Saudi industrial production up; Egyptian inflation rises: Economy wrap

Saudi industrial production up; Egyptian inflation rises: Economy wrap
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Updated 10 October 2021

Saudi industrial production up; Egyptian inflation rises: Economy wrap

Saudi industrial production up; Egyptian inflation rises: Economy wrap

CAIRO/RIYADH: Mining and quarrying activity (which includes oil activity) continued to be a key driver for the growth in the Saudi Industrial Production Index (IPI), which grew annually by 5.8 percent in August. 

The sector's growth  increased by 6.5 percent YoY in August, according to data published by GASTAT.

Non-oil manufacturing also exhibited a notable growth of 5 percent in August while electricity and gas supply activity declined annually by 4 percent. However, electricity and gas supply activities hold only a 2.9 percent weight in the index, making its variations less influential on the index's overall value.

Month-on-month the IPI also rose by 3.6 percent in August propelled by a significant 13 percent growth in non-oil manufacturing activity.

Egyptian urban inflation

Egyptian cities’ yearly inflation rate reached 6.6 percent in September compared to 5.7 percent in August, data from CAPMAS revealed. This is a noticeable increase from the rate recorded in April, when it stood at just 4.1 percent.

The price increase was mainly driven by sharp hikes in food prices. in particular, the price of vegetables (across the whole republic) jumped by a pronounced 38.1 percent YoY in September.

Month-on-month inflation rate for the entire country also jumped from a negative 0.1 percent in August to a positive 1.6 percent in September.

However, the annual urban inflation rate is still within the Egyptian central bank’s target range of 5-9 percent. The monetary policy committee is expected to meet on October 28 to decide interest rates.

Omani budget deficit narrows
The Sultanate’s budget deficit fell from OR1.96 billion in August last year to OR1.05 billion in August, mirroring a dramatic 46.2 percent decline in the deficit. This was mainly due to a considerable growth in revenues driven by increases in oil and gas prices, the Omani Ministry of Finance reported.

Revenues increased by almost 14 percent year-on-year as the average oil price jumped to $55.6 in August from the $50 recorded in the same month last year. Expenditures also decreased by 1.7 percent contributing to the fall in the country’s deficit.

As a result of these developments, S&P has decided to revise its outlook for the country from stable to positive, and they expect Oman’s fiscal deficit to slide sharply as a share of GDP; a drop from 15.3 percent in 2020 to 4.2 percent in 2021.

Tunisian banks at risk
Tunis’ 10 biggest banks experienced significantly higher profits in the first half of 2021 as their net aggregated income grew annually by 37 percent.

However, Fitch Ratings agency has said that this masks the various risk factors which could hamper the sector. These include an unstable political environment, the expiry of debt relief measures and the transition to IFRS 9 accounting.

The agency expected the country’s GDP to increase only by 3.4 percent in 2021, compared to the huge decline it faced last year when it contracted by 9.3 percent. In addition, the banks’ assets quality is quickly deteriorating as the NPL ratio reached 11 percent in H1 2021. Fitch also added that “capital buffers could prove insufficient in a severe stress scenario, which cannot be ruled out.”

Global taxes for corporates

A minimum tax rate of 15 percent for corporations has been agreed upon by 136 countries. Consequently, countries’ tax revenues will see a surge of $150 billion annually, the OECD said.
However, this tax rate is below the average 23.5 percent rate levied by industrialized countries.

Jobless claims in the U.S.

The US job market and economy continue to show positive signs of recovery from last year’s coronavirus recession as the number of Americans applying for unemployment benefits fell last week, dropping by 38,000 to 326,000. This is the first drop in four weeks, according to data published by the Department of Labor.

Turkish Lira

The Turkish currency’s exchange rate has fallen to an all-time low, as it reached 8.9750 TL per dollar on Friday. This was partly due to worries about the course of the country’s monetary policy.


Aramco announces collaboration with French companies including hydrogen cars deal with Gaussin

Aramco announces collaboration with French companies including hydrogen cars deal with Gaussin
Updated 04 December 2021

Aramco announces collaboration with French companies including hydrogen cars deal with Gaussin

Aramco announces collaboration with French companies including hydrogen cars deal with Gaussin
  • Gaussin to explore manufacturing of hydrogen vehicles in Saudi Arabia
  • Aramco sponsors first hydrogen-fueled truck to compete in Dakar Rally

JEDDAH: Saudi Aramco on Saturday signed five agreements with leading French companies including an agreement to explore a hydrogen-powered vehicle business with Gaussin, said a statement.

The signing was held during an event in Jeddah, organized by the Ministry of Investment to explore investment opportunities for French companies in Saudi Arabia. 

Commenting on the deal with Gaussin, a pioneer in clean and intelligent transport solutions, Saudi Aramco CEO Amin Nasser said: “It represents an opportunity to promote hydrogen as a low-carbon solution, not just for motorsport, but eventually for mass transportation as well. Such collaboration helps us to advance economic growth in the Kingdom as part of the Namaat industrial investment program and takes us a step closer to our shared vision of a more sustainable future.”

The agreement aims to establish a modern manufacturing facility for on-road and off-road hydrogen powered vehicles in the Kingdom. The two companies will study the feasibility of a manufacturing facility and a hydrogen distribution business to serve the Middle East region.

The two companies also agreed that Aramco’s Advanced Innovation Center (LAB7) will be closely involved in Gaussin’s development of hydrogen-powered vehicles and the development of a remote controlled/autonomous hydrogen racing truck. LAB7 aims to integrate Aramco’s composite materials into Gaussin’s existing range of products to reduce the weight, energy consumption and cost of these vehicles.

Aramco will also be sponsoring the world’s first hydrogen-fueled racing truck, which has been developed by Gaussin and which will compete in the 2022 Dakar Rally in Saudi Arabia. Aramco’s sponsorship of Gaussin’s participation in the Dakar Rally continues to promote low-emission transportation technology developments.

Additional MoU’s

Other agreements announced on Saturday seek to further Aramco’s research and development in the areas of carbon capture technology, artificial intelligence and local manufacturing. The MoUs include:

  • Air Liquide – Non-binding MoU to evaluate low Carbon hydrogen and ammonia production, logistics, and backcracking technology and an additional non-binding MoU to evaluate Carbon Capture and Sequestration opportunities.
  • Alteia – Non-binding MoU to develop advanced artificial intelligence driven geospatial imagery interpretation and processing capabilities in the Kingdom of Saudi Arabia.
  • Axens – non-binding MoU to explore the local manufacturing and maintenance services of furnaces and fired heaters.

SAMI launches JV with French firm to build aerostructure components in Kingdom

SAMI launches JV with French firm to build aerostructure components in Kingdom
Updated 04 December 2021

SAMI launches JV with French firm to build aerostructure components in Kingdom

SAMI launches JV with French firm to build aerostructure components in Kingdom

JEDDAH: The Saudi Arabian Military Industries, a wholly owned subsidiary of the Public Investment Fund, on Saturday launched a joint venture with French company Figeac Aero and the Saudi Arabian Industrial Investments Co., Dussur, to build a high-precision manufacturing facility in the Kingdom to produce aerostructure components, SAMI said on Saturday.

The company said that the joint venture’s revenue would reach $200 million by 2030 and the ownership would be divided among the two countries. Fifty-one percent would be owned by Saudi Arabia and 49 percent by France.

SAMI also signed an agreement with Airbus to form a joint project specialized in military aviation services and maintenance, the statement said. As per the deal, the Kingdom would own 51 percent of the joint venture with the European planemaker holding the other 49 percent.

 

Aviation deals

Saudi Arabian Airlines signed an agreement with CFM International worth $8.5 billion at list prices, the carrier said in a statement.

The state-owned carrier, also known as Saudia, said “it has ordered CFM International LEAP-1A engines to power its new fleet of 35 Airbus A321neo and 30 A320neo aircraft.”

Low-cost Saudi airline flynas also signed an agreement with CFM International to maintain LEAP-1A engines in a deal valued at $4 billion, the Saudi Arabian budget carrier said.


Egypt to increase cotton gins capacity, says official report

Egypt to increase cotton gins capacity, says official report
Updated 04 December 2021

Egypt to increase cotton gins capacity, says official report

Egypt to increase cotton gins capacity, says official report

RIYADH: Egypt aims to increase cotton gins capacity to 4.4 million kantars annually up from 1.5 million kantars, according to a government report issued on Saturday.

A kantar is the official Egyptian weight unit for measuring cotton. It corresponds to the US hundredweight, and is roughly equal to 99.05 pounds, or 45.02 kg. It is equal to either 157 kg of seed cotton or 50 kg of lint cotton.

The Egyptian government is trying to breath a new life into the country’s textile industry, which contributes almost 3 percent to the gross domestic product, employs one-third of the industrial labor and generates exports worth $2.6 billion annually. 

According to reports, the country’s cotton production rose by 30 percent during 2021.

Egypt increased the cultivated area this year to 236,000 feddans (one feddan equals 1.038 acres or 0.42 hectare) compared to 182,000 feddans last year.

In its annual report on Egypt’s cotton on March 31, 2021, the US Department of Agriculture said that “cotton area harvested in Egypt was forecast to increase seven percent to 70,000 hectares (ha), from 65,000 ha in MY 2020/21.” It added that Egypt’s production is estimated to increase to 250,000 bales this year compared to 215,000 bales in the previous year.


Bitcoin falls by a fifth, cryptos see $1bn worth liquidated

Bitcoin falls by a fifth, cryptos see $1bn worth liquidated
Updated 04 December 2021

Bitcoin falls by a fifth, cryptos see $1bn worth liquidated

Bitcoin falls by a fifth, cryptos see $1bn worth liquidated

NEW YORK: Bitcoin shed a fifth of its value on Saturday as a combination of profit-taking and macro-economic concerns triggered nearly a billion dollars worth of selling across cryptocurrencies.

Bitcoin was 12 percent down at 0920 GMT at $47,495. It fell as low as $41,967.5 during the session, taking total losses for the day to 22 percent.

The broad selloff in cryptocurrencies also saw ether, the coin linked to the ethereum blockchain network, plunge more than 10 percent.

Based on cryptocurrency data platform Coingecko, the market capitalization of the 11,392 coins it tracks dropped nearly 15 percent to $2.34 trillion. That value had briefly crossed $3 trillion last month, when bitcoin hit a record $69,000.

The plunge follows a volatile week for financial markets. Global equities and benchmark US bond yields tumbled on Friday after data showed US job growth slowed in November and the omicron variant of the coronavirus kept investors on edge.

Justin d'Anethan, Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, said he had been watching the increase in leverage ratios across the cryptocurrency markets as well how large holders had been moving their coins from wallets to exchanges. The latter is usually a sign of intent to sell.

“Whales in the crypto space seem to have transferred coins to trading venue, taken advantage of a bullish bias and leverage from retail traders, to then push prices down,” he said.

The selloff also comes ahead of testimony by executives from eight major cryptocurrency firms, including Coinbase Global CFO Alesia Haas and FTX Trading CEO Sam Bankman-Fried, before the US House Financial Services Committee on Dec. 8.

The hearing marks the first time major players in the crypto markets will testify before US lawmakers, as policymakers grapple with the implications of cryptocurrencies and how to best regulate them.

Last week, the US Securities and Exchange Commission (SEC) rejected a second spot-bitcoin exchange-traded fund proposal from WisdomTree.

Data from another platform Coinglass showed nearly $1 billion worth of cryptocurrencies had been liquidated over the past 24 hours, with the bulk being on digital exchange Bitfinex.

A plunge in bitcoin funding rates — the cost of holding bitcoin via perpetual futures which peaked at 0.06 percent in October — also showed traders had turned bearish.

The funding rate on cryptocurrency trading platform BitMEX fell to a negative 0.18 percent from levels of 0.01 percent for most of November.


Saudi, French firms sign 27 MoUs as Macron visits the Kingdom

Saudi, French firms sign 27 MoUs as Macron visits the Kingdom
Updated 04 December 2021

Saudi, French firms sign 27 MoUs as Macron visits the Kingdom

Saudi, French firms sign 27 MoUs as Macron visits the Kingdom

JEDDAH: A group of leading Saudi and French companies signed 27 memorandum of understanding at an investment forum in Jeddah as French President Emmanuel Macron met with Crown Prince Mohammed bin Salman today during his official trip to the Gulf region, where he is visiting Saudi Arabia, the UAE and Qatar between Dec. 3 and 4.

Around 101 Saudi companies and 84 French companies attended six workshops at the forum, which was opened by Khalid Al Falih, Minister of Investment, Saudi Arabia and Franck Riester, Minister Delegate for Foreign Trade and Economic Attractiveness.

"The memorandums of understanding signed today were a cause for optimism and satisfaction," Al Falih said in a tweet after the event.

Represenatives of French companies and banks including EDF Renewables, Engie, Sanofi, and BNP Paribas are meeting with chairmen and CEOs of leading Saudi firms including ACWA Power, Banque Saudi Fransi, Riyad Bank, and Saudi Military Industries Co. Officials from the Public Investment Fund and Royal Commission of AlUla among others are also participating in the forum. 

 

Below is the agenda for the one-day forum: