Investors eye Saudi inflation plays as Fed turns hawkish

Investors eye Saudi inflation plays as Fed turns hawkish
Food was the biggest contributor to inflation in Saudi Arabia in May.
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Updated 17 June 2021

Investors eye Saudi inflation plays as Fed turns hawkish

Investors eye Saudi inflation plays as Fed turns hawkish
  • Inflation is more than a transitory spike, Credit Suisse says
  • Fed moved prediction for first rate rises to 2023, from 2024

RIYADH: Saudi investors should ensure their portfolios include inflation exposure as global prices continue to accelerate, said a Credit Suisse banker.
The Federal Reserve on Wednesday signaled it may act sooner than previously planned to start dialing back its low-interest-rate policy as inflation gathers pace worldwide.
Fed policymakers forecast that they would raise their benchmark short-term rate twice by late 2023. They had earlier indicated rate hikes would not happen before 2024.
“Certainly inflation and inflationary exposure is the name of the game now, Fahd Iqbal, Credit Suisse head of private bank Middle East research, told Bloomberg TV on Thursday. “There are transitory aspects of inflation, not just in Saudi but in the US and globally — but once that transitory spike abates and we see inflation come down again, we will see structural factors that will help keep inflation higher than we’ve been accustomed to and that’s going to be the case for some time to come.”
Saudi inflation rose for a second straight month in May as the consumer price index hit 5.7 percent. Prices rose from 5.3 percent the previous month according to data from the General Authority for Statistics.
The pickup in inflation highlighted the continuing impact of higher value added tax (VAT) which was increased to 15 percent in July 2020 from 5 percent before. Transport prices also increased by 19.3 percent, led by the rising cost of buying a vehicle.
Rising prices in the Kingdom are now influencing how investors play the market, say analysts.
“Investors really need to make sure that they are focusing on ensuring they have inflation exposure in their portfolios,” said Iqbal. “For us it would be market leaders in consumer and industrial names at the top of the list. Beyond that you would look at financials, which is really about interest rates, a by-product of inflation, not inflation itself.”
A 7.3 percent increase in food prices was the main driver of Saudi inflation in May 2021, the General Authority for Statistics said yesterday. Food represents a weighting of 17 percent in the Saudi consumer basket that economists use to measure the cost of living in the Kingdom.


Egypt to sell minority stake in state payments firm e-finance

Egypt to sell minority stake in state payments firm e-finance
Updated 7 sec ago

Egypt to sell minority stake in state payments firm e-finance

Egypt to sell minority stake in state payments firm e-finance

CAIRO: Egyptian state-controlled payments firm e-finance for Digital and Financial Investments said on Sunday it would offer up to 14.5 percent of its capital in an initial public offering in the fourth quarter of 2021.

Founded in 2005, e-finance said in a statement it is the sole entity authorized to operate the government’s financial network, including processing and settling payment and collection transactions.

The sale is one of several planned for this year.

In May, Egypt sold a 51 percent stake in state-owned Arab Investment Bank to privately owned EFG Hermes, its first sale of a majority bank stake since 2006.

The government announced in 2018 it intended to sell minority stakes in nearly two dozen companies, but those sales have been delayed repeatedly by market downturns and more recently by the coronavirus pandemic.

e-finance said it would float 177.8 million new shares on the stock exchange and 80 million shares owned by current shareholders, to both institutional and retail investors.

Among its shareholders are three state-owned banks: National Investment Bank, with 63.64 percent, and the National Bank of Egypt and Banque Misr, each with 9.09 percent, according to e-finance’s 2019 annual report.

Egyptian Banks Co., a payments operator led by the central bank, and a firm called Egyptian Company for Investment Projects each own another 9.09 percent.

e-finance's revenue rose to 1.23 billion Egyptian pounds ($78 million) in 2020 and 904 million pounds in the first half of 2021, a 2018-20 compound annual growth rate of 30 percent, it said.

The sale is subject to market conditions and regulatory approvals, the statement added.


Saudi ministry launches initiative to implement global financial practices in govt entities

Saudi ministry launches initiative to implement global financial practices in govt entities
Updated 5 min 35 sec ago

Saudi ministry launches initiative to implement global financial practices in govt entities

Saudi ministry launches initiative to implement global financial practices in govt entities

RIYADH: Saudi Arabia’s Finance Ministry on Sunday launched an initiative to ensure implementation of the latest global financial practices in the government sector to increase its efficiency in line with the Vision 2030, said a ministry statement.
Prior to the launch of the Financial Control and Support and Development Initiative, the ministry launched a self-assessment pilot program on selected government entities, it said.
The pilot project conducted field studies on the feasibility of self-assessment tools in government entities. The project sought to assess the efficiency of the entities’ internal control systems, level of transparency, and overall control measures.
The program aims to strengthen financial control procedures, improve governance, and switching to automation.


KSA’s grains storage capacity rises by 37% with 2 new silos


KSA’s grains storage capacity rises by 37%  with 2 new silos

Updated 26 min 49 sec ago

KSA’s grains storage capacity rises by 37% with 2 new silos


KSA’s grains storage capacity rises by 37%  with 2 new silos


RIYADH: Saudi Arabia has added two new silos to its existing infrastructure increasing its strategic grain storage capacity by 37 percent, according to an Al-Eqtisadiyah report.

The Saudi Grains Organizations completed the Yanbu Silos Project with a storage capacity of 120,000 tons and it is working on adding a new one with the same capacity in Duba port, the reported said citing SAGO Gov. Ahmed Al-Faris.

Al-Faris said that Saudi strategic storage capacity of grains increased by 900,000 tons to 3.4 millions between 2015 and 2021.  

The SAGO chief said that the Kingdom has reached self-sufficiency in many products such as fresh milk, eggs, dates and white corn etc.

SAGO is one of the leading national institutions tasked with ensuring availability of key food commodities in Saudi Arabia.


Skeptics fail to deter companies from entering crypto fray: Market wrap

Skeptics fail to deter companies from entering crypto fray: Market wrap
Updated 59 min 53 sec ago

Skeptics fail to deter companies from entering crypto fray: Market wrap

Skeptics fail to deter companies from entering crypto fray: Market wrap
  • Paypal Crypto is now available to its UK customers

RIYADH: Paypal has completed the first international expansion of its cryptocurrency offering outside the US. 

Paypal Crypto is now available to its UK customers allowing them to buy, hold and sell four types of cryptocurrencies.

The official account of Paypal UK tweeted: “We are delighted to share that all eligible customers in the UK can now buy, hold and sell cryptocurrencies such as: Bitcoin, ethereum, bitcoin cash and litecoin from their Paypal account.”

Meanwhile, Laos has allowed a series of cryptocurrency mining and trading projects in the country in contravention of the policies of its central bank which issued warnings against cryptocurrencies just a month ago. The move to allow bitcoin mining is part of the government’s efforts to compensate for the losses caused due to a decline in tourism due to the coronavirus disease pandemic. 

Six companies have been authorized to start cryptocurrency trading and mining operations in the country, according to the Prime Minister’s Office.

Laos could also try to attract some of the miners who were expelled from China.

Skepticism

Sergei Shvetsov, deputy chairman of the board of directors of the Bank of Russia, stated that the bank remains skeptical about the acquisition of cryptocurrencies and will not support increased access to crypto markets for Russian investors, most of whom are not certified, according to media reports.

Russia’s central bank is now working with commercial banks to delay payments made on digital asset exchanges.

The move aims to limit cryptocurrency purchases that Russian investors make based on emotion and are not qualified to do so. The move is likely to affect peer-to-peer and over-the-counter trading platforms.

Speaking at the International Banking Forum, the senior official explained: “When it comes to buying cryptocurrency for investment purposes, we are skeptical about this idea. We believe it’s different from traditional assets, it’s highly risky and has signs of a pyramid scheme.”

Trading

Bitcoin, the leading digital currency, traded lower on Sunday and slipped by 1.57 percent to $47,690.80 at 5:52 p.m. Riyadh time.

Ether, the second most-traded cryptocurrency, was down by 3.46 percent at $3,357.70, according to data from CoinDesk.

 

 


UAE economy minister to visit Britain seeking trade deal

UAE economy minister to visit Britain seeking trade deal
Updated 19 September 2021

UAE economy minister to visit Britain seeking trade deal

UAE economy minister to visit Britain seeking trade deal
  • Trade between the two countries was worth almost $8.1 billion in 2020

DUBAI: The UAE’s economy minister will lead a high-level delegation to Britain this week, the ministry said on Sunday, as the Gulf state seeks to deepen trade ties.

Abdulla bin Touq Al-Marri and the delegation will meet British ministers, officials and representatives from the private sector to discuss recently announced UAE economic policies.

One of those policies includes the UAE seeking to seal what it calls a comprehensive economic agreement covering trade and foreign investment with Britain and seven other countries.

The delegation would also discuss ways to develop economic ties and strengthen cooperation in trade, investment, healthcare and energy, among other sectors, the ministry said.

The UAE last week announced it had expanded an investment partnership with the British government, committing  £10 billion ($13.7 billion) to invest in the UK over five years.

The UAE delegation will also include local government, investment company and private sector representatives, the ministry said.

Britain is the UAE’s third largest non-oil trade partner in Europe, with trade between the two countries worth almost $8.1 billion in 2020, it said.