THIS MORNING: Yemen launches Saudi-backed offensive to retake Houthi territory

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In today’s issue: Yemen’s government has launched a campaign to take back Houthi-held territory and is getting Saudi financial backing to shore up its economy and fiscal position as it does so.

A large portion of our issue today dovetails rather neatly with another bout of fighting breaking out in our neighborhood: In different corners of the economy, companies have stopped treating disruption as an event. In construction, projects are planning ahead and ordering materials far earlier, while hiring points in the same direction, as industrial players that built contingency plans in the past several years are trudging along through this year’s shipping-cost shock.

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Dr. Heikal founded Qalaa Holdings in 2004, building it into Africa’s largest private equity firm with investments spanning 15 countries and 15 industries, before leading its transformation into a holding company spanning energy, cement, transportation & logistics, agrifoods, and mining. Along the way, he built more than 80 businesses across Egypt and Africa, including the Egyptian Refining Company, Egypt's largest private-sector-led infrastructure project, and has since exited more than 20 of them. He also founded the Qalaa Holdings Scholarship Foundation in 2007, which has supported more than 70k beneficiaries.

Earlier in his career, Heikal joined EFG Hermes in 1992 and played a key role in transforming the small financial consultancy into the leading investment bank in the Arab world and emerging markets, holding senior roles across asset management, investment banking, brokerage, and private equity before becoming an executive board member and Managing Director.

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WEATHER- Heavy thunderstorms could bring flash floods and hail to Jazan, Asir, Al Baha, Makkah, and Madinah today, according to the NCM. Lighter showers are forecast across parts of the north and Eastern Province, while dust-raising winds will affect several regions. The coastal areas of Makkah and the Eastern Province could also see fog.

Funding the front lines

Yemen’s government has initiated military operations against the Houthis with the support of Saudi Arabia. Yemeni President Rashad Al Alimi said the decision was made after exhausting all other de-escalation avenues, and that the campaign will continue until the government takes back control of Houthi-held territory.

Calling in (financial) backup: Riyadh is making a new budget support disbursement of more than SAR 224 mn to the Yemeni government, the Saudi Development and Reconstruction Program for Yemen said yesterday. The statement did not make an explicit connection between the financial support and Yemen’s military campaign against the Houthis, saying the funding is meant to “cover operational expenditures and salaries … [and] contribute to reducing the budget deficit, ensuring stable governmental financial flows, strengthening purchasing power, and boosting economic activity.”

Coordinating with regional allies: A committee under the Makkah Agreement for Joint Defence between Saudi Arabia, Turkey, ​and Pakistan will convene in ‌Riyadh today, according to a statement by the Turkish Foreign Affairs Ministry. The talks will address “regional developments and the stage reached in the Alliance’s institutionalization efforts,” the statement said.

A new sheriff in town

Foreign ownership limits on Saudi listed companies are being set sector by sector, with the Capital Market Authority (CMA) negotiating the caps with the regulators that oversee each industry, Chairman Mazen Al Sudairi tells Al Arabiya Business (watch, runtime: 24:41). The aim is to agree on limits that won’t later be walked back.

REMEMBER- Days after Al Sudairi’s appointment last August, Morgan Stanley projected the foreign ownership cap could rise to 75%, drawing around USD 4.3 bn in additional inflows, or USD 7.4 bn if restrictions are lifted entirely.

The CMA has drawn up a 90-day action plan covering IPO quality, the number of declining stocks, and retail participation, Al Sudairi says. Most demand submitted in IPOs does not necessarily reflect “genuine investor demand,” he says, adding that the oversubscription rate of an offering’s book is not by itself a measure of its success.

More of the book for retail: The regulator wants retail allocation in IPOs raised to 30%, as part of making the stock market a genuine savings destination for Saudi citizens.

Enforcement without the chill factor: The CMA has investigated previous IPOs but doesn’t want that role to deter participation. Al Sudairi describes the authority as a “regulator rather than a police officer” and says it should be a source of confidence — not fear — for investors.

Also coming down the pipeline: The CMA is working on new rules for short selling, which Al Sudairi ties to the practice’s current effect on the market. Listed companies will also be required to hold two earnings discussion meetings a year, aimed at improving transparency and helping institutional investors engage with small and mid-cap names.

Benching Neom stadium

Saudi Arabia has indefinitely paused the 2034 World Cup stadium it planned to build inside Neom’s The Line, Reuters reports, citing two people familiar with the matter. The 46k seat venue has no restart date.

The signs were there: PIF governor Yasir Al Rumayyan said in April that The Line had slipped down the priority list, though he maintained nothing had been canceled. Months on, Neom’s website had swapped The Line’s futuristic renders and sweeping promises for more sober language on delivery and commercial viability. Construction tracker Meed now carries the USD 2.5 bn stadium as “on hold.”

Caught up in a wider trim: Riyadh has been paring back its costliest giga-projects — work on the Mukaab, the giant cube at New Murabba, is already suspended. The backdrop is tighter money. The Finance Ministry projected last week a fiscal deficit of 3.6% of GDP and an equal contraction in real GDP for the year.

The tournament itself isn’t at risk. Saudi Arabia is still building or renovating 14 other venues for 2034, with completions scheduled between 2026 and 2033. The Aramco Stadium in Al Khobar opens in January, with tickets already on sale.

The glitz is getting cut first

Saudi Arabia looks set to skip next year’s Joy Awards. The government is preparing to drop the next edition of the annual show, due in January, as it reprioritizes entertainment spending and the Iran war weighs on the sector, Reuters reports, citing two people with knowledge of the matter.

Two other events have already gone… The Red Sea Film Festival has moved to 2027, and the Soundstorm (MDLBEAST) festival is off for December. Booking international acts has grown harder during the war, industry sources told the newswire, and culture and entertainment budgets were tightening before it.

… but investment events are staying on. The Future Investment Initiative goes ahead late this month, and organizers say other investor-focused gatherings are unaffected. For now, the savings are coming from entertainment while the economic calendar holds.

On track

Opec+ left the taps where they are: Opec+ held November output targets steady, pausing the run of monthly increases they had been making through 2026, according to a statement. The decision matched market expectations.

The quota matters less than usual. Gulf members are already pumping well under target as the war on Iran disrupts exports, which have run at 60-80% of normal in recent months. The seven countries produced 25 mn bbl / d in August, Opec data shows, still about 5 mn bbl / d below February, with Brent holding above USD 100.

Nothing big moves before 2027. The capacity review that sets members’ 2027 quotas is on hold until the war clears the uncertainty around future output, sources told Reuters. The next meeting is scheduled for 1 November.

Aramco cuts Arab Light crude price

Aramco cut its Arab Light crude price for Asian buyers for November by USD 3 from October, dropping USD 5 below the regional benchmark and its lowest level since June 2020, Reuters reports, citing a pricing document. This defied a Reuters survey that predicted a USD 3 / bbl hike in line with rising Middle East benchmarks.

ICYMI- Aramco cut October Arab Light prices for Asia by USD 0.5 for September, dropping USD 2 below the regional benchmark, marking the fifth-lowest price set by the Kingdom since 2000.

That’s not all: The company also lowered its prices for Northwest Europe by roughly USD 0.80 / bbl across grades and shaved USD 0.10 / bbl off prices for North America.

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