Saudi investment funds see largest fall in 16 years

Saudi investment funds see largest fall in 16 years
Domestic shares and other domestic assets decreased by sr6.4 billion and sr4.5 billion respectively in the second quarter. (SPA)
Short Url
Updated 04 September 2022

Saudi investment funds see largest fall in 16 years

Saudi investment funds see largest fall in 16 years
  • Funds dropped by SR23.2 billion in Q2 of 2022, Saudi Central Bank data shows

The total assets of Saudi Arabia’s investment funds dropped by SR23.2 billion ($6.2 billion) in the second quarter of 2022, according to data from the Saudi Central Bank, also known as SAMA.

This drop recorded the steepest fall the Kingdom has seen since the second quarter of 2006, when the decrease in total fund assets amounted to SR30 billion.

While the 2006 downturn was predominantly driven by the SR28.8 billion drop in the country’s domestic shares, this year’s tumble was due to a more general decrease in an array of asset types.

Foreign money market instruments witnessed the largest decrease of SR8.7 billion in the second quarter of this year.

Domestic shares and other domestic assets decreased by SR6.4 billion and SR4.5 billion respectively in the second quarter.

Furthermore, domestic money market instruments and domestic sukuk and bonds fell by SR4.1 billion and SR1.3 billion respectively, according to SAMA data.

Investment funds’ assets have been seeing a downward trend since the third quarter of 2021.

Total assets fell 1 percent by SR1.8 billion in the third quarter of 2021, reaching SR240 billion.

Total assets fell by 5 percent in the fourth quarter of 2021 to SR227 billion, and by another 5 percent in the first quarter of 2022 to SR216 billion quarter on quarter, showed the SAMA data.

The latest data showed a staggering 11 percent drop in the second quarter of this year, totaling SR193 billion. The Kingdom’s second quarter investment funds comprised SR143 billion worth of domestic assets and SR50 billion worth of foreign assets, according to the data.

Domestic assets fell twice in the past year; they dropped by SR7.7 billion in the fourth quarter of 2021, and then by SR15.4 billion a year later.

However, these assets witnessed a SR10.4 billion jump in the previous quarter of this year, as well as a moderate rise of SR138 million in the third quarter of 2021.

Foreign assets have been declining the past four quarters; they dropped by SR2.0 billion, SR5.0 billion, SR21.9 billion and SR7.7 billion in each quarter within that time frame, showed the data.

FASTFACTS

While the 2006 downturn was predominantly driven by the SR28.8 billion drop in the country’s domestic shares, this year’s tumble was due to a more general decrease in an array of asset types.

Foreign money market instruments witnessed the largest decrease of SR8.7 billion in the second quarter of this year. Domestic shares and other domestic assets decreased by SR6.4 billion and SR4.5 billion respectively in the second quarter.

At the end of the second quarter of this year, there were 254 operating funds and approximately 666,000 subscribers for the country’s investment fund.

The number of open-ended investment fund assets in the second quarter amounted to SR160 billion, which is SR25 billion less than the previous quarter.

Close-ended assets, on the other hand, saw an increase of SR1.9 billion in that quarter, reaching a total of SR32.7 billion. Domestic money market instruments held the largest share of total invest-ment fund assets, accounting for 34 percent of the total.

Foreign money market instruments came in second with 22 percent of total assets, whereas other foreign assets came in third with 15 percent.


‘Clean’ energy technologies are not absolutely clean, says top expert at IAEE conference

‘Clean’ energy technologies are not absolutely clean, says top expert at IAEE conference
Updated 12 sec ago

‘Clean’ energy technologies are not absolutely clean, says top expert at IAEE conference

‘Clean’ energy technologies are not absolutely clean, says top expert at IAEE conference

RIYADH: Clean energy technologies which include solar and wind power are not completely clean as there could be lifecycle emissions associated with these power generation methods, according to Shihab Elborai, partner at consulting business Strategy& Middle East.

In an exclusive interview with Arab News on the sidelines of the 44th conference of the International Association for Energy Economics, Elborai said that fossil fuels are required to develop solar panels, wind turbines, batteries, transformers and cables for the grid, which may create a spike in carbon emissions if clean energy technologies are being rolled out at an exponential speed all across the globe.

“There are lifecycle emissions associated with clean energy technology. So, clean energy technologies are not really absolutely clean. There are 50 grams of carbon dioxide equivalent per kilowatt produced from solar panels. Around 10 grams of CO2 per kilowatt hour are produced from wind turbines,” said Elborai.

He added: “If these (clean energy) technologies are deployed at an exponential rate without an equivalently rapid clean up of the supply chain, then we can end up with a situation where, in the short term, we have a spike of CO2 emissions, even though we are reducing emissions in the long term.”

According to Elborai, a large amount of carbon dioxide released while deploying clean energy technologies at a high pace will remain in the atmosphere, which will negatively impact the sustainable journey.

“Everybody understands the repercussions of acting too slow in the energy transition. There are impacts of also acting too fast,” he noted.

He added that the right rate of deployment is necessary for a smooth energy transition, void of unintended climate consequences.

During the talk, Elborai noted that technology has a huge role to play to reduce the carbon footprint in the supply chain.

Elborai further pointed out that the exact time required for energy transition cannot be determined, as the timeframe is dependent on several factors.

“I think this (time for energy transition) is something that needs to be studied and modeled. It is something that depends on the progress that is being made in developing technologies and in the deployment of carbon capture. It will change with time as these technologies evolve as well. So it’s something that needs to be constantly monitored and adjusted. It’s not a simple answer,” he said.

He also emphasized the role of recycling critical minerals to reduce emissions in the mining sector.

“There is also a role that recycling can play. If we are using materials that have already been mined, and we are closing the cycle at the end of life, then that can have a role to mitigate the impact. But really, the key measure that needs to be taken is to carefully think about the deployment of renewable technologies. Not too fast, not too slow, just right,” he added.

Elborai went on to say that carbon capture technology has a crucial role in accelerating energy transition in a sustainable manner.

“Using carbon capture as a means of removal or closing the cycle on the carbon is one of the very important measures for managing the spike in emissions during the transition,” added Elborai.

According to Elborai, Saudi Arabia has an advantaged position in both renewables and traditional sources of energy, as the world sails toward sustainability.

“The Kingdom is in a very advantaged position, as Saudi Arabia has a strong advantage in producing conventional (energy). It will be the last standing player or supplier of gas and oil. The Kingdom also has a huge advantage when it comes to solar, wind, and renewable resources,” said Elborai.

He added: “So, at every point in that transition, the Kingdom can actually produce the product that meets the requirements of the end users of energy globally. The Kingdom is definitely a winner when it comes to the energy transition.”


Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 

Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 
Updated 07 February 2023

Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 

Ericsson and Mobily deploy AI-based solutions to enhance network performance in Kingdom 

RIYADH: Saudi telecom operator Mobily has deployed a new artificial intelligence-based technology with Swedish firm Ericsson to enhance network performance across the Kingdom.   

The ‘Ericsson AI-based network solution’ is expected to enhance end-user experience by providing 5G network diagnostics and root cause analysis, according to a press release. 

The announcement about the new technology, which will help cater to the needs of the growing number of mobile phone users, was made during the LEAP 23 international technology conference in Riyadh.  

“Ericsson’s artificial intelligence-based solution enables our customers to enjoy superior and uninterrupted 5G connectivity to stay connected with loved ones or to document key moments anytime, anywhere,” said Mobily Chief Technology Officer, Alaa Malki. 

The network diagnostics capabilities within the software suite are expected to provide ‘proactive network optimization’, allowing the operator to identify and resolve network anomalies, along with providing reliable connectivity, the press release noted.  

Ekow Nelson, vice president at Ericsson Middle East and Africa, said: “Our success relied on Ericsson’s artificial intelligence-based network solution built with machine learning models that learn from the live network using the multiple sources of data to deliver near real-time improvements, thus avoiding interruptions during critical and peak times.”  

Both companies also announced the launch of Mobily Pay, a mobile financial service, during the ongoing LEAP 23 international technology conference. The new solution will allow all the users in the Kingdom to conduct personalized financial transactions like contactless payments, money transfers, international remittances, digital card payments, cash-back, bill payments, and mobile top-ups. 


Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  

Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  
Updated 07 February 2023

Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  

Saudi Arabia sees 54% jump in investment licenses to 4,358 in 2022  

RIYADH: Saudi Arabia issued 4,358 investment licenses in 2022, up 53.9 percent compared to 2021, as the Kingdom steadily emerges as an investment destination in line with the goals outlined in Vision 2030.  

According to a monthly report from the Kingdom’s Ministry of Investment, the number of licenses approved in the fourth quarter of 2022, excluding those granted under the “Tasattur” anti-concealment campaign, rose 30.7 percent year-on-year to 1,276. 

“This increase reflects the growing position of Saudi Arabia as an attractive investment destination with competitive advantages including a stable and business-friendly investment environment,” said MISA in the report. 

The ministry further revealed that the government’s total revenues increased to SR283.8 billion ($75.64 billion) in the fourth quarter of 2022, recording 5.4 percent growth over the same period in 2021. 

MISA expects that figure to reach SR1.23 trillion in 2022, up by 27.8 percent on an annual basis. 

The government also managed to reduce its expenditures by 1.8 percent to SR331.3 billion in the fourth quarter of 2022 on an annual basis, the MISA data revealed.  

However, it expects government expenditures to reach about SR1.13 trillion in 2022, up by 9 percent compared to 2021. 

Saudi Arabia’s stock exchange, known as Tadawul All Share Index, showed a decrease of 7.1 percent in the fourth quarter of 2022 on an annual basis, while the parallel market Nomu registered a decrease of 25.2 percent during the same period. 

The MISA report attributed the decrease in these indexes to global economic uncertainties and fluctuations in oil prices. 

Saudi Arabia’s inflation rate also rose to 3.1 percent in the fourth quarter of 2022, compared to the same period in 2021. 

The MISA report attributed the rise in inflation rate to a number of factors including the increase in prices of housing, water, electricity, gas, and other fuels by 5.6 percent, and food and beverages by 4.0 percent. 

The Kingdom’s Real Estate Price Index increased by 1.6 percent year-on-year in the fourth quarter of 2022, primarily driven by the increase in the prices of residential real estate prices by 2.6 percent. 

According to the report, the Real Estate Price Index for the full year 2022 showed an increase of 1.1 percent on an annual basis.


Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 

Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 
Updated 07 February 2023

Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 

Saudi Arabia’s regional maritime transshipment share hits 32% in boost for Vision 2030 goals: Minister 

RIYADH: Saudi Arabia’s share of transshipment operations in the region has almost tripled in three years, according to the Kingdom’s Minister of Transport and Logistics Saleh Al-Jasser. 

The level rose to 32 percent in 2022, up from 12 percent three years prior, the minister revealed.

The Kingdom is aiming for a 50 percent regional share of transshipment - the act of off-loading a container from one ship and loading it onto another ship to its final destination – by the end of the decade as part of its Vision 2030 goals.

It also intends to have the largest share of transit maritime trade in the Red Sea, drawing in global transshipment operations to Saudi ports. 

“Seventeen international maritime lines were launched in the Kingdom, which increased the interconnection of ports and increased the process of exports, imports, and transportation through the Kingdom to other countries,” Al-Jasser told Asharq on the sidelines of the LEAP conference taking place in Riyadh. 

The Ministry also initiated the Unified Logistics Window on Monday to grant access to operational services in numerous languages across multiple entities from the country’s logistics ecosystem. 

Al-Jasser added that the platform will facilitate the beneficiary and improve the customer experience.  

While it currently comprises 70 transportation system services, the platform aspires to increase to 450 automated services in 2025. 

“What we are currently working on is re-engineering, facilitating, and unifying these services. The platform is intended for individuals, the business sector, and government agencies that are integrated with the transportation system,” added the minister.  

As for the Kingdom’s railway sector, the minister underlined that the expansion plans of the railways in the near future will focus on achieving connectivity both locally and in the region.  

The sectoral rail strategy is set to add around 8,000 km to the current rail network, which is  currently 5,500 km, according to Al-Jasser's statements to Asharq. 

Another main concern of this strategy is Saudi Arabia’s rail transport of goods – the total tons transported on trains in 2022 is equivalent to the displacement of almost two million trucks from the Kingdom’s roads. 


Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists

Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists
Updated 07 February 2023

Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists

Technology, regulatory and cost factors to drive green transportation developments, say IEAA conference panelists

RIYADH: The transport sector's dependency on fossil fuel has dropped by just 3 percent since the 1970s, Saudi Aramco's Transport Chief Technologist Amer Amer said as he emphasized the need to keep developing green fuels.

Speaking on the third day of the International Association for Energy Economics conference in Riyadh, Amer insisted there needs to be more effort put into technology development to ensure significant greenhouse gas emission reductions.

Amer said: “Improving the technology, not only on the engine side but also on reducing the carbon intensity of fuels that go into these vehicles, will result in an immediate reduction in greenhouse gasses. 

“Also, Saudi Aramco is working on direct air capture to bring the cost of this technology to less than $100 per tonne of CO2.”

His comments came during a panel session focused on the technology and regulatory options needed to deliver transport services, while meeting the challenges of resource use, emissions, cost, and impact on the urban environment.

Geetam Tiwari, professor of civil engineering, transportation research, and injury prevention program at IIT Delhi, used her appearance on the panel to warn that when creating transport systems, investing or relying only on technology innovation may not be the answer. 

“Many innovations happen because of setting targets by governments, regulations are required,” she said.

Tiwari used the example of electric buses to highlight the need for a pragmatic approach in this area.

“Instead of straight away emphasizing on a 100 per cent conversion to electric, we have to go slowly and understand all the barriers and problems that we are going to face,” she said. 

Gerardo Rabinovich, the previous president of the Latin American Association of Energy Economics used his remarks to warn about the high entry costs for consumers into green transportation.

“We have economic barriers already for the electric vehicle because the price of an electric vehicle for the people is 50 per cent more than the regular vehicle, and that needs fiscal incentive and maybe subsidies,” he said.

Andreas W. Schäfer, chair of energy and transport at the University College London Energy Institute, insisted that renewable technologies “must be market ready and deployable at scale by 2030.”

He warned against seeing liquid hydrogen – which is used in rocket fuel – as a potential resource in this area, as it would require major infrastructure transformation to make it viable. 

Topics being tackled at the forum, which runs from Feb. 4 to 9, including renewable energy opportunities and challenges, challenges facing the power sector in the MENA region, and the impact of oil price volatility on supply and investment.

The IAEE is a global non-profit organization formed in the US in 1977 and works to promote dialogue and the exchange of ideas around the economic analysis of energy resources.