Oil prices set to snap two-day winning streak ahead of Fed decision

Oil prices set to snap two-day winning streak ahead of Fed decision
Brent crude futures for November were down 49 cents, or 0.7 percent, at $73.21 a barrel, as of 9:43 a.m. Saudi time.
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Updated 18 September 2024
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Oil prices set to snap two-day winning streak ahead of Fed decision

Oil prices set to snap two-day winning streak ahead of Fed decision

TOKYO: Oil prices fell on Wednesday after two sessions of gains, as weak macroeconomic data weighed on demand, offsetting the possible disruption of violence in the Middle East and the potentially bullish impact of an expected US rates cut.

Brent crude futures for November were down 49 cents, or 0.7 percent, at $73.21 a barrel, as of 9:43 a.m. Saudi time. US crude futures for October slid 50 cents, or 0.7 percent, to $70.69 a barrel.

“Weak macroeconomic data are deepening oil demand concerns. Money managers have turned net negative for the first time since 2011. End of the peak summer demand is also weighing on the market sentiment,” analysts at ANZ said in a note.

Prices found some support from the risk increased violence in the oil-producing Middle East could disrupt supply after Israel allegedly attacked militant group Hezbollah with explosive-laden pagers in Lebanon.

“Investors are focusing on Fed’s likely rate cuts, which could revitalize US fuel demand and weaken the dollar,” said Mitsuru Muraishi, an analyst at Fujitomi Securities.

Traders kept bets that the Fed will start an anticipated series of interest rate reduction with a half-percentage-point move downward on Wednesday, an expectation that may put pressure on central bankers to deliver that.

Hezbollah promised to retaliate against Israel after the pagers detonated across Lebanon on Tuesday, killing at least eight people and wounding nearly 3,000 others, including fighters and Iran’s envoy to Beirut.

The market found further support from the expectation of US oil purchases for the Strategic Petroleum Reserve.

Analysts polled by Reuters estimated on average that crude inventories fell by about 500,000 barrels last week. The US Energy Information Administration’s report is due on Wednesday at 5:30 p.m. Saudi time. 


Closing Bell: TASI ends in green to close at 12,374

Closing Bell: TASI ends in green to close at 12,374
Updated 26 September 2024
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Closing Bell: TASI ends in green to close at 12,374

Closing Bell: TASI ends in green to close at 12,374

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 30.58 points or 0.25 percent to close at 12,374.30.

The total trading turnover of the benchmark index was SR8.28 billion ($2.2 billion), with 133 of the listed stocks advancing and 91 declining. 

The Kingdom’s parallel market, however, shed 125.91 points or 0.49 percent to close at 25,527.47. 

The MSCI Tadawul Index gained 3.14 points or 0.20 percent to 1,548.77. 

The best-performing stock on the main market was Arab Sea Information System Co. The firm’s share price surged by 9.91 percent to SR7.32.

Other top performers were Batic Investments and Logistics Co. and Alistithmar AREIC Diversified REIT Fund, whose share prices soared by 8.47 percent and 7.81 percent, respectively. 

On another note, ACWA Power shares reached an all-time high of SR500.80 after surging by 8 percent during Thursday’s trading session.

The worst performer of the day was AlJazira REIT, as its share price slipped by 3.17 percent to SR17.72. 

On Nomu, the best performers were Edarat Communication and Information Technology Co. and Arabian Plastic Industrial Co., whose share prices increased by 7.64 percent and 7.46 percent, respectively. 

On the announcements front, Riyad Bank confirmed the commencement of issuing sustainable additional tier-one capital sukuk denominated in US dollars to improve the financial institution’s capital and for general banking purposes. 

In a statement on Tadawul, the bank mentioned that the sukuk issuance would be through a special purpose entity and would be offered to qualified investors inside and outside Saudi Arabia.

The financial institution explained that the value and terms of the sukuk offering would be based on market conditions.

Joint lead managers and bookrunners for the potential offering include HSBC, Kamco Investment Co.,  ad Merrill Lynch International, as well Mizuho International plc, Morgan Stanley and Co., and Riyad Capital.

SMBC Nikko Capital Markets Limited, Standard Chartered Bank, and Warba Bank are also part of the group.

Additional tier-one securities, which are the riskiest debt instruments that banks can issue, are designed to be perpetual; however, this sukuk may be redeemed after five years.

The bank underlined that the minimum subscription is $200,000, with increments of $1000, and that the price and yield of the sukuk offering will be determined based on market conditions.

Another announcement saw the Capital Market Authority issue a decision approving Salama Cooperative Insurance Co.’s request to increase its capital by offering rights issue shares worth SR100 million.

According to the company’s statement on Tadawul, its capital before the growth was SR200 million, and it will rise to SR300 million following the capital increase decision.

As a result, the number of shares will grow from 20 million to 30 million, representing an increase of 10 million at a ratio of one new stock for every two existing.

The CMA also announced the approval of Nice One Beauty Digital Marketing Co.’s request to register its shares and offer 34.65 million stocks for public subscription on the main market.

The stocks to be offered represent 30 percent of the company’s total equity, which amounts to 115.5 million shares.


Saudi Arabia advances COP16 plans with first meeting at UN General Assembly

Saudi Arabia advances COP16 plans with first meeting at UN General Assembly
Updated 26 September 2024
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Saudi Arabia advances COP16 plans with first meeting at UN General Assembly

Saudi Arabia advances COP16 plans with first meeting at UN General Assembly

JEDDAH: Saudi Arabia is ramping up its preparations for the UN Convention to Combat Desertification’s COP16, hosting its first Advisory Council meeting during the UN General Assembly in New York.  

The session was chaired by the Kingdom’s Minister of Environment, Water, and Agriculture Abdulrahman Abdulmohsen Al-Fadley. 

Scheduled for Dec. 2 to 13 at Boulevard Riyadh City, COP16 will feature a green zone aimed at fostering collaboration among public and private stakeholders. The gathering brought together experts and policymakers focused on combating land degradation, drought, and desertification. 

Saudi Arabia has launched several key initiatives, including the Saudi Green and Middle East Green Initiatives, aimed at enhancing the value of natural resources for economic and ecological sustainability.  

Announced by Crown Prince Mohammed bin Salman, these initiatives include plans to cut regional carbon emissions by 60 percent and plant 50 billion trees in what is set to become the world’s largest afforestation project. 

The initiatives also aim to increase protected land coverage to over 30 percent, surpassing the global target of 17 percent, while reducing global carbon emissions by more than 4 percent through renewable energy projects set to account for 50 percent of the Kingdom’s energy mix by 2030.  

During the meeting, council members highlighted the critical role of land in supporting both human and planetary health. They discussed strategies to raise awareness of the severe impacts of land degradation, desertification, and drought.  

Ibrahim Thiaw, executive secretary of the UN Convention to Combat Desertification, provided key insights to council members, including former presidents Tarja Halonen of Finland, Iván Duque Márquez of Colombia, and Carlos Alvarado Quesada of Costa Rica.  

Other notable participants included Chadian environmental activist Hindou Oumarou Ibrahim and Nasser Baker Al-Kahtani, executive director of the Arab Gulf Program for Development. 

Saudi Arabia’s delegation featured Adel Al-Jubeir, minister of state for foreign affairs and climate affairs envoy, and Osama Ibrahim Faqeeha, deputy minister of environment and adviser to the president of UNCCD COP16.  

The Riyadh event will be the first UNCCD COP to feature a green zone, offering a platform for the public, businesses, financial institutions, NGOs, media, and affected communities to collaborate on solutions to land degradation, desertification, and drought. 


Saudi Arabia, UAE drive expansion of GCC retail sector in GCC: industry report 

Saudi Arabia, UAE drive expansion of GCC retail sector in GCC: industry report 
Updated 26 September 2024
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Saudi Arabia, UAE drive expansion of GCC retail sector in GCC: industry report 

Saudi Arabia, UAE drive expansion of GCC retail sector in GCC: industry report 

RIYADH: The retail sector in the Gulf Cooperation Council is projected to grow at an annual rate of 4.6 percent between 2023 and 2028, primarily fueled by the UAE and Saudi markets, according to a recent analysis by investment banking advisory firm Alpen Capital.

Retail sales in the GCC are expected to rise from $309.6 billion in 2023 to $386.9 billion by 2028.

The UAE and Saudi Arabia are set to see expansions of 5.4 percent and 5.1 percent, respectively, reaching $161.4 billion and $139.1 billion during this period. This growth is attributed to factors such as population increases, rising per capita income, and heightened tourism activities. Strengthening the retail sector is essential for Saudi Arabia as it seeks to position itself as a leading business and tourist destination, aligning with the economic diversification goals outlined in Vision 2030.

In February, Majid Al-Hogail, Saudi Arabia’s minister of municipal and rural affairs and housing, noted that the retail sector contributes 23 percent to the non-oil economy and aims to surpass $122.6 billion by the end of 2024.

“The long-term prospects of the GCC retail industry continue to remain positive owing to economic growth, favorable demographics, relaxation of visa rules, and liberalization policies,” said Sameena Ahmad, managing director of Alpen Capital.

She added that ambitious government agendas for economic diversification are leading to significant advancements in infrastructure and tourism, further enhancing the region’s appeal.

Emerging trends such as “buy now, pay later” options and evolving consumer preferences are also reshaping market dynamics. The report projects that retail sales in Kuwait and Bahrain will grow at a compound annual growth rate of 3.1 percent each from 2023 to 2028, while Qatar and Oman are expected to grow at rates of 2.2 percent and 1 percent, respectively.

Alpen Capital emphasizes that the rising population, particularly with a concentration of expatriates and high-net-worth individuals, is a key driver of GCC retail growth.

“Anticipated pick up in the economic activity and improvement in per capita income is expected to further advance the appetite for global brands and luxury items. Amid expanding infrastructure developments, the GCC economies are establishing themselves as a hub for global business, entertainment, and sporting events,” the report said.

Additionally, religious and cultural tourism significantly contributes to sector growth, attracting many tourists during pilgrimages and festivals. However, the analysis also identifies risks that could hinder growth, such as geopolitical tensions. Vulnerabilities in hydrocarbon revenues, rising geopolitical concerns, and global macroeconomic challenges may pressure the industry. “The region is sensitive to supply-side shocks, which could lead to inflationary pressures and affect consumer spending power,” added Alpen Capital.


Saudi Arabia starts process on 4,500 MW-renewable energy projects

Saudi Arabia starts process on 4,500 MW-renewable energy projects
Updated 26 September 2024
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Saudi Arabia starts process on 4,500 MW-renewable energy projects

Saudi Arabia starts process on 4,500 MW-renewable energy projects

JEDDAH: Saudi Arabia will add 4,500 megawatts of renewable energy to its grid after its procurement agency issued a request for qualifications for the sixth round of solar and wind projects. 

The Saudi Power Procurement Co. outlined the key projects, including the 1,500-MW Dawadmi wind project in the Riyadh region, the 1,400-MW Najran solar project, and two solar initiatives in Jazan — Samtah and Al-Darb — each boasting a capacity of 600 MW. Additionally, the Sufun solar project in Hail will contribute 400 MW to the grid. 

This initiative is part of the National Renewable Energy Program, which is overseen by the Ministry of Energy and aligns with Saudi Arabia’s Vision 2030 and the King Salman Renewable Energy Initiative.  

The NREP serves as a strategic framework to diversify the Kingdom’s energy sources, stimulate economic development, and promote sustainable stability. By 2030, the program aims for renewable energy to account for nearly 50 percent of the energy mix used for electricity generation.   

It aims to establish a robust renewable energy industry and advance this vital sector while upholding the Kingdom’s commitment to reducing carbon dioxide emissions. 

The SPPC is tasked with conducting preliminary studies, tendering, and procuring electricity generated from energy projects within the Kingdom. So far, projects totaling over 19 gigawatts have been awarded under the NREP. 

In another move earlier this year, the SPPC finalized power purchase agreements valued at SR12.3 billion ($3.3 billion) for three solar photovoltaic projects with ACWA Power Co., Water & Electricity Holding Co., known as Badeel, and Aramco Power.

These solar projects include the Haden Solar PV and Al-Muwaih Solar PV in the Makkah region, each with a capacity of 2,000 MW, alongside the Al-Khushaybi PV project in Qassim Province, which will add 1,500 MW to the grid. 

In February, the SPPC also announced qualified bidders for its fifth round of renewable energy projects, set to add 3,700 MW to the grid. 

A total of 23 companies, including Abu Dhabi Future Energy Co. or Masdar, GEK Terna, and EDF Renewables, were selected for key roles in these initiatives, which further underline the Kingdom’s commitment to expanding its renewable energy landscape. 


UAE’s central bank raises 2024 GDP growth forecast to 4% amid oil sector expansion

UAE’s central bank raises 2024 GDP growth forecast to 4% amid oil sector expansion
Updated 26 September 2024
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UAE’s central bank raises 2024 GDP growth forecast to 4% amid oil sector expansion

UAE’s central bank raises 2024 GDP growth forecast to 4% amid oil sector expansion

RIYADH: The UAE’s central bank has revised up its forecast for the country’s GDP growth in 2024 by 0.1 percentage points in light of expected improvements in the oil sector.

The institution had originally slated 3.9 percent growth for the 12-month period, but is now projecting an expansion of 4 percent.

In its second-quarter economic report, the bank maintained its 2025 growth forecast at 6 percent.

The analysis predicted that the non-hydrocarbon sector will grow by 5.2 percent in 2024, rising to 5.3 percent in 2025, while the hydrocarbon division is expected to see a modest 0.7 percent growth this year, increasing to 7.7 percent in 2025.

The report said: “Growth forecasts continue to be driven by tourism, transportation, financial and insurance services, construction and real estate, and communications sectors; while the current levels of oil production during 2024 partially moderate the overall growth.”

The central bank anticipated strong momentum in the hydrocarbon sector in 2025, with significant production increases. Additionally, it underlined that a rapid decline in interest rates in major advanced economies could boost global demand and encourage capital flows into emerging markets, including the UAE.

The report also revealed that non-hydrocarbon GDP growth stood at 4 percent year-on-year in the first quarter of 2024, down from 6.7 percent in the previous quarter, mainly due to a slowdown in financial and insurance services, real estate activities, construction and manufacturing.

However, the report said that “non-hydrocarbon GDP growth is expected to remain strong at 5.2 percent in 2024 and 5.3 percent in 2025,” mainly driven by strategic plans and policies that the government has undertaken to attract foreign investments and the ongoing structural reforms.

The fiscal balance for the first quarter of the year remained positive at 23.5 billion Emirati dirhams ($6.39 billion), or 4.9 percent of GDP, compared to 23.2 billion dirhams, or 5.1 percent of GDP, in the first quarter of 2023.

The UAE’s consolidated budget revenues grew by 4.3 percent year-on-year in the first quarter to 120.6 billion dirhams, or 24.9 percent of GDP, driven primarily by a 32.5 percent annual increase in tax revenues.

The central bank highlighted that the UAE’s fiscal stability is improving, with tax revenues making up an increasing share of total revenues — rising from 45.8 percent in the first quarter of 2022 to 70 percent in the first quarter of 2024 — mainly due to the recent introduction of corporate taxes.

The report also detailed government spending in the first quarter, saying: “Government expenditure in the first quarter of 2024 totaled 97.1 billion dirhams, or 20 percent of GDP, reflecting a 5 percent year-on-year increase.”

Key spending categories, including employee compensation, goods and services, and social benefits, rose by 6.3 percent, 15.2 percent, and 3.4 percent, respectively. Capital expenditures also saw a significant rise, increasing more than sevenfold to 5.6 billion dirhams.

The Central Bank of the UAE pointed to signs of expansion in the private non-oil sector, with the country’s purchasing managers’ index reaching 53.7 in July, reflecting sustained business confidence. 

Employment data showed that the number of workers covered by the Wage Protection System remained stable year-on-year in June, while average monthly wages increased by 4.8 percent. 

“The 16 non-oil sectors continued their robust growth pattern in Q2 2024, albeit at a more moderate rate,” the report added.

Wholesale and retail trade, manufacturing, and construction remained key pillars of non-oil sector expansion. 

Various comprehensive economic partnership agreements and visa-related initiatives have boosted trade volumes and transactions, while the manufacturing sector “continued to attract greater levels of FDI (foreign direct investment), expanding in line with Operation 300 billion.”

The construction sector also advanced, with numerous new infrastructure projects underway, including Etihad Rail and the Port of Dubai Creek.