Saudi stock exchange has 50 IPO applications for 2022, considers SPAC listings

Saudi stock exchange has 50 IPO applications for 2022, considers SPAC listings
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Updated 08 December 2021

Saudi stock exchange has 50 IPO applications for 2022, considers SPAC listings

Saudi stock exchange has 50 IPO applications for 2022, considers SPAC listings

Saudi Arabia’s stock exchange has 50 applications from companies for initial public offerings next year and is considering whether to allow blank-check companies, known as SPACs, to list, the Saudi Tadawul Group chief executive said on Wednesday.

A SPAC, or special purpose acquisition company, raises money to acquire a private firm with the purpose of taking it public and allowing the target to list more quickly on an exchange rather than via a traditional IPO.

Khalid Al-Hussan, the CEO of bourse owner and operator Tadawul, said the exchange was discussing business models and assessing appetite for SPACs in the Kingdom, but added that no legal framework had been proposed as yet.

“We are looking very closely to this recent development (about SPACs) and we absolutely look forward to add this element to our market,” Al-Hussan said after Tadawul made the debut of its shares earlier in the day.

“We have to make sure that this vehicle is in demand by the investors as well as by the issuers,” he said.

The bourse, which raised about $1 billion through an IPO, priced its shares last week at the top of the range at SR105 each. 

“As far as the market momentum, I think the markets are still very solid, in regards to IPOs. It is just a fantastic time for us,” Al-Hussan said.


Shares in SoftBank trading at their lowest level since May 2020

Shares in SoftBank trading at their lowest level since May 2020
Updated 13 sec ago

Shares in SoftBank trading at their lowest level since May 2020

Shares in SoftBank trading at their lowest level since May 2020

RIYADH: Japan's SoftBank, backed by the Saudi Public Investment Fund was among the most significant victims of the tech stock sell-off across Asia on Thursday, Bloomberg reported.

Investors turned on billionaire Masayoshi Son's company as the tightening phase of central bank policies unfolded.

The stock dropped as much as 9.8 percent in Tokyo, the most since March 2020, as Nasdaq futures tumbled and shares of the firm’s biggest investment, Alibaba Group, dropped in Hong Kong.

Hawkish signals from Federal Reserve Chair Jerome Powell led investors to bet against technology companies, which have powered much of the recent growth in global markets: something SoftBank has been gambling on with its Vision Funds of speculative tech bets.

“SoftBank is a poster child of a firm highly leveraged to the current asset bubbles,” wrote Amir Anvarzadeh, senior strategist at Asymmetric Advisors Pte, who recommends shorting the stock.

“This latest lurch down in its value could add further pressure on its financing structure.”

Shares in SoftBank traded at their lowest level since May 2020, with reports that a planned sale of its Arm chip unit to Nvidia was likely to fall through also weighing on the stock.

Analysts pointed out that the failure of the deal may lead to a credit downgrade.


Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks

Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks
Updated 7 min 33 sec ago

Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks

Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks

US Federal Reserve officials signaled on Wednesday an interest rates raise starting March, with the decision driven by high inflation, a tightening labor market and the fast rebound of the economy as pandemic restrictions are eased.

Although international investors are nervously watching the Fed’s next move, Gulf financial researchers remain positive on the region’s prospects.

Soaring oil prices are shielding Gulf economies from the US’s tightening of monetary policies, as they provide them with high liquidities. 

A strong banking sector and commodities market are to also profit positively from the Fed’s next moves, according to Jaap Meijer, head of research at Arqaam Capital.

“While we are cautious about the US equity market, as high valuations for technology shares unwind, we remain constructive on GCC (Gulf Cooperation Council) equity markets,” he said, adding: “We expect GCC monetary policymakers to reflect US Fed rate hikes entirely (such as in Saudi or the UAE which currencies are pegged to the dollar) or at least partially (in other GCC countries).”

“However, GCC banks, which comprise 40 percent of the region’s indexes, will enormously benefit from higher net interest margins, particularly Saudi banks.” he underlines, as banks' profitability tends to increase with high interest rates, boosting their net margins.

Meijer warns nonetheless that he is cautious about Egypt’s equity markets. 

“Egypt runs at a low single-digit current account deficit and has a high USD dependency, despite strong foreign exchange reserves. We expect fiscal and monetary policy to be managed very tightly and could see a rate hike by the end of the year, which will likely weigh on equity valuations, as T-bills remain an attractive alternative for local investors,” adds Meijer.

Regarding regional commodities, higher commodity prices, particularly Aluminum and Urea, will remain supportive for the Gulf commodity sector, explains Meijer. Urea has important uses as a fertilizer and feed supplement. It is also a starting material for the manufacture of plastics and drugs as well as batteries.

This would result in higher index weights that should continue to support Qatar and Saudi Arabia valuations. 

“We see M&A arbitrage and further economic reforms being a tailwind,” he added.

While international bond markets will be negatively affected by the interest hike, the GCC will be able to mitigate the impact. 

Bonds markets are fixed income instruments used by corporations and governments as a borrowing tool. 

“Liquidity will most likely become less abundant as the asset purchases will end in early March, while the balance sheet run-off will begin after rates have started to rise. Nonetheless credit spreads in the GCC should remain tight on strong liquidity, with almost all governments running large fiscal surpluses as oil prices remain high,” emphasizes Meijer.

The region’s local sovereign wealth funds will continue internationalizing and diversifying their holdings. 

“They can afford a risk-on approach, reaping benefits from potential market locations as the US. Fed tightens its monetary policy,” he concludes.


Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn

Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn
Updated 35 min 2 sec ago

Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn

Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn

RIYADH: Saudi Arabian petrochemical firm SABIC Agri-Nutrients Co. has seen a nearly fourfold jump in its profits in 2021, buoyed by an increase in selling prices.

Amid global economic recovery in 2021, net profit soared to SR5.23 billion ($1.2 billion), compared to SR1.29 billion a year earlier, according to a bourse filing.

Revenues almost tripled, reaching SR9.59 billion, and the profit per share was up from SR3 to SR11.

The company, half-owned by SABIC, attributed the profit hike to higher selling prices of products.

However, profits were capped by an increase in inventory as well as general and administrative expenses, the firm said in a statement to the Saudi exchange, Tadawul.

The homegrown fertilizer producer earlier said it plans to take over 49 percent of Dubai-based ETG Inputs Holdco’s share capital amid a SR1.2 billion deal. 

 


Saudi stocks end flat amid earnings season, crude oil rally: Closing bell

Saudi stocks end flat amid earnings season, crude oil rally: Closing bell
Getty Images
Updated 27 January 2022

Saudi stocks end flat amid earnings season, crude oil rally: Closing bell

Saudi stocks end flat amid earnings season, crude oil rally: Closing bell

RIYADH: Saudi Arabia’s stock market was flat at the closing bell on Thursday, as investors saw a wave of earnings announcements lead to cautious trading, despite a rally in the energy market.

Brent crude oil crossed $90 per barrel, and US benchmark WTI crude oil reached $88.3 per barrel as of 3:48 p.m. Saudi time.

The main TASI index closed at 12,179 points, while the parallel market, Nomu, ended at 25,660 points.

TASI was pushed higher by gains in Saudi Kayan Petrochemical Co. but weighed down by National Petrochemical Co., known as Petrochem, and the Saudi Industrial Investment Group, even as all three firms reported earnings.

Saudi Kayan saw its share price soar over 2 percent, after it turned from losses into profits of SR2.39 billion ($640 million) in 2021.

Shares in Petrochem and the Saudi Industrial Investment Group were down 1.2 and 0.9 percent respectively, despite seeing major profit hikes on an annual basis.

The Kingdom’s largest valued bank, Al Rajhi Bank, and one of its leading petrochemical firms, Sipchem, were down 0.7 and 2.9, respectively.

Saudi Automotive Services Co., known as SASCO, soared nearly 10 percent, topping the gainers for a second consecutive day.

SASCO had earlier acquired 80 percent of gas station operator NAFT Services Limited Co. for SR1.1 billion.

Allied Cooperative Insurance Group led the fallers, with its shares declining almost 4 percent.


Rising costs, pandemic curbs take a bite out of McDonald’s profit

Rising costs, pandemic curbs take a bite out of McDonald’s profit
Image: Shutterstock
Updated 27 January 2022

Rising costs, pandemic curbs take a bite out of McDonald’s profit

Rising costs, pandemic curbs take a bite out of McDonald’s profit
  • Sales rise in Italy, Germany, France, the US and the UK boosted total revenue by 13 percent to $6.01 billion in the three months ended Dec. 31

McDonald’s Corp. missed revenue and profit expectations on Thursday, as higher costs and dismal sales in its over 4,500 restaurants in Australia and China due to pandemic-led curbs ate into gains from growth in the United States in the fourth quarter.


Operating costs rose 14 percent to $3.61 billion as supply chain bottlenecks led the world’s largest burger chain to spend more for ingredients such as chicken and beef, as well as packaging material, while it also raised wages in the United States.


Shares fell nearly 3 percent as sales in China contracted after some cities banned dining in restaurants to control fresh outbreaks ahead of the Winter Olympics. In Australia, sales growth remained muted compared to a year earlier.


“COVID-19 continued to result in varying levels of government restrictions on restaurant operating hours, limited dine-in capacity and, in some cases, dining room closures,” McDonald’s said.


Sales rise in Italy, Germany, France, the US and the UK boosted total revenue by 13 percent to $6.01 billion in the three months ended Dec. 31, but still the company missed market expectation of $6.03 billion, according to Refinitiv data.


Meanwhile, expenses for the burger chain that has more than 40,000 restaurants in over 100 countries have been rising. While McDonald’s had raised prices in 2021, higher costs continue to weigh on profit as it was forced to increase wages to retain workers in the United States, its largest market.


On a per share basis, McDonald’s earned $2.23, but missed analysts’ average estimate of $2.34.


Its US same-store sales increased 7.5 percent compared to analysts’ estimate of a 6.8 percent rise, thanks to the launch of special menu items such as McRib, loyalty program-driven growth in digital sales and higher prices.


Global same-store sales jumped 12.3 percent, compared with Wall Street estimates of a 10.73 percent rise.