UAE’s PMI grows but Egypt’s index falls to 11-month low: S&P Global

UAE’s PMI grows but Egypt’s index falls to 11-month low: S&P Global
A PMI above 50 indicates that the sector is expanding, while below that number suggests contraction. Shutterstock
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Updated 05 March 2024
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UAE’s PMI grows but Egypt’s index falls to 11-month low: S&P Global

UAE’s PMI grows but Egypt’s index falls to 11-month low: S&P Global

RIYADH: The UAE’s non-oil private sector expanded in February as it delivered the strongest output growth since June 2019, according to S&P Global’s purchasing managers’ index report.

The analysis saw the Middle Eastern country given a PMI standing of 57.1 – up from 56.6 in January – with increased new business, more robust client activity, and intensified marketing and development efforts contributing to this growth.

A PMI above 50 indicates that the sector is expanding, while below that number suggests contraction.

Meanwhile, business activity in Egypt’s non-oil private sector declined at the sharpest rate in just over a year, with the PMI dropping from 48.1 in January to 47.1 in February, according to S&P Global Egypt PMI. This marked the lowest level in 11 months and is weaker than the survey’s long-run trend.

The drop in activity can be attributed to several factors, including the worsening foreign exchange crisis as the sharp decline in Suez Canal trade due to Red Sea shipping disruptions exacerbated shortages of the US dollar and other foreign currencies. 

This, in turn, led to substantial increases in purchasing costs and contributed to the most significant lengthening of supplier delivery times since June 2022.

“Red Sea shipping disruption has roughly halved Suez Canal revenues so far in 2024, which February PMI survey data indicated had a considerable impact on foreign currency inflows and inflationary pressures,” said Senior Economist at S&P Global Market Intelligence, David Owen.

Supply chain disruptions from Red Sea shipment issues were also a challenge to the UAE private sector, leading to input delivery delays and a backlog of work. However, according to the report, supplier performance remained generally positive, with prompt input distribution when requested.

“One of the PMI’s largest components, the output index, rose to its highest level since June 2019, pointing to a rapid expansion of business activity ... capacity pressures were apparent, however, with backlogs of work rising at their fastest pace in nearly four years, as Red Sea shipping disruption fed through into transport delays,” Owen commented.

Consequently, hiring activity accelerated to manage workloads and address backlog growth, increasing employment levels at the fastest rate since May 2023, as reported.

While overall input costs rose in the UAE, driven by increases in material prices and wages, firms opted for price cuts. This strategy was aimed at retaining market share, often achieved through offering discounts to clients, according to the report.

In contrast, Egyptian companies opted to transfer increased purchase costs to customers, resulting in a sharp increase in selling charges, the most significant in 13 months. Consequently, new orders experienced the fastest decline since March 2023, particularly in domestic sales facing mounting price pressures.

Heightened inflationary pressures, particularly in wages, were noted as Egyptian firms raised salaries in response to the cost-of-living crisis. Consequently, there was a decrease in hiring activity within the non-oil private sector in the first quarter, with recent data indicating a slight decline in workforce numbers, according to the report.


Pakistan hopes to get new IMF loan by early July, says finance minister

Pakistan hopes to get new IMF loan by early July, says finance minister
Updated 7 min 57 sec ago
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Pakistan hopes to get new IMF loan by early July, says finance minister

Pakistan hopes to get new IMF loan by early July, says finance minister
  • Pakistan’s current $3 billion financial arrangement with IMF expires in late April
  • Islamabad is seeking “bigger,” long-term loan to ensure macroeconomic stability

Pakistan is hoping to reach a staff-level agreement with the International Monetary Fund by June or early July, its finance minister said on Tuesday.

The country’s current $3 billion arrangement with the fund runs out in late-April, which it secured last summer to avert a sovereign default.

Islamabad is seeking a long-term bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute structural reforms.

“We are still hoping that we get a staff-level agreement by June or early July,” Finance Minister Muhammad Aurangzeb told a conference in Islamabad.

He returned from Washington last week after leading a team to attend the IMF and World Bank’s spring meetings. “We had very good discussions in Washington,” he said.

He said he did not know at this stage the volume and tenure of the longer program.


Riyadh prepares to host special meeting of World Economic Forum

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