China’s central bank says Evergrande risks ‘controllable’

China’s central bank says Evergrande risks ‘controllable’
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Updated 16 October 2021

China’s central bank says Evergrande risks ‘controllable’

China’s central bank says Evergrande risks ‘controllable’

BEIJING: China's central bank said on Friday that financial risks from China Evergrande Group’s debt problems are “controllable” and unlikely to spill over, amid growing investor concerns that the crisis could ripple through other developers.
Evergrande is the world's most indebted developer, with over $300 billion in liabilities. The company missed a third round of interest payments on its offshore bonds this week, spooking investors globally and sparking concern that other companies in the sector may also default on payments.
“Of the total liabilities of Evergrande Group, financial liabilities are less than one-third. Creditors are also relatively dispersed, and individual financial institutions have little risk exposure,” People’s Bank of China official Zou Lan said at a news briefing on Friday.
“Overall, the risk of the spillover to the financial industry is controllable,” he added.
Evergrande came under pressure after Chinese authorities ordered property developers to reduce their debt levels. The authorities are trying to direct the industry toward a more sustainable pace of development after many years of stimulus-fueled growth.


OPEC+ meets under pressure from Biden and Omicron

OPEC+ meets under pressure from Biden and Omicron
Image: Shutterstock
Updated 6 sec ago

OPEC+ meets under pressure from Biden and Omicron

OPEC+ meets under pressure from Biden and Omicron
  • The meeting "is shaping up to be one of the most significant since the pandemic demand recovery began

OPEC+ oil producers meet Thursday under pressure from US President Joe Biden, who has opened up his country's taps hoping to bring down crude prices, and a new Covid-19 variant that has complicated the equation.


The meeting "is shaping up to be one of the most significant since the pandemic demand recovery began, and the key signal will be how much more oil will be added to supply to start the new year," said Peter McNally, an analyst at the Third Bridge think tank.


After coming under heavy pressure to step up production, leading members the United States, China, India and Japan last week announced that they would dip into their strategic reserves to help bring down crude prices, after a surge that has undermined economic recovery.


Biden called it a "major initiative", with analysts estimating the injection at between 65 and 80 million barrels, including 50 million from the United States alone.


But the move did not have the desired effect, with prices rising regardless — followed by the damper on prices caused by the emergence of the new Omicron variant of Covid-19.


The detection of the new variant on Thursday caused crude prices to plunge more than 10 percent, a first since the nightmarish drops of April 2020.


Carsten Fritsch of Commerzbank said "there is much to suggest that OPEC+ will not initially step up its oil production any further" in an effort to maintain current prices at around $70 a barrel.


Such a decision comports with the cautious approach seen since OPEC+ countries began slowly boosting supplies.


Saudi Energy Minister Prince Abdulaziz bin Salman warned in late October against complacency.


The group said earlier this month it planned to boost output by 400,000 barrels per day in December, despite a room for manoeuvre that is 10 times greater.

Russian Deputy Prime Minister Alexander Novak, the Kremlin's oil pointman, warned Monday against any "hasty decisions", according to Russian news agencies.


A technical meeting was set for Tuesday ahead of the summit but was postponed to Thursday as experts seek more information on the "current situation", Novak said.


Iran's possible re-entry into OPEC will be another key element in the supply calculus.


Iran was sidelined from OPEC in 2018 when then US president Donald Trump pulled Washington out of the 2015 nuclear accord with the Islamic republic.


After a five-month hiatus, negotiations resumed Monday in Vienna.


While most analysts are pessimistic about the outcome, Bjarne Schieldrop of Swedish bank SEB said: "Getting Iranian oil production and exports back on track is probably the best option for President Joe Biden to ease the current oil market tightness."


Iran produced nearly four million barrels a day in 2017 — an output that dropped to around two million barrels per day last year.


Jadwa Investment revises up Saudi GDP growth in 2022, expects budget surpluses till 2023

Jadwa Investment revises up Saudi GDP growth in 2022, expects budget surpluses till 2023
Updated 33 min 33 sec ago

Jadwa Investment revises up Saudi GDP growth in 2022, expects budget surpluses till 2023

Jadwa Investment revises up Saudi GDP growth in 2022, expects budget surpluses till 2023
  • The Kingdom's GDP is expected to grow by 7 percent next year up from last month's forecast of 5.1 percent

CAIRO: Saudi investment bank, Jadwa Investment, revised its forecast for Saudi Arabia's GDP growth next year, while it expects the Kingdom's to report budget surpluses in 2022 and 2023 as the government will cut spending, according to a report today.

The Kingdom's GDP is expected to grow by 7 percent next year up from last month's forecast of 5.1 percent, it said.  

The surplus next year is expected at SR35 billion ($9.3 billion) while that of 2023 is estimated at SR37 billion. 


Saudi retailer Alhokair signs franchise deal to nearly double Subway outlets in Saudi Arabia

Saudi retailer Alhokair signs franchise deal to nearly double Subway outlets in Saudi Arabia
Updated 58 min 6 sec ago

Saudi retailer Alhokair signs franchise deal to nearly double Subway outlets in Saudi Arabia

Saudi retailer Alhokair signs franchise deal to nearly double Subway outlets in Saudi Arabia
  • The new agreement will nearly double Subway’s footprint of 210 restaurants over the next six years

RIYADH: Subway, one of the world’s largest restaurant brands, and Fawaz Abdulaziz Alhokair Co, a leading franchise retailer in Saudi Arabia, signed a new master franchise agreement to expand into the Kingdom.

The new agreement will nearly double Subway’s footprint of 210 restaurants over the next six years by adding a minimum of 145 new locations, Alhokair said in a filing. 

“Today’s announcement is another example of our refreshed approach to international growth,” said John Chidsey, Chief Executive Officer of Subway, in a statement. “Through partnering with companies that have deep regional knowledge and proven success in the industry, such as Alhokair, we are strategically expanding and strengthening our global footprint around the world.”


Middle East on close watch as omicron rattles recovery prospects: Daily Virus Update

Middle East on close watch as omicron rattles recovery prospects: Daily Virus Update
Updated 30 November 2021

Middle East on close watch as omicron rattles recovery prospects: Daily Virus Update

Middle East on close watch as omicron rattles recovery prospects: Daily Virus Update
  • Oil prices stumbled in their biggest decline since April 2020

DUBAI: Oil prices gave up gains on Tuesday, falling more than 2 percent along with broader financial markets, after a media report cast doubt on the efficacy of COVID-19 vaccines against the omicron coronavirus variant.

The head of drugmaker Moderna told the Financial Times that COVID-19 vaccines are unlikely to be as effective against the omicron variant of the coronavirus as they have been against the Delta variant.

Both benchmarks tumbled more than $1 on the news. Brent crude futures fell $1.82, or 2.5 percent, to $71.62 a barrel at 0605 GMT, US West Texas Intermediate crude futures dropped $1.61, or 2.3 percent, to $68.34 a barrel.

Oil plunged more than 12 percent on Friday along with other markets on fears the heavily mutated omicron would spark fresh lockdowns and dent global growth, hurting oil demand.

November 30

Amid speculations on the impact of omicron on oil demand, the Saudi energy minister said it was too early to tell, adding OPEC+ was keen to monitor the situation.

The group of oil-producing countries has rescheduled its meetings to later this week to have more time in assessing the impact, Prince Abdulaziz bin Salman, told Arab News in an Aramco ceremony in Dhahran on Monday.

Earlier, Russian Deputy Prime Minister Alexander Novak said, there is “no need for emergency measures in the oil market.”

He added OPEC+ partners did not call to review the current deal.

Oil prices rebounded on Monday after a huge slump last week, which was led by fears brought by the new coronavirus variant.

Brent crude futures climbed $3.11, or 4.3 percent, to $75.83 a barrel by 0355 GMT, after falling $9.50 on Friday.

U.S. West Texas Intermediate (WTI) crude was up $3.47, or 5.1 percent, at $71.62 a barrel, having tumbled $10.24 in the previous session.

Oil prices plunged more than 10 percent on Friday, their biggest one-day drop since April 2020,  as the new variant spooked investors across financial markets.

There are worries the new variant could derail the global economic recovery, potentially hurting oil demand, while it has also added to concerns that a supply surplus could swell in the first quarter.

Economists at Goldman Sachs outlined four scenarios that could happen as the world cautiously navigates the situation. 

If omicron turns out to transmit faster than its predecessor, Delta, it will result in first-quarter global growth slowing to a 2 percent quarter-on-quarter annual rate.

The economists said if both the disease severity and immunity against hospitalizations are worse than for Delta, global economic growth will take a more substantial hit, but inflation impact will be “ambitious.”

On a slightly positive note, if omicron spreads slower than delta, it will have no significant effect on global growth and inflation, Goldman Sachs said.

If the new variant is more transmissible, but causes less severe disease, global growth could be higher than Goldman’s baseline.

November 29

Most Gulf stock markets ended lower on Sunday, with the Saudi and Dubai indexes suffering their biggest single-day fall in nearly two years as fears of a potentially vaccine-resistant coronavirus variant spooked investors.

Opinion

This section contains relevant reference points, placed in (Opinion field)

The World Health Organization on Friday designated the omicron coronavirus variant detected in South Africa as being “of concern” — the fifth variant to be given that designation

Saudi Arabia’s benchmark index slid 4.5 percent, dragged down by a 5.4 percent fall for Al Rajhi Bank and a 6.2 percent decline for Saudi Basic Industries.

The Kingdom halted flights from and to Malawi, Zambia, Madagascar, Angola, Seychelles, Mauritius and the Comoros Islands on Sunday owing to concerns related to the spread of the new COVID-19 strain, state news agency SPA reported on Twitter.

The latest pandemic developments also sent oil prices, a key catalyst for the Gulf’s financial markets, plunging by $10 a barrel on Friday for their largest one-day drop since April 2020. The new variant added to concerns that an oil supply surplus could swell in the first quarter.

“It’s obvious that traders are concerned about the implications of the newly mutated virus which brings back the lock-down memories from last year. If Saudi decides to impose more restrictive measures the economy will be impacted significantly and the growth prospects next year will vanish”, Mohammed Al-Suwayed, chief executive officer of Razeen Capital, said. He said the time is now suitable for investors to reinvest in the market since the share prices are relatively low.

Dubai’s main share index declined 5.2 percent, its biggest intraday fall since March 2020, with most stocks in negative territory.

Blue-chip developer Emaar Properties plunged 9.4 percent and budget carrier Air Arabia retreated by 7.1 percent.

In Abu Dhabi, the index fell 1.8 percent, weighed down by a 3.3 percent drop for telecoms company Etisalat and a 1.4 percent decline for First Abu Dhabi Bank, the country’s largest lender.

The UAE has suspended entry for travelers from South Africa, Namibia, Lesotho, Eswatini, Zimbabwe, Botswana and Mozambique from Nov. 29 over concerns about the new coronavirus variant, the state news agency reported on Friday.

In Qatar, the index slipped by 2.8 percent as investors shunned stocks across board, with petrochemicals group Industries Qatar leading the losses.

Egypt’s blue-chip index lost 1.3 percent, with top lender Commercial International Bank retreating by 0.8 percent.

(With Reuters)


Aramco deploys first $10bn to local, international firms to kickstart Jafurah project

Aramco deploys first $10bn to local, international firms to kickstart Jafurah project
Updated 30 November 2021

Aramco deploys first $10bn to local, international firms to kickstart Jafurah project

Aramco deploys first $10bn to local, international firms to kickstart Jafurah project
  • The company said it signed 16 subsurface and Engineering, Procurement, and Construction (EPC) contracts

DUBAI: Saudi Arabia’s oil giant Aramco has signed $10 billion worth of contracts to kickstart the development of its massive Jafurah unconventional gas field.

The company said it signed 16 subsurface and Engineering, Procurement, and Construction (EPC) contracts with local and international companies, including US-based Schlumberger and Halliburton. 

Other companies that signed contracts with Aramco include Baker Hughes, NESR, Saudi Taqa, Sinopec, Larsen and Toubro, and Saipem. 

A total of $68 billion is expected to be spent over the first 10 years of the project’s development, Aramco said, as it anticipates more than $100 billion total lifecycle investment. 

By 2030, the Saudi oil giant expects the Jafurah site to produce up to two billion standard cubic feet per day of sales gas, 418 million scfd of ethane, and around 630,000 barrels per day of gas liquids and condensates.