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  
SAMA's Reverse Repo rate has also increased to 4.75 percent (File)
Short Url
Updated 02 February 2023

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. 

Rising interest rates increase the cost of borrowing for consumers, leading to more expensive mortgage bills and loan repayments – something that can lead to reduced spending on other items as people try to reduce costs.

However, savers benefit from the interest rates rise, with money stored away gaining a greater return. Yet, with inflation across the globe still running hot, any extra interest gained by savings is lower than the rising cost of goods and services.

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.  


Closing bell: Tasi slightly slips amid oil prices uncertainty  

Closing bell: Tasi slightly slips amid oil prices uncertainty  
Updated 22 March 2023

Closing bell: Tasi slightly slips amid oil prices uncertainty  

Closing bell: Tasi slightly slips amid oil prices uncertainty  

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped slightly on Wednesday and lost 9.23 points – or 0.09 percent – to close at 10,350.51, as oil prices were down following fresh indications of weak demand and the market awaited a crucial interest rate decision by the US Federal Reserve.  

MCSI Tadawul 30 Index dropped by 0.12 percent to 1,408.99, while the parallel market Nomu gained 165.55 points or 0.87 percent to close at 19,094.44.  

The total trading turnover of the benchmark index on Wednesday was SR5.01 billion ($1.33 billion).  

The top performer of the day was Mouwasat Medical Services Co., as its share prices surged 10 percent to SR220.  

Other major gainers on Wednesday were Thimar Development Holding Co. and Alinma Tokio Marine Co., whose share prices surged 9.95 percent and 6.98 percent respectively.  

The worst performer of the day was Al-Etihad Cooperative Insurance Co. whose share prices dropped by 8.93 percent, after reporting a fall in total comprehensive income of 73.93 percent in 2022.  

Gulf Insurance Group is another company that saw its shares fall by 7.45 percent as it reported a decrease in net income of SR73.4 million, or 44 percent, in 2022, driven by a lower surplus from insurance operations.  

On the announcements front, Obeikan Glass Co. reported an annual profit of SR177.65 million in 2022, up 2.29 percent compared to 2021, driven by an increase in sales prices as a result of the rise in demand and the expansion of the company in new markets.  

Amid the marginal profit rise, Obeikan Glass Co.’s shares, which are listed in Nomu, dropped by 12.45 percent to SR76.20.  

Basic Chemical Industries Co. announced that its net profit hit SR70.4 million in 2022, up 21.97 percent from the previous year. Even as the profits soared, the share prices of Basic Chemical Industries fell 4.32 percent to SR33.20.   

Driven by the rise in profits, the board of directors of BCI recommended the payment of a cash dividend at 10 percent of capital, or SR1 a share, for 2022.  

Meanwhile, Saudi Printing and Packaging Co. also announced in its financial results that its losses narrowed to SR9.2 million in 2022, from SR59.3 million in the year-ago period. 

Despite narrowing the losses, the share prices of Saudi Printing and Packaging Co. went down 0.24 percent to SR16.86.  

Allied Cooperative Insurance Group also trimmed its loss to SR13.7 million in 2022, from SR114.6 million in 2021. The company’s share prices rose 1.31 percent to SR10.80 at the end of Wednesday’s closing.  

AME Co. for Medical Supplies reported an annual net profit of SR26.6 million in 2022, up 25.73 percent compared to 2021, due to the increase in net revenues driven by a rise in sales of medical supplies.  

As profits surged, AME Co. for Medical Services’ board of directors recommended a 20 percent dividend payout, or SR2 per share, for 2022. The company’s share prices also went up 2.55 percent to SR40.25 on Wednesday’s closing bell.  

Oil prices edged lower on Wednesday. At 04.10 p.m. Saudi time, Brent crude futures, which have risen by almost 3 percent this week, were down 11 cents, or 0.15 percent, at $75.21 a barrel.  

US West Texas Intermediate crude futures were down 9 cents, or 0.13 percent, at $69.58. 


World Bank approves $7bn financing program for Egypt

World Bank approves $7bn financing program for Egypt
Updated 22 March 2023

World Bank approves $7bn financing program for Egypt

World Bank approves $7bn financing program for Egypt

RIYADH: The World Bank has announced that it has approved a $7 billion financing program for Egypt that extends from 2023 until 2027, according to a statement.

The partnership framework is done in collaboration with the International Finance Corp. as well as the global insurance firm Multilateral Investment Guarantee Agency.

The financing program is projected to support green and inclusive developments as well as growth activities in the African country.

This money comes as Egypt is struggling with negative factors such as low foreign currency reserves, high interest payments, and high inflation.

It is also feeling the economic impact of the Russia-Ukraine war, as well as reduced tourism, and an increase in food insecurity.

In January, the International Monetary Fund stressed that despite Egypt seeing an “economic recovery” during 2021-2022, “imbalances also started building amidst a stabilized exchange rate.”

The source of World Bank approved funds will be split, with $1 billion annually coming from the International Bank for Reconstruction and Development, in addition to $2 billion over the entire Central Provident Fund period from the International Finance Corp.

In addition to this, the program will also provide Egypt with guarantees from the Multilateral Investment Guarantee Agency.

This is not the first time that the lender has approved a green scheme for Egypt.

In October 2022, it signed off on a $400 million development-financing agreement to help boost the African country’s logistics and transportation sectors and facilitate the transition to low-carbon technology along the Alexandria the 6th of October–Greater Cairo Area railway corridor.

In June last year the World Bank also approved a $500 million loan to help Egypt ensure an uninterrupted supply of bread as the country faced food security concerns amid rising prices and supply disruption due to the Russia-Ukraine war.


Saudi Arabia and China tourism officials discuss Kingdom’s ambitious tourism target

Saudi Arabia and China tourism officials discuss Kingdom’s ambitious tourism target
Updated 22 March 2023

Saudi Arabia and China tourism officials discuss Kingdom’s ambitious tourism target

Saudi Arabia and China tourism officials discuss Kingdom’s ambitious tourism target

RIYADH: Saudi Tourism Authority’s CEO has held a meeting with China’s Vice Minister of Culture and Tourism to discuss ways to elevate and enhance strategic collaborations in the tourism sector, Saudi Press Agency reported.

Fahd Hamidaddin held talks with Rao Quan amid the Kingdom’s efforts to attract more than 4 million Chinese tourists by the year 2030.

During the meeting, both sides agreed on the general terms of a Memorandum of Understanding to support this target. 

The two sides also settled to introduce and launch several joint tourism initiatives to develop human capacities working within the sector.

Saudi Ambassador to China Abdulrahman bin Ahmed Al-Harbi was also present during the meeting as officials discussed bilateral cooperation prospects in the sector.

In addition to this, the meeting also looked at ways to pave the way for a unified vision as well as efforts through relevant global organizations and associations.

Aside from tourism, the officials reflected on the outcomes of China’s President Xi Jinping’s visit to the Kingdom back in December 2022.

The latest meeting came as part of a promotional tour held by the Saudi Tourism Authority in collaboration with its partners from the Saudi tourism sector in China in an attempt to showcase Saudi tourist destinations and build partnerships between the tourism sectors of both countries.

The tour kicked off in Beijing before moving to Shanghai, and finally Guangzhou.

Earlier this month, the authority completed a successful three days at ITB Berlin, the world’s largest trade fair for the industry. 

Ahmed Al-Khateeb, Saudi minister of tourism and chairman of the authority’s board of directors, opened the Saudi pavilion at the fair, which received a number of presidents, ministers, leaders, and other key officials. 

Al-Khateeb also met officials of major commercial bodies such as TUI Group and FTI Consulting, in addition to leaders of the UN World Tourism Organization and the World Travel and Tourism Council.

The Saudi Tourism Authority is working to develop, promote, and distribute packages and products in partnership with the private sector.

The authority also participates in tourism events, exhibitions, trade shows, and roadshows both locally and globally to measure the tourist experience and suggest ways to enhance it to the relevant stakeholders.


Matarat Holding inks deal with Egis to serve 26 airports in Saudi Arabia 

Matarat Holding inks deal with Egis to serve 26 airports in Saudi Arabia 
Updated 22 March 2023

Matarat Holding inks deal with Egis to serve 26 airports in Saudi Arabia 

Matarat Holding inks deal with Egis to serve 26 airports in Saudi Arabia 

RIYADH: Saudi state-owned aviation management firm Matarat Holding Co. has inked a three-year contract with consulting company Egis to serve 26 airports in Saudi Arabia, as the Kingdom pushes to develop a global aviation hub in line with the goals outlined in Vision 2030.  

The contract was signed by Matarat’s CEO Mohammed Almaghlouth and Egis’ CEO in the Middle East and South Asia, Alaa AbuSiam, according to a press release.  

The three-year contract aims to establish phased project management portals, update airport project management policies and procedures, and provide technical support for planning and designing. The deal involved following up on the implementation of capital projects with Matarat subsidiaries including Riyadh Airports Co., Jeddah Airports, Dammam Airports, and Cluster2.  

“This contract focuses on providing support in several major areas and activities, which include strategic planning for projects, building an asset management guide, preparing a unified guide for engineering specifications for designing and implementing projects, and following up on continuous improvement of their performance,” said Turki Almubadal, executive vice president of Projects and Technical Affairs at Matarat.

He added that the signing of this contract will help the Kingdom achieve its National Aviation Strategy which aims to increase international destinations to 250 and passenger capacity to 330 million by 2030.  

“We are extremely delighted to be partnering with Matarat to be part of one of the most transformative projects in the Middle East region. The Kingdom’s strong commitment to the aviation sector as part of its 2030 Vision, will surely transform the country into a global hub connecting Asia, Europe and Africa,” said AbuSiam.   

Formerly known as Saudi Civil Aviation Holding Co., Matarat Holding Co. was established in 2013 by Saudi Arabia’s General Authority for Civil Aviation.  

The company aims to develop the Kingdom’s airports and improve their performance, along with contributing to Saudi Arabia’s sustainable development process in the aviation sector.  


OPEC+ likely to stick to its guns despite price slump, delegates say

OPEC+ likely to stick to its guns despite price slump, delegates say
Updated 22 March 2023

OPEC+ likely to stick to its guns despite price slump, delegates say

OPEC+ likely to stick to its guns despite price slump, delegates say

LONDON: The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, is likely to stick to its deal on output cuts of 2 million barrels per day until the end of the year, even after a banking crisis sent crude prices plunging, three delegates from the producer group told Reuters.

Oil prices hit 15-month lows on Monday in response to the banking crisis that followed the collapse of two US lenders and resulted in Credit Suisse being rescued by Switzerland's biggest bank UBS.

Brent crude was trading around $75 a barrel on Wednesday morning.

Last October OPEC+, which includes Russia, agreed steep output cuts of 2 million bpd from November until the end of 2023 despite major consumers calling for increases in production.

That decision helped to push Brent close to $100 a barrel, but prices have come under pressure since then as rising interest rates to combat high inflation threaten to stymie oil demand growth.

Falling oil prices are a problem for most of the group's members because their economies rely heavily on oil revenue.

Russian Deputy Prime Minister Alexander Novak on Tuesday said that Moscow will continue with a 500,000-bpd production cut it announced last month, lasting until the end of June.

"This is only a unilateral cut of Russia," one of the delegates said.

"No changes for the group until the end of year," he added.

Another delegate added that no further cuts were planned by the group.

A third delegate said the recent slump in oil prices was related to speculation in the financial market, not market fundamentals.

The heads of top oil traders and hedge funds that spoke at an industry event this week said that they expected oil prices to strengthen by the end of the year as continued easing of COVID-19 restrictions in China drive up demand in the world's biggest oil importer.

Pierre Andurand, founder of hedge fund Andurand Capital, was the most bullish and forecast a potential Brent oil price of $140 a barrel by the end of the year.

In its most recent monthly report, OPEC upgraded its forecast for Chinese oil demand growth this year but maintained its projection for global demand growth at 2.32 million bpd.

OPEC+ is due to hold a virtual meeting of its ministerial committee, which includes Russia and Saudi Arabia, on April 3 before a full ministerial meeting in Vienna on June 4.