Can COP28 grab the world’s attention? 

Participants gather in a hall at the venue of the COP28 UN climate summit in Dubai on Wednesday. The central focus of talks will be a stocktaking of the world's progress on cutting greenhouse gas emissions. AFP
Participants gather in a hall at the venue of the COP28 UN climate summit in Dubai on Wednesday. The central focus of talks will be a stocktaking of the world's progress on cutting greenhouse gas emissions. AFP
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Updated 29 November 2023

Can COP28 grab the world’s attention? 

Can COP28 grab the world’s attention? 
  • Meeting comes at a time when global attention is fixated on regional conflict 

RIYADH: Around 200 heads of state, and diplomats will gather in Dubai later this week for the COP28 climate summit. This occurs at a time when global attention is fixated on the Israel-Hamas war in Gaza. 

While a ceasefire has been extended for a few more days, there are concerns that the ongoing global noise and chaos, intensified by the war since it began on Oct. 7 and the continued conflict in Ukraine, may overshadow the pivotal need to address climate change. 

The two-week COP28 begins on Nov. 30 and is convened annually by the UN COP, which stands for “Conference of the Parties,” referring to nations that agreed to a climate change framework by the UN in 1992. This marks the 28th year of its occurrence. 

“The UAE has called for the protection of civilians and stressed that the immediate priority is to end the violence,” a COP28 spokesperson told Arab News.  

“In coordination with the UNFCCC (UN Framework Convention on Climate Change), we remain confident that COP28 will focus on delivering tangible outcomes in the global fight against climate change. We will provide an environment that enables attendees to focus on the pressing issue of climate action and the collaborative efforts required to address it effectively.” 

While the impact of the conflict in Gaza on the world economy has been minimal thus far, a prolongation of the war, as termed by the IMF, could cast a “new cloud” over the economic outlook.  

This would have a direct impact on oil prices and global economic growth, thus entailing a negative influence on richer nations’ ability and desire to assist developing countries grappling with climate-related challenges. This includes nations in the Middle East, such as Iraq, and a range of African countries, among others. 

Several notable guests, including King Charles III, UN Secretary-General Antonio Guterres, and UAE President Mohammed bin Zayed Al-Nahyan, are expected to attend. Although originally scheduled, Pope Francis, in what would have been a first for a pontiff, had to cancel last minute due to poor health.

However, some other crucial world players have chosen not to attend. US President Joe Biden announced that he would sit out the world leaders’ summit scheduled for this Friday and Saturday, coinciding with the opening of COP28. The White House did not provide an explanation for his absence, although Biden has participated in the global conference over the past two years. 

The World Climate Action  “signifies the importance for world leaders to implement and transform key climate-related decisions into concrete actions and credible plans, continue raising ambition, building up from previous Conference of the Parties, and keep the high-level commitment on climate change issues,” the UN said on its website. 

The US is one of the world’s largest emitters of greenhouse gases, making its attendance crucial as a major contributor to human-caused climate change. The White House will be represented at COP28 by a climate team, including Special Envoy John Kerry, National Climate Adviser Ali Zaidi, and Clean Energy Adviser John Podesta. 

Biden had also pledged to visit Africa before the end of the year, but that trip doesn’t seem to be materializing either. The conflicts in Ukraine and in Gaza between Israel and Hamas, along with domestic challenges back home, have deeply engaged the US President.  

Biden has referred to climate change as the “ultimate threat to humanity.”  Israel’s Prime Minister Benjamin Netanyahu will also not be attending COP28. 

UN climate negotiations require unanimous support from all participating countries for any deals to pass, making the task of finding consensus exceptionally challenging. 

Tensions, state analysts, are likely to arise at the upcoming summit in Dubai, hosted by the UAE, the world’s fifth-largest oil producer.  

The UAE has been at the forefront of normalization with Israel and has also been providing humanitarian aid in Gaza through field hospitals and treating Palestinian victims at hospitals in the UAE. 

“The greatest worry over the past few years has been a sequence of global events, from COVID-19, the Ukraine war and now the war in Gaza, which all have had the potential to overshadow and distract from action on climate change, which is obviously critically important even while all these other crises are happening,” David Waskow, international climate director, World Resources Institute, told Arab News. 

Despite the noise, Waskow said he saw some slivers of light on the horizon in the last few weeks with the US-China joint statement “on enhancing cooperation to address the climate crisis.”  

The announcement came shortly before the Asia-Pacific Economic Cooperation forum, where President Biden and President Xi Jinping met on the sidelines. 

“This clearly demonstrated how climate was on the agenda for them, not just on their radar,” said Waskow.  

Why is this important?  

China and the US are the world’s two biggest polluters. China is the world’s biggest emitter of carbon dioxide, producing 12.7 billion tons of emissions annually. The US is the second-largest producer of carbon dioxide gas in the world, currently at 5.9 billion tons annually. 

Both countries are also the world’s green tech powerhouses. If both countries can come to an agreement to curb their greenhouse gas emissions, it would constitute a significantly impactful step toward the world’s ability to address climate change and, consequently, global warming. 

“The climate issue still has real salience geopolitically,” adds Waskow. “The large number of heads of state attending COP28 speaks to the level of input that countries are giving to the climate issue.” 

While Waskow, like others, acknowledges the burdens of the world’s conflicts overshadowing the critical issue of climate, he believes that the events and attendees showing up to the event can “cut through the noise to ensure that climate is given the priority it requires.” 

After the tensions over last year’s COP held in Egypt’s Sharm El Sheikh, some remain skeptical about how COPs can make a difference in addressing the urgent issue of climate change, particularly concerning crucial matters of loss and damages that involve the ability of the world’s most vulnerable countries to repair damage from climate breakdown.  

The question of who will finance the repair remains paramount, and these important questions are once again on the table this year in Dubai. 

Waskow emphasizes the importance of keeping in context and perspective what COPs can achieve. 

“I believe they’re one of our levers among many levers that need to be pulled,” he added. “Sometimes I think people see COPs as a panacea event where some agreement will be reached and that will move everything forward in some dramatic way.” 

What COPs do, he continues, is something very specific: they move the conversation forward. 

“I’ve thought of it in terms of climbing a mountain,” he emphasizes. “COPs provide a compass, a magnifying glass, so you can see clearly on the map what needs to be done. That is clearly the case with the issue of fossil fuels this year.”

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping
Updated 20 sec ago

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

RIYADH: Oil prices on Tuesday mostly held onto gains made a day earlier amid attacks on shipping in the Red Sea that have exacerbated supply worries, according to Reuters.

Brent crude futures fell 1 cent to $82.52 a barrel by 7:35 a.m Saudi time, while US West Texas Intermediate crude futures rose 1 cent to $77.59 a barrel.

“Concerns around shipping disruptions in the Red Sea have supported a rebound in the price of crude oil overnight, offsetting a more hawkish Fed currently weighing on the demand side of the equation,” said Tony Sycamore, an analyst at IG in Sydney.

The attacks by Iran-aligned Houthis in support of Palestinians have increased freight rates and shipping times. On Monday, US Central Command said that the Houthis had unsuccessfully fired a missile at the US flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24.

US President Joe Biden said on Monday he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday. In public, Israel and Hamas continued to take positions far apart on a possible truce, while blaming each other for delays.

Both oil benchmarks settled more than 1 percent higher on Monday which followed declines of 2 percent-3 percent over the previous week as markets factored in a greater likelihood that rate cuts might take longer to come.

Kansas City Federal Reserve Bank President Jeffrey Schmid on Monday used a debut speech on policy to signal that he, like most of his central banking colleagues, is in no rush to cut interest rates. High borrowing costs typically reduce economic growth and oil demand.

Oil prices were also supported on Tuesday by indications of improved demand in China.

“Concerns over Chinese demand are abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel. This is despite them having planned more maintenance halts than usual,” analysts from ANZ Bank said in a note.

A market focus for the day will be the American Petroleum Institute industry group’s weekly data on US crude inventories which is due to be released at 0.30 a.m. on Wednesday.

Analysts polled by Reuters on Monday estimated on average that crude inventories rose by about 1.8 million barrels in the week to Feb. 23. 

WTO conference spotlights global trade challenges and collaborative solutions

WTO conference spotlights global trade challenges and collaborative solutions
Updated 27 February 2024

WTO conference spotlights global trade challenges and collaborative solutions

WTO conference spotlights global trade challenges and collaborative solutions
  • Established in 1995, the World Trade Organization serves as global authority governing international trade regulations
  • The four-day conference, which kicked off on Monday, will feature trade ministers, senior officials from around the world

RIYADH: Global trading system accessibility, intellectual property, and dispute settlement take center stage as the 13th World Trade Organization Ministerial Conference commenced in Abu Dhabi.   

The four-day event, starting on Feb. 26, will address these issues within the WTO, featuring the participation of trade ministers and senior officials from around the world, the Saudi Press Agency reported. 

The event will bring together 175 member states, private sector leaders, nongovernmental organizations, and civil society representatives.  

The goal is to collaborate on advancing a more efficient, sustainable, and inclusive trading system while enhancing the effectiveness of trade policies and programs. 

Participants in this conference edition aim to build upon the achievements of the previous ministerial conference held in Geneva in June 2022. The event witnessed accomplishments in supporting fisheries, food security, and e-commerce, the SPA report added. 

Speaking on behalf of the Saudi government, Commerce Minister Majid Al-Qasabi began his video address by pointing out that the event provides a pivotal opportunity to mark the WTO’s 30th anniversary.  

“We all look forward to working with you to achieve successful outcomes of the MC 13. Such outcomes would support restoring trust in the multilateral trading system, that is facing significant challenges and headwinds, confirming the essential role of the WTO, and reiterating the global trade agenda,” he said.  

Al-Qasabi warmly welcomed Comoros and Timor-Leste as new members of the WTO, reaffirming the commitment to accelerating the remaining accession.  

He also announced the Kingdom’s approval of the Agreement on Fisheries Subsidies, noting the WTO’s contribution to the economic growth and development of its members.  

The minister emphasized the importance for the Kingdom to achieve constructive and meaningful outcomes in Abu Dhabi and beyond. 

He concluded by reaffirming Saudi Arabia’s commitment to working constructively with all members to ensure the success of the 13th ministerial conference and beyond. 

Established in 1995, the WTO serves as the global authority governing international trade regulations. Its biennial ministerial conference acts as the paramount decision-making platform, bringing together ministers and senior officials from all member nations to assess, revise, and enhance the treaties shaping the global trade framework.  

Ahead of the event, WTO Director General Ngozi Okonjo-Iweala unveiled a $50 million initiative aimed at empowering female entrepreneurs in developing countries. 

The new fund looks to unlock the power of the digital economy, helping women exporters overcome financing hurdles and capture untapped opportunities. 

“This initiative embodies our collective commitment to empowering women,” Okonjo-Iweala said, adding that it is a crucial step toward addressing the financing gap faced by women entrepreneurs, who are “key drivers of economic growth and development.” 

Meanwhile, Thani bin Ahmed Al-Zeyoudi, the UAE’s minister of state for foreign trade and chair of the 13th WTO Ministerial Conference 2024, announced that the country allocated $5 million to the $50 million fund.  

Abdullah bin Zayed Al-Nahyan, the UAE’s minister of foreign affairs, earlier announced that the Gulf country will provide a $10 million grant to support several key initiatives of the WTO.  

He added that the grant would be allocated to the Fisheries Funding Mechanism, the Enhanced Integrated Framework, and the WEIDE fund that will be launched during the event.


Moody’s affirms credit ratings of key Saudi companies

Moody’s affirms credit ratings of key Saudi companies
Updated 26 February 2024

Moody’s affirms credit ratings of key Saudi companies

Moody’s affirms credit ratings of key Saudi companies

RIYADH: Several prominent Saudi companies received affirmation on their credit ratings from Moody’s Investor Services, a leading global provider of financial assessments, research, and risk analysis.

Following the agency’s recent update to its Government-Related Issuers Methodology, several firms, including Saudi Basic Industries Corp., Saudi Telecom Co., and Saudi Electricity Co., have maintained their A1 ratings, while Saudi Arabian Mining Co., also known as Ma’aden, continues to hold a Baa1 rating.  

For SABIC, the A1 rating acknowledges its strong global presence in the petrochemicals market, competitive cost structure, and robust financial health.  

Moody’s also highlights the cyclical nature of SABIC’s operations and its concentration in Saudi Arabia as considerations. 

stc’s A1 rating reflects its dominant position in the Saudi telecommunications sector, strong financial metrics, and substantial government support. Challenges include market competition and the capital intensity of the telecom industry, Moody’s stated. 

SEC’s rating considers its integrated electricity operations, market dominance, and regulatory support balanced against the company’s growing debt burden due to significant infrastructure investments. 

Ma’aden’s Baa1 rating is supported by its diversified production, low-cost operations, and strategic importance to Saudi Arabia’s economy. 

The company’s exposure to commodity price volatility and its expansion plans are areas of focus. 

The positive outlooks for SABIC, stc, and SEC align with Moody’s view on the government of Saudi Arabia, indicating a high likelihood of state support.  

Furthermore, Ma’aden’s stable outlook reflects its solid financial policies and liquidity management. 

The ratings of the Saudi companies could potentially be upgraded or downgraded based on several factors outlined by Moody’s.  

For SABIC, an upgrade could be on the horizon if the ratings of the Saudi government or Saudi Aramco are elevated or if the company itself demonstrates improved revenue and profitability and maintains strong credit metrics and liquidity.  

Conversely, SABIC’s ratings might face a downgrade if the company experiences a significant downturn in operating performance or engages in heavy debt-financed investments, pushing its deficit to earnings before interest, taxes, depreciation, and amortization ratio toward a multiple of 1.5. 

Similarly, stc could see its scores positively impacted if the ratings of the government or the Public Investment Fund are upgraded, given its status as one of the highest-rated telecom operators globally.  

However, an escalation in competition, debt-financed acquisitions, or sustained negative free cash flow could apply downward pressure on stc’s ratings. Any decrease in the government’s or PIF’s ratings would also likely result in a downgrade for stc. 

SEC’s situation mirrors that of the aforementioned entities, with the potential for an upgrade if the sovereign rating of Saudi Arabia or the PIF improves, contingent upon the company maintaining strong operational and financial performance.  

A downgrade could occur if there is a notable decline in the company’s liquidity profile or its financial metrics weaken significantly. 

Ma’aden’s ratings could be elevated if the company successfully reduces its debt relative to EBITDA and boosts its retained cash flow to net debt ratio while maintaining strong liquidity. 

Conversely, an increase in debt and EBITDA ratio beyond certain thresholds or a significant weakening of liquidity could trigger a downgrade.  

Adjustments in the perceived likelihood of support from PIF or the government in times of financial stress could also influence Ma’aden’s ratings.

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  
Updated 26 February 2024

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,531.76 points on Monday, marking a decrease of 72.83 points or 0.58 percent.   

The parallel market Nomu concluded at 25,592.61, registering a fall of 109.54 points, or 0.43 percent. Alongside, the MSCI Index also descended by 3.81 points to settle at 1,616.76, a drop of 0.24 percent.   

By the day’s end, the main index posted a trading value of SR9.15 billion ($2.4 billion) with 42 stocks advancing and 186 declining. On the other hand, Nomu reported a trade volume of SR47.1 million.   

TASI’s top performer was Saudi Arabian Amiantit Co., which saw a 7.69 percent jump to SR31.50.

Maharah Human Resources Co. and Wataniya Insurance Co. also recorded notable gains, with their shares closing at SR7.21 and SR22.56, marking an increase of 6.19 percent and 5.82 percent, respectively. The Co. for Cooperative Insurance and Saudi Paper Manufacturing Co. also fared well.   

On the announcement front, Saudi German Health successfully concluded the offering of its Saudi Riyal-denominated sukuk, reaching a total value of SR1 billion.  

The offering comprised 1 million sukuk, each with a nominal value of SR1,000, and a fixed annual yield of 7.20 percent, paid out quarterly over a maturity period of five years.  

The company has specified that under certain conditions detailed in the base prospectus and the final terms, the sukuk may be redeemed before their maturity date.

Investors can review these final terms, which will be available on Al Rajhi Capital’s website starting Mar. 6, 2024, the entity overseeing the subscription management for this issuance.  

The allocation of sukuk to investors will be finalized by the end of Feb. 29, with the settlement process concluding on Mar. 6, 2024.   

Furthermore, Saudi German Health plans to list the sukuk on Saudi Stock Exchange once all regulatory procedures necessary for the listing are completed, with an announcement to be made at the appropriate time.  

Moreover, Alinma Bank is set to bolster its Tier 1 capital through a strategic move to issue additional sukuk denominated in US dollars.   

This initiative, aimed at enhancing the bank’s capital base and supporting its general banking operations, follows a board resolution authorizing the CEO to manage the issuance process.  

The planned issuance will be executed by a special-purpose vehicle, targeting qualified investors both within Saudi Arabia and internationally.   

Participating as joint lead managers, Abu Dhabi Islamic Bank, Alinma Investment Co., and Emirates NBD, have been appointed to oversee the issuance, as well as J.P. Morgan Securities, MUFG Securities EMEA, and Standard Chartered Bank.

Saudi Arabia records 10% surge in number of factories

Saudi Arabia records 10% surge in number of factories
Updated 26 February 2024

Saudi Arabia records 10% surge in number of factories

Saudi Arabia records 10% surge in number of factories

RIYADH: The number of industrial units in Saudi Arabia recorded a 10 percent surge year on year in 2023 to reach 11, 549, according to the Ministry of Industry and Mineral Resources.

A spokesman for the minister, Jarrah bin Mohammed Al-Jarrah, revealed that the new industrial establishments were set up with an investment of SR1.54 trillion ($48.4 billion).

The rise in the number of factories falls in line with the Kingdom’s plan of boosting industrialization and achieving a target of 36,000 plants by 2035.

Moreover, the number of new industrial licenses issued in 2023 reached 1,379, with investments amounting to more than SR81 billion.

On the other hand, production began in a total of 1,058 factories during the same year with investments amounting to SR45 billion.

In addition, Al-Jarrah noted that the new licenses were distributed among 25 industrial activities, led by food products manufacturing with 244 permits, followed by the manufacturing of non-metallic mineral products (176) and the manufacturing of formed metal products with 165. A total of 123 licenses were issued to factories engaged in the manufacturing of rubber and plastic products.

With a vision to increase the number of factories to 36,000 by 2035, including 4,000 which will be fully automated, Saudi Arabia is poised to create a dynamic and innovative production landscape.

The adoption of advanced technologies, including artificial intelligence, 3D printing, and robotics, positions Saudi industries as global leaders of this revolution.

The Kingdom’s industrial sector is experiencing sustained growth, with investments in manufacturing reaching $132 billion since the launch of the economic diversification strategy Vision 2030 in 2016.