THIS MORNING: Houthis continue targeting Riyadh but deny targeting Makkah and Madinah

Good morning, friends. Seven months in, and the war is showing up in the cost of moving things rather than in anyone’s appetite to build here.

September’s construction cost index cooled again, with the heat concentrated in hired equipment, while materials and labor stayed mild and forecasters kept raising their tender price expectations.

This morning’s batch of earnings tells the same story from the income side. Sabic’s distribution bill climbed by nearly SAR 1 bn, Astra Industrial lost a fifth of its bottom line on softer pharma and steel, and Dr. Suliman Al Habib grew double digits on hospital capacity it had already built.

Meanwhile, the compute buildout has not blinked. Gulf appetite for AI infrastructure looks much as it did before Iranian drones damaged Amazon’s data centers here in the spring, and the sovereign programs are carrying on regardless.

War watch

The capital remains firmly within the Houthis’ sights. The Saudi-led coalition announced today the interception of a ballistic missile fired toward Riyadh. Yesterday, the coalition said that it had intercepted a drone in the Riyadh region, as well as a ballistic missile fired toward the capital, without giving further details. The Houthis said they used ballistic missiles to strike King Khalid International Airport in Riyadh, which they consider a “military target.” Since yesterday, Riyadh Air has been operating flights between Riyadh and Cairo, Jeddah, Dhaka, London, Lahore, and Islamabad through Al Qassim Airport, at least a 4.5-hour bus ride away from the capital, amid continued attacks on Riyadh.

Military assets, too, remain high on the Houthis’ target list. The group said it carried out a “precise and targeted” operation on hangars, ammunition depots, drone control centers, and other “critical sites” at King Khalid Air Base in Khamis Mushait. It also claimed a separate operation on the Border Guard Forces’ Southern Naval Base in Jizan. The Saudi-led coalition said it intercepted a cruise missile heading toward Khamis Mushait, without saying whether it was linked to the Houthi attack on the air base.

Conflicting claims: The Saudi Civil Defense said that it intercepted two missiles launched toward Makkah and Madinah, with the debris falling in Makkah, Jeddah, Taif, and Rabigh. The Houthis rejected claims that they had targeted the two cities, calling them a “great and grievous falsehood,” and said their operations target oil facilities and military bases.

ICYMI- Over the weekend, the group carried out seven operations using ballistic missiles and drones, targeting King Khalid International Airport in Riyadh; King Fahd International Airport in Dammam; Najran International Airport; Aramco in Yanbu; the Rabigh oil refinery; crude oil pumping stations and a pipeline carrying crude oil from east to west; and Khamis Mushait Air Base.

Double or nothing

Folk Maritime is keeping its target to double the size of its business within three years. The PIF-owned carrier plans to grow by buying secondhand vessels, chartering more ships, and working with partners, with newbuild orders on the table toward the end of that period, CEO Poul Hestbaek told Asharq Business. The goal is to rank among the region’s three largest operators in its segment.

Marine ins. premiums are running at 10-15 times normal levels due to the Hormuz and Bab Al Mandab risks, and bunker fuel has at times reached three times its usual price, Hestbaek said. Security risks have forced Folk to slow its operations, leaving cargo volumes below forecast. Folk has also moved about 75% of its capacity to the Red Sea, up from roughly half before the conflict.

REMEMBER- Folk paused its expansion earlier this month, with overall costs up 30-40%, and some India-Red Sea round trips stretched from about 20 to 30 days. Growth has “flattened out” until conditions normalize.

A buffer against the bills

Eligible public-sector employees, retirees, and social security beneficiaries are set to receive SAR 500 in monthly support ahead of electricity and water tariff changes set to take effect on 1 January 2027, SPA reported. The package raises the minimum monthly wage for Saudi employees to count fully toward Nitaqat Saudization quotas to SAR 5k, effective six months after implementation begins, rising to SAR 6k after a further 12 months.

Another delay in the calendar

Al Nassr’s AFC Champions League Elite match against Dubai’s Al Wasl, initially scheduled for today at King Saud University Stadium in Riyadh, has been postponed, the Asian Football Confederation said. A new date and kick-off time will be confirmed in due course. The AFC gave no reason for the postponement.

REMEMBER- Riyadh has pushed some events into next year, with the sixth UN World Data Forum and the second Saudi Statistics Forum, originally scheduled for 9-12 November, and the Future Investment Initiative, postponed to 2027. The postponements come as the Saudi capital has faced repeated Houthi missile and drone attacks in recent weeks, including strikes on King Khalid International Airport that have led to civilian casualties and prompted several foreign carriers to suspend flights.

Eyes on the prize

Axelerated Solutions is lining up a move to the big board. The ICT firm’s board has approved shifting its listing from the Nomu parallel market to the Tadawul main market, and has appointed BIM Capital as financial advisor to manage the transfer, according to a Tadawul disclosure. The move still needs market approval and has to clear the full set of listing requirements before it goes through.

REMEMBER- The company is also raising a SAR 675 mn shariah-compliant fund — the BIM Capital DC-Infrastructure Fund — to build and run two Tier-III data centers, each starting at 10 MW and expandable to 20 MW, taking fund units in exchange for the construction and facilities-management contracts.

Data point

73.2 — That’s Saudi Arabia’s score out of 100 in the 2026 Marsh CFA Institute Global Pension Index, up from 67.6 a year earlier and enough to rank the Kingdom first in the GCC and 12th of 55 systems worldwide, a 15-place climb since 2022, state news agency SPA reports. That puts its retirement system ahead of B-band peers including the UK, Canada, France, Germany, and Hong Kong. The biggest lift came in integrity, up 9.3 points to 83.5 for an A grade on stronger governance and member protections, with sustainability (61.2) and adequacy (77.2) also edging higher.

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The big story abroad

Leftist incumbent Luiz Inácio Lula da Silva has secured a fourth term as Brazil’s president, winning 51.8% of the vote and beating right-wing challenger Flávio Bolsonaro. The result is a setback for US President Donald Trump, who backed Bolsonaro, and could result in continued tense relations between Washington and Latin America’s largest economy.

AI spending clouds strong earnings hopes: Alphabet, Microsoft, and Amazon are expected to report strong quarterly earnings this week, but investors will be listening closely for what they say about AI. Investors are reportedly torn on the technology. They believe it will drive markets in the long run, but they doubt the hundreds of bns being spent will pay off anytime soon. That’s a sore point now that the spending has pushed several tech giants into negative freecash flow.

Kyiv is ready to talk peace. Ukrainian President Volodymyr Zelensky said Ukraine is prepared to join trilateral talks between technical teams from Ukraine, the United States, and Russia. His priorities are an “energy ceasefire, the sea, grain, an all-for-all exchange.” The announcement comes after Russian President Vladimir Putin signaled interest in three-way negotiations during talks with US Special Envoy Steve Witkoff in St. Petersburg.