Japan and Saudi Arabia seek common ground on mining sector development

Japan and Saudi Arabia seek common ground on mining sector development
On the sidelines of Fumio’s visit, Saudi Energy Minister Prince Abdulaziz bin Salman stressed how Saudi Arabia and Japan, whose relationship spans 50 years, are crucial strategic partners in the energy sector. (SPA)
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Updated 23 July 2023
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Japan and Saudi Arabia seek common ground on mining sector development

Japan and Saudi Arabia seek common ground on mining sector development
  • Both countries are looking to diversify their supply chains and look closer to home for rare earth minerals

RIYADH: Saudi Arabia and Japan are strengthening their long-standing bilateral trade relations in the energy sector as both countries pursue common goals towards decarbonization and economic diversification.

While the allied nations are moving closer in numerous areas, one critical sector in which both have a shared desire for growth is in the field of mineral development and mining.

Both countries are looking to further invest in rare earth resources that are crucial in the production of electric vehicles. Their shared interest in this segment of the energy sector comes as demand for EVs increases amid a global push towards decarbonization.

Announcements of expanded business relations between the two nations came on July 16 at the Ritz Carlton in Jeddah, when Japanese Prime Minister Fumio Kishida met with Saudi Crown Prince and Prime Minister Mohammed bin Salman.

There they set the course for strong trade ties through the exchange of 26 pre-signed economic agreements. These include the fields of healthcare, mining, clean energy and digital innovation.

On the sidelines of Fumio’s visit, Saudi Energy Minister Prince Abdulaziz bin Salman stressed how Saudi Arabia and Japan, whose relationship spans 50 years, are crucial strategic partners in the energy sector, according to the Saudi Press Agency.

The alliance, he said, has played an important role in strengthening the Kingdom’s pathway to achieving the goals stated in its Vision 2030 agenda towards economic growth, diversification and social transformation.

Saudi Investment Minister Khalid Al-Falih, also in attendance, emphasized how critical Japan is as an economic partner, adding: “The meeting is a testimony to how strong our economic relations are.”

According to Al-Falih, the Kingdom’s gross domestic product is now 66 percent higher than before the launch of Vision 2030. “Our foreign direct investment has also increased significantly by 120 percent,” he added. 

Japan’s industrial complex has this need and Saudi Arabia’s mineral wealth is a potential source to achieve this goal, whether from Saudi Arabia or other places where the two countries can invest together.

Ali Husein Alireza, managing director of Haji Husein Alireza & Co. Ltd

Japan’s energy relationship with Saudi Arabia continues to progress.

In December 2022, the allied countries signed two sets of cooperation agreements in the fields of hydrogen, fuel ammonia and carbon recycling, strengthening the current relationship primarily based on buyer and supplier of crude oil.

The two nations adhere to the Framework Convention on Climate Change principles and the Paris Agreement by working towards a circular economy and technologies that adhere to recycling.

Japan plans to be entirely carbon-neutral by 2050 and Saudi Arabia is actively seeking to diversify its oil-based economy, particularly through new initiatives implemented under its Vision 2030 agenda.

Mining and mining development are thus important sectors of growth for both nations.

“Rare earth metals are essential raw materials for a wide range of applications,” Giovanni Staunovo, commodity analyst at UBS Global Wealth Management told Arab News.

“They likely also play a key role in the energy transition, as those elements together with other critical metals are used in wind turbines, solar panels, electric vehicles and batteries,” he added.

Staunovo argued that “significant investments” across a range of energy sources are set to continue as global demand increases.

“To avoid too much dependence on the primary supplier of rare earth, China, it makes sense to diversify and look to alternative suppliers,” he said. 

FASTFACTS

• Both countries are looking to further invest in rare earth resources that are crucial in the production of electric vehicles. Their shared interest in this segment of the energy sector comes as demand for EVs increases amid a global push towards decarbonization.

• In December 2022, the allied countries signed two sets of cooperation agreements in the fields of hydrogen, fuel ammonia and carbon recycling, strengthening the current relationship primarily based on buyer and supplier of crude oil.

The most important rare earth element is neodymium, which is used as magnets for hard drives, speakers and electric motors. This is followed by dysprosium, terbium and praseodymium, which are all  commonly used as additives in neodymium magnets.

Japan has been working to diversify its sources of rare earth metals since its imports have increased in recent years due to the rising output of EVs, wind turbines and other products that use permanent magnets.

In January, Japan amended its Mining Act to target rare earth minerals, recognizing their importance to fuel a shift towards green energy amid increased market demands for EVs and other products.

Saudi Arabia is similarly searching for new rare earth deposits at home as part of its Vision 2030 strategy.

According to the Ministry of Industry and Mineral Resources, Saudi Arabia possesses over 20 different types of minerals, including gold, iron, copper, granite and marble. Resources currently being mined in the Kingdom include iron, copper and zinc.

In March, the ministry announced indicative timelines for the bidding cycle of five new mineral exploration opportunities showcased at the Future Minerals Forum 2023 in January in Riyadh. The move marks a strategic shift in the Kingdom towards the discovery and extraction of metals and minerals aiding the country’s transition towards green energy.

Such new investment opportunities aim to explore the mineral resources in the Kingdom, diversify its economy away from an oil-based carbon economy and achieve the goals of Vision 2030 by raising the mining sector’s contribution to the GDP to $64 billion by 20230. Moreover, by investing in mining, the Kingdom aims to diversify its economy and solidify mining as the third pillar of the national industry.

As part of this, in May, Saudi Arabia issued 34 new minings licenses, bringing the total number of permits in the industry to 2,365.

Of those 1,475 licenses are for building materials quarries and 644 for exploration.

Saudi businessman Ali Husein Alireza, managing director of Haji Husein Alireza & Co. Ltd, told Arab News that the Kingdom and Japan “complement each other” when it comes to the mineral exploration industry.

“Japan’s industrial complex has this need and Saudi Arabia’s mineral wealth is a potential source to achieve this goal, whether from Saudi Arabia or other places where the two countries can invest together,” he said.

Reza further emphasized how Saudi Arabia can also benefit from expanding its minerals industry and gaining technical knowledge and know-how in the sector by using Japanese expertise, adding how the strengthened economic ties “offer an overlapping desire in the business sector to address world demand for minerals much needed for the industries of the future.”

Presently, only a handful of countries produce most of the world’s rare earth minerals, including elements used in EV batteries such as cobalt and lithium.

China produces 70 percent of the global production of rare earth metals, followed by the US, Myanmar, Australia and Thailand, which together account for 24 percent of the remaining mine production, according to Mineral Commodity Summaries 2023, a report released by the US Department of the Interior.

“China dominates the market of rare earths, as the importance of rare earth minerals is set to increase over time due to their usage in electric vehicles — where they’re used as permanent magnets. Japan’s 2050 net-zero target has a huge China risk issue,” Viktor Katona, head of oil analysis at Kpler, told Arab News.

“While the United States is the second-largest, rare earth element producer globally, with some 13-14 percent of global supply, it is unlikely to share it widely even with strategic allies as domestic producers would seek to clinch deals and keep the minerals at home,” added Katona, concluding: “Consequently, Japan has a sourcing problem. The largest, rare-earth resources are in geopolitically inconvenient countries — China, Russia, Vietnam or even Brazil might be against Japanese entry into their markets.”


Regional startup activity continues to rise ahead of LEAP24

Regional startup activity continues to rise ahead of LEAP24
Updated 02 March 2024
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Regional startup activity continues to rise ahead of LEAP24

Regional startup activity continues to rise ahead of LEAP24
  • Regional venture capitals, enterprises gear up for a significant entrepreneurial uplift from March 4 to 7

CAIRO: Startup momentum in the Middle East and North Africa region is on the rise, with the eagerly awaited technology event LEAP24 just around the corner.  

Regional venture capitals have replenished their funds and burgeoning enterprises have secured financing – preparing Riyadh’s ecosystem for a significant entrepreneurial uplift from March 4 to 7.

US-based fintech MoneyHash sealed $4.5 million in a seed funding round to further expand its presence in the Saudi and regional markets.  

Founded in late 2020 by Nader Abdelrazik, Mustafa Eid, and Anisha Sekar, MoneyHash is in the field of payment orchestration. (Supplied)

The round was co-led by the UAE’s COTU Ventures and Saudi Arabia’s Sukna Ventures, with additional investments from RZM Investment, Dubai Future District Fund, VentureFriends, and several angel investors.  

Founded in late 2020 by Nader Abdelrazik, Mustafa Eid, and Anisha Sekar, MoneyHash is in the field of payment orchestration, offering a comprehensive payment operating system as a service designed to tackle the diverse technological and product challenges encountered by enterprise merchants.  

“COVID certainly boosted the adoption of digital payments in the region, but the infrastructure remains significantly underdeveloped,” Abdelrazik said.

Established in 2020 by Amir Farha, COTU Ventures boasts a dynamic portfolio of MENA startups, such as Huspy and MoneyHash. (Supplied)

“In MEA, payment failure rates are three times the global average, and fraud rates and cart abandonment are over 20 percent higher than in all other regions. This places merchants in a challenging position, viewing payments as a cost and risk center rather than a strategic enabler,” he added.

Following a $3 million pre-seed round in 2022, the newly acquired funds are earmarked for expanding the business team, enhancing growth capabilities, and sustaining technological advancement.

Saudi investment firm acquires startup platform VeFund   

The Saudi startup ecosystem is set to expand further with investment fund CoreVision acquiring VeFund, infusing artificial intelligence technologies for enhanced venture evaluation, innovation, and strategic growth.  

Third picture shows CoreVision CEO Faisal Al-Abdulsalam and VeFund cofounder Mohamed Gaber at  signing ceremony. (Supplied)

The acquisition of VeFund, a regional platform for venture evaluation and investor connections, represents a significant step in CoreVision’s strategic growth, enhancing its portfolio with advanced AI-driven technologies.  

The Saudi investment firm plans to use VeFund’s AI technology to support startups in navigating competitive environments.   

Following the acquisition, CoreVision CEO Faisal Al-Abdulsalam will lead VeFund as its chief executive.  

COVID certainly boosted the adoption of digital payments in the region, but the infrastructure remains significantly underdeveloped.

Nader Abdelrazik, MoneyHash cofounder

Al-Abdulsalam’s extensive experience and portfolio of over 80 investments in various sectors are set to bring a new strategy of leadership and vision to VeFund, the company said.    

“We at CoreVision are not just investors, we see ourselves as ecosystem builders. As such, our vision is to transform VeFund into a secondary market for startups, offering a platform for investors to trade safe notes, which is essential in contributing to the vibrancy of the startup community here in Saudi Arabia,” said Al-Abdulsalam.    

Launched in 2023 by Mohamed Gaber, an AI specialist and serial entrepreneur, along with co-founder Ahmed Magdy, VeFund’s intelligent evaluator provides a suite of tools, including an AI Survivability Index, valuation calculators, and extensive portfolio management solutions.  

Hayi facilitates connections among residents within the same neighborhood for the exchange of news and services. (Supplied)

“I am excited about the future of VeFund and believe strongly that this transition will drive VeFund’s mission forward, fostering an environment of innovation and success for startups across the Middle East,” Gaber said.   

VeFund currently has over 1,400 startups registered on its platform and has a database of more than 400 angel investors and investments funds spanning across Saudi Arabia, the UAE, Egypt, and Pakistan.

Saudi Arabia’s Tawaref inks MoU with Plus VC

Saudi Arabia’s Tawaref, recognized for financing regional startups and providing entrepreneurial services, has inked an agreement with Kuwait-based venture capital firm Plus VC.

The memorandum of understanding will see both firms collaborate to facilitate accelerated Saudi expansion for Plus VC’s startup portfolio companies through Tawaref’s Saudi Landing program.

We at CoreVision are not just investors; we see ourselves as ecosystem builders, says Faisal Al-Abdulsalam, CoreVision CEO

This partnership underscores Plus VC’s recognition of the crucial role that Tawaref plays in minimizing the time to market for tech startups and assisting them in navigating the complexities of securing approvals from various government departments for establishing operations in Saudi Arabia.  

The Saudi Landing program by Tawaref serves as a comprehensive solution, liaising with over 10 entities within the Kingdom.  

It offers startups advice on market entry strategies, understanding regulatory requirements, and adapting to local business practices, thus streamlining the process for startups to establish and expand their presence in the Kingdom efficiently.

UAE’s COTU Ventures unveiled $54m fund

The UAE-based early-stage venture capital firm COTU Ventures has unveiled a $54 million inaugural fund dedicated to nurturing startups across the Middle East from pre-seed to seed stages.  

Established in 2020 by Amir Farha, COTU Ventures boasts a dynamic portfolio of Mena startups, such as Huspy and MoneyHash.  

This fund is set to provide robust support to startups from their inception to post-production launch, offering up to $2 million in investment, and earmarking additional capital for follow-on investments.

UAE’s Hayi raises seed round

The UAE-based social networking app Hayi has successfully raised an undisclosed amount in a seed funding round led by Plus VC, with additional backing from regional angel investors.  

Launched in 2020 by founders Chris Darnell and Rene Morgan, Hayi is designed as a community-centric platform, facilitating connections among residents within the same neighborhood for the exchange of news and services.  

This infusion of capital is earmarked for scaling Hayi’s operations, enhancing its marketing efforts, and broadening its presence both within the UAE and internationally.  

This follows a pre-seed investment of $325,000 in 2021 from Sarya Holdings and Falak Startups, marking a continued trajectory of growth and expansion for the company.

 


Saudi Aramco completes acquisition of 100% equity stake in Chile’s Esmax

Saudi Aramco completes acquisition of 100% equity stake in Chile’s Esmax
Updated 01 March 2024
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Saudi Aramco completes acquisition of 100% equity stake in Chile’s Esmax

Saudi Aramco completes acquisition of 100% equity stake in Chile’s Esmax
  • Transaction, first announced in September 2023, represents Aramco’s first downstream retail investment in South America

LONDON: Saudi Aramco successfully completed the acquisition of a 100 percent equity stake in Chile’s Esmax Distribucion, a leading diversified downstream fuels and lubricants retailer, it was announced on Friday.

Esmax has a national presence that includes retail fuel stations, airport operations, fuel distribution terminals and a lubricant blending plant. 

The transaction, which was first announced in September 2023, represented Aramco’s first downstream retail investment in South America, illustrating the attractiveness of this market, and supports the Saudi company’s strategic goal to strengthen its downstream value chain.  

“We are delighted to conclude the acquisition of Esmax and look forward to working with the outstanding team on the ground in Chile to achieve our shared ambitions,” Yasser Mufti, Aramco executive vice president of products & customers, said.

“Aramco aims to be a primary global retail player and this deal combines our high quality products and services, including Valvoline lubricants, with the experience and quality of an established operator in Chile.” 


Germany’s WIKA opens new plant in Dammam

Germany’s WIKA opens new plant in Dammam
Updated 01 March 2024
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Germany’s WIKA opens new plant in Dammam

Germany’s WIKA opens new plant in Dammam

DAMMAM: The vast industrial city, known as MODON, situated in the industrial patch of land lined by warehouses and factories in Dammam has a new factory in town. 

The well-established German WIKA group inaugurated their newest plant on Feb. 29, with the local state-of-the-art production facilities meant to streamline every step of their journey forward.

“This is a symbol of our bilateral relationship which consists of a myriad of business, economic, cultural and political relations,” German Ambassador to the Kingdom Michael Kindsgrab said to the crowd.

Kindsgrab, who flew in for the occasion, pointed out how this new plant served as an example of the ample opportunities recently made available to German companies in the Kingdom and would help to further deepen the close relationship between Germany and Saudi Arabia. 

He cited this as his first visit to the Eastern Province and seemed to immensely delight in the cultural offerings on stage when local performers welcomed him — and WIKA — in traditional folk song and dance in between the various speeches.

The launch also brought together Germans and Saudis, as well as the diverse staff at WIKA.

“On behalf of Saudi Aramco, I would like to extend my warm thanks, appreciation and congratulations to WIKA for inaugurating WIKA Saudi Arabia,”  Fawaz Al-Sahan, manager of process automation system division at Saudi Aramco said, adding: “Today I’m honored to celebrate this success with you because we believe that localization has great benefits to both of our companies.

“In terms of scope, I believe that this is the largest instrumentation facility in the Kingdom. I trust this facility will serve as a WIKA hub for the Middle East.”

Alexander Wiegand, chairman and CEO of WIKA, also spoke to the crowd and offered his heartfelt gratitude to those who helped his family-owned company excel over the decades. He lovingly recalled the days when his mother was in charge and how this new facility in Dammam would be an extension of the WIKA family that is celebrating 78 years of operation in 2024.

“WIKA’s expansion in Saudi Arabia will create more than 100 new jobs over the next few years, it thus makes an important contribution to the local job market. In the new plant, German top technology is implemented by a qualified team with in-depth knowledge of the local market. This ensures that customers are supplied with high-quality instrumentation solutions tailored to their specific needs,” Wiegand said.

The factory covers a total area of 3,000 sq. m. Supplied

The new factory, with the logo colors of orange and blue, aims to enable WIKA to serve customers in Saudi Arabia, and the region at large, even more extensively. 

In the future, products for measuring pressure, temperature, level and flow will be manufactured locally on a total area of 3,000 sq. m. This would include diaphragm seals, instrumentation valves and thermometer thermowells for connecting measuring instruments to critical processes. The range of these services will be further expanded.

WIKA, as it was noted at the ceremony, sees itself as a partner in Saudi Arabia’s economic development, especially in the area of expanding economic sectors alongside oil and gas and diversifying beyond it. The group of companies has been present with sales subsidiaries in the Kingdom for over 20 years with about 12,000 employees worldwide, and counting.

In keeping with the Saudi Vision 2030 and the Saudi Made initiative, the launch also had its eye to the future.

“We are not thinking in quarters, we are thinking in decades,” Wiegand concluded.


Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
Updated 01 March 2024
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Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
  • Egypt, UAE attended as guests alongside Saudi Arabia, the only Arab G20 member
  • Saudi minister: Fair trade practices must be promoted ‘to enhance economic opportunities for developing countries’

SAO PAULO: The meeting of G20 finance ministers and central bank governors that took place in Brazil on Feb. 28-29 could not be concluded with a joint statement as there was no consensus over the conflicts in Ukraine and Gaza.

But many of the leaders who attended shared similar concerns regarding the topics suggested as priorities by Brazil, which is the current president of the forum, especially reducing inequality and building multilateral cooperation to address the most pressing global issues such as sustainable development and financial stability.

Three Arab nations took part in the meeting. Besides Saudi Arabia, which is the only Arab member of the G20, Egypt and the UAE attended as guests. They manifested concurrent views regarding the central themes of the forum.

Finance Minister Mohammed Al-Jadaan, who headed the Saudi delegation along with Saudi Central Bank Gov. Ayman Al-Sayari, affirmed during one of the event’s sessions that “addressing debt vulnerabilities in low-income countries cannot happen without multilateral cooperation from all stakeholders, including creditors, debtors, international financial institutions, and the private sector,” the ministry’s media center reported.

Al-Jadaan added that fair trade practices must be promoted “in order to enhance economic opportunities for developing countries.”

Regarding low-income nations’ debt, he said implementation of the G20 Common Framework, an initiative launched a few years ago to support poor countries with unsustainable debt, must go on.

Mohamed Hadi Al-Hussaini, the UAE’s minister for financial affairs, expressed his country’s commitment to reducing inequalities through financial inclusion, Emirates News Agency reported.

He cited the Financial Infrastructure Transformation Programme, launched in 2023 with the goal of speeding up the digital transition in the financial sector.

The initiative shares the same principles as the G20-supported Global Partnership for Financial Inclusion.

Al-Hussaini said innovative instruments may have a relevant role in promoting development, mentioning green bonds and sukuk, a Shariah-compliant bond used in Islamic finance.

He also addressed the UAE’s efforts regarding energy transition and combating climate change.

The Emirati government has been helping vulnerable nations enhance their climate resilience. The UAE pledged $200 million to the Resilience Sustainability Trust in December 2023.

Al-Hussaini said the UAE decided to prioritize multilateral cooperation during the 13th World Trade Organization Ministerial Conference, which was held in Abu Dhabi on Feb. 26-29 and discussed new models for global trade.

Egyptian Finance Minister Mohamed Maait emphasized in his speech that developing nations have been impacted by challenging situations in recent months, something that affects their budgets and their ability to meet their citizens’ needs amid growing inflation crises, Ahram Online reported.

He said international cooperation is fundamental to support countries that are struggling to maintain their efforts for social protection.

He added that Egypt gained great experience in relief programs in recent years. During the COVID-19 pandemic, the country increased its support programs in order to assist vulnerable social segments at a time of economic hardship and high inflation. Any reform needs social programs if the goal is to obtain success, he stressed.

Al-Jadaan had bilateral meetings with Maait, Ilan Goldfajn, who heads the Inter American Development Bank, the French delegation and US Treasury Secretary Janet Yellen. Al-Sayari met with his Turkish counterpart.

According to a statement released by the US Treasury Department, Al-Jadaan and Yellen discussed the Saudi economy, “the progress of its reform program” and the need to “work together effectively in both bilateral and multilateral settings.”

Al-Hussaini met with the finance ministers of South Africa and Germany, as well as the executive president of the Development Bank of Latin America and the Caribbean.


Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers
Updated 01 March 2024
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Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

SINGAPORE: Oil prices edged up on Friday and were set to end the week modestly higher as markets awaited an OPEC+ decision on supply agreements for the second quarter amid differing demand indicators for key consumers US and China, according to Reuters.

Brent futures for May climbed 31 cents, or 0.38 percent, to $82.22 a barrel by 9:45 a.m. Saudi time, while US West Texas Intermediate for April rose 24 cents, or 0.31 percent, to $78.50.

WTI is on track for at least a 2.5 percent increase this week, while Brent is holding near last week’s settlement price. Brent has hovered comfortably above the $80 mark for three weeks.

“Brent crude prices continued to trade sideways this week ... Brent at $83/bbl has shown recent strength although fundamentals remain tilted to oversupply,” said BMI analysts in a client note.

“Expectations of a continuation of OPEC+ production cuts into Q224 is also weighing on sentiment as soft demand is expected to persist ... However, timespreads for Brent futures contracts have widened. The move to stronger backwardation (market structure) will be supportive of a more bullish stance for prices as markets are pricing in tightening in the months ahead,” the analysts added.

A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day this month, up 90,000 bpd from January. Libyan output rose month-on-month by 150,000 bpd.

A decision on extending the cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions.

Increasing possibilities of OPEC+ continuing with the supply cuts beyond the first quarter, potentially till the end of 2024, will likely keep oil prices above $80 a barrel, said DBS Bank energy sector team lead Suvro Sarkar.

Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market.

Supporting prices, the Federal Reserve’s preferred inflation gauge, the US personal consumption expenditures index, showed January inflation in line with economists’ expectations, reinforcing market bets for a June interest rate cut. This in turn could lower consumer costs and spur fuel buying activity.

However, a mixed bag of February purchasing managers’ index data from China, the world’s top oil consumer, capped price gains.

China’s manufacturing activity in February contracted for a fifth straight month, an official factory survey showed on Friday, raising pressure on Beijing policymakers to roll out further stimulus measures as factory owners struggle for orders.

“Demand side we concur that 2Q will have hiccups and we are projecting Brent to average lower in 2Q24 compared to 1Q24, before rebounding in 2H24 on the back of the potential rate cut scenario, which should boost fund flows toward riskier assets,” said DBS Bank’s Sarkar.