Closing bell: Saudi main index slips to close at 12,555
Updated 03 March 2024
Arab News
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 75.66 points, or 0.60 percent, to close at 12,555.20.
The total trading turnover of the benchmark index was SR8.19 billion ($2.18 billion) as 82 of the stocks advanced, while 134 retreated.
On the other hand, the Kingdom’s parallel market Nomu rose 559.57 points, or 2.12 percent, to close at 26,962.39. This comes as 32 of the stocks advanced, while as many as 31 retreated.
Meanwhile, the MSCI Tadawul Index slipped 14.06 points, or 0.87 percent, to close at 1,609.62.
The best-performing stock of the day was Al-Rajhi Co. for Cooperative Insurance. The company’s share price surged 9.92 percent to SR93.10.
Other top performers included Saudi Steel Pipe Co. as well as Middle East Pharmaceutical Industries Co.
Conversely, Mobile Telecommunication Co. Saudi Arabia, also known as Zain KSA, experienced the most significant decline, with its share price dropping by 6.31 percent to SR13.96. Other underperformers in the market were Saudi Arabian Amiantit Co. and Hail Cement Co.
On the announcements front, Arabian Centres Co. has reported the successful completion of the offering of $500 million worth of US dollar-denominated Shariah-compliant sukuk.
According to a statement from Tadawul, the company anticipates that the issuance will be credit-neutral. The proceeds from the issuance are intended for the refinancing of its 2019 sukuk, set to mature in November 2024.
With a maturity of five years, the total number of sukuk stands at 2,500 with a par value of $200,000 and a return of 9.5 percent.
Moreover, Zain KSA has announced its annual consolidated financial results for the year ending Dec. 31.
A bourse filing revealed that the firm’s net profit reached SR1.26 billion, reflecting a 130 percent surge compared to the same period in 2022.
The rise is primarily attributed to the company achieving its highest-ever revenues, totaling SR9.9 billion in 2023, marking an 8.9 percent growth compared to 2022. This surge in revenue resulted in a 7 percent increase in the cost of revenue.
In addition to this, gross profit increased by 10 percent, representing SR541 million, as a result of the growth in the high-margin segments.
Furthermore, Saudi Real Estate Co. also announced its annual financial results for the year 2023. According to a Tadawul statement, the company’s net profit hit SR67.6 million in the period ending on Dec. 31, down 38.82 percent in comparison to 2022 figures.
The drop is mainly attributed to an increase in financial charges by SR96 million due to the significant rise in interest rates as well as a climb in net losses in one of the subsidiaries due to the recording of extraordinary losses of SR46 million in one of its projects.
Oil Updates – crude gains more than $1 after OPEC+ delays output hike
Brent up 1.9 percent, WTI up 2 percent
OPEC+ delays December output hike by one month
Updated 38 sec ago
Reuters
BEIJING/SINGAPORE: Oil prices extended gains on Monday, rising more than $1 on a decision by OPEC+ to delay by a month plans to increase output, while the market braced for a week that spans a US presidential election and a key meeting in China.
Brent futures rose by $1.39 per barrel, or 1.9 percent, to stand at $74.49 a barrel by 10:22 a.m. Saudi time. US West Texas Intermediate crude rose by $1.41 a barrel, or 2.0 percent, to stand at $70.90.
On Sunday, OPEC+, which includes the Organization of the Petroleum Exporting Countries plus Russia and other allies, said it would extend its output cut of 2.2 million barrels per day for another month in December, with an increase already delayed from October because of falling prices and weak demand.
The grouping had been due to increase output by 180,000 bpd from December.
“While the delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+,” ING analysts said in a note.
The delay bucked the expectations of some in the market for OPEC+ to deliver the planned hike in output, they added.
“This delayed supply increase means that maybe the group are more willing to support prices than many believe,” they said.
The group is set to gradually unwind the 2.2-million-bpd cut over the coming months, while another 3.66 million bpd of production cuts will stay until the end of 2025.
Brent and WTI posted weekly declines last week of about 4 percent and 3 percent, respectively, as record US output weighed on prices. But both contracts edged up on Friday on reports that Iran could launch a retaliatory strike on Israel within days.
On Thursday, US news website Axios said Israeli intelligence suggested that Iran was preparing to attack Israel from Iraq within days, citing two unidentified Israeli sources.
It is questionable whether the price uptrend will be sustained as previous initial positive reaction to the delayed output hike and geopolitical tension have eventually fizzled off, said Yeap Jun Rong, a market strategist at IG.
For now, oil prices may stay in a broad consolidation range, with any upside likely to find some resistance at the level of $78.50, he added.
Markets await Tuesday’s US presidential election, with polls showing Democratic Vice President Kamala Harris and Republican former President Donald Trump neck-and-neck.
And on Thursday, economists expect the US Federal Reserve to cut interest rates by 25 basis points.
In China, the Standing Committee of the National People’s Congress meets from Monday to Friday and is expected to approve additional stimulus to boost the slowing economy, though analysts say the bulk may go to help cut local government debt.
Pakistan set to deliver fourth consecutive rate cut today to revive economy
All 15 investors and analysts surveyed by Reuters expect the central bank to cut rates next week
Policymakers continue efforts to revive a fragile economy as inflation eases off recent record highs
Updated 04 November 2024
Reuters
KARACHI: Pakistan’s central bank is expected to cut its key interest rate further at its policy meeting today, Monday, with policymakers continuing their efforts to revive a fragile economy as inflation eases off recent record highs.
The central bank, the State Bank of Pakistan, has slashed the benchmark policy rate to 17.5 percent from an all time-high of 22 percent in three consecutive policy meetings since June, having last reduced it by 200 basis points in September.
All 15 investors and analysts surveyed by Reuters expect the central bank to cut rates. Two expect a 150 bps cut, twelve predict a 200 bps reduction, and one forecasts a 250 bps cut.
Economic activity has stabilized since last summer when the country came close to a default before an eleventh hour bailout by the International Monetary Fund (IMF).
The IMF, which in September gave a boost to Pakistan’s struggling economy by approving a long-awaited $7 billion facility, said that the South Asian nation had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
While the economy has started to gradually recover, and inflation has moved sharply down from a multi-decade high of nearly 40 percent in May 2023, analysts say further rate cuts are needed to bolster growth.
Mustafa Pasha, Chief Investment Officer at Lakson Investments, said rates must drop under 15 percent and hold below that for six months to have a material impact.
The IMF in its latest October report forecast Pakistan’s gross domestic product growth at 3.2 percent for the fiscal year ending June 2025, up from 2.4 percent in fiscal 2024.
The government expects annual inflation to have come in at 6-7 percent last month and slow further to 5.5-6.5 percent in November.
However, inflation could pick up again in 2025, driven by electricity and gas tariff hikes under the new $7 billion IMF bailout, and the potential impact of taxes on the retail and wholesale sector proposed in the June budget.
Ahmad Mobeen, senior economist at S&P Global Market Intelligence, said that while lower rates will offer some relief to the manufacturing sector, the benefits may be limited due to “elevated input costs, driven by high electricity and gas tariffs, combined with global supply and shipping constraints.”
Sindalah showcases Saudi Arabia’s investment potential, says commentator Ali Shihabi
Likens Kingdom’s approach to giga-projects to that of venture capitalist following launch of NEOM’s new tourism destination
Updated 04 November 2024
Arab News
DUBAI: Sindalah Island, NEOM’s new luxury tourism destination under construction on Saudi Arabia’s Red Sea coast, represents a critical milestone in the Kingdom’s economic transformation and proves many of its early doubters wrong, Saudi commentator Ali Shihabi has said.
Appearing on Arab News’ current affairs program “Frankly Speaking,” Shihabi highlighted the significance of Sindalah, saying its launch marked an important shift in global perceptions of the Kingdom as a holiday destination and as an investment opportunity.
“The launch of Sindalah was very, very important because you needed proof of a concept on the ground to show what can be done,” he said.
“For people to come and see it and feel it and enjoy it and experience it” validates the vision that Saudi Arabia has for NEOM and similar projects.
Sindalah Island, which will feature world-class yachting, luxury hotels and a golf club, could soon rival the likes of Monaco or Greece as a global destination. It is the latest in a bevy of megaprojects under construction across the Kingdom as part of the Vision 2030 transformation.
This transformation is already drawing the interest of major investors. Shihabi mentioned a recent conversation with an Indian investor planning to establish a $15 billion steel plant in the Kingdom, describing it as an “exciting opportunity” that showcases the nation’s appeal to foreign investors.
“His group will be investing a billion dollars in equity,” Shihabi told “Frankly Speaking” host Katie Jensen. “And he was very excited about the potential, the structure of incentives that are given to foreign investors, whether industrial investors, whether it’s the SIDF (Saudi Industrial Development Fund), or other facilities that the Saudi government makes available for foreign investors, and the good size domestic market also for different products.”
In Shihabi’s view, the Saudi government’s approach to giga-projects like NEOM is akin to that of a venture capitalist. The government has taken on the financial risk of building and launching these projects to attract global investors.
“It was a theoretical opportunity and you needed the Kingdom to be the venture capitalist really: to build the first models, even if those are loss leaders, because you needed a proof of concept on the ground,” he said.
Shihabi said Saudi Arabia’s Red Sea coastline, largely untouched by mass tourism, is “one of the last, if not the last, unspoiled virgin territory of exquisite seafront.”
By acting as an initial investor, the government aims to establish Saudi Arabia as a legitimate luxury destination and to cultivate demand among global tourists.
While Shihabi acknowledged that it will take time for Saudi Arabia to fully emerge as a tourism hub, he is confident that the foundation stones are in place. “Putting Saudi Arabia on the tourist mindset and map is going to take a number of years,” he said.
However, the momentum of these projects and Saudi Arabia’s investments in infrastructure, marketing, and partnerships are advancing the Kingdom’s vision to create an attractive and competitive tourism sector in the region.
“It will take time for tourists to get used to the concept of coming to the Kingdom as a tourist destination,” said Shihabi. “But I think that the foundation stones are being put in place successfully.”
The recent annual conference of the Future Investment Initiative in Riyadh, commonly referred to as “Davos in the desert,” showcased the Kingdom’s commitment to becoming a significant player on the global stage.
Shihabi, who is both an author and commentator on the politics and economics of Saudi Arabia, acknowledged that FII plays a valuable role in promoting the Kingdom’s image and helping international investors understand the scale and seriousness of Vision 2030.
With the launch of projects like Sindalah and explosion of opportunities in NEOM, Saudi Arabia is gradually redefining its reputation on the world stage. However, Shihabi said changing global perceptions will require time and continued openness.
“The Kingdom has never been good at communication,” he said. “One of the deep structural problems the Kingdom had was it was closed off to the world. And the big change has been the opening up of the Kingdom to the world now.
“I encourage Western journalists, always, just to take a tourist visa, get on the plane and go and see things the way they are and the way they are developing and changing. And I can hardly think of a journalist who, having made the effort, has not changed his opinion of the Kingdom from what he had before he came to the Kingdom.
“The story really is a good one to be told on the ground and much easier to be told on the ground than to be explained in theory abroad. And there are a lot of skeptics; there are a lot of cynics.
“There’s a certain amount, I guess you can say, in the world of … I don’t want to exaggerate and use the word racism, but sort of prejudice toward Arabs and Muslims, which carries over to the Kingdom, prejudice against oil wealth. And a lot of historical baggage that the Kingdom has carried, which continues to affect its image.
“But I think that the more we open up the country and the more we allow people to come in and the more we allow people to see the changes on the ground, the better the image becomes.”
OPEC countries extend 2.2m bpd voluntary production cut until end of December
Originally implemented in April and November 2023, these additional reductions aim to stabilize the global oil market
Updated 41 min 28 sec ago
Arab News
LONDON: OPEC announced on Sunday that eight key OPEC+ member nations have agreed to extend their voluntary production cuts of 2.2 million barrels per day through December.
The countries are Saudi Arabia, Russia, and Iraq, as well as the UAE, Kuwait, Kazakhstan, Algeria, and Oman.
Originally implemented in April and November 2023, these additional reductions aim to stabilize the global oil market, according to a statement from the OPEC Secretariat.
The countries emphasized their commitment to full adherence to the Declaration of Cooperation, which includes monitoring the production adjustments to ensure compliance.
The 53rd meeting of the Joint Ministerial Monitoring Committee, held on April 3, underscored this dedication, establishing a timeline for the eight nations to fully offset any overproduction by September 2025.
Both Iraq and the Russia-Kazakhstan alliance recently reiterated their strong support for the agreement, pledging to uphold their compensation schedules.
Number of hotel rooms in Saudi Arabia surges 107% in Q3
Room licenses doubled to over 3,950, as opposed to 2,000 permits in the third quarter of last year
Kingdom aims to create over 1 million tourism-related jobs, driving economic growth and increasing its global travel footprint
Updated 03 November 2024
NOUR EL-SHAERI
RIYADH: Saudi Arabia’s tourism sector experienced a 107 percent increase in hotel rooms year-on-year in the third quarter of the year, according to official data.
The Kingdom’s hospitality industry saw room numbers increase from 214,600 in the third quarter of last year to 443,200 during the same period in 2024.
Room licenses also doubled to over 3,950, as opposed to 2,000 permits in the third quarter of last year.
Saudi Arabia has ambitious tourism objectives, aiming to attract 150 million visitors annually by the end of the decade as part of its Vision 2030 plan.
The initiative is key to diversifying the country’s economy beyond oil, with tourism expected to become a necessary pillar of the Kingdom’s gross domestic product.
The nation has plans for investments exceeding $1 trillion for new attractions and infrastructure, including the Red Sea initiative and NEOM, a $500 billion mega-city.
An accessible e-visa program has also been introduced to facilitate international travel.
By focusing on heritage sites, luxury resorts, and cultural experiences, the Kingdom aims to create over 1 million tourism-related jobs, driving economic growth and increasing its global travel footprint.
In February, Saudi Arabia’s Minister of Tourism Ahmed Al-Khateeb announced plans to add 250,000 hotel rooms by 2030, with 75,000 to be developed through private sector contracts.
During a ministerial panel session at the Private Sector Forum in Riyadh, Al-Khateeb said the total number of hotel rooms in the Kingdom had reached 280,000 by the end of 2023.
He also said that the target for 2030 is approximately 550,000 hotel rooms, emphasizing the high quality of current and upcoming projects, which will position Saudi Arabia among the top global destinations.
The minister added that the tourism sector had reached a 10 percent contribution to GDP and a 7 percent contribution to non-oil GDP.
Al-Khateeb said that the Kingdom has surpassed its original target of attracting 100 million tourists by 2030, reporting 100 million visitors so far, including 77 million domestic and 27 million international travelers.