THIS MORNING: Dakar Rally Moves From Saudi Arabia to Africa

Good morning, friends. A handful of banks reporting their third-quarter earnings share a common thread: earnings growth is coming out of the spread now, and provisioning has stopped doing anyone any favors. Several of the biggest lenders turned healthy income growth into flat net income, with the charge for expected credit losses absorbing the difference.

The explanation is consistent enough across the sector to be worth trusting. Each bank ties the heavier charge to a bigger financing book or to last year’s reversals not repeating, rather than to anything going wrong with credit quality. Al Rajhi shows what the spread can do on its own, posting double-digit margin growth on a book that barely moved, carried by what it pays for deposits.

Contractors are meeting the same squeeze from the other end. JLL has pushed its tender price inflation forecast for this year up to 5%, with copper, aluminum, and diesel doing most of the damage and rerouted shipping adding to landed costs and lead times. What stands out in that review is where the increase is sitting — contractors are taking part of it in thinner margins rather than handing all of it to clients, which is a choice that can’t hold indefinitely.

MEANWHILE- French President Emmanuel Macron wrapped his Gulf tour with a stop in Riyadh, reaffirming Paris’ support for the Kingdom’s security and defense, according to the French presidency.

Happening today

Today is the last day of the Saudi Maritime and Logistics Congress. The two-day event showcases maritime equipment and logistics services with panels and workshops discussing trade corridors, connectivity, ports, logistics, energy transition, and infrastructure investment.

Changing gears

The Dakar Rally looks set to leave Saudi Arabia. Its 2027 edition, scheduled to run from 9 to 22 January, will move back to Africa, opening with a European prologue in Spain or Portugal before roughly 12 stages across Morocco, three people involved in the World Rally-Raid Championship told Reuters. The race was originally set to start and finish in King Abdullah Economic City, though organizers were reportedly working on an alternative route in the north of the Kingdom. The Houthi escalation, including the strikes on Riyadh’s airport, ultimately ended the effort to keep the event in the country. Saudi Arabia has hosted the race every year since 2020.

REMEMBER- This comes after a run of cancelled or postponed major business and entertainment events: Future Investment Initiative, the GCC-EU summit, the Asian Tour’s season-ending PIF Saudi International, Urban Cycling World Championships, the Joy Awards, the Red Sea Film Festival, and Soundstorm (MDLBEAST).

A clearer picture

The Capital Market Authority (CMA) wants listed companies to provide more detailed disclosures on their financial and operational performance in their annual board reports, under new rules that are now up for a 30-day public consultation through Istitlaa, according to a statement. The proposal would consolidate existing disclosure requirements.

The upshot for investors is a clearer line of sight into what sits behind a set of results, rather than the figures alone.

The disclosure regime is being rebuilt piece by piece. This is the second consultation in a week: CMA sought feedback days ago on draft amendments that would require private funds to report asset-level detail on their real estate, private equity, and venture capital holdings — part of a push under Chairman Mazen Al Sudairi toward numbers investors can rely on and deeper capital pools.

REMEMBER- Last month the regulator moved to rewire the IPO process, requiring banks to firmly underwrite offerings and large book-building bids to be backed by verified cash, after a year in which heavy oversubscription repeatedly failed to carry through to aftermarket performance. It also moved to keep more public money market fund investments at home, limiting exposure to overseas assets to 5% of net assets and favoring domestic deposits and shariah-compliant instruments.

An unlikely broker of peace?

Iran wants to broker talks between Saudi Arabia and Yemen’s Houthis, although Iranian Foreign Minister Abbas Araqchi said Tehran has yet to receive a response to its offer and warned that any “foreign intervention” could complicate matters. Araqchi’s warning comes as Saudi allies are either already providing support or are mulling the move. Egypt’s parliament is voting next week on providing military support to Riyadh, while the UK has deployed RAF Typhoon fighters to help defend Saudi cities and France has sent radar systems to Yanbu.

The attacks continue with conflicting claims around what’s happening in Madinah. The coalition said it intercepted and destroyed four drones launched toward the Kingdom over Madinah and the Eastern Province, plus another heading for the eastern region. Meanwhile, the Houthis denied launching any operations toward Saudi territory yesterday and rejected the coalition’s claim of drone interceptions over Madinah.

Aviation remains disrupted by the conflict, with the General Authority of Civil Aviation (GACA) announcing a new attack on King Fahd International Airport in Dammam. The attack killed one person and injured eight, in addition to causing property damage.

The militia is also targeting the coalition’s forces. The Houthis attacked a Yemeni government security forces training camp in Shabwa province, killing 73 people and injuring more than 200. The Houthis say the camp was run by Saudi forces. The group also struck military equipment flown by Saudi cargo aircraft into Al Rayyan Airport, as well as an operations room at Badr Camp in Aden.

MEANWHILE- The United States has ordered non-emergency government employees and their families to leave Saudi Arabia. The decision follows Houthi attacks on critical infrastructure, including civilian sites, which caused “civilian casualties and severe travel disruptions,” State Department spokesperson Tommy Pigott said on X.

Data point

3% — that’s how much Saudi Arabia’s Operating Revenues Index rose y-o-y in August 2026, according to Gastat (pdf). The annual increase was driven mainly by gains in manufacturing (7.7%), wholesale and retail trade and motor vehicle repair (2.2%), construction (3.2%), financial and ins. activities (10.8%), and information and communication (5.8%).

ALSO- The Employees Compensation Index climbed 6.3% y-o-y, while issued building permits decreased 19.7% y-o-y.

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The big story abroad

Meta will begin offering shares without voting rights in January 2027 to pay for its costly AI expansion. The decision comes as Meta spends heavily on advanced chips and data centers to compete with AI rivals like OpenAI and Anthropic.

Italy has brought in tougher security rules after rioters, some of them minors, reportedly looted shops, started fires, and damaged property in Milan’s main shopping area amid anti-government protests. A government decree will send 500 extra soldiers to Milan for the rest of the year, make parents pay for damage their children cause, and make it easier to take minors aged over 14 to court.

Russian President Vladimir Putin told US envoy Steve Witkoff that Russia is willing to restart three-party peace talks with the US and Ukraine in early November. The talks would focus on setting up a postwar security arrangement for Russia and Ukraine. Officials from the three countries have met on and off throughout the war.