Saudi Arabia’s Advanced Petrochemical posts record profits

Saudi Arabia’s Advanced Petrochemical posts record profits
The Saudi industrial city of Jubail, home to Advanced Petrochemical Co, one of the Kingdom's big chemical producers. (Supplied)
Short Url
Updated 07 July 2021

Saudi Arabia’s Advanced Petrochemical posts record profits

Saudi Arabia’s Advanced Petrochemical posts record profits
  • Surging demand for polypropylene lifted profits at Jubail-based producer

RIYADH: Saudi Arabia’s Advanced Petrochemical reported record estimated second-quarter profits driven by a surge in polypropylene sales.
Net profit gained 71 percent to SR265 million ($70.6 million) compared to the year-earlier period, the Jubail-based producer said in a filing to the Saudi stock exchange.
The main contributor to earnings was a 72 percent increase in sales of polypropylene, used to make packaging as well as a wide array of consumer products.
Saudi petrochemical producers have benefited from a rise in global demand for packaging as more people shopped online during the pandemic. At the same time a global explosion of demand for visors, masks and other personal protective equipment has also helped to support sales.
The company said its performance for the current period was the best on record.


Over 1.3 million homes to be completed in Saudi Arabia by 2030: Knight Frank

Over 1.3 million homes to be completed in Saudi Arabia by 2030: Knight Frank
Updated 33 sec ago

Over 1.3 million homes to be completed in Saudi Arabia by 2030: Knight Frank

Over 1.3 million homes to be completed in Saudi Arabia by 2030: Knight Frank

RIYADH: More than 1.3 million homes and 100,000 hotel rooms will be built in Saudi Arabia in the next nine years, according to the global real estate consultant Knight Frank.

The firm has made the prediction after the Kingdom witnessed a tenfold increase in the number of residential mortgages issued in the first half of 2021 compared to the same period in 2016.

Knight Frank has estimated that close to $1 trillion worth of real estate and infrastructure projects have been announced in the wake of the National Transformation Plan, unveiled in 2016.

This is only a third of the total $3.2 trillion of spending that is planned, according to the consultancy firm.

Faisal Durrani, head of Middle East research at Knight Frank, said: “In the national office markets, headline rents were clearly impacted by the pandemic, but rates for the best offices in Riyadh have recovered to pre-pandemic levels and demand is growing rapidly. 

“The industrial markets too are expanding at an unprecedented rate as requirements outstrip demand in many locations.” 

The first quarter of 2021 has seen the highest ever number of new foreign business investment licenses issued, as the government’s efforts to reshape the economic and real estate landscape drove a sharp upturn in business activity.

Infrastructure building planned in the Kingdom includes 8 giga projects and new super cities, including the $500 billion NEOM and the $20 billion Diriyah Gate luxury neighbourhood in Riyadh.

Knight Frank’s Harmen de Jong said: “We are beginning to see increased appetite from private sector real estate developers in the form of public-private-partnership initiatives with large scale government led projects. 

“This is a key trend which will further support the realisation of Vision 2030.”


Britain may give state loans to energy companies as gas prices surge

Britain may give state loans to energy companies as gas prices surge
Image: Shutterstock
Updated 30 min 28 sec ago

Britain may give state loans to energy companies as gas prices surge

Britain may give state loans to energy companies as gas prices surge
  • The record prices have strained the British energy sector, destroying the business model of smaller energy traders and sending shockwaves through the chemical and fertiliser markets
  • Britain's biggest energy companies have asked the government for support to help cover the cost of taking on customers from firms that have gone bust

Britain is considering offering state loans to energy companies that take on customers from firms which go bust due to soaring wholesale natural gas prices, Business Secretary Kwasi Kwarteng said on Tuesday.


Wholesale natural gas prices in Europe have soared this year, pushed up by high demand for liquefied natural gas in Asia, nuclear maintenance and lower-than-usual supplies from Russia.


The record prices have strained the British energy sector, destroying the business model of smaller energy traders and sending shockwaves through the chemical and fertiliser markets, leading to a shortage of carbon dioxide.


Britain's biggest energy companies have asked the government for support to help cover the cost of taking on customers from firms that have gone bust.


Kwarteng told Sky News when asked about state-backed loans that, "there are lots of options."


"It costs a company to absorb up to hundreds of thousands of customers from another company that's failed and there may well be a provision for some sort of loan and that's been discussed," he added.


Kwarteng said that in an average year about 5-8 smaller energy companies exited the market in Britain, but that this year the number could be bigger.


Britain could also look at providing some kind of economic support for the U.S. company that provides 60 percent of its carbon dioxide, CF Industries, Kwarteng said.

WINTER HEATING BILLS
European consumers are facing the prospect of soaring winter heating bills due to a confluence of global factors that have raised questions about how vulnerable Europe remains to swings in global energy prices.


Benchmark European gas prices have risen by more than 250 percent since January, with contributory factors also including low storage stocks, high EU carbon prices and low renewable energy output.


Britain privatised British Gas in 1986 and, after a series of deregulating steps since then, the consumer market has seen a plethora of different companies - some essentially just traders - offering gas and electricity to households.


"I don't think we should be throwing taxpayers' money at companies which have been, let's face it, badly run," Kwarteng said. "I don't want there to be a reward for failure," he added.


Kwarteng said he also hoped to have some resolution to a shortage of carbon dioxide, which is used to put the fizz in beer and soft drinks, and also used to stun pigs and poultry in abattoirs as well as to preserve the shelf-life of meat.


"Its pretty imminent but I'm confident, this week I hope we have a very clear plan to get CO2 production going again," he said, adding that he had spoken to finance minister Rishi Sunak about the situation.


CF Industries has halted its operations at two plants in Britain that produce CO2 as a byproduct of its main business, producing fertiliser. Kwarteng met Tony Will, the head of CF, on Sunday.

 


Cement factories in Egypt to operate with natural gas instead of coal

Cement factories in Egypt to operate with natural gas instead of coal
Updated 44 min 19 sec ago

Cement factories in Egypt to operate with natural gas instead of coal

Cement factories in Egypt to operate with natural gas instead of coal

RIYADH: Cement companies in Egypt are seeking to return to operating with natural gas fuels instead of coal, after nearly seven years of the government’s decision to compel companies to use a mixture of fuels from coal and waste, Head of Industrials Sector at the Arab African International Securities Company, Rehan Hamza, said.

The continuous pumping of natural gas, and the rise in coal prices, will be guarantors of a stable return for cement factories in Egypt to rely on natural gas, she said in an interview with Al Arabiya.

The Export Council for Building Materials has prepared technical studies on the economic feasibility of cement factories returning to work with natural gas in light of rising coal prices to record levels, in addition to the high cost of shipping and import, and the abundance of local natural gas, she said. The study will be presented to the Ministry of Trade and Industry within days,

The Egyptian Cabinet issued a decision to reduce the price of natural gas for industry to $4.5 per million thermal unit, in March last year.


Good COVID care added to KSA’s investment attraction, says Sedco chief

Good COVID care added to KSA’s investment attraction, says Sedco chief
Updated 20 September 2021

Good COVID care added to KSA’s investment attraction, says Sedco chief

Good COVID care added to KSA’s investment attraction, says Sedco chief
  • Saudi Arabia is shifting toward cleaner energy, even though oil will continue to be an important component of our economy, says Abu Aker

DUBAI: Sedco Capital, one of Saudi Arabia’s leading investment groups, takes a global stance as it expands outside its Jeddah base.

Samer Abu Aker, Sedco chief executive officer, told Arab News: “In terms of regional exposure, we are actually global in the sense that we invest in Asia, in Europe, in the Middle East and America.”

“Our strategy is split between developed markets, emerging markets, passive strategies, active strategies in different asset classes — listed equities, private markets, direct investment into companies and in real estate as well,” he added.

Sedco, founded in 1976, has offices across the world, in Dubai, London and Luxembourg, giving it a view across global publicly listed and private asset sectors.

After two decades in financial services, Abu Aker joined the company in 2011 after Sedco was relaunched as a standalone asset management group.

The current Sedco focus is more on developed markets, with the US a favorite as American asset classes have responded well to pandemic stimulus packages that curtailed its recession.

The US government provided almost $6 trillion in coronavirus relief, while the Federal Reserve slashed its overnight benchmark overnight interest rate to near zero and is pump money into the economy through monthly bond purchases.

Last year, Sedco invested in what Abu Aker calls “jewel” real estate assets in Pennsylvania Avenue, home to the White House, in the heart of Washington DC.

The (coronavirus disease) pandemic presented opportunities, he said.

The money manager said: “Definitely it has shifted the position of our portfolios over the course of the last 18 months.

“For example, while we have maintained a strategic asset allocation based on our views on different economies and the different markets, with the pandemic coming into play we have seen the more active role of the US government both on the monetary side but also the robust fiscal spending that they have that they have put in place.”

Sedco is also actively involved in other big markets, in China and in Europe, for example, to take advantage of economic recovery as vaccines are rolled out round the world.

“As the global cycle marches on through the latter part of the year, led by developed countries, chances are that investors’ preferences might change as the worst news is priced in and valuations become more appealing,” he said.

The firm said in its August monthly bulletin that pressure on the supply of goods caused by pandemic bottlenecks “should eventually subside in the second half of 2022 as economic mobility in the US and Europe eventually decouples from the spread of the delta variant.”

But the firm adds that it does not expect core prices in these markets to quickly return to “pre-pandemic levels as a result of more fundamental forces at play,” such as wage growth.

Investors have cast a close eye on China’s crackdown on the tech sector and other industries this year, which has seen billions in fines handed out after antimonopoly investigations.

This regulatory campaign from Beijing has wiped as much as $1.5 trillion from Chinese stocks.

But Abu Aker said: “While we still retain a cautious exposure on emerging markets as a whole, we are closely watching China as it is our belief that the authorities don’t mean to cross the line of losing foreign investors’ trust. Overall, we see positive prospects in Asia.”

But Sedco remains a Saudi Arabia-based firm, and investment in the Kingdom will always be a big focus. He thinks the government measures taken during the pandemic have made it a more attractive place to invest.

The Kingdom’s second-quarter economic data showed growth of 1.1 percent quarter-on-quarter. The oil sector grew by 2.5 percent quarter-on-quarter on the back of the unwinding of the 1 million billion barrels per day voluntary output cut that lasted from February to April.

Abu Aker said: “If you would speak to any of the managers and investment companies in Saudi Arabia you will hear nothing but positive surprises from the actions and the role that the government has played.”

“We’ve never felt that there’s any lack of liquidity within the banks. They are still rich in cash, and the central bank has supported them with all the liquidity they need to support the economy, both on the government side and in the private sector.”

He added: “We have seen a good rebound as well on the residential real estate side, and this is mainly driven by structural reforms where the government has been promoting Saudi home ownership and of course mortgages.”

Other government policies will also affect investment sentiment in coming years. The move to encourage multinational companies to have their regional headquarters in Riyadh is a positive one, Abu Aker said.

“I don’t think those multinational companies should have waited for such an announcement to come out from the Saudi government for them to actually make the move. I think today if we look at the Saudi market, it is the largest market not only in the GCC but it is also one of the largest markets in the Middle East,” he said.

Sedco also believes that the $3.2 billion Shareek initiative, launched in March, to stimulate greater private sector investment in Vision 2030 projects will pay dividends.

The chief executive said: “I think it’s one more step toward engaging the government more with the private sector and increasing the ties between the government and the private sector.”

“It’s going to avail more financing, more grants to corporates and to the private sector to allow them to capture some of the opportunities they could not get funding for through the normal channels.”

The core of Sedco’s investment philosophy lies in the complementarity between Shariah principles and the current enthusiasm for ESG — ethical, social and governance — investment practice.

“We have run our own internal analysis and research, and the interesting finding that we came up with is that there’s a lot of commonalities between the Shariah guidelines and ESG — environmental, social and governance — or ethical investing.”

Shariah and ethical guidelines overlapped 90 percent of the time, he said, making “one unified investment philosophy” that helps set Sedco’s investment strategy.

“We don’t just talk the talk, we also walk the walk,” Abu Aker said.

The Sedco investment philosophy is not just governed by Shariah’s conventional stance of refusing to invest in sectors, such as tobacco, alcohol or gambling, that are frowned upon under Islam, but also by a wider commitment to prudent, ethical financial principles.

The firm signed up to the UN Principles for Responsible Investment charter six years ago, the first Saudi firm to do so.

Abu Aker sees no conflict in being a Saudi institution, based in an economy that is still mainly driven by oil revenues, and espousing ESG standards when some in the global financial industry are steering away from hydrocarbon assets on ethical grounds.

He said: “Saudi Arabia is shifting toward cleaner energy, even though oil will continue to be an important component of our economy.”

“But we understand that the future is more toward alternative and cleaner energy. Right now, it’s a transitional period, and it will take some time, but it’s heading in the right direction.”


Cryptocurrencies slide as market selloff deepens

Cryptocurrencies slide as market selloff deepens
Updated 20 September 2021

Cryptocurrencies slide as market selloff deepens

Cryptocurrencies slide as market selloff deepens
  • Digital currencies gaining popularity among Indians in smaller cities

RIYADH: Prices of cryptocurrencies plunged on Monday as concerns over the spillover risk to the global economy from Chinese property group Evergrande’s troubles rippled over to wider markets.

Bitcoin tumbled 7.33 percent to $43,804 at 4:29 p.m. Riyadh time. Its rival Ether, the coin linked to the Ethereum blockchain network, fell 8.74 percent to $3,050.45, according to data from CoinDesk.

The loss in the value of cryptocurrencies comes at a time when institutional interest in the space has surged and some investment banks have ramped up their forecasts for cryptocurrencies in the coming months.

“Their fate seems a little tied to equities at the moment, and the price action is incredibly similar too,” said John Marley, CEO of forexxtra, a London-based FX consultancy. 

Ether price

Nikolaos Panigirtzoglou, managing director of JPMorgan said that the fair value of Ether is much lower than its current price.

According to a set of measurements based on the network’s activity, it calculated the value of the digital coin at $1,500, 55 percent below its market price.

One of the reasons cited was that Ethereum was not unique anymore, and it faced stiff competition from other chains such as Solana and Avalanche.

“We look at the hash rate and the number of unique addresses to try to understand the value for Ethereum. We’re struggling to go above $1,500. There is a question mark here. The current price is expressing an exponential increase in usage and traffic that might not materialize,” he stated.

 

Lawsuit

In the midst of an ongoing lawsuit with the US Securities and Exchange Commission, Ripple's legal team said they have no plans to settle with the SEC.

They are confident that SEC President Gary Gensler will be convinced that pursuing the case is to pick winners and losers in the crypto space based on innovation.

"Ripple’s legal team told Fox Business they have no plans to settle with SEC over lawsuit on XRP, confident they can show Gary Gensler in pursuing the case is picking winners and losers in the crypto business to the detriment of innovation,” Charles Gasparino tweeted.

 

Indians embrace crypto

Indian citizens are embracing cryptocurrencies to invest and earn extra money after the pandemic, according to reports from the regional media.

But what is even more interesting is that this growth has been greater in smaller cities, where interest in cryptocurrency is at its peak.

The profile of these participants was also interesting, as they are highly educated and open to diversifying their investment portfolios and not only focus on Bitcoin.

 A local exchange, Wazirx, has reported astonishing levels of new customers coming from these small towns, classified as Tier 2 and Tier 3 cities.

“Tier 2 and Tier 3 cities have driven almost 55 percent of the total user signups on Wazirx in 2021, thereby overtaking Tier 1 cities, which demonstrated a signup growth of 2,375 percent,” Wazirx CEO Nischal Shetty was quoted as saying in local media reports.