup 2022

RIYADH: Qatar Airways will reconsider an initial public offering after the country concludes hosting World Cup 2022 later this year, CEO Akbar Al Baker told Asharq Business.

Earlier in 2012, the airline had planned to offer 50 percent stakes in an initial share sale, following three profitable years by the company.

However, it had to delay these plans due to regional conditions, which were followed by the COVID-19 pandemic.

 “If you want to invest your money, you will have to wait until the end of the decade to be able to invest in an IPO of Qatar Airways,” Al Baker said in a news conference without providing further details, according to Reuters.


Egypt In-focus: Egypt, South Africa sign deal to boost ties; Cairo reveals plans to promote clean energy projects

Egypt In-focus: Egypt, South Africa sign deal to boost ties; Cairo reveals plans to promote clean energy projects
Updated 48 min 47 sec ago

Egypt In-focus: Egypt, South Africa sign deal to boost ties; Cairo reveals plans to promote clean energy projects

Egypt In-focus: Egypt, South Africa sign deal to boost ties; Cairo reveals plans to promote clean energy projects

RIYADH: Egypt and South Africa plan to strengthen bilateral and continental collaboration. The country has also decided to dedicate a large area of land for clean and renewable projects. In addition, Egypt topped the continent in the Travel and Tourism Development Index for 2021. The North African country also jumped in the Arab Sustainable Development Goals Index for the Arab region in 2022. 

·      Egypt and South Africa have signed a joint agreement to propel bilateral and continental collaboration, local daily newspaper Ahram reported, citing a statement from the Egyptian Foreign Ministry. The deal was signed following  9 rounds of a joint committee meeting attended by Egyptian Minister of Foreign Affairs Sameh Shoukty and South African Minister of International Relations and Cooperation Naledi Pandor. 

·      Egypt’s New and Renewable Energy Authority has revealed plans to dedicate up to 5,200 sq. km for clean energy projects initiated by both the private and public sector firms, local newspaper Daily News Egypt reported. 

·      Egypt ranked first in Africa in the Travel and Tourism Development Index for 2021, local newspaper Youm 7 reported, citing the index issued by the World Economic Forum. Egypt also ranked 5th in the Middle East and 51st globally, according to the index. On this indicator, Egypt surged 6 points when compared to 2019, making it one of the few countries that witnessed a significant improvement in the sector since 2019. 

·      Egypt has gained a total of 63.6 points in the Arab Sustainable Development Goals Index for the Arab region in 2022, local newspaper Youm 7 reported, citing the Ministry of Planning and Economic Development. This reflects improvement in the North African country’s performance in achieving sustainable development goals.

·      Egypt’s wellness online consultancy platform startup Esaal has secured $1.7 million in its seed round, bringing the firm’s total investment to $3 million, Wamda reported. Founded in 2018, Esaal plans to utilize the amount raised in further expansion across the MENA region, product and brand development, and boosting talent acquisition.