Rise of BRICS reveals shifting power dynamics of global economy: FII panel 

Several sessions at the FII focused on the rising power of BRICS, as well as its ability to act as a counterweight to the West.
Several sessions at the FII focused on the rising power of BRICS, as well as its ability to act as a counterweight to the West.
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Updated 25 October 2023

Rise of BRICS reveals shifting power dynamics of global economy: FII panel 

Rise of BRICS reveals shifting power dynamics of global economy: FII panel 
  • According to the IMF, in 2022 the BRICS bloc GDP was worth $26 trillion. 
  • Saudi Arabia was invited to join BRICS in August

RIYADH: A new global economic playing field is set to be created with the expansion of the Brazil, Russia, India, China and South Africa bloc of countries, business leaders suggested during panels at the Future Investment Initiative forum in Riyadh.

Known as BRICS, the group announced in August it plans to double its membership next year, a move that will open the door for Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the UAE, and could redefine the global economic and political landscape.  

Several sessions at the FII focused on the rising power of BRICS, as well as its ability to act as a counterweight to the West.

“The global economy is going through a transition — we are at a threshold,” said Eric Li, chairman and managing partner of Chinese venture capital firm Chengwei Capital, during a panel on the evolving BRICS bloc. 

Li added: “There’s a potential for the Global South … to move up the value chain, to get the high-value industries, and that does pose a threat to the center where they make most of their money from — it’s just pure economic competition.”  

The Global South is a term used to denote emerging economies or underdeveloped nations, while the Global North implies advanced democracies. 

According to the International Monetary Fund, the gross domestic product of the BRICs bloc in 2022 was worth $26 trillion. 

The term was created as BRIC, without South Africa, by Goldman Sachs economist Jim O’Neill in 2001. He believed that by 2050, the four BRIC economies would come to dominate the global economy. South Africa was added to the list in 2010.

According to Andre Esteves, chairman of Argentina’s largest asset managers, BTG Pactual, the BRICS bloc can be a source for stabilization in the long term. 

“If you look at how the Chinese leadership is advancing technology, the amazing digital revolution in India or Saudi Arabia, the leadership in energy transition or Brazil that last year constructed a fiber optic broadband network to the level of technological agricultural revolution that we see, the BRICS are leading numerous subsegments of the technological revolution, which is quite healthy for the world,” said Esteves. 

People often see success, said Anish Shah, CEO and managing director of India’s Mahindra Group, as economics affecting politics and not vice versa.  

Shah added: “It’s very important for us to really look at what we need to do to address the challenges of the world. It’s very easy to get into a finger-pointing game and a politics-driven agenda.” 

Economics, he added, can trump politics.  

“We have seen this during this golden age of development,” he added. “We interact a lot with various governments from the world, and I would say that in our interactions with the developed countries as well, they are looking for stability in the world as well,” said Shah. 

Nations such as China and South Korea are rising fast in the global economic landscape alongside blossoming economies in the East and Southeast Asian regions, demonstrating how the continent as a whole is increasingly providing an anchor for the global economy. 

The Asian Development Bank estimates that Asia and the Pacific will grow 4.8 percent in 2023 and 2024.  

Asia represents 60 percent of the world’s population, said Christine Tsai, founding partner and CEO of early-stage venture fund 500 Global, which she co-founded in 2010. 

There is tremendous potential in what Tsai calls “rise economies,” or the fastest-growing markets after the US and China. 

“When you think about the population that will be online by the end of 2023, it is projected to be about 5 billion, and this means there’s close to 3 billion that still has yet to come online,” she said, explaining how her company recently published research that took a global macroeconomic view of significant venture activity to identify 30 markets which they have dubbed as “rise economies.”  

“There are trillions of dollars of potential value creation coming out of these ‘rise economies’, and about 11 of these 30 markets are in Asia,” she stressed.  

Tsai added: “This is the macro view of why you should be looking at this market.” 

A crucial question on the table during both sessions was the rising power of BRICS and the Global South compared to the continued dominance of Western institutions.  

Business leaders from these countries noted how the Global South has often felt ostracized over the last few decades concerning major economic and political issues. Still, recent advancements seem to be changing the landscape toward a more equal playing field.  

Many business leaders believe that the global economic landscape is shifting with the rapidly rising economies of BRICS and Global South countries. 

“We are very used to a world dominated by the US dollar, but there is a whole new digital evolution that is happening, which is the emergence of central bank digital currencies, an example as an alternative way of business-to-business trading, which falls outside of the US dollar driven economy,” said Magda Wierzycka, co-founder & CEO, Sygnia Ltd, a South African financial services company.  

For instance, PetroChina International on Oct. 10 executed a historic transaction, purchasing 1 million barrels of crude oil using the digital yuan or the central bank digital currencies.  

This transaction came in response to a call by the government’s decision to apply the CBDC to international trade, underlining the digital yuan’s growing role in cross-border commerce. 

Pointing out the CBDC transaction, Wierzycka said there is absolutely no reason why, with sufficient political willpower and cooperation of the central banks, one cannot develop an alternative trading mechanism to the US dollar as a global currency. 

What is needed is a multipolar and multi-economic world, said Lubna Olayan, chair of the executive committee of Olayan Financing Co., where the northern and southern economies work and survive together.  

“As businesspeople, we need to continuously try to navigate the business landscape and avoid politics, and that’s the reality of it if we want to operate in all parts of the world,” said Olayan, adding: “But can we ignore politics? No. We must navigate through it and be sensitive too, but unfortunately, we cannot ignore politics.”

Riyadh prepares to host special meeting of World Economic Forum

Riyadh prepares to host special meeting of World Economic Forum
Updated 22 April 2024

Riyadh prepares to host special meeting of World Economic Forum

Riyadh prepares to host special meeting of World Economic Forum
  • The aim of the gathering is to find solutions to global challenges relating to humanitarian issues, the climate and the economy

RIYADH: Final preparations are taking place this week in the Saudi capital, Riyadh, for a special meeting of the World Economic Forum in the city on April 28 and 29.

Heads of state and senior executives from the public and private sectors are expected to be among the participants, who will discuss a range of global economic issues and developments under the theme “Global Collaboration, Growth and Energy for Development.”

The aim of the meeting is to find solutions to a host of global challenges relating to humanitarian issues, the climate and the economy. On the sidelines of the main event, the Kingdom will host exhibitions and other events to highlight the latest developments and trends in areas such as sustainability, innovation and culture.

The selection of Riyadh as host of the special meeting reflects the extensive partnership between Saudi Arabia and the WEF, officials said.

It builds upon the Kingdom’s active participation and contributions to the WEF’s Annual Meetings in Davos.

The agenda is designed to rekindle the spirit of cooperation and collaboration with various panel discussions, workshops, and networking opportunities. It represents a significant gathering of global leaders and experts dedicated to forging a path toward a more resilient, sustainable, and equitable world.

ACWA Power inks deal to drive renewable energy development in Azerbaijan 

ACWA Power inks deal to drive renewable energy development in Azerbaijan 
Updated 22 April 2024

ACWA Power inks deal to drive renewable energy development in Azerbaijan 

ACWA Power inks deal to drive renewable energy development in Azerbaijan 

RIYADH: Saudi energy giant ACWA Power is signing a new agreement to accelerate the development of renewable projects in Azerbaijan. 

The private water desalination company, known for its extensive green hydrogen storage capacity, announced it has now finalized an agreement with SOCAR, the State Oil Company of the Azerbaijan Republic.

This development follows an initial cooperation understanding signed in February 2023.

This deal focuses on the joint evaluation of the “Low-Carbon/Green Fertilizer” project, in which the two bodies will collaborate on assessing the production of green hydrogen to support the decarbonization of SOCAR downstream assets.

Marco Arcelli, CEO of ACWA Power, said in a statement, “I am proud to announce our collaboration with SOCAR to ignite a new era of renewable energy development in Azerbaijan. With our shared vision and commitment to sustainability, this partnership will not only drive innovation but also pave the way for a cleaner and brighter future for this country.”

The primary directive of the agreement will be to enhance SOCAR’s carbamide fertilizer facility, striving toward more value-added low-carbon products.

As part of the project, SOCAR and ACWA Power will conduct feasibility studies to assess the potential production and sale of green fertilizers, aligning with Azerbaijan’s vision of achieving a clean environment.

ACWA Power will take a role in driving the project’s renewable energy and green hydrogen production aspects, bringing their expertise to bear on this initiative.

For his part, Anar Mammadov, vice president of SOCAR, said, “Azerbaijan is committed to building a sustainable future, and our partnership with ACWA Power underscores our shared dedication to driving renewable energy development in the region. Together, we will work towards realizing our vision of a cleaner, greener Azerbaijan.”

He added: “The cooperation with ACWA Power represents a significant step forward in Azerbaijan’s transition towards a low-carbon economy and underscores the commitment of both organizations to sustainable development practices.” 

Preceding this announcement, the two nations posed their intent to collaborate on renewables as Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman met with Azerbaijan’s Minister of Environment and Natural Resources Mukhtar Babayev in March.

During the meeting, the counterparts discussed opportunities for work and cooperation between their two countries in the field of climate change. 

They also talked about joint efforts to achieve the goals of the UN Framework Convention on Climate Change and the Paris Agreement, the Kingdom’s ministry said in a statement at the time.

Closing Bell: TASI edges down to close at 12,509 points 

Closing Bell: TASI edges down to close at 12,509 points 
Updated 22 April 2024

Closing Bell: TASI edges down to close at 12,509 points 

Closing Bell: TASI edges down to close at 12,509 points 

RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,508.93 points on Monday, losing 9.29 points or 0.07 percent. 

The parallel market, Nomu, also shed 343.96 points or 1.28 percent to end the day’s trading at 26,596.22. 

Concurrently, the MSCI Tadawul 30 Index fell 3.95 points or 0.25 percent to finish at 1,567.16. 

The main index posted a trading value of SR8.8 billion ($2.3 billion), with 74 stocks advancing and 148 declining. On the other hand, Nomu reported a trade volume of SR37.7 million. 

Al-Rajhi Company for Cooperative Insurance was the top performer on TASI as its share price surged 9.93 percent to SR126.20. LIVA Insurance Co. followed next with its share price jumping 9.92 percent to close at SR21.50. 

Gulf General Cooperative Insurance Co.  also performed well, climbing 9.16 percent to SR16.44. Raydan Food Co. and Fitaihi Holding Group increased 8.14 and 8.11 percent to SR28.55 and SR4.40, respectively. 

Conversely, Saudi Cable Co. recorded the most significant dip, declining 4.94 percent to SR75. 

Alkhaleej Training and Education Co. and Ash-Sharqiyah Development Co. also experienced setbacks, with their shares dropping to SR31.50 and SR23.40, reflecting declines of 4.83 and 4.10 percent, respectively.

Nomu’s top performer was Dar Almarkabah for Renting Cars Co., which saw a 9.73 percent jump to SR44. Mayar Holding Co. and Alqemam for Computer Systems Co. also recorded notable gains, with their shares closing at SR4.27 and SR89.80, marking an increase of 7.02 and 5.03 percent, respectively. Arabian International Healthcare Holding Co. and Foods Gate Trading Co. also fared well. 

On Nomu, Raoom Trading Co. was the worst performer, declining by 7.28 percent to SR135. Other underperformers included Natural Gas Distribution Co. and National Environmental Recycling Co., whose share prices dropped 5.58 percent and 5.23 percent to SR42.30 and SR12.32, respectively. 

Watani Iron Steel Co. and Future Care Trading Co. declined during the day to settle at SR2.81 and SR8.70, respectively. 

Saudi Aramco in talks to acquire 10% stake in China’s Hengli Petrochemical

Saudi Aramco in talks to acquire 10% stake in China’s Hengli Petrochemical
Updated 22 April 2024

Saudi Aramco in talks to acquire 10% stake in China’s Hengli Petrochemical

Saudi Aramco in talks to acquire 10% stake in China’s Hengli Petrochemical

RIYADH: Energy giant Saudi Aramco held talks with Chinese Hengli Group Co. to acquire a 10 percent stake in its subsidiary, subject to due diligence and required regulatory clearances.

Aramco and Hengli Petrochemical Co. signed a memorandum of understanding for the proposed deal. The agreement supports the former’s strategy to increase its presence in key downstream markets, enhance its liquids-to-chemicals initiative, and ensure long-term crude oil supply agreements.

Last year, Aramco signed two multibillion-dollar agreements for liquids to chemicals investments in China.

In March 2023, a deal was signed between China’s Norinco Group and Panjin Xincheng Industrial Group to establish a joint venture to build a refinery and petrochemical complex in China’s Liaoning province. The initiative cost stands at approximately $12 billion.

The second agreement, signed in July, is an acquisition of a 10 percent stake in China-based firm Rongsheng Petrochemical Co. for $3.4 billion.

“This MoU supports our efforts to grow our global downstream footprint. We continue to explore new opportunities in important markets as we seek to progress in our liquids-to-chemicals strategy,” Mohammed Al-Qahtani, Aramco’s downstream president, said in a press release.

He continued: “We look forward to forging new partnerships and are excited by the prospect of expanding our presence in the important Chinese market.”

Hengli Petrochemical, a controlled subsidiary of Hengli Group, owns and operates a 400,000-barrel-per-day refinery and integrated chemicals complex in Liaoning province, and several plants and production facilities in Jiangsu and Guangdong provinces.

Speaking at a development forum held in March 2023 in Beijing, Amin Nasser, president and CEO of Aramco, highlighted substantial opportunities for cooperation between Saudi Aramco and Chinese partners in sectors aimed at reducing emissions.

“China has distinct strengths in renewables and critical materials, while Aramco and Saudi Arabia have a clear interest in solar, wind, hydrogen, and electrofuels. These areas have great long-term potential, and combining our strengths could match our ambitions,” he noted.

Saudi Arabia and China are working together to strengthen their already well-established strategic ties.

In September, the Kingdom’s minister of industry and mineral resources held meetings with key Chinese officials in Beijing. Bandar Alkhorayef also toured various companies and factories in different Chinese cities as part of his trip.

He held talks with China’s Vice Minister of Commerce Wang Shouwen, during which they discussed ways to boost economic collaboration and trade ties, the Saudi Press Agency reported.

The top officials also discussed investment opportunities in several economic sectors, including mining. At the time, the Saudi minister highlighted the Kingdom’s progress in the field of industries and mining.

IsDB leads multilateral development banks group in $300-$400bn lending boost target

IsDB leads multilateral development banks group in $300-$400bn lending boost target
Updated 22 April 2024

IsDB leads multilateral development banks group in $300-$400bn lending boost target

IsDB leads multilateral development banks group in $300-$400bn lending boost target

RIYADH: A group of elite financial institutions, led by the Islamic Development Bank, is aiming to increase its lending margin by $300-$400 billion over the next decade to reduce global inequalities.

The announcement came after presidents of ten multilateral development banks met in Washington, D.C., to discuss new strategies to strengthen their impact on tackling development issues and improve coordinated efforts in 2024 and beyond.

The MDB Heads Group, of which IsDB currently holds the presidency, is seeking to expand its financing capacity by implementing the G20 Capital Adequacy Frameworks Review report recommendations as well as other initiatives.

A joint statement issued by the group, which includes African Development Bank, European Investment Bank, and World Bank Group, at the conclusion of the meeting read: “Collectively, these efforts on balance sheet optimization and financial innovation are expected to generate additional lending headroom in the order of $300 billion to $400 billion over the next decade, with strong contributions from shareholders and development partners. Related actions … have already created additional lending capacity.”

Among the actions set out to help increase funding include introducing diverse, innovative financial instruments, such as hybrid capital tools and risk transfer methods, to shareholders, development partners, and capital markets.

There will also be efforts to encourage the direction of International Monetary Fund Special Drawing Rights through the MDBs and to provide greater clarity on callable capital, helping rating agencies better assess its value.

Another area of focus seeks to boost action on climate change by presenting the first common approach for measuring environmental outcomes in terms of adaptation and mitigation, aligning operations with the goals of the Paris Agreement, and providing joint reporting on climate-related finance.

Additionally, the MDBs will engage in the UN-led process toward a new collective climate finance goal.

A third area is strengthening country-level collaboration and co-financing. The MDB heads emphasized enhancing partnership and co-financing and assessing proposals for nation-led and owned platforms to reach a common understanding.

Some MDBs will establish platforms and use one another’s procurement policies to cut transaction costs, boost efficiency, and promote sustainability.

They will also accelerate co-financing for public sector projects through the newly launched co-financing collaboration gateway.

A fourth area focuses on mobilizing the private sector, with MDBs committing to increase the division’s financing for development goals, expand local currency lending, and offer foreign exchange hedging solutions to boost private investment.

The heads agreed to develop the type and classification of statistics issued by MDBs and development finance through the Global Emerging Markets Risk Database Consortium.

Moreover, in a fifth area, MDBs agreed to emphasize impact more through enhanced collaboration in joint impact assessments.

This includes sharing approaches for measuring and monitoring outcomes, maintaining ongoing coordination efforts, and assessing key performance indicators tied to nature and biodiversity.

The statement added that the MDB group “recognize our collective duty to accelerate international efforts to eradicate poverty and hunger, reduce inequalities, tackle regional and global challenges including on climate and health, as well as boost inclusive socioeconomic development.”

It continued. “As a group, we reaffirm our determination to deliver on our commitments and continue strengthening our collaboration for the benefit of poor and vulnerable countries, communities, and people.”