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.


Electric car construction will drive aluminum prices to 30 year high: Mining company CEO

Electric car construction will drive aluminum prices to 30 year high: Mining company CEO
Updated 28 January 2022

Electric car construction will drive aluminum prices to 30 year high: Mining company CEO

Electric car construction will drive aluminum prices to 30 year high: Mining company CEO

Aluminum is set to reach its highest price for more than 30 years, according to the CEO of mining company Eurasian Resources Group.

In 2021, the price of the metal surged to a 13-year high, gaining over 40 percent year-on-year.

Benedikt Sobotka believes a combination of Chinese demand, a global focus on renewables, and rising electric vehicle production will further push up the cost of aluminum over the upcoming 12 months.

In a report, he said: “We believe that aluminum has strong potential to outperform other LME base metals in 2022, having again breached the important milestone of USD 3,000/tonne at the start of this year. The market will remain in a sizable deficit for the second consecutive year, with visible inventories at the lowest level since the global financial crisis.”

His comments came after a year in which the cost of metals and other commodities rose, with copper, iron ore and natural gas prices hitting all-time highs.  

“The main driving forces for these markets were supply chain disruptions, production restrictions in China, the energy crisis, a stimulus-led consumption boom in the US and depleted inventories,” said Sobotka.

As well as aluminum, Sobotka forecasts an increase in the cost of cobalt, saying that its 119 percent price surge through the course of 2021 emanates “a very loud and clear message: the market is severely short of the blue metal.”

“As we move into the New Year, there are no discernible signs of any fundamental easing, with prices remaining on an upward trajectory as consumers skirmish to secure sparsely available spot units – a situation that will undoubtedly persist throughout 2022 and beyond,” he added.


Gold demand hits highest level in more than two years

Gold demand hits highest level in more than two years
Updated 28 January 2022

Gold demand hits highest level in more than two years

Gold demand hits highest level in more than two years

Rising inflation and the post-pandemic economic uncertainty has sent demand for gold to a two year high, according to the World Gold Council.

The organisation’s latest report shows the appetite for the metal  reached 1,147 tonnes in the last three months of 2021, its highest level since the second quarter of 2019 and an increase of almost 50 percent year-on-year.

Gold bar and coin demand rose 31 percent to an eight-year high of 1,180 tonnes, while the  jewellery sector rebounded to match 2019’s pre-pandemic total of 2,124 tonnes.

For the twelfth consecutive year, central banks were net purchasers of gold, adding 463 tonnes to their holdings — 82 percent higher than 2020. 

Central banks from both emerging and developed markets added to their gold reserves, lifting the global total to a near 30-year high.

Louise Street, a senior analyst at the World Gold Council, said: “On the investment side, the tug of war between persistent inflation and rising rates created a mixed picture for demand. Increasing rates fuelled a risk-on appetite among some investors, reflected in ETF (exchange-traded fund) outflows. 

“On the other hand, a search for safe haven assets led to a rise in gold bar and coin purchases, buoyed by central bank buying.

“Declines in ETFs were offset by demand growth in other sectors. Jewellery reached its highest level in nearly a decade as key markets like China and India regained economic vibrancy.”

Street added that the World Gold Council is expecting demand to fluctuate in 2022, with how central banks deal with persistent high levels of inflation a key factor affecting the sector.

Likewise, the jewellery market’s strength could be hampered if new COVID variants once again restrict consumer access.

 


Alturki migrating recently-bought US drilling firm to Dhahran

Alturki migrating recently-bought US drilling firm to Dhahran
Updated 28 January 2022

Alturki migrating recently-bought US drilling firm to Dhahran

Alturki migrating recently-bought US drilling firm to Dhahran

DAMMAM: Investment firm Alturki Holding is shifting the base of a US drilling firm it recently acquired to Dhahran, according to the head of the company.

Speaking to Arab News, Alturki’s CEO Rami Alturki said the move was related to Newsco International Energy Services, which it snapped up in October 2021 for an undisclosed amount. 

The comments came on the sideline of the Saudi Aramco hosted In-Kingdom Total Value Add forum, held in Dhahran.

Referring to Newsco, Alturki said: “We are in the process of migrating the company to be based here in Dhahran.” 

Alturki also commented on another of his firm’s subsidiaries, Sawafi Borets, which was awarded a contract to create a $50 million facility in King Salman Energy Park, or SPARK, to assemble electrical submersible pumps.

“We're also very involved on the construction side, building facilities for Aramco across the Kingdom,” he added. 


Iraqi ‘super app’ Baly raises $10.5m in funding round

Iraqi ‘super app’ Baly raises $10.5m in funding round
Updated 28 January 2022

Iraqi ‘super app’ Baly raises $10.5m in funding round

Iraqi ‘super app’ Baly raises $10.5m in funding round

RIYADH: Iraq’s first super app Baly raised an historic $10.5 million in its latest funding round — the most ever for a tech startup in the country. 

Baly launched ride-hailing as its first service in Baghdad last month, and already boasts thousands of rides each day, according to a press release. 

Additional services, like food and grocery delivery, will go live in the next few weeks, and Baly will expand to cover more cities in the country.

The startup will be able to use the new funds to support its scaling efforts in operations and market growth, the company said.

Baly Managing Director Matteo Mantovani said: “Iraq is home to 40 million people, with over 90 percent smartphone penetration amongst those aged 17-40. 

“With a young, urbanized population, it is the perfect place to revolutionize the economy through digital services.

Arnd Lodowicks, chief financial officer of investor Rocket Internet, said: “Baly is for us a world-class team in an extremely exciting and promising market. We are looking forward to supporting  the company on its mission to become the leading super app of Iraq.”

Venture capital funding in Iraq reached record highs in 2021, despite the political and socio-economic challenges in the region, according to Baly.

It crossed the $5 million mark over five deals in 2021, recording a 170 percent year-on-year jump in VC funding.

Kingsway Capital, MSA Capital, Global Founders Capital, Vostok Ventures, Majid Al Futtaim, and March Holding all participated in the funding round for Baly.


HP wins fraud case against UK tech tycoon Mike Lynch

HP wins fraud case against UK tech tycoon Mike Lynch
Updated 28 January 2022

HP wins fraud case against UK tech tycoon Mike Lynch

HP wins fraud case against UK tech tycoon Mike Lynch

LONDON: Hewlett-Packard won the majority of its civil case against British tech tycoon Mike Lynch over its acquisition of Autonomy in 2011, a London judge said on Friday, though damages will be considerably less than the $5 billion claimed.
The court’s decision comes on the same day as Britain has to decide whether or not to extradite Lynch to the United States after almost a decade of bitter wrangling over who was to blame for the failure of Hewlett-Packard’s $11 billion takeover of Lynch’s Autonomy.
HP had sued Lynch, arguing that he had fraudulently inflated the value of Autonomy before he sold it to the US tech giant. Lynch had argued that HP mismanaged the acquisition.
High Court Justice Robert Hildyard said HP had substantially succeeded in their case but the damages would be less than they were demanding.
Lynch faces separate criminal charges in the US, including wire fraud and securities fraud.
A year after acquiring Autonomy, HP threw out the architect of the deal which was supposed to help transform the computer and printer maker, one of Silicon Valley’s original companies, into a more profitable group centered on business software and services.
It wrote down the value of Autonomy by $8.8 billion and sought damages of around $5 billion from Lynch and his colleague Sushovan Hussain, alleging they inflated the value of Autonomy before selling it. Hussain was convicted in the United States in 2019.
Lynch has denied all the allegations.
Lynch is due to hear on Friday whether Britain’s interior minister Priti Patel has approved the extradition request to the United States.
A court has given Patel until midnight on Friday to make a decision, although Lynch could appeal any ruling that goes against him. The US charges carry a maximum term of 20 years imprisonment.
Lynch is one of Britain’s leading tech bosses. He founded Autonomy which was capable of searching and organizing unstructured information, such as telephone conversations.
The 56-year-old’s doctoral thesis remains one of the most consulted at Cambridge University and his success, including the around $800 million he made from his stake in Autonomy, elevated his position in Britain, giving him a place on government advisory boards.
Lynch was also central to the creation of DarkTrace , a cybersecurity firm that listed on the stock market last year. Lynch and his wife Angela Bacares own nearly 16 percent of DarkTrace, according to Refinitiv