Saudi Arabia’s PMI hits 57.2 fueled by strong non-oil sector growth: S&P

Saudi Arabia’s PMI hits 57.2 fueled by strong non-oil sector growth: S&P
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Updated 02 November 2022

Saudi Arabia’s PMI hits 57.2 fueled by strong non-oil sector growth: S&P

Saudi Arabia’s PMI hits 57.2 fueled by strong non-oil sector growth: S&P

RIYADH: Saudi Arabia’s Purchasing Managers’ Index hit at 57.2 in October, the strongest since January 2021,  as the Kingdom's non-oil economy continues to expand driven by strong demand and rising new work inflows, according to a report.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index — formerly the S&P Global Saudi Arabia PMI — has marked the Kingdom as maintaining growth for the 26th successive month. 

In September, Saudi Arabia’s PMI was 56.6. 

According to S&P Global, readings above 50 mark growth, while those below 50 signal contraction.

“Saudi Arabian non-oil businesses signalled a strong degree of confidence in future economic conditions in October. The outlook for the next 12 months rose to its highest level since the beginning of 2021, as firms suggested that the current robust level of growth is likely to continue,” said Naif Al-Ghaith, chief economist at Riyad Bank. 

He added: “At the same time, business activity and new orders rose sharply again, with firms seeing client demand strengthen at a robust rate.” 

Improved market conditions and ongoing projects paved the way for flourishing output and new orders in terms of activity and sales in October 2022, according to the report.  

Suppliers' delivery times proceeded to shorten at the start of the fourth quarter, aiding companies in raising their inventories and purchasing activity, while employment saw a modest increase.  

Additionally, Saudi Arabia’s increasing demand from foreign markets promoted sales growth last month, while its new export order increase marked the sharpest rise in almost one year. 

The report added that output rises took place in the manufacturing, construction, wholesale and retail and services sectors, with the sturdiest upturn recorded among goods producers. 

Firms reported the slowest increase in the costs of inputs in eight months, where only 4 percent of partakers recorded higher expenses compared to the previous month. 

“Output charges subsequently rose only modestly, with upticks led by wholesale & retail and services firms,” concluded the report.  


SAMA among Gulf central banks to mirror US Fed 25 bps interest rate hike  

SAMA among Gulf central banks to mirror US Fed 25 bps interest rate hike  
Updated 16 sec ago

SAMA among Gulf central banks to mirror US Fed 25 bps interest rate hike  

SAMA among Gulf central banks to mirror US Fed 25 bps interest rate hike  

RIYADH: The Saudi Central Bank has increased its interest rate by 25 basis points to 5.25 percent, echoing Wednesday’s move by the US Federal Reserve to curb inflation. 

A statement from the bank, also known as SAMA, noted its Reverse Repo rate has also increased to 4.75 percent.  

Inflation is on the rise in the Kingdom, with the annual rate rising to 3.3 percent in December, up from 2.9 percent in November.  

The Fed’s quarter-point interest rate hike follows months of larger increases, as it hiked 50 basis points in December, and 75 basis points in November, September, July and June.

Despite recent signs of a slow down in the US economy, prices are running at their highest level since the early 1980s. 

While the US Central Bank’s decision was driven by its desire to lower high inflation, this played a part in driving the Gulf region’s monetary policy, as most of the region’s currencies are pegged to the dollar.  

Following the US Fed’s decision, regional central banks also swung into action to raise their interest rates – although Qatar chose to hold. 

The UAE's central bank increased its base rate to 4.65 percent, effective on Thursday, while the Central Bank of Oman hiked its Repo rate to reach 5.25 percent.

Bahrain also raised its main rate by 25 basis points, with its one-week deposit facility rate rising to 5.5 percent, while the overnight deposit rate hit 5.25 percent. 

Qatar’s Central Bank said in a press release Wednesday that it would keep its rates unchanged, keeping its deposit rate at 5 percent, its lending rate at 5.5 percent, and its repo rates at 5.25 percent. 

As it was predicted that the country would mirror the Fed in early 2023 by the credit ratings agency Fitch in a report last month, this decision came somewhat as a surprise. 

The Central Bank of Kuwait, which raised its interest rate by 50 basis points last month, often acts separately and does not necessarily follow the Fed’s hikes.  

In addition, the Central Bank of Egypt is forecast to raise its overnight interest rates by 150 basis points at its regular monetary policy committee meeting on Thursday, a Reuters poll showed last Monday.  

The CBE increased its interest rates by an unprecedented 800 basis points over the last year alone, and has been involved in a constant series of currency devaluations.  

A poll of 13 analysts anticipated the bank to increase its deposit rate to 17.75 percent and its lending rate to 18.75 percent.  


Egypt poised to announce detailed plan for state stake sales

Egypt poised to announce detailed plan for state stake sales
Updated 31 min 55 sec ago

Egypt poised to announce detailed plan for state stake sales

Egypt poised to announce detailed plan for state stake sales

CAIRO: Egypt's government aims to announce a detailed plan next week to offer stakes in at least 20 state companies over the coming year, Prime Minister Moustafa Madbouly said after a cabinet meeting on Wednesday.

An Egyptian plan to sell stakes in public companies, first announced more than five years ago, has gained new urgency since the Russian invasion of Ukraine triggered heavy foreign investment outflows from Egyptian financial markets and threw the economy into crisis.

Egypt in December agreed to a $3 billion rescue plan with the International Monetary Fund in expectation that the state withdraws from some non-strategic sectors of the economy to allow space for the private sector to grow.

"The whole goal is to increase the participation of citizens and the private sector in the development process and their management and participation in public institutions that have been owned by the state," Madbouly said, adding that a detailed plan should be in place after the next cabinet meeting.

The company offerings will be made over the course of a year, with some being sold on the stock exchange and others to strategic investors, Madbouly said.

"Large investors will also participate in restructuring and expanding production lines of the companies while also increasing their capital," he added.


Basra Oil Co. head expects Qatar to take 20-25% stake in TotalEnergies’ Iraq project 

Basra Oil Co. head expects Qatar to take 20-25% stake in TotalEnergies’ Iraq project 
Updated 37 min 59 sec ago

Basra Oil Co. head expects Qatar to take 20-25% stake in TotalEnergies’ Iraq project 

Basra Oil Co. head expects Qatar to take 20-25% stake in TotalEnergies’ Iraq project 

BASRA: The head of Iraq's Basra Oil Co. told Reuters on Wednesday that he expects Qatar to acquire a 20-25 percent stake in TotalEnergies' $27 billion cluster of energy projects in the country, with the Baghdad government aiming to hold around 40 percent. 

A major investment in the projects by a Gulf state would be an important win for Iraqi Prime Minister Mohammed al-Sudani, who took office last October following more than a year of political turmoil. It would also be considered a step towards countering Iranian influence. 

"Qatar is one of the promising and developed countries in this regard...we determine our percentage as an Iraqi country, and the rest is for Total and QatarEnergy...I don't expect more than 20-25 percent, they are talking about 30 percent," said Bassem Abdul Karim, director general of state-run BOC, referring to Qatar's potential stake. 

"The important thing for us is to set our share...Iraq is talking about 40 percent." 

Talks are ongoing, Abdul Karim added. Sources told Reuters last week that Qatar was looking to acquire a stake of around 30 percent in the project. 

QatarEnergy and TotalEnergies did not immediately respond to requests for comment. 

Abdul Karim said he hopes that the contract with France's TotalEnergies — which was signed in 2021 and requires an initial investment of $10 billion to build four giant solar, gas, power and water projects in southern Iraq over 25 years — would be activated within three months. 

The deal had stalled amid disputes between Iraqi politicians over the terms of the deal, which have not been made public, sources familiar with the situation told Reuters early last year, although the oil ministry said it just "needed time". 

France and Iraq signed a treaty last month seeking to strengthen bilateral relations in anti-corruption, security, renewable energy and culture, while committing to the implementation of the TotalEnergies project. 

Separately, Abdul Karim said that Iraq’s oil production from its southern oilfields currently stands at 3.59 million barrels per day. 

 


Abu Dhabi's Borouge announces $400m cost savings drive; Q4 profit drops

Abu Dhabi's Borouge announces $400m cost savings drive; Q4 profit drops
Updated 47 min 7 sec ago

Abu Dhabi's Borouge announces $400m cost savings drive; Q4 profit drops

Abu Dhabi's Borouge announces $400m cost savings drive; Q4 profit drops

DUBAI: Abu Dhabi's Borouge announced a $400 million cost savings drive on Thursday to navigate inflation and supply chain disruptions, as it reported a 17 percent decline in fourth-quarter profit on pricing compression for polyethylene and polypropylene.

The program was introduced "in response to the prevailing market challenges and to sustain its competitive positioning," adding that its core markets, the Asia Pacific and the Middle East, remain stronger than in developed markets, the petrochemicals firm said in a statement.

The polyefins producer said the benefits of its program should mostly be felt in the second half of the year, offsetting anticipated market pressures, and expects the recent shifts in China's COVID policy to stimulate demand, but that would take some time to take effect.

"We will be looking at all levers," Chief Financial Officer Jan-Martin Nufer said in a post-earnings interview.

"We will need to look at all the cost areas, into logistics variable cost and conversion variable costs but also at the fixed costs."

Borouge reported a net profit of $247 million in the three months to Dec. 31 on a pro forma basis, down from $299 in the comparable period a year earlier, it said in a regulatory filing.

Borouge's board has mandated its executive management to actively explore growth opportunities through international expansion, the company said in the filing.

It also reiterated its commitment to pay $975 million in post-initial public offering dividends to shareholders for 2022, of which $325 million has already been paid, and at least $1.3 billion for 2023.

Abu Dhabi National Oil Co. and Austria's Borealis own a 54 percent and 36 percent stake in Borouge, respectively.


Saudi Arabia issues first license at OXAGON to NEOM Green Hydrogen

Saudi Arabia issues first license at OXAGON to NEOM Green Hydrogen
Updated 01 February 2023

Saudi Arabia issues first license at OXAGON to NEOM Green Hydrogen

Saudi Arabia issues first license at OXAGON to NEOM Green Hydrogen

RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources on Tuesday issued the first industrial license to NEOM Green Hydrogen Co. at OXAGON, the Saudi Press Agency reported.

It is an equal joint venture between NEOM, ACWA Power, and Air Products.

It is part of the Kingdom’s efforts to catalyze the global hydrogen economy by becoming the world’s leading hydrogen producer while maintaining its position as a key player in the energy sector.

The NEOM Green Hydrogen plant is expected to begin green hydrogen production using 100 percent renewables in 2026. It will produce up to 1.2 million tons of green ammonia annually, or 600 tons of green hydrogen daily. Green ammonia will be exported to global markets to support the decarbonization of the heavy transport sector.

It is estimated that the plant will provide up to 5 million tons of CO2 annually. When the plant commences operations at OXAGON in 2026, 100 percent of the green hydrogen will be exportable to global markets in the form of green ammonia, under an exclusive long-term agreement with US-based Air Products Co.

The plant will run on around 4 GW of wind and solar energy and produce green hydrogen using the electrolysis 2.2GW technology.