Vladimir Putin lands in Riyadh today

Good morning, friends. It’s another packed issue this morning, so we’re going to once more jump straight in with no preamble.

UP FIRST- Russian President Vladimir Putin will land in Riyadh today and visit the UAE on a rare, two-country whistle-stop tour of the region. Expect trade and investment, cooperation on oil production, Israel’s war in Gaza, and the conflict in Ukraine to be on the agenda when Putin sits down with Crown Prince and Prime Minister Mohammed bin Salman.

Sound smart: Putin is the latest world leader to skip COP28 in Dubai. In the UAE, he’ll be heading instead to Abu Dhabi to meet President Sheikh Mohamed bin Zayed Al Nahyan.

Remember: Saudi and Russia recently coordinated a 2.2 mn barrels-per-day production cut at OPEC+, as we discussed earlier this week.

Putin is also welcoming Iranian President Ebrahim Raisi to Moscow. The two are scheduled to meet tomorrow as Russia continues to push on regional diplomacy.

The visit to KSA is getting plenty of ink in the global press: Wall Street Journal | FinancialTimes | New York Time | Bloomberg.

ALSO- The film industry got a huge shout-out in Variety— arguably the most influential business publication covering Hollywood — as US Ambassador Michael Ratney talked up the “extraordinary explosion” in culture and film in the Kingdom.

The ambassador said international producers can count on help from the embassy as they look to push into the industry.Ratney, who noted that “extraordinary ambition” as being a “defining characteristic of Saudi Arabia,” was speaking at the Red Sea Film Festival in Jeddah, which continues through this weekend.

SMART POLICY- The Kingdom is offering tax incentives to foreign companies that relocate their regional headquarters here, state-run news agency SPA reported yesterday. The Investment Ministry said the tax incentives include a 30-year exemption from corporate income tax as well as withholding tax on each company’s approved activities. The 30-year no-tax windows for the activities of the regional entity incorporated in KSA will open from the day the company’s business license is issued.

Remember: Companies face a 1 January 2024 deadline to move their regional HQ’s to Saudi or run the risk of losing out on government contracts. The plan, a cornerstone of Prince Mohamed’s drive to build a diversified, globally significant non-oil economy, has been in the works since February 2021. At least 200 foreign companies have so far established HQs here, according to Investment Minister Khaled Al-Falih.

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EXPO WATCH- Riyadh Expo 2030 will be a boon to construction and infrastructure players (among others) in the Kingdom, with spending on infrastructure and other components of the event now estimated to be in the USD 92 bn range. That’s according to remarks by Princess Haifa bin Mohammed Al Saud, the vice minister of tourism, who was speaking at the Saudi Green Initiative in Dubai.

Spending highlights: Expect big earmarks designed to turn Riyadh into one of the world’s most sustainable cities, Princess Haifa said, including the decarbonization of urban transport and the inauguration of the King Salman Park.

Sound smart: King Salman Park will be the world’s largest urban park when it opens.

HAPPENING TODAY-

#1- The Council of Ministers is set to approve the state budget for 2024 when it meets later today. The Finance Ministry’s pre-budget statement back in September suggested we’re looking at a modest fiscal deficit, with total spending set to come in at SAR 1.25 bn against revenues of SAE 1.17 bn. That sets up a deficit of just under 2% of GDP.

What to watch for: Ministers are unlikely to pull back from significant spending on infrastructure — and will look at additional measures to encourage private-sector growth. We don’t expect any cuts to outlays for services benefitting citizens and residents.

#2- Institutional investors have until the close of business to place orders for shares in broadcaster MBC’s blockbuster IPO, which got underway with a bang last Thursday as bankers took orders in the first hour sufficient to cover 100% of the offering. Advisors on the transaction said they expect to price the offering at SAR 23-25per share (pdf), valuing the company at as much as SAR 8.1 bn, according to Enterprise calculations.Some 90% of the offering is earmarked for institutions.

Bankers will price the offering by 12 December, and individual investors can place between 14 and 18 December, according to the prospectus (pdf).

#3- It’s day seven of COP28 in Dubai. Discussions today will focus on the shift to sustainable transport, building green infrastructure and cities, and looking at ways to minimize waste in the production-consumption cycle.

Want to go deeper on everything happening over there? Enterprise Climate has got yourback.

REMEMBER- KSA is playing an outsized role in Dubai even as top officials including the Crown Prince and energy ministers give COP28 a pass. As we reported yesterday, the Kingdom will not back western countries’ call for a phase-down or phase-out of oil and gas.

The Kingdom’s position on the “energy transition” is clear: It’s not about the mix of fuels used, it’s about reaching zero emissions — itself a key target of the Kingdom’s economic policy, which sees us using proceeds from fossil fuels to build a diverse, green, globally competitive economy.

#4- Lana Medical debuts on Nomu today: Qualified investors will start trading shares of pharma player Lana Medical after it listed 720k shares — good for a 20% stake — on the parallel market Nomu, Tadawul said. Shares will open at SAR 31 a piece. Yaqeen Capital was financial advisor and underwriter for the IPO.

#5- KSA’s RSGT is set to be the first foreign firm to operate a port in Bangladesh today with a concession agreement with the Chittagong Port Authority (CPA) to manage and operate the Patenga Container Terminal in Bangladesh.

Making history: RSGT is the first foreign company to operate a port in Bangladesh as the South Asian country looks to attract investment and shore up its export base. The container terminal was completed last year and was initially set to be operated by the CPA, but Bangladesh’s government opted for a foreign operator instead under a PPP model.

PSA #1- You can no longer get a cold soda at the traffic light: The Municipal, Rural Affairs and Housing Ministry has banned the installation of vending machines alongside the main roads’ traffic lights, to avoid visual distortions, Okaz reported yesterday. Also banned: The sale of energy drinks and tobacco products in self-serve machines.

So where can you find a vending machine? Only in public facilities and parks, event sites, service centers, commercial streets, government facilities, and malls, among others.

PSA #2- It’s set to be another beautiful late-fall day in the Kingdom. Expect a daytime high of 24°C in Riyadh, with a bit more heat and humidity in Dammam (26°C) and Jeddah (32°C).

THE BIG STORIES-

HERE AT HOME- The non-oil private sector continued to grow at a red-hot pace in November despite rising price pressures.

PLUS- Crown Prince and Prime Minister Mohamed bin Salman landed in Qatar yesterday for the Gulf Cooperation Council summit, which Turkish President Recep Tayyip Erdogan attended at the invitation of the GCC.

^^ We have the rundown on both stories in this morning’s news well, below.

ABROAD- No single story has captured the interest of the global business press:

• xAI: The plan by Elon Musk’s AI startup to raise USD 1 bn in equity is the big story in the business press — Reuters | Financial Times | CNBC | WSJ .
• Gaza:Reuters on why the US is unlikely to stop supplying arms for Israel’s war effort, despite the devastating impact on civilians.
• The Donald: The Associated Press and the Washington Post have the latest on the legal woes of the ex-president and frontrunner for the Republican nomination.

WATCH THIS SPACE-

#1- Aramco still wants to go big on blue hydrogen: Tadawul-listed oil giant Aramco wants to be among the world’s top investors in blue hydrogen, according to remarks by Aramco chairman and PIF governor Yasir Al Rumayyan on the sidelines of the Saudi Green Initiative (SGI) in Dubai. “Carbon sequestration is also one of the methods that helps in bringing down emissions and we want to reach carbon zero as quickly as possible,” he said of the company’s plans.

Saudi has ambitious plans to be a globally significant player in green and blue hydrogen, as we noted yesterday in our coverage of Energy Minister Prince Abdulaziz bin Salman’s remarks via video to attendees at the SGI. Bin Salman was speaking at the same time as construction wrapped up on phase one of Neom’s massive green hydrogen plant.

BACKGROUND- Aramco refuted reports earlier this year that it was putting its blue hydrogen plans on hold, stressing that its goal of producing up to 11 mn tons of blue ammonia by 2030 remained unchanged. The clarification after CEO Amin Nasser commented on challenges developing offtake agreements with markets including the European Union, South Korea, and Japan.

Sound smart: Blue hydrogen is carbon-neutral even though the energy input to make it is natural gas — to qualify as “blue,” the production process has to involve a carbon capture apparatus. Green hydrogen is also carbon-neutral, but the energy input comes from a renewable source, like solar or wind.

#2- The Chinese could be getting into lithium in Yanbu: A delegation from China’s GanfengLithium discussed possible investments in Yanbu Industrial City with the Royal Commission for Jubail & Yanbu, Al Eqtisadiah reported yesterday. The Chinese company is one of the world’s biggest lithium companies with a focus on lithium carbonate — a key component in phones, laptops, electric vehicles, and renewable energy storage technologies. Best known for its importance in the making of rechargeable batters, lithium carbonate is also used in some medical applications as well as glass and ceramics, depending on its grade.

Adios Mexico, Marhaba KSA? Ganfeng Lithium execs were visiting KSA one month after it decided to indefinitely postpone its plans to begin mining lithium in Mexico on the back of a spat with the Mexican government. Mexican mining authorities say the Chinese company failed to comply with minimum investment requirements in the country.

WHISPERS-

The PIF will not be taking a stake in Italy’s Pirelli, Reuters reported yesterday, citing statements by the tire maker’s executive vice chairman, Marco Tronchetti Provera. “It’s what you see, there’s nothing more,” he said in reference to the Italian company’s new JV with the PIF. “There isn’t going to be anything else,” he added.

Background: The PIF and Pirelli signed a joint venture agreement worth USD 550 mn in October for a tire manufacturing facility in the Kingdom that is set start production in 2026. The PIF will hold a 75% in the JV, while Pirelli will hold the rest.

CIRCLE YOUR CALENDAR-

Calling all gearheads, The Riyadh Motor Show kicked off yesterday and will continue until Saturday at Riyadh’s Kingdom Arena.

The 2024 Saudi Games continue today:

• Today’s finals: jujitsu and para table tennis;
• Also today: beach volleyball, chess, futsal for the hearing impaired, handball, mixed martial arts, padel, sailing, table tennis, and tennis.

The Red Sea Film Festival continues through Saturday, with Hollywood and European A-listers set to attend. Among them: Johnny Depp, Will Smith, Sharon Stone, and Alessandra Ambrosio.

The Fintech Tour will continue until Wednesday, 13 December. The fintech-focused gathering includes more than 15 events, presentations, and meetups involving key local and international speakers in eight cities across the country.

The International Arabian Horse Show kicks off on Wednesday, 13 December and continues through Saturday, 16 December at the King Abdulaziz Center for Purebred Arabian Horses’ headquarters in Riyadh.

Metallica is coming to Riyadh on Thursday, 14 December as part of the eclectic musicfestival Soundstorm. Soundstorm runs 14-16 December with a lineup that also includes Pharrell Williams, Chris Brown and Her, DJs Tiesto and David Guetta, Black Eyed Peas, and others.

Cycling fans have just 9 days left until the Arab Road Cycling Championship comes to Riyadh, with the event running 15-23 December.

Tickets are on sale for the 2024 Saudi Arabian Grand Prix with less than 100 days to go until the racetrack roars to life in Jeddah from 7-9 March. Grandstand, premium hospitality, and general admission tickets are now available.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.