Saudi companies vie to make mark in global export market

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Updated 28 March 2022

Saudi companies vie to make mark in global export market

Saudi companies vie to make mark in global export market
  • KSA aims to increase non-oil exports from 16% to 50% of non-oil GDP by 2030.
  • 147 firms have launched their products in the market under the slogan ‘Made in Saudi Arabia’ in various fields.

RIYADH: Over 1,400 Saudi manufacturing companies are now part of the country’s growing network of firms that advance Saudi exports as the Kingdom taps more resources to develop and expand local industry, said Faisal Al-Maghlooth, director general of Made in Saudi Program at Saudi Made.

“We are proud to have more than 1,400 companies that represent the national industry identity, enhance the quality of the local product and make it a first choice for the consumer in all markets,” Al-Maghlooth told Arab News on the occasion of the first anniversary of the Made in Saudi Program.

He proudly pointed to some important developments and factors that have helped shape the Saudi industry. “Within one year of starting Made in Saudi Arabia, there have been many achievements that we are proud of.

‘Made in Saudi’ (program) seeks to market national goods and services to become the preferred option locally and globally.

Faisal Al-Maghlooth

There are more than 30 strategic partners, and more partners are being added,” Al-Maghlooth informed.

Up until now, more than 6,500 products have been registered by Saudi companies and 147 firms have launched their products in the market under the slogan “Made in Saudi Arabia” in various fields of food, chemicals, iron, pharmaceuticals, paints and others.

Asked about the contributions made by “Made in Saudi Arabia” at the local economic level, Al-Maghlooth said there were plenty. “Increasing domestic consumption of national goods and services, raising the share of national products, especially those with higher local content, in the Saudi market as well as in our exports, increasing Saudi non-oil exports to priority export markets and enhancing the attractiveness of the Saudi industrial sector for local and foreign investment,” he noted.


 Faisal Al-Maghlooth, director general of Made in Saudi Program

Faisal Al-Maghlooth, director general of Made in Saudi Program

‘Made in Saudi Arabia’ advantage

Al-Maghlooth highlighted some of the advantages in joining the program. “Many advantages have been achieved by the companies that joined, the most important of which is the use of the Made in Saudi Arabia logo on the company’s registered products, which contributes to strengthening its institutional and marketing presence with member companies and products registered under the same logo,” he pointed out.

Moreover, these firms benefited from all the posts and marketing campaigns launched by the Saudi Export Development Authority under the slogan “Made in Saudi Arabia” through social networking sites, facilitating members’ communication with all government agencies, exchanging experiences in specialized fields, training in developing local content, entering global and export markets, using the logo on products that meet recognized national content and quality standards.

Al-Maghlooth emphasized the importance of the Saudi private sector in the program. “It is important to clarify that ‘Made in Saudi’ (program) seeks, as I mentioned earlier, to market national goods and services to become the preferred option locally and globally, and this can only be achieved in close and vital cooperation with the private sector, as well as the public sector,” he said.

One of the goals that the program is working on is to develop the contribution of the private sector to the national economy, and even to unleash the capabilities of the promising non-oil sectors, which are always focused on by Crown Prince Mohammed bin Salman when talking about the Saudi economy, according to Al-Maghlooth.

As for the eligibility to register products in the program, it revolves around fulfilling the requirements for adding value, meaning that the percentage of local materials included in the final product is not less than 40 percent.

This program will also enable both Saudi men and women to join the workforce of the rapidly growing industry and will further enhance medium, small and micro-enterprises.

Diversifying the economy

This development comes at a time when Saudi Arabia has made steady and giant steps to diversify the economy and reduce dependence on oil as the main source of revenue.

All indicators and available statistics show that the Kingdom is on the right path to increase the share of non-oil exports in general.

Although oil exports still have the lion’s share of total exports (more than 70 percent), the private sector, with the support of the government, has succeeded in opening new markets around the world for non-oil products.

The drive to boost non-oil exports was also seen as an integral part of the ambitious Vision 2030 agenda that is supposed to shape the Saudi economy.

According to the Saudi General Authority for Statistics, GASTAT, non-oil Saudi exports to the rest of the world in 2021 stood at $61.7 billion compared to $45.1 billion in 2020, an increase of 89.52 percent.

Total Saudi non-oil exports in 2019 stood at $50 billion, based on GASTAT data.

In the fourth quarter of 2021, non-oil exports surged to $12.6 billion compared to $12.2 billion in the same quarter of 2020, an increase of 14.13 percent.

China remained the largest recipient of Saudi non-oil products as evident by official statistics.

In the fourth quarter of 2021, Saudi non-oil exports to China amounted to SR55.3 billion ($14.7 billion), or 17.3 percent of total exports.

India and Japan followed next with SR34 billion and SR33.3 billion respectively.

South Korea, the UAE, the US, Egypt, Singapore, Taiwan and Bahrain were the other countries that ranked in the top 10 destinations. Exports of Saudi Arabia to those 10 countries amounted to SR225.4 billion, accounting for 70.4 percent of total exports.

The data compiled by Arab News also showed that Saudi Arabia’s non-oil exports helped reduce some of the negative impact from the volatility in the Kingdom’s oil exports revenues.

“The volatility in non-oil exports revenues on a yearly basis was relatively milder than that for oil exports,” according to recent GASTAT data.

The diversification of the Saudi economy including increasing exports is at the heart of Saudi Vision 2030.

The Vision 2030 aims to increase non-oil exports from 16 percent to 50 percent of non-oil gross domestic product by 2030.

The Kingdom seemed very determined to open new markets for its non-oil products irrespective of the number of years to realize this objective.

The purpose of these studies are to help policymakers in the Kingdom to develop a modern and effective approach to streamline the Saudi economy in a bid to allow the non-oil sector to increase exports to other countries in the world.

Based on the promising data over the past few years, Saudi Arabia will most likely increase non-oil exports and even focus on other products besides chemicals and plastic.


World food prices decline for 10th month running in January, says UN Food Agency

World food prices decline for 10th month running in January, says UN Food Agency
Updated 03 February 2023

World food prices decline for 10th month running in January, says UN Food Agency

World food prices decline for 10th month running in January, says UN Food Agency

ROME: World food prices fell in January for a 10th consecutive month, and are now down some 18 percent from a record high hit last March following Russia’s invasion of Ukraine, the UN's food agency said on Friday.

The Food and Agriculture Organization’s price index, which tracks the most globally traded food commodities, averaged 131.2 points last month against 132.2 for December, the agency said on Friday. It was the lowest reading since September 2021.

The December figure was revised down from an original estimate of 132.4.

Falls in the prices of vegetable oils, dairy and sugar helped pull down the index, while cereals and meat remained largely stable, the FAO said.

In separate cereal supply and demand estimates on Friday, the FAO raised its forecast for global cereal production in 2022 to 2.77 billion tons from a previous estimate of 2.76 billion tons.

The FAO cereal price index rose just 0.1 percent month-on-month in January to give a 4.8 percent increase on the year.

International wheat prices declined 2.5 percent as production in Australia and Russia outpaced expectations. Rice, by contrast, jumped 6.2 percent, driven in part by strong local demand in some Asian exporting countries.

Vegetable oil prices fell 2.9 percent in January, the dairy index dipped 1.4 percent and sugar declined 1.1 percent. Meat slipped a mere 0.1 percent.

Looking at supply and demand for cereals, FAO said it expected a record global output of wheat in 2022 thanks to revised crop forecasts from Australia and Russia.

The forecast for world rice production was revised down on the back of lower-than-expected output in China, and is now predicted to decline 2.6 percent from its all-time high in 2021.

Looking ahead to 2023, FAO said early indications pointed to a likely expansion of winter wheat cropping in the northern hemisphere. However, it warned that high fertilizer costs may impact yields.

World cereal utilization in 2022/23 was forecast to dip 0.7 percent from the previous year to 2.78 billion tons. The estimate for world cereal stocks was pegged at 844 million tons, pushing down the world stock-to-use ratio for 2022/23 to 29.5 percent from 30.8 percent in 2021/22


Oil steadies as market eyes China recovery and EU embargo

Oil steadies as market eyes China recovery and EU embargo
Updated 03 February 2023

Oil steadies as market eyes China recovery and EU embargo

Oil steadies as market eyes China recovery and EU embargo

LONDON: Oil prices steadied on Friday but were on track for a second week of losses as the market awaited further signs of fuel demand recovery in China and the impact of an EU embargo and price cap on Russian oil products.

Brent crude LCOc1 futures fell 18 cents, or 0.2 percent, to $81.99 a barrel by 1043 GMT, having dropped by about 1 percent in the previous session. US West Texas Intermediate crude CLc1 futures slipped by 14 cents, or 0.2 percent, to $75.74.

Brent is poised to register a more than 5 percent decline this week while WTI is on course for a 4 percent drop.

"Oil prices are likely to tread water until it becomes clear how dynamically Chinese demand will recover or what the consequences of the EU embargo and price caps will be," Commerzbank said.

ANZ analysts pointed to a sharp jump in traffic in China's 15 largest cities after the Lunar New Year holiday but also noted that Chinese traders had been "relatively absent".

A slightly stronger dollar ahead of US job data kept a lid on gains. A stronger U.S. currency can curb oil demand because it usually makes the dollar-priced commodity more expensive for those holding other currencies.

US job growth in January is likely to have remained strong thanks to a resilient labour market, but expectations of a continued slowdown in wage gains offer the Federal Reserve some comfort in its fight against inflation, a Reuters survey showed.

The US central bank scaled back to a milder rate increase than those over the past year, but policymakers also projected that "ongoing increases" in borrowing costs would be needed.

Increases to interest rates in 2023 are likely to weigh on the US and European economies, boosting fears of an economic slowdown that is highly likely to dent global crude oil demand, said Priyanka Sachdeva, market analyst at Phillip Nova.

Investors are also eyeing developments on the Feb. 5 EU ban on Russian refined products, with member countries seeking a deal on Friday to set price caps for Russian oil products.

The Kremlin on Friday said that the EU embargo on Russia's refined oil products would lead to further imbalance global energy markets.

 


Who is Hindenburg, the firm targeting India’s Adani?

Who is Hindenburg, the firm targeting India’s Adani?
Updated 03 February 2023

Who is Hindenburg, the firm targeting India’s Adani?

Who is Hindenburg, the firm targeting India’s Adani?
  • Hindenburg is an investment research firm with a focus on activist short-selling. It looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management, and It can make money out of its work

NEW YORK: Hindenburg Research, the financial research firm with an explosive name and a track record of sending the stock prices of its targets tumbling, is taking on one of the world’s richest men.
Hindenburg is back in the headlines after last week accusing Indian conglomerate Adani Group of “a brazen stock manipulation and accounting fraud scheme.” It cited two years of research, including talks with former Adani senior executives and reviews of thousands of documents.
The Adani Group has blasted the accusations, calling them “a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts.”
Nevertheless, Hindenburg’s scorching allegations have caused the fortune of Adani Group’s founder, Gautam Adani, to slide by nearly $47 billion in just over a week, according to the Bloomberg Billionaires index. Here’s a look at the firm behind all the movement:
What is it?
Hindenburg says it specializes in “forensic financial research.” In layman’s terms, it looks for corruption or fraud in the business world, such as accounting irregularities and bad actors in management.
Hindenburg has even come to be known as Ponzi hunters in some circles, according to the Washington Post, which detailed how it helped bring down an alleged $500 million scheme that targeted Mormons.
Where did its name come from?
The firm says it sees the Hindenburg, the airship that famously caught fire in the 1930s to the cry of “Oh, the humanity,” as the “epitome of a totally man-made, totally avoidable disaster.” It says it looks for similar disasters in financial markets “before they lure in more unsuspecting victims.”
Who else has Hindenburg gone after?
It’s perhaps most famous for a 2020 report on Nikola, a company in the electric-vehicle industry whose founder Hindenburg said made misleading claims to ink partnerships with top auto companies hungry to catch up to Tesla.
Among its allegations, Hindenburg accused Nikola of staging a video to calm skepticism about its truck, one that showed the vehicle cruising on a road. Hindenburg said the video was actually just showing the truck rolling down a hill after getting towed to the top.
What has come of such accusations?
For Nikola, quick scrutiny from the government and investors.
The company and its founder, Trevor Milton, received grand jury subpoenas from the US Attorney’s office for the Southern District of New York and the N.Y. County District Attorney’s Office shortly after Hindenburg released its report.
The Securities and Exchange Commission also soon issued subpoenas to Nikola’s directors.
Milton was convicted this past October of charges he deceived investors with exaggerated claims about his company’s progress in producing zero-emission 18-wheel trucks fueled by electricity or hydrogen.
And Nikola in late 2021 agreed to pay $125 million to settle SEC charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects.
What does Hindenburg get out of this?
It can make money. In its Adani report, it said that it had taken a “short position in Adani Group Companies” through bonds that trade in the US and other investments that trade outside India.
It has made similar “short” bets against other companies it published unflattering reports on. A “short” trade is a way for someone to make money if an investment’s price falls. Afterward, if the price of a company’s stock or bonds falls because of the negative attention from the report, Hindenburg can profit.
Such short sellers have been criticized for unfairly pushing down prices of stocks with potentially unfounded allegations. But proponents also call them a healthy part of a stock market, keeping stock prices in check and preventing them from running too high.


Adani’s market losses top $100 billion as crisis shockwaves spread

Adani’s market losses top $100 billion as crisis shockwaves spread
Updated 03 February 2023

Adani’s market losses top $100 billion as crisis shockwaves spread

Adani’s market losses top $100 billion as crisis shockwaves spread
  • Mukesh Ambani of Reliance Industries is now Asia’s richest person as Adani Group chairman's net worth plunges
  • S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices

NEW DELHI/MUMBAI: Adani’s market losses swelled above $100 billion on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5 billion stock offering.
Another challenge for Adani on Thursday came when S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices, effective Feb. 7, which would make the shares less appealing to sustainability-minded funds.
In addition, India’s National Stock Exchange said it has placed on additional surveillance shares of Adani Enterprises , Adani Ports and Ambuja Cements .
However, Adani Group Chairman Gautam Adani is in talks with lenders to prepay and release pledged shares as he seeks to restore confidence in the financial health of his conglomerate, Bloomberg News reported on Thursday.
The shock withdrawal of Adani Enterprises’ share sale marks a dramatic setback for founder Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by US-based short-seller Hindenburg Research.


ALSO READ: Who is Hindenburg, the firm targeting India’s Adani?


Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition lawmakers called for a wider probe and India’s central bank sprang into action to check on the exposure of banks to the group. Meanwhile, Citigroup’s wealth unit stopped making margin loans to clients against Adani Group securities.

The crisis marks an dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies and attracted investors such as Abu Dhabi’s International Holding Company as he pursues a global expansion stretching from ports to the power sector.
In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.
“Adani may have started a confidence crisis in Indian shares and that could have broader market implications,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
Adani Enterprises shares tumbled 27 percent on Thursday, closing at their lowest level since March 2022.

Other group companies also lost further ground, with 10 percent losses at Adani Total Gas, Adani Green Energy and Adani Transmission, while Adani Ports and Special Economic Zone shed nearly 7 percent.
Since Hindenburg’s report on Jan. 24, group companies have lost nearly half their combined market value. Adani Enterprises — described as an incubator of Adani’s businesses — has lost $26 billion in market capitalization.
Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.
The 60-year-old had been third on the list, behind billionaires Elon Musk and Bernard Arnault.
His rival Mukesh Ambani of Reliance Industries is now Asia’s richest person.

Mukesh Ambani, chairman oil-to-telecom conglomerate Reliance Industries, is now Asia''s richest person. (AFP) file)


Broader concerns
Adani’s plummeting stock and bond prices have raised concerns about the likelihood of a wider impact on India’s financial system.
India’s central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.
CLSA estimates that Indian banks were exposed to about 40 percent of the $24.5 billion of Adani Group debt in the fiscal year to March 2022.
Dollar bonds issued by entities of Adani Group extended losses on Thursday, with notes of Adani Green Energy crashing to a record low. Adani Group entities made scheduled coupon payments on outstanding US dollar-denominated bonds on Thursday, Reuters reported citing sources.
“We see the market is losing confidence on how to gauge where the bottom can be and although there will be short-covering rebounds, we expect more fundamental downside risks given more private banks (are) likely to cut or reduce margin,” said Monica Hsiao, chief investment officer of Hong Kong-based credit fund Triada Capital.
In New Delhi, opposition lawmakers submitted notices in parliament demanding discussion of the short-seller’s report.
The Congress Party called for a Joint Parliamentary Committee be set up or a Supreme Court monitored investigation, while some lawmakers shouted anti-Adani slogans inside parliament, which was adjourned for the day.
Adani vs Hindenburg
Adani made acquisitions worth $13.8 billion in 2022, Dealogic data showed, its highest ever and more than double the previous year.
The canceled fundraising was critical for Adani, which had said it would use $1.33 billion to fund green hydrogen projects, airports facilities and greenfield expressways, and $508 million to repay debt at some units.
Hindenburg’s report alleged an improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.
The Adani Group has denied the accusations, saying the allegation of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It said it has always made the necessary regulatory disclosures.
Adani had managed to secure share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, investments which will now be reimbursed by Adani.
Late on Wednesday, the group’s founder said he was withdrawing the sale given the share price fall, adding his board felt going ahead with it “will not be morally correct.”


Oil steady as Russian crude products ban looms

Oil steady as Russian crude products ban looms
Updated 02 February 2023

Oil steady as Russian crude products ban looms

Oil steady as Russian crude products ban looms
  • A EU ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply

LONDON: Oil prices were steady on Thursday as looming sanctions on Russian oil products added uncertainty over supply but the dollar lost value in a boost to the oil trade.

Brent crude futures fell 18 cents, or 0.2 percent, to $82.66 a barrel by 1415 GMT while West Texas Intermediate US crude futures lost 3 cents to $76.38.

Both benchmarks plunged more than 3 percent overnight after US government data showed a large build in oil stocks. A EU ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply.

EU countries will seek a deal on Friday on a European Commission proposal to set price caps on Russian oil products after postponing a decision on Wednesday because of divisions among member states, diplomats said. The European Commission proposed last week that from Feb. 5 the EU apply a price cap of $100 a barrel on premium Russian oil products such as diesel and a $45 per barrel cap on discounted products such as fuel oil.

Meanwhile an OPEC+ panel endorsed the producer group’s current output policy at a meeting on Wednesday, leaving production cuts agreed last year unchanged amid hopes of higher Chinese demand and uncertain prospects for Russian supply.

OPEC+ agreed to cut its production target by 2 million barrels per day — about 2 percent of global demand — from November last year until the end of 2023 to support the market.