Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 

Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 
The Riyad Bank Saudi Arabia PMI survey, compiled by S&P Global, showed the Kingdom’s Purchasing Managers’ Index reached 56.3 in September, up from 54.8 in August. Shutterstock
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Updated 03 October 2024
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Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 

Saudi Arabia’s non-oil business growth continues as PMI rises to 56.3 

RIYADH: Saudi Arabia’s non-oil private sector business conditions strengthened in September, driven by improved sales momentum and rising new orders, according to an economic tracker. 

The Riyad Bank Saudi Arabia PMI survey, compiled by S&P Global, showed the Kingdom’s Purchasing Managers’ Index reached 56.3 in September, up from 54.8 in August. 

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

Supporting non-oil sector growth is a key goal of Saudi Arabia’s Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil revenue. 

“The rise in Saudi Arabia’s PMI to 56.3 shows the highest level in four months, highlighting a notable acceleration in non-oil private sector growth. This uptick was primarily driven by increased output and new orders, reflecting the sector’s expanding activity,” said Naif Al-Ghaith, chief economist at Riyad Bank.  

He added: “Businesses are responding to stronger domestic demand, which plays a critical role in reducing Saudi Arabia’s dependence on oil revenues.”  

Al-Ghaith also emphasized the significance of non-oil sector growth, given current crude production cuts and declining global oil prices. 

To stabilize the market, Saudi Arabia reduced its oil output by 500,000 barrels per day in April 2023, with the cut extended until December 2024. 

“As oil revenues come under pressure, the robust performance of the non-oil private sector serves as a buffer, helping to mitigate the potential impact on the country’s economic health. The diversification of revenue streams is crucial for maintaining growth amid fluctuating oil markets,” said Al-Ghaith.  

The report also indicated that improved business conditions supported employment growth, though companies struggled to find skilled workers in September. 

Despite strengthening demand, firms expressed concerns over competitive pressures, which dampened future activity expectations.  

S&P Global noted that higher competition led to a reduction in selling prices for the third consecutive month, despite rising business costs. 

“Rising output levels not only enhance the competitiveness of Saudi businesses but also drive forward developments aimed at expanding private sector participation in the economy. This shift provides a more stable foundation for long-term growth, making the economy less vulnerable to oil price volatility,” said Al-Ghaith.  

According to the report, growth was robust and widespread across monitored segments of the non-oil economy, with respondents citing higher demand and new project approvals. 

“By expanding output across key non-oil industries, Saudi Arabia is better positioned to navigate the challenges of oil market fluctuations, ensuring a more sustainable and diversified economic future,” concluded Al-Ghaith. 


Saudi Arabia’s CMA approves regulatory changes to strengthen debt market

Saudi Arabia’s CMA approves regulatory changes to strengthen debt market
Updated 7 sec ago
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Saudi Arabia’s CMA approves regulatory changes to strengthen debt market

Saudi Arabia’s CMA approves regulatory changes to strengthen debt market

RIYADH: Saudi Arabia’s Capital Market Authority has approved its largest regulatory overhaul to date for the sukuk and debt instruments market, marking a significant step in the country’s financial sector development.

The newly approved changes introduce key amendments to the rules on the offer of securities and continuing obligations, particularly related to the issuance of debt instruments.

These adjustments simplify prospectus requirements for public, private, and exempted offerings, streamlining the process and reducing regulatory burdens.

These changes will take effect as soon as they are published and are designed to attract a wider range of issuers and foster deeper investment in the market.

The reforms aim to strengthen Saudi Arabia’s regulatory framework for debt instruments, creating a more dynamic and accessible market. Notably, the amendments allow the Kingdom’s development funds, sovereign wealth funds, and development banks to issue debt instruments through exempt offerings, subject to specific conditions. This flexibility will enable these institutions to better align their financing strategies with Saudi Arabia’s broader development goals.

The new regulations also simplify the documentation process for public offerings, reducing prospectus requirements by more than 50 percent. A dedicated section for public offerings will improve regulatory clarity, ensuring that all material information is disclosed to investors while maintaining investor protection.

In addition to easing public offering requirements, the changes introduce more flexibility for private offerings. The CMA has eliminated the prior requirement for advance notification before launching an offering.

Issuers can now notify the CMA and immediately proceed with their offerings, a change that is expected to expedite the financing process and improve efficiency.

These regulatory enhancements are part of Saudi Arabia’s broader efforts to develop its sukuk and debt markets as a crucial funding channel for businesses.

By improving access to financing, the reforms are expected to drive greater economic growth and help position the sukuk and debt markets as central components of the Kingdom’s financial ecosystem.

The reforms align with Saudi Arabia’s Vision 2030 strategy, which seeks to diversify the economy and enhance the capital markets. They also reflect the CMA’s ongoing commitment to improving market transparency, protecting investors, and increasing market participation.

In parallel, the CMA recently invited public feedback on amendments to the investment funds regulations, which are also part of efforts to refine the framework for private and foreign investment funds, particularly in retail markets. These changes aim to better protect retail investors, addressing risks that emerged from a 2021 regulation allowing individual retail investments up to SR200,000 ($53,245).

The consultation period for these proposed changes will run for 30 calendar days.

With these far-reaching regulatory reforms, Saudi Arabia is poised to further strengthen its sukuk and debt markets, positioning them as key drivers of economic growth and investment. The CMA’s efforts to enhance transparency and investor protection are expected to boost both domestic and international confidence in the Kingdom’s financial markets.


Saudi PIF to offer 2% of Saudi Telecom Co. shares to investors

Saudi PIF to offer 2% of Saudi Telecom Co. shares to investors
Updated 7 min 16 sec ago
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Saudi PIF to offer 2% of Saudi Telecom Co. shares to investors

Saudi PIF to offer 2% of Saudi Telecom Co. shares to investors
  • Goldman Sachs Saudi Arabia and SNB Capital are acting as joint global coordinators and bookrunners for PIF
  • Remaining shares held by PIF represent 62% of the firm’s issued share capital

RIYADH: Saudi Arabia’s Public Investment Fund has announced the offering of 2 percent of its Saudi Telecom Co.’s stake, amounting to 100 million shares, to qualified institutional investors locally and globally.

Goldman Sachs Saudi Arabia and SNB Capital, acting as joint global coordinators and bookrunners for PIF, announced that the share price, or offer rate, would be determined through an accelerated book-building process, according to a statement on the Saudi Stock Exchange.

This falls in line with PIF’s vision, which has about $925 billion assets under management, of becoming a global investment powerhouse and the world’s most impactful investor, enabling the creation of new sectors and opportunities that will shape the future global economy, while driving the economic transformation of Saudi Arabia.

The Tadawul statement said that following the completion of the offering, the remaining shares held by PIF in the company, representing 62 percent of the firm’s issued share capital, will be subject to a 90-day contractual lock-up undertaking.

The company will not receive any proceeds from the issuance, and the offering will not dilute the shares of the organization’s additional shareholders.

The statement also said that the final number of offer shares, price, and results will be announced by Nov. 14. 

The sale will be executed through off-market negotiated deals on Nov. 14 before market opening, under the Negotiated Deals Framework stipulated under the Trading and Membership Procedures issued by the Saudi Exchange.

The offering will be available to institutional investors within the Kingdom, qualified foreign institutional backers in line with the Rules for Foreign Investment in Securities, and institutional beneficiaries of swap agreements made with a Capital Market Authority-authorized person to trade shares on the Saudi Exchange on their behalf. 

It will also be open to Gulf Cooperation Council investors, including companies and funds authorized to trade in Saudi shares.


Closing Bell: Saudi Arabia’s TASI closes in red, down 0.97%

Closing Bell: Saudi Arabia’s TASI closes in red, down 0.97%
Updated 48 min 20 sec ago
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Closing Bell: Saudi Arabia’s TASI closes in red, down 0.97%

Closing Bell: Saudi Arabia’s TASI closes in red, down 0.97%
  • MSCI Tadawul 30 Index declined 15.60 points to close at 1,500.54 points
  • Parallel market Nomu closed the day at 29,205.53 points, reflecting an increase of 95.12 points

RIYADH: The Tadawul All Share Index in Saudi Arabia concluded Wednesday’s trading session at 11,930.45 points, marking a decrease of 117.22 points or 0.97 percent. 

MSCI Tadawul 30 Index also declined 15.60 points to close at 1,500.54 points, a 1.03 percent decrease. 

The parallel market Nomu closed the day at 29,205.53 points, reflecting an increase of 95.12 points, or 0.33 percent.

TASI reported a trading volume of SR5.540 billion ($1.474 billion), with 52 stocks gaining and 178 falling.

The best-performing stock was Shatirah House Restaurant Co., whose share price surged 10 percent to SR20.24.  

Other top performers include Saudi Cable Co. and Alkhaleej Training and Education Co., whose share prices soared by 5 percent and 4.08 percent to SR88.20 and SR30.60, respectively.

Other top performers include Bawan Co. and Middle East Specialized Cables Co.

The worst performer was Ash-Sharqiyah Development Co., whose share price dropped by 5.18 percent to SR19.40.

Other worst performers were United International Transportation Co. and National Medical Care Co., whose share prices dropped by 3.87 percent and 3.33 percent, respectively, to stand at SR79.50 and SR168.60.

Saudi Tadawul Group Holding Co. was another worst performer, whose share price dropped by 3.08 percent to SR232.60.   

On the parallel market Nomu, Leaf Global Environmental Services Co. was the top gainer, with its share price surging by 8.68 percent to SR98.90.

Other top gainers on the parallel market were Fad International Co. and Al Mohafaza Co. for Education, with their share prices surging by 7.24 percent and 6.04 percent to reach SR81.50 and SR28.10, respectively.

Rawasi Albina Investment Co. and Amwaj International Co. were the other top gainers on Nomu.

Al-Razi Medical Co. was the major loser on this market, as the company’s share price slipped by 7.98 percent to SR47.85.  

First Avenue for Real Estate Development Co. and Obeikan Glass Co. were other major losers on Nomu, with share prices dropping by 6.18 percent and 6.01 percent, reaching SR8.35 and SR49.25, respectively.


GCC banks to remain resilient in 2025 despite anticipated rate cuts: S&P Global

GCC banks to remain resilient in 2025 despite anticipated rate cuts: S&P Global
Updated 13 November 2024
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GCC banks to remain resilient in 2025 despite anticipated rate cuts: S&P Global

GCC banks to remain resilient in 2025 despite anticipated rate cuts: S&P Global
  • S&P Global predicts a manageable impact on bank margins
  • GCC banking sector’s strong efficiency provides solid foundation for continued growth and resilience through 2025

RIYADH: Banks in the Gulf Cooperation Council region are expected to maintain strong asset quality, profitability, and ample liquidity through 2025, according to a new report by S&P Global.  

The global credit rating agency highlighted the robust performance of the region’s banking sector, which it attributes to solid capitalization and well-managed balance sheets, despite potential challenges from lower interest rates.  

S&P Global said that while the outlook for GCC banks remains positive, heightened geopolitical risks or a sharp drop in oil prices could pose threats to their creditworthiness. However, the agency added that the banks are likely to demonstrate resilience in the face of such adverse scenarios, reflected in their currently high ratings. 

The report forecasts that Brent crude oil will average $75 per barrel from the fourth quarter of the year through 2027, supporting GCC economies.  

“In our view, GCC countries will also benefit from the implementation of economic transformation projects (in Saudi Arabia), the expansion of gas production (in Qatar), reform implementations (in Bahrain and Oman), and the non-oil economy’s good performance (in Bahrain and the UAE),” the report said.
 
Despite expected interest rate cuts by the US Federal Reserve, and mirrored reductions by GCC central banks, S&P Global predicts a manageable impact on bank margins.  

The decline in rates could reduce funding costs and mitigate unrealized losses in securities portfolios, with an estimated margin impact ranging from 20-60 basis points, depending on the country. 

GCC banks maintain strong capitalization levels, which continue to underpin their overall creditworthiness, according to the report.  

Shareholder support has been a key factor, with dividend payouts generally below 50 percent, allowing banks to retain profits and stabilize their capital positions. 

The quality of capital remains robust, with limited reliance on hybrid instruments. However, S&P Global anticipates an increase in hybrid issuance by GCC banks over 2025-2026, as institutions seek to take advantage of lower interest rates and address the first call dates of previously issued instruments. 

“GCC banks are mainly funded by domestic deposits, which have proved stable through periods of mild stress, such as the COVID-19 pandemic and previous instances of geopolitical risk,” the report added. 

It also outlined potential risks stemming from ongoing regional conflicts. 

S&P Global conducted stress tests on GCC banks, analyzing scenarios ranging from modest to severe geopolitical escalations.  

In severe cases, involving broader regional conflict and disruptions to trade routes, the impact could extend to energy prices and macroeconomic stability, affecting both sovereign and banking sector credit metrics. 

S&P Global said despite these challenges, the GCC banking sector’s strong efficiency, driven by low labor costs and increasing digitalization, provides a solid foundation for continued growth and resilience through 2025. 


Saudi National Housing Co. signs 21 new deals on Cityscape’s 2nd day

Saudi National Housing Co. signs 21 new deals on Cityscape’s 2nd day
Updated 47 min 53 sec ago
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Saudi National Housing Co. signs 21 new deals on Cityscape’s 2nd day

Saudi National Housing Co. signs 21 new deals on Cityscape’s 2nd day
  • Agreements also included partnerships with leading global companies in the manufacture of electrical appliances
  • REDF signed four MoUs at the event to strengthen partnerships in real-estate financing and investment

RIYADH: Saudi Arabia’s National Housing Co. secured 21 new agreements and partnerships with various local and international companies on the second day of Cityscape, expanding its investment momentum.

This brings the value of the total deals signed by the firm on the first and second day of the event to over SR5 billion (1.33 billion), according to a statement.

The deals aim to enhance the quality of infrastructure and services provided within its urban destinations and include the fields of supply, logistics, and interior design, the Saudi Press Agency reported.   

The agreements contribute to achieving NHC’s aspirations to build integrated and sustainable destinations that meet global ambitions.  

The Kingdom’s real estate is vital to the country’s economy, contributing around 7 percent of gross domestic product and supporting numerous additional sectors.   

Among the most prominent of these agreements that support the solutions division, NHC signed a strategic partnership with “Solutions by stc” to develop technical services for the “Sakani” and “Balady” platforms.  

It also signed a deal with Sakani Foundation to inspect buildings, with local real estate developer Ardara to assess sustainability, with LX and K-water companies to transfer knowledge, and with 2GIS to provide technical services.   

The firm inked a pact with the Public Investment Fund’s ROSHN real estate company to benefit from Sakani services and assess sustainability.   

NHC also signed an agreement with Takamol in the professional accreditation program to achieve an integrated residential environment that meets the needs of individuals and society.   

The deal comes within the framework of the two companies’ strategy to improve the quality of the residential landscape and enhance constructive cooperation between organizations in the housing sector. This aligns with national efforts to promote sustainable development and deliver suitable housing.  

The company also agreed to cooperate with the General Authority for Roads in implementing new routes and their mechanisms in NHC destinations to enhance sustainability.   

NHC also saw a cooperation with Al-Fahhad Co. to develop the cleaning and maintenance system for its destinations.  

Additionally, NHC signed a group of investment agreements to implement residential projects and build community centers in its urban destinations with Dar Wa Emaar, Ajdan Real Estate Development, Maya Real Estate Development and Investment, Rashed Abdul Rahman Al-Rashed & Sons Group, and Mohammed Al-Habib Real Estate Co.    

In the supply chain sector, the company signed agreements with local and international companies, including Bahra Electric Co., to provide cables and wires, and Al-Nasser Group to deliver lighting products that are characterized by efficiency and high quality, which enhances energy consumption efficiency.  

The agreements also included partnerships with leading global companies in the manufacture of electrical appliances, including Legrand, Panasonic, and Siemens to ensure the provision of high-quality equipment according to the highest technical standards.   

To enhance the efficiency of privacy and security in NHC destinations, the company signed an agreement with Al-Kuhaimi Metal Industries Ltd. to supply metal doors. The step improves the reliability of the destinations and meets the safety and security requirements of residents.   

The partnerships also included an agreement with Al-Hayat Building Materials Co. to supply sanitary ware to improve the quality of interior finishes and provide a distinctive living experience.   

The housing organization also signed a memorandum of understanding with Mask to invest in developing areas and logistics services, which contributes to improving the efficiency of construction and supply operations and enhancing the flexibility of the supply chain.   

Another MoU was also concluded with Madar to provide innovative interior designs that meet the tastes of residents and reflect a distinctive architectural identity that adds a unique character to NHC destinations.   

During the gathering, which kicked off on Nov. 11 in Riyadh and runs until Nov. 14, the Real Estate Development Fund reported that the housing support program and the various financing solutions and advantages it provides in partnership with financing entities recorded a 190 percent growth in financing contracts provided to Sakani beneficiaries.  

In comparison, the total value of real estate financing recorded an increase of 225 percent compared to the same period last month, during the first and second days of the exhibition.   

Sakani is a program that facilitates the process of owning a home, offers affordable housing options and helps with financing.  

The housing support programs provide a competitive opportunity on the sidelines of Cityscape to enable beneficiaries to sign financing contracts with solutions and advantages, including the lowest profit margin of up to 2.59 percent, in addition to housing support packages that provide immediate non-refundable support of up to SR150,000.   

The results achieved on the first two days of Cityscape in empowering housing support beneficiaries embody the effectiveness of strategic partnerships with financing entities and property development companies.   

The results also reflect the pioneering role of REDF in partnership with financing entities and the movement witnessed by the real estate funding and development sector, which resulted in the diversity of housing products and monetary solutions that achieve the aspirations of support beneficiaries.   

REDF signed four MoUs at the event to strengthen partnerships in real-estate financing and investment.  

The MOUs, inked with Jadwa Investment, Value Capital, ANB Capital, and the Knowledge Economic City, aim to support the fund’s strategic goals of helping beneficiaries acquire suitable housing.  

REDF’s Chief Executive Mansour bin Madi said the partnerships will explore opportunities and create investment funds to stimulate real-estate investment and finance housing projects.   

He highlighted REDF’s commitment to working with financial institutions to enable the development of high-quality, affordable housing.  

Also happening on the sidelines of the exhibition, Kuwait’s Minister of Municipality and Housing Abdullatif Al-Mishari discussed with Saudi Arabia’s Minister of Municipal and Rural Affairs and Housing Majid Al-Hojail cooperation in the real estate sector.   

The meeting touched on housing experiences and the ministry’s programs, such as housing support, guarantees, and property development, in addition to exchanging visions on expanding construction and supporting real estate developers, said the Saudi minister in a post on X.  

He also said they agreed to form a joint working team between the two countries to transfer experiences in several tracks that serve the real estate sector and enhance the integration of efforts to achieve sustainable development in this field.  

Also taking place at the event, the Real Estate Registry concluded seven memoranda of cooperation and agreements as part of its efforts to strengthen the relationship and communication with the public and private sectors, establish strategic partnerships with actors in the housing system, and enable technology companies to access property registry data.  

The first pact was with the REDF to enhance cooperation and partnership between the fund and the Real Estate Registry to facilitate the journey of the former’s beneficiaries from the latter’s services.  

It also signed a memorandum of cooperation with the Hail Region Development Authority to support and accelerate the real estate registration process, and three memoranda of cooperation with Talaat Moustafa Group-Saudi, Al-Majdiah Residence, and Sijil to facilitate the property registration process and improve the beneficiaries’ journey and direct linking with the registry services.  

At the level of real estate technology companies, the entity further signed agreements with two property platforms, Nuzul and ReInvest, to enable them to link with registry services, access data, and benefit from it in developing innovative products and services that enrich the sector.   

Cityscape Global 2024 is a testament to Saudi Arabia’s rapid development and commitment to excellence. As the Kingdom positions itself as a global leader in real estate, the global forum will drive the sector to new heights, aligned with the country’s Vision 2030 and its pursuit of creating thriving, sustainable communities.