SAMA lifts key interest rate in less aggressive way than regional counterparts

Update SAMA lifts key interest rate in less aggressive way than regional counterparts
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Updated 16 June 2022

SAMA lifts key interest rate in less aggressive way than regional counterparts

SAMA lifts key interest rate in less aggressive way than regional counterparts

RIYADH: Unlike the UAE, Qatar and Bahrain’s central banks, which raised key interest rates by 75 basis points following the US Federal Reserve’s move, the Saudi Central Bank, also known as SAMA, has opted for a moderate hike of 50 basis points.
The Federal Reserve on Wednesday launched its biggest broadside yet against inflation, raising benchmark interest rates three-quarters of a percentage point in a move that equates to the most aggressive hike since 1994. Ending weeks of speculation, the rate-setting Federal Open Market Committee took the level of its benchmark funds rate to a range of 1.5 percent-1.75 percent, the highest since just before the COVID-19 pandemic began in March 2020.

The discrepancy in the size of change is a rare occurrence for the Saudi Central Bank as the Kingdom’s currency is pegged to the US dollar. 

Last time such a misalignment took place was in March 2020 when a cut in interest rate by SAMA came in at a more moderate 75 basis points, 25 basis point lower than the 100-basis point cut in the Fed Fund rate announced that day.

“In line with the Saudi Central Bank’s objective of maintaining monetary and financial stability, the Saudi Central Bank has decided to raise the Repurchase Agreement rate by 0.5 percent to 1.75 percent from a previous 1.25 percent, and the Reverse Repurchase Agreement rate by 0.5 percent to 1.25 percent from a previous 0.75 percent,” it said in a statement issued late on Wednesday.

Earlier on Wednesday, the Kingdom’s General Authority for Statistics said in a press release that the annual rate of consumer inflation in the Kingdom slowed to 2.2 percent in May from 2.3 percent in April.

Moreover, there was a slowdown in inflation on a month-on-month basis as well — 0.1 percent in May compared to 0.4 percent in April. 

Both headline year-on-year and month-on-month inflation numbers came in lower than the 2.5 percent and 0.4 percent expected in a Bloomberg poll earlier.

Including the May reading of 2.2 percent, the annual inflation has averaged at just 1.9 percent so far this year, data compiled by Arab News shows.

In a research report issued in May this year, analysts at the Saudi-based investment firm Jadwa pointed out that given “the possibility of further hikes by the end of 2022,” they expected the value of the Kingdom’s currency to rise, thereby helping “insulate the Kingdom’s import costs somewhat during the year.”

 The benchmark three-month Saudi Arabian Interbank Offered Rate, also known as SAIBOR, was seen rising following the previous 50-basis point rate hike by SAMA in May earlier this year, according to a report by Argaam.

With the rise of SAIBOR, the cost of financing for highly geared companies is expected to increase, however “higher SAIBOR rates will boost the profitability of banks, which provide finance with variable interest,” the Argaam report pointed out.

The three-month SAIBOR rate jumped to 3.05 percent in May this year, up from 2.33 percent in April, according to Argaam data.


    Saudi Arabia calls on African mining industry to invest in Kingdom’s ‘rich, vast natural resources’

    Saudi Arabia calls on African mining industry to invest in Kingdom’s ‘rich, vast natural resources’
    Updated 08 February 2023

    Saudi Arabia calls on African mining industry to invest in Kingdom’s ‘rich, vast natural resources’

    Saudi Arabia calls on African mining industry to invest in Kingdom’s ‘rich, vast natural resources’
    • Khalid Al-Mudayfer, deputy minister for mining affairs, told the African Mining Conference in Cape Town the value of the Kingdom’s mineral wealth is estimated at $1.3 trillion

    RIYADH: Saudi Arabia called on leading stakeholders in the mining industry across Africa to work together and benefit from the Kingdom’s rich and vast natural resources, to help support economic growth and social development.

    Speaking during the African Mining Conference in Cape Town, South Africa, Khalid Al-Mudayfer, the Saudi deputy minister for mining affairs, said the value of the Kingdom’s mineral wealth is estimated at $1.3 trillion, the Saudi Press Agency reported on Tuesday.

    He reviewed investment opportunities offered by the Ministry of Industry and Mineral Resources, along with the infrastructure and legislative capabilities of the Kingdom, which he said positions Saudi Arabia as the leading global destination for investment in the mining sector.

    Al-Mudayfer, who inaugurated a meeting organized by the ministry for potential investors, highlighted the great opportunities he said were available in the Kingdom, and its efforts to develop its mining sector.

    He spoke about the modernization of the mining investment system, which includes regulatory infrastructure for the sector and a clear, transparent and simple environment for investors, along with the availability of geological data for investors, improvements to basic infrastructure, and incentives for those who invest.

    The Saudi delegation at the four-day exhibition included representatives from the Ministry of Investment, the National Industry Development and Logistics Program, the Saudi Geological Survey, and the National Center for Industrial Development.

    The Saudi pavilion at the event showcases the Kingdom’s continual efforts to develop its mining sector by facilitating access to geological data and updating regulations and legislation to attract investors, build the foundations for sustainability, and develop a mining sector based on integrated value chains.


    LEAP investment workshop uses Lego to encourage entrepreneurial culture change

    LEAP investment workshop uses Lego to encourage entrepreneurial culture change
    Updated 08 February 2023

    LEAP investment workshop uses Lego to encourage entrepreneurial culture change

    LEAP investment workshop uses Lego to encourage entrepreneurial culture change
    • David Gram-Hanssen of Diplomatic Rebels underscored importance of innovation and change while anticipating resistance
    • Workshop used Lego building blocks to demonstrate how a more experimental and entrepreneurial culture can be adopted

    RIYADH: Interactive investment workshops were featured on the second day of LEAP’s second edition, with the spotlight falling on David Gram-Hanssen, co-founder of Diplomatic Rebels.

    His workshop utilized Lego building blocks to help participants focus on the changes they can create in the future as they become diplomatic rebels in their respective industries.

    He said: “Future success depends on the ability to explore and experiment. We all need to become even better at adapting to change.

    “There’s a perfect storm of change happening right now geopolitically, environmentally, business-wise. Everything seems to be sort of moving, and over time that speed is only going to pick up.”

    Diplomatic Rebels was a concept created out of the work of Lego’s radical innovation department, Future Lab.

    It turned into a system and a way of thought that helped people navigate the bureaucracy of companies, sparking change in their offices and communities.

    Gram-Hanssen, who previously worked at Lego Ventures, said companies needed to adopt this entrepreneurial culture.

    He added: “At Lego we started saying as a mantra, radical is normal. It means that radical change and radical innovation is the new normal.

    “We constantly have to move along and experiment and explore what is happening out there.”

    He discussed what it means to be a diplomatic rebel, sparking innovation and positive change while anticipating resistance.

    He said: “One of the things at Lego that we understood over time was when you’re working with radical innovation and trying to change things, it’s really hard work.

    “One aspect to be mindful of is creating the necessary resilience in the teams you are working with.”

    He explained that most entrepreneurs feel like they are constantly fighting the immune system of that existing environment.

    He added: “They are trying to do something that doesn’t compute in the existing system.”

    Gram-Hanssen gave his audience the task of building a Lego model to represent their work today and their vision for the future.

    He also explained the concept of a “pretotype,” a predecessor of a prototype, which aims to gather data to aid faster testing, encouraging participants at the session to implement the concept in their daily lives.

    He said: “The right question is not so much what is going to change and when, because it’s hard to foresee.

    “Maybe the right question to ask is how do we take a lead on this change? What is it? What do we want to see in the world, and how do we put ourselves in front of this change?”

     


    Nuclear energy offers ‘a golden opportunity’ to build a clean world

    Nuclear energy offers ‘a golden opportunity’ to build a clean world
    Updated 07 February 2023

    Nuclear energy offers ‘a golden opportunity’ to build a clean world

    Nuclear energy offers ‘a golden opportunity’ to build a clean world

    RIYADH: Being a cost-effective and low-carbon solution, nuclear energy “offers a golden opportunity” to help build a clean world, according to the director general of the World Nuclear Association.

    Sama Bilbao y Leon was speaking as a keynote speaker at the 44th IAEE International Conference in Riyadh on Tuesday. The top official said nuclear energy offers an opportunity to build a cleaner and more equitable world in which everyone has access to “clean, abundant and affordable round-the-clock energy and high quality of life.”

    “As a low-carbon energy source, nuclear power can play a very important role, decarbonizing other difficult-to-able sectors,” she said.

    The official said nuclear energy is certainly a cost-effective, low-carbon solution and a catalyst for economic development. It is more efficient than other sources when we think of energy transition, she added.

    She, however, cautioned saying that much work is needed to deploy nuclear power with determination and speed.

    Leon also pointed out that the current energy market is unstable, and there is a need to take a step back and adopt scientific approaches to make the sustainable energy transition a success.

    Yousef Al-Ghamdi, executive director of strategic planning at the Saudi Electricity Co. noted that renewable energy will play an important role in energy transition, especially hydrogen energy.

    Shihab Elborai, a partner at Strategy& Middle East, underscored the importance of technological advances to meet the challenges of climate change. He said recycling can help mitigate the climate effect and reduce carbon in the environment, therefore countries should invest in efficient technologies to improve the energy sector.

    Peter Hartley, the George A. Peterkin Professor of Economics at Rice University, said natural gas is cheaper and a better option and as an energy source is going to stay. He added that nuclear energy is a costly affair.

    Ayad Alamri, executive director for business development, at ACWA Power, said that PVC has a key role in clean energy management and distribution as we are aiming at a net-zero future.


    Saudi, Hong Kong bourses sign MoU to explore listing opportunities

    Saudi, Hong Kong bourses sign MoU to explore listing opportunities
    Updated 07 February 2023

    Saudi, Hong Kong bourses sign MoU to explore listing opportunities

    Saudi, Hong Kong bourses sign MoU to explore listing opportunities

    RIYADH: Saudi Tadawul Group Holding Co. has signed a memorandum of understanding with Hong Kong Exchanges and Clearing to work together to explore listing opportunities and collaborate in sectors such as fintech and environmental, social and governance, according to a tweet by the parent company of the Saudi Exchange.

    The MoU reflected the HKEX’s “ongoing commitment to driving global connectivity and shaping a successful shared sustainable future,” said Nicolas Aguzin, CEO of the Hong Kong bourse operator.

    “This MoU brings us one step closer toward enabling cross listings and other areas of collaboration between Saudi Arabia and Hong Kong,” Tadawul CEO Khalid Al-Hussan was quoted as saying by the Chinese media.

    “As we seek to position the Saudi capital market as an investment hub between East and West, we are seeing increased interest from issuers and investors in Asia.”

     

     


    Saudi Arabia-China Entrepreneur Association launched at LEAP

    Saudi Arabia-China Entrepreneur Association launched at LEAP
    Updated 07 February 2023

    Saudi Arabia-China Entrepreneur Association launched at LEAP

    Saudi Arabia-China Entrepreneur Association launched at LEAP

    RIYADH: The Saudi Arabia-China Entrepreneur Association was launched at the LEAP 2023 conference in Riyadh on Tuesday.

    The association — comprising over 100 Saudi and Chinese businesses, government entities, nongovernmental organizations, and academic institutions — seeks to boost cooperation between the private sectors on both sides along with bilateral ties at the government level. 

    The nonprofit organization is supported by the Saudi Ministry of Communications and Information Technology and the Saudi Federation for Cybersecurity, Programming, and Drones. It will be operated by eWTP Arabia Capital.

    “In line with Saudi Arabia’s Vision 2030, SCEA will enable cross-border investments and valuable collaborations,” said Jerry Li, founder and managing partner of eWTPA. 

    The organization also plans to promote investment, encourage innovation, and develop social responsibility and public welfare.  

    “China is a strategic partner for Saudi Arabia in terms of technology and innovation. Having worked closely with Alibaba and eWTPA for the last three years, I highly appreciate their efforts in contributing to the development of our local digital ecosystem,” said Faisal Al-Khamisi, chairman of the Saudi Federation for Cybersecurity, Programming, and Drones. 

    Al-Khamisi added: “This association will take our collaboration to the next level and provide the broader Saudi-China business community with a forum to share valuable experiences.”