Oil slides on China demand concerns, easing supply worries

Oil slides on China demand concerns, easing supply worries
The dollar index inched lower on Friday, making oil cheaper for buyers holding other currencies (Shutterstock)
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Updated 18 November 2022

Oil slides on China demand concerns, easing supply worries

Oil slides on China demand concerns, easing supply worries

LONDON: Oil fell around 2 percent on Friday and was on track for a second weekly decline, pressured by concern about weakening demand in China and further interest rate rises by the US Federal Reserve.

As part of the rout, the market structure of both oil benchmarks shifted in ways that reflect dwindling supply concerns. Crude had come close to all-time highs earlier this year as Russia’s invasion of Ukraine added to those concerns.

China, which sources say is looking to slow crude imports from some exporters, has seen a rise in COVID-19 cases, while hopes for the moderation of aggressive US rate hikes have been dented by remarks from some Fed officials this week.

“As things stand, bullish price drivers are in short supply,” Stephen Brennock of oil broker PVM said. “Yet with the EU embargo on Russian crude less than three weeks away, oil prices could still end the year with a bang.”

Brent crude was down $1.80, or 2 percent, at $87.98 a barrel by 1325 GMT, having touched $87.86 earlier, the lowest since Oct. 3. US West Texas Intermediate (WTI) crude was down $1.52 or 1.9 percent at $80.12.

Both benchmarks are heading for a second weekly loss. Brent is on track for a decline of more than 8 percent, while WTI is down about 10 percent.

In a sign of easing concern about supply, the nearby WTI contract moved to a discount to the second month , a structure known as contango, for the first time since 2021, according to Refinitiv Eikon data.

Brent was still in the opposite structure, backwardation, although the premium of nearby Brent over barrels loading in six months fell as low as $3.24 a barrel, the lowest since April.

Recession concerns have dominated this week even with the EU's ban on Russian crude looming on Dec. 5 and the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, tightening supply.

“On the demand side, there are concerns about an economic slowdown,” said Naeem Aslam of Avatrade. “The path of the least resistance seems skewed to the downside.”

The Fed is expected to raise rates by a smaller 50 basis points (bps) at its Dec. 13-14 policy meeting after four consecutive 75 bp hikes, according to a Reuters poll.

OPEC+, which began a new round of supply cuts in November, holds a policy meeting on Dec. 4.

Saudi Arabia, UAE leads Gulf region in M&A activity: survey

Saudi Arabia, UAE leads Gulf region in M&A activity: survey
Updated 11 sec ago

Saudi Arabia, UAE leads Gulf region in M&A activity: survey

Saudi Arabia, UAE leads Gulf region in M&A activity: survey

RIYADH: Amid the global economic slowdown, the strategic interconnectedness and pivotal strength of the Gulf Cooperation Council markets are driving inbound and cross-border mergers and acquisitions activity with Saudi Arabia and the UAE taking the lead, a survey showed.

According to the findings of the survey conducted by Lumina Capital Advisers, the GCC has witnessed a great deal of attention in terms of M&A transactions as 80 percent of the respondents are executing or have executed these deals in the last 12 months.

Inbound M&A activity, which refers to mergers and acquisitions in which a foreign company or entity acquires or merges with a company or assets located within the GCC, has increased 112 percent since the last Lumina survey. As many as 40 percent of respondents are reportedly considering an inbound transaction into the Middle East within the next 18 months.

The survey also found that 70 percent of the investors interviewed are transacting cross-border within the GCC, with Saudi Arabia and the UAE being the most sought-after markets.

“Deal sizes are increasing significantly compared to our previous survey, moving from less than $100 million to below $250 million,” said Andrew Nichol, partner at Lumina Capital Advisers.

The strategic location of Saudi Arabia provides access to regional and global markets, making it a strategic hub for trade and investment, the M&A activity report showed.   

The Kingdom’s ambitious economic diversification plan, Vision 2030, creates opportunities for foreign companies, as investors use it as a regional platform to “buy and build” out into the wider region.

The fundamental idea behind “buy and build” strategies is to acquire multiple smaller companies in the same or related industries and integrate them into a larger, more comprehensive entity. This approach offers several advantages, including economies of scale, enhanced market share, and increased competitiveness.

According to the survey findings, a $900 billion spending plan in the Kingdom is set to facilitate the development of megacities, incorporating advancements in sustainability, technology, and automation.

Healthcare and education sectors are also experiencing specific attention in the Kingdom.

Saudi Arabia’s population is growing, and there is an increasing demand for healthcare services and education. The healthcare sector, in particular, has seen a rise in lifestyle-related diseases and an aging population, necessitating expanded healthcare infrastructure.

The government is focused on enhancing the quality of healthcare and education services to meet international standards. This requires significant investments in facilities, technology, and human resources, leading to M&A opportunities.

The UAE, on the other hand, is a sought-after target in terms of acquisitions at the federal level, according to the survey.

The trend is fueling a surge in acquisitions, particularly in infrastructure, construction, and contracting markets, signifying a strategic alignment with the nation’s development objectives.

According to the survey, 76 percent of investors identified equity as the preferred funding method of acquisitions, whereas 44 percent chose debt as a significant source of transaction funding. The increase in the use of debt is driven by the access of sovereign wealth funds and quasi-government entities, it showed.

Saudi Arabia is set to establish WIPO’s first Joint Master’s Program in Arab region 

Saudi Arabia is set to establish WIPO’s first Joint Master’s Program in Arab region 
Updated 15 min 31 sec ago

Saudi Arabia is set to establish WIPO’s first Joint Master’s Program in Arab region 

Saudi Arabia is set to establish WIPO’s first Joint Master’s Program in Arab region 

RIYADH: The World Intellectual Property Organization signed an agreement with the Saudi Authority for Intellectual Property and Umm Al-Qura University to establish WIPO’s first Joint Master’s Program in the Arab region. 

This program will strengthen the connection between innovation and entrepreneurship through high-quality intellectual property education, according to a press release from WIPO. 

During his three-day visit to Saudi Arabia, WIPO Director General Daren Tang signed the agreement along with CEO of SAIP Abdulaziz Al-Swailem and President of Umm Al-Qura University Farid bin Ali Al-Ghamdi. 

The importance of incorporating IP education into school curricula was another key theme discussed during the visit with government officials. 

Tang emphasized that IP will grow in significance as the economy diversifies and digitizes. He pledged WIPO’s ongoing support for Saudi Arabia’s aspirations to diversify its economy and foster an innovation ecosystem that empowers future generations. 

Throughout his visit, Tang engaged in a series of meetings with high-ranking government officials, gaining insights into how Saudi Arabia is translating its Vision 2030 into tangible achievements. 

The discussions prominently featured the role of innovation as a catalyst for future growth. 

Over the past five years, SAIP has transformed from a mere IP registry into an innovation agency, playing a pivotal role in the Vision 2023 initiative. 

At a meeting at SAIP headquarters, Tang had the opportunity to learn about SAIP’s multifaceted work and how its strategy is central to realizing Vision 2030. The launch of Saudi Arabia’s inaugural national IP strategy last year marked a significant milestone toward achieving the vision. 

Additionally, the WIPO director general signed an agreement with SAIP on alternative dispute resolution in the realm of IP.  

As IP takes center stage in more economies, IP disputes are expected to become more prevalent. This agreement is set to bolster Saudi Arabia’s ADR system while increasing IP awareness on a broader scale. 

Tang stated: “These two agreements underscore WIPO’s close and constructive relationship with Saudi Arabia, as well as our shared commitment to leveraging innovation, creativity, and IP for the good of all.” 

Furthermore, a trilateral cooperation agreement was inked between WIPO, SAIP and NEOM, cementing collaboration on innovation and IP. 

NEOM, a green megacity, seeks to redefine urban development with a strong emphasis on innovation and creativity. 

Tang acknowledged the impressive performance of the Gulf Cooperation Council countries in WIPO’s Global Innovation Index, emphasizing that enforcement is crucial to sustaining innovation-driven development. 

“IP infringement undermines innovation and devalues creativity, posing economic and societal risks. IP crime is closely linked to other illegal activities, and counterfeit goods jeopardize public health,” he explained. 

Addressing IP infringement necessitates a comprehensive approach, and WIPO pursues this through various means, including raising public awareness about IP protection and enforcement, offering legislative support to member states, and conducting capacity-building activities. 

Closing bell: TASI sheds 113 points to close at 10,840  

Closing bell: TASI sheds 113 points to close at 10,840  
Updated 30 min 30 sec ago

Closing bell: TASI sheds 113 points to close at 10,840  

Closing bell: TASI sheds 113 points to close at 10,840  

RIYADH: Saudi Arabia’s Tadawul All Share Index concluded Wednesday’s trading session at 10,840.27 points, marking a fall of 112.07 points or 1.02 percent.   

MSCI Tadawul 30 Index also fell 16.29 points to close at 1,390.84 points, a 1.16 percent drop.   

On the other hand, the parallel market Nomu closed the day at 22,758.35, reflecting an increase by 214.14 points or 0.95 percent.  

TASI reported a trading volume of SR6.34 billion ($1.69 billion), with 43 companies gaining and 176 losing steam.    

The best-performing stock of the day was Alinma Tokio Marine Co. whose share price surged 3.95 percent to SR15.80.    

The second top performer today was National Agricultural Development Co. as its share price soared 3.59 percent to SR49.     

Other top gainers include Dar Alarkan Real Estate Development Co. and Astra Industrial Group, as their share prices increased by 2.99 percent and 2.70 percent to SR15.18 and SR87.50, respectively.  

The worst performer was Leejam Sports Co., also known as Fitness Time, whose share price dropped 5.90 percent to SR140.4.     

The second loser of the day was Zamil Industrial Investment Co. whose shares price dropped by 4.20 percent to reach SR21.44.  

Other worst performers included National Medical Care Co. and Elm Co., whose share prices shed by 3.91 percent and 3.82 percent, respectively.  

In the parallel market Nomu, National Building and Marketing Co. was the top gainer with its share price edging up by 6.53 percent to SR257.80.  

Keir International Co. was the major loser on Nomu, as the company’s share price slipped by 5.39 percent to SR4.56.    

On the announcements front, Atlas Elevators General Trading and Contracting Co. began listing its shares on Nomu on Oct. 4 at a SR23 per share.   

The company floated 1.2 million shares, which represents 20 percent of its capital, to qualified investors. The offering was oversubscribed by 495.07 percent.   

Horizon Food Co. disclosed its financial results for the first half of 2023. The company’s net profit dropped by 44.24 percent to SR2.61 million, down from SR4.68 million in the same period last year.  

The company said in a bourse filing that the decrease was due to a decline in sales by 26 percent, and an increase in administrative and general expenses.  

Social Development Bank allocates $621m in Q3 to support economic development  

Social Development Bank allocates $621m in Q3 to support economic development  
Updated 36 min 52 sec ago

Social Development Bank allocates $621m in Q3 to support economic development  

Social Development Bank allocates $621m in Q3 to support economic development  

RIYADH: Entrepreneurs and business owners were among 39,000 recipients of a combined SR2.3 billion ($621 million) in support from the Social Development Bank in the third quarter of 2023, it has been announced. 

According to the Saudi Press Agency, the development fund benefited also helped individuals availing themselves of social services. 

Saudi Minister of Human Resources and Social Development Ahmed bin Sulaiman Al-Rajhi revealed the figure during SDB’s quarterly board meeting on Wednesday. 

The minister also highlighted the ongoing endeavors to foster collaboration across all sectors to realize sustainable development goals and elevate the Kingdom’s quality of life. 

Al-Rajhi underlined SDB’s role in empowering aspiring entrepreneurs and fledgling enterprises to transform their dreams into tangible projects by participating in the Saudi Vision 2030 initiatives. 

In August, the bank announced that it provided SR6.4 billion in financing during the first half of 2023, mainly targeting small and medium enterprises.   

Over 150,000 beneficiaries availed of the bank’s financial services, with SR2.6 billion dedicated to supporting 5,700 SMEs through the year’s first half.   

The bank has also collaborated with the UN Conference on Trade and Development in hosting the annual meeting of Empretec center managers in Riyadh in October 2023. 

Empretec is the flagship capacity-building program of the UN established by the UN Conference on Trade and Development to promote SMEs. 

Moreover, SDB introduced several targeted empowerment programs and capacity-building solutions between January and August to strengthen SMEs and ensure their sustainability.   

One of these programs was the innovative training project launched in May to empower Saudi families and microenterprises.   

The project brought together regional and global experts to deliver 13 specialized training programs.   

These initiatives reflect the SDB’s role in cultivating a job market that appeals to local and international talent pools. 

Last September, the General Authority for Small and Medium Enterprises inked a cooperation agreement with the SDB and Riyadh Development Co. to support entrepreneurs entering the agricultural sector. 

The agreement intended to assist SMEs in growing their commercial operations in the agricultural crop wholesale and retail sectors. 

Egyptian state-run infrastructure firm to establish Saudi branch

Egyptian state-run infrastructure firm to establish Saudi branch
Updated 04 October 2023

Egyptian state-run infrastructure firm to establish Saudi branch

Egyptian state-run infrastructure firm to establish Saudi branch

RIYADH: Egypt’s Holding Co. for Roads, Bridges, and Land Transportation Projects is planning to establish a branch of its headquarters in Saudi Arabia after securing contracts for infrastructure projects in the Kingdom. 

The decision to set up the Saudi branch was approved by Egyptian Transportation Minister Kamel Al-Wazir during the company’s general assembly meeting held on Tuesday. 

Al-Wazir, in a statement to the cabinet, emphasized the company’s expansion plans and its interest in exploring business opportunities, particularly in African and Arab countries.  

He also expressed interest in broadening the scope of the holding company beyond its primary focus. 

“There is a need to expand into activities other than roads and bridges, such as the establishment of concrete sleepers’ factories,” added Al-Wazir in the cabinet note.