Saudi Arabia’s non-oil sector maintains growth with steady PMI of 57 in April 

Saudi Arabia’s non-oil sector maintains growth with steady PMI of 57 in April 
The Kingdom’s Purchasing Managers’ Index in April remained unchanged at 57 compared to March, signifying a flourishing non-oil economy in the country, according to the Riyad Bank Saudi Arabia PMI report by S&P Global. Shutterstock
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Updated 12 May 2024
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Saudi Arabia’s non-oil sector maintains growth with steady PMI of 57 in April 

Saudi Arabia’s non-oil sector maintains growth with steady PMI of 57 in April 

RIYADH: Saudi Arabia’s non-oil private sector continued its growth momentum in April, driven by strong demand conditions across domestic markets, as indicated by an economic tracker. 

The Kingdom’s Purchasing Managers’ Index in April remained unchanged at 57 compared to March, signifying a flourishing non-oil economy in the country, according to the Riyad Bank Saudi Arabia PMI report by S&P Global. 

In February, PMI hit a five-month high of 57.2, while it was 55.4 in January. 

According to S&P Global, any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction. 

David Owen, senior economist at S&P Global Market Intelligence, said: “The latest Saudi PMI has sustained a robust figure of 57.0 for the second consecutive month, signifying a flourishing non-oil economy. This uptrend hints at an anticipated spike in the non-oil GDP, likely exceeding the 4.5 percent mark for this year.” 

He added: “Noteworthy is the surge in new orders and inventory expansion, indicative of a proactive response to mounting demand within the market.”  

According to the report, expectations of strong sales performance drove companies to increase their purchasing activities in April, while cost considerations caused a decline in job creation during the month. 

S&P Global highlighted that the overall rate of input price inflation eased to a nine-month low in April. 

“Despite a decline in employment figures, there’s a notable increase in the costs associated with employment to incentivize the workforce. This strategy aims to bolster productivity and ensure the retention of skilled workers within the expanding economy,” added Owen.  

Competitive pricing, promotional activity, investment, and expanding client bases, particularly in the domestic market, were other crucial factors that propelled the non-oil private sector in the Kingdom in April, the report noted. 

Regarding the future outlook, most of the companies in Saudi Arabia that took part in the survey expressed a positive view due to continued improvement in sales performances in April. 

“The prevailing strength in demand, along with strategic marketing initiatives and corporate expansions in both wholesale and retail sectors, further fortifies the positive trajectory of the Saudi economy,” Owen said.  

He concluded: “The sustained expansion, coupled with evolving market dynamics, underscores a favorable environment for continued economic prosperity and stability in Saudi Arabia’s non-oil economy.” 


Saudi Arabia closes July sukuk issuance at $856m 

Saudi Arabia closes July sukuk issuance at $856m 
Updated 23 July 2024
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Saudi Arabia closes July sukuk issuance at $856m 

Saudi Arabia closes July sukuk issuance at $856m 

RIYADH: Saudi Arabia completed its riyal-denominated sukuk issuance for July at SR3.21 billion ($855.7 million), according to the National Debt Management Center.  

The level once again remained above SR3 billion, following a June issuance level of SR4.4 billion, SR3.23 billion in May, SR7.39 billion in April, and SR4.4 billion in March. 

NDMC revealed that the Shariah-compliant debt product in July was divided into five tranches. 

The first tranche is valued at SR612 million and is set to mature in 2029, while the second amounted to SR159 million maturing in 2031. 

The third tranche’s value stood at SR961 million, maturing in 2034, and the fourth was a SR1.25 million tranche with a maturity date in 2036. 

The fifth tranche had a size of SR226 million maturing 2039. 

This is part of the Kingdom’s Sukuk Issuance Program, which started in 2017, with the aim of establishing an unlimited riyal-denominated sukuk initiative under the NDMC. 

The announcement from NDMC came as Kuwait’s financial center Markaz published its own figures for bond and sukuk issuance across the Gulf Cooperation Council region for the first half of 2024.

The analysis showed that Saudi Arabia was the leading player in the six months to the end of June, raising $37 billion through 44 issuances.

A report released by S&P Global in April said that sukuk issuance globally is expected to hover between the $160 billion to $170 billion mark in 2024, holding steady compared to the $168.4 billion seen in 2023 and $179.4 billion in 2022. 

According to the US-based firm, the issuance of this Shariah-compliant debt product began on a “strong footing” in 2024, with Saudi Arabia becoming a key contributor to the performance. 

The credit rating agency also noted that the sukuk market will continue to grow in the near term driven by financing needs in core Islamic finance countries, along with the ongoing economic transformation programs which are currently underway in nations like Saudi Arabia. 

It added: “The drop in issuance volumes in 2023, which mainly resulted from tighter liquidity conditions in Saudi Arabia’s banking system and Indonesia’s lower fiscal deficit, was somewhat compensated by an increase in foreign currency-denominated sukuk issuance.” 

In April, another report released by Fitch Ratings also echoed similar views and noted that global sukuk issuance is expected to continue growing in the coming months of this year. 

Fitch noted that economic diversification efforts and the rapid development of the debt capital market in the Gulf Cooperation Council region will propel the growth of the sukuk market in the coming months. 


Flydubai in early talks for largest ever airplane order

Flydubai in early talks for largest ever airplane order
Updated 23 July 2024
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Flydubai in early talks for largest ever airplane order

Flydubai in early talks for largest ever airplane order

FARNBOROUGH, United Kingdom: Government-owned airline flydubai is in early talks with planemakers Boeing and Airbus to place its largest-ever airplane order, CEO Chief Executive Ghaith Al-Ghaith said on Tuesday.
“The last order we did was 175 and this (next one) is going to be the biggest, I’m sure,” Al-Ghaith told Reuters in an interview at the Farnborough Air Show. Flydubai announced the purchase of 175 Boeing 737 MAX airplanes in 2017. 


Closing Bell: Saudi main market slips to close at 12,105

Closing Bell: Saudi main market slips to close at 12,105
Updated 23 July 2024
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Closing Bell: Saudi main market slips to close at 12,105

Closing Bell: Saudi main market slips to close at 12,105

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Tuesday, losing 69.22 points, or 0.57 percent, to close at 12,105.54.        

The total trading turnover of the benchmark index was SR6.8 billion ($1.8 billion) as 55 of the listed stocks advanced, while 173 retreated.    

The MSCI Tadawul Index also dropped 10.49 points, or 0.69 percent, to close at 1,512.94.    

The Kingdom’s parallel market Nomu gained 123.53 points, or 0.47 percent, to close at 26,164. This comes as 33 of the listed stocks advanced, while 32 retreated.  

Sumou Real Estate Co. was TASI’s best-performing stock as the company’s share price surged 9.98 percent to SR47.95.        

Other top performers included Kingdom Holding Co. as well as Perfect Presentation for Commercial Services Co., whose share prices soared by 9.93 percent and 4.04 percent, to stand at SR7.86 and SR15.96 respectively.        

Other top gainers included Nayifat Finance Co. and Gulf Union Alahlia Cooperative Insurance Co.      

Miahona Co. was the worst performer, wth its share price dropping by 6.82 percent to SR39.60.    

Nama Chemicals Co. and Jadwa REIT Saudi Fund saw their share prices drop by 3.39 percent and 3.22 percent to SR27.10 and SR12.02, respectively.

Other poor performers included Rasan Information Technology Co. and National Medical Care Co.

On the announcements front, First Mills Co. reported a net profit of SR45.5 million in the second quarter of the year, representing a rise of 30.3 percent compared to the same period in 2023.

Revenue also saw an annual increase of 13 percent in the second quarter of this year to reach SR242.3 million.

The company announced that it will distribute cash dividends of SR1.55 per share to shareholders for the first half of 2024.

The total dividend distribution amounts to SR86.03 million, to be allocated across 55 million shares.    

Saudi telecom Etihad Etisalat Co., also known as Mobily, reported a 33 percent increase in profits, reaching SR661 million in the second quarter of 2024, compared to SR497 million in the same period last year.  

The company attributed the rise in net profit to higher operating profits and a 26.2 percent reduction in financing expenses, which decreased to SR130 million due to a reduced debt portfolio.    

Lower zakat and income tax expenses also contributed to the improved financial performance, it added.  

Saudi Telecom Co. also reported a 9 percent increase in profits, reaching SR3.3 billion in the second quarter, compared to SR3.0 billion in the same period last year.  

The company attributed the rise in net profit to a revenue increase of SR828 million, which was partially offset by a SR272 million rise in the cost of revenues, resulting in a gross profit increase of SR556 million.    

Operating expenses decreased by SR48 million, and zakat and income tax expenses fell by SR23 million, it added.


Fitch Ratings withdraws from Lebanon 

Fitch Ratings withdraws from Lebanon 
Updated 23 July 2024
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Fitch Ratings withdraws from Lebanon 

Fitch Ratings withdraws from Lebanon 

RIYADH: The unavailability of certain key data has led Fitch Ratings to withdraw from categorizing Lebanon, as the agency no longer has sufficient information to maintain its assessment of the nation. 

The global credit rating agency has affirmed Lebanon’s long-term foreign and local-currency issuer default ratings as restricted and has subsequently withdrawn the nation’s IDR and country ceiling. 

Restricted default indicates a country has neglected specific financial obligations while continuing to meet others. 

This means that the agency has confirmed Lebanon’s long-term debt ratings as restricted and ceased providing assessments and analysis for the country due to insufficient data. 

Lebanon has been in default on its foreign-currency obligations since March 2020, significantly influencing its rating assessment. 

The government’s failure to repay the Eurobond, which was due on March 9, 2020, led to its categorization as restricted default.

“The government has stopped servicing its outstanding stock of Eurobonds pending a debt restructuring,” the agency said.  

The local-currency IDRs remain in restricted default due to the government’s failure to resume interest payments on Banque du Liban’s holdings of local-currency securities despite continuing to serve local-currency debt to private creditors. 

Fitch also stated that the authorities have not initiated a local-currency debt restructuring. 

The agency’s decision to withdraw Lebanon’s ratings was driven by the issuer’s cessation of publishing national accounts and fiscal data, which are now only available up to 2021. 

This lack of up-to-date financial information has made it unfeasible for Fitch to maintain accurate ratings. 

The agency added that Lebanon’s environmental, social, and governance relevance score for political stability and rights and for the rule of law, institutional and regulatory quality, and control of corruption stands at five. 

This reflects the high impact of the World Bank Governance Indicators in Fitch’s Sovereign Rating Model. 

“Lebanon has a low WBGI ranking at 14.8, reflecting the absence of a recent track record of peaceful political transitions, relatively weak rights for participation in the political process, weak institutional capacity, uneven application of the rule of law and a high level of corruption,” the agency added. 


Qatar Airways orders 20 Boeing 777X long-haul jets

Qatar Airways orders 20 Boeing 777X long-haul jets
Updated 23 July 2024
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Qatar Airways orders 20 Boeing 777X long-haul jets

Qatar Airways orders 20 Boeing 777X long-haul jets
  • The order was worth $8.8 billion at catalogue prices
  • Qatar Airways held out the prospect of a ‘sizeable’ order for wide-body jets around the turn of the year

FARNBOROUGH, United Kingdom: Qatar Airways on Tuesday ordered 20 Boeing 777X long-haul aircraft worth $8.8 billion at list prices, boosting the US aviation giant at Britain’s Farnborough International Airshow.
“Qatar Airways is proud to announce an expansion to the existing Boeing 777X aircraft order with an additional 20, totalling 94 Boeing 777X aircraft,” said the airline’s chief executive Badr Mohammed Al-Meer.
“We... are an industry leader and operate one of the youngest fleets, offering unparalleled innovation and quality. Keeping an eye on the future, we continue to ensure that all Qatar Airways passengers are only met with the best products and services available in the industry.”
The order was worth $8.8 billion at catalogue prices although major aviation customers typically secure big discounts from aircraft manufacturers.
Boeing’s 777X began test flights earlier this month in preparation for certification to enter service. That is expected in 2025, which is five years behind schedule.

The blockbuster news came on the second day of the biennial Farnborough Airshow, which traditionally features a dogfight between Airbus and Boeing for multi-billion-dollar orders.
More plane orders flowed in at the Airshow on Tuesday despite supply chain pressures on jetmakers and the complaints from airlines about delivery delays.
Airbus announced deals with Japan Airlines and Virgin Atlantic, while Boeing bagged an order from Macquarie Airfinance. 
Delegates have been expecting limited deal-making at this year’s showcase aviation industry event, with Airbus and Boeing sold out for several years of production and struggling to ramp up output amid supply chain problems.
Delays in plane deliveries have limited some airlines’ ability to take advantage of a post-pandemic travel boom which some say is starting to fade.
“I think all of us on the airline side are slightly surprised by the long impact of COVID on the supply chain,” Virgin Atlantic CEO Shai Weiss told Reuters, as his airline ordered seven Airbus A330-900s in a deal worth $807 million, according to estimated delivery prices from Cirium Ascend.
“We’re urging our ... engine suppliers, the manufacturers, to do everything they can to get back on track.”
Boeing in particular had to scale back production as it came under legal and regulatory scrutiny after a panel blew off mid-air on a near-new 737 MAX 9 in January.

RUNNING PLANES FOR LONGER
Japan Airlines finalized an order for 20 Airbus A350-900 and 11 A321neo jets to be delivered from 2028, worth just over $3 billion in total, according to Cirium Ascend estimates.
The airline had said in March it would buy 21 wide-body A350s and 11 A321neo narrow-body jets, but it is only ordering 20 A350s now as it will receive one as a replacement for a jet destroyed in January in a collision with a Coast Guard aircraft.
Macquarie Airfinance, meanwhile, ordered 20 Boeing 737 MAX-8 planes to be delivered in 2029-2030, worth just over $1 billion, according Cirium Ascend estimates.

Also at the show, Al-Meer said Qatar Airways would decide on a “sizeable” new order of wide-body jets around the end of this year or in the first quarter of 2025.
He added the company had also decided to extend the service life of its Airbus A380 jets and would carry out upgrades including new wifi.
Airlines are increasingly looking to run existing planes for longer as jetmakers struggle to deliver on their order backlogs.
Consultancy Bain said in a report last week that airlines faced their longest-ever waits for engine maintenance amid the shortfall in new aircraft, adding to their costs.
British Airways CEO Sean Doyle said at the air show that his airline was being “very vigilant” on new plane deliveries, but that at the moment “our planes are broadly coming in the timelines that we need them to come.”
(With AFP and Reuters)