Good morning, friends, and happy almost-THURSDAY. It’s another brisk morning here in the Kingdom, as the Public Investment Fund priced its USD 4 bn bond issuance after the order books were nearly 4x oversubscribed, while the Saudi Telecom Company landed a SAR multi-bn contract for telecom infrastructure with a public entity.

^^ We have these stories and more in this morning’s news well, below.

WEATHER– A rainy Riyadh is expected to see a high of 17°C and a low of 9°C today, while a windy Jeddah will see its mercury peak at 29°C, with a low of 19°C. Makkah will see a 30°C high and an 18°C low.

HAPPENING TODAY-

#1- Time to tune in to C-SPAN: The US Federal Reserve Chairman Jerome Powell will be holding a press conference at 10:30pm KSA to lay out the new interest rate policy, following the Federal Open Market Committee’s two-day meeting.

Powell is widely anticipated to “hit pause” on rate cuts for the first time since the Fed began rolling back interest rates in September, as fears of a recession have mostly dissipated, while inflation is still hanging around, the New York Times reports.

Why this matters: The Saudi Central Bank (Sama) rate cuts are aligned with the Fed, meaning that if the Fed holds back on further cuts, we do too.

REMEMBER- US job growth in December came in higher than expected, with nonfarm payrolls increasing by 256k jobs, far exceeding analyst expectations of 160k new jobs. The better-than-expected results means that traders are now pencilling a single rate cut for the year that won’t unfold before June. Meanwhile, rallying oil prices and longer-term expectations for consumer inflation have revived concerns about inflation.

#2- The two-day Global Labor Market Conference kicks off today at the King Abdulaziz International Conference Center in Riyadh. The event brings together business leaders, policymakers, regulators, and researchers to mull prospects and address challenges facing the global labor markets, with a focus on youth employment and their participation in the global economy.

PSAs-

Property owners in four districts in Riyadh and 13 in Diriyah have until tomorrow to register their properties online through the Real Estate Registry website, according to state news agency SPA. The Riyadh districts are Banban, Al Manakh, Al Faisaliah, and Al Mashael, while the Diriyah districts include Dhahrat Al Awda East and West, Al Asemah, Al Malqa, Al Faisaliyah, and Al Serhia, among others.

WATCH THIS SPACE-

#1- Saudi normalization with Israel “closer than ever”: Talks between Saudi and Israel are “on the cusp of a major breakthrough,” Israel’s newly-appointed Ambassador to the US Yechiel Leiter tells The Jerusalem Post, describing the potential agreement as part of a broader realignment in the region after Iran’s influence declined.

Issues remain: “The Saudis want to ensure that their public sees tangible benefits for the Palestinians in any [agreement],” Leiter said. Efforts led by the Biden administration last year to secure the agreement — which was originally designed to include a defense pact and cooperation on nuclear technology and AI — fell through due to the outbreak of the war in Gaza. The Kingdom has insisted on assurances for a credible path to Palestinian statehood before normalizing ties with Israel.

#2- Petro Rabigh has cleared its books with Saudi Aramco and Sumitomo Chemical after the two companies waived a second revolving shareholder loan (RSL) worth USD 500 mn that was split two ways across Sumitomo and Aramco, according to a disclosure to Tadawul. The waivers come under a sale and purchase agreement signed last year that will see Aramco acquiring an additional 22.5% stake in Petro Rabigh. The agreement also includes Aramco and Sumitomo Chemical — which each hold 37.5% of Petro Rabigh as a JV — extending fresh funding and waiving previous loans in a bid to turn around the company’s financials. The first USD 1 bn waiver was completed in September.

REMEMBER- Petro Rabigh’s 3Q earnings were in the red: Petro Rabigh’s losses widened to SAR 1.3 bn in 3Q 2024 compared to a SAR 1.1 bn loss incurred during the same period last year, with the downturn attributed to lower sales volumes and product margins, and upped shipping costs on the back of Red Sea disruptions. Meanwhile, third quarter revenues fell 21.3% y-o-y to SAR 10 bn. On a 9M basis the company reported a net loss of SAR 3.8 bn, compared to SAR 3.3 bn in 2023, while revenues declined 18.5% y-o-y at SAR 28 bn.

#3- The second round of the GCC-Indonesia freetrade agreement talks is scheduled to kick off on 2 February in Riyadh, Aleqtisadiah reports, citing Raja Al-Marzouqi, head of the GCC’s negotiating team.

Background: The initiative, launched in July during a meeting between GCC Secretary-General Jasem Albudaiwi and Indonesian Trade Minister Zulkifli Hasan, aims to finalize the agreement within two years from the start of the first negotiations round. Discussions of the first round, held in Jakarta in September, covered merchandise and service trade, digital trade, and customs procedures, among other areas.

More in the works: The GCC is also negotiating similar agreements with the EU, Malaysia, India, China, Japan, the UK, and Thailand.

#4- IsDB pledges USD 4.7 bn for Africa’s energy: The Islamic Development Bank pledged USD 4.7 bn for the Mission 300 initiative, which aims to accelerate the deployment of electricity across Sub-Saharan Africa, the bank said in a statement. Mission 300 aims to provide electricity to some 300 mn people in Sub-Saharan Africa by 2030.

#5- The Arab Energy Fund has rebranded as the Arab Energy Organization (AEO), with member states of the Organization of Arab Petroleum Exporting Countries (OAPEC) also giving the go-ahead to the body’s restructuring, amendments to its founding agreement, and an expanded purview, according to a press release. The AEO is poised to increase its offerings, “including loans, equity investments, and financial advisory services” to public and private sector partners in 35 nations.

UPDATE-

More Italian companies sealed agreements with Saudi firms, part of a USD 10 bn raft ofagreements made during Italian Prime Minister Giorgia Meloni’s visit to the Kingdom yesterday.

Here’s the breakdown of the announced agreements:

  • CDP + Acwa: Italian development bank Cassa Depositi e Prestiti (CDP) signed an agreement with Acwa Power to implement joint projects in renewables, water desalination, and green hydrogen in Africa, CDP said in a press release.
  • CDP + SFD: CDP signed another agreement with the Saudi Fund for Development (SFD) to identify potential co-financing prospects in agriculture, water management, education, health, renewable energy, sustainable infrastructure, and ecosystem protection projects in Africa.
  • De Nora + Acwa: Italian electrochemical solutions firm De Nora signed an MoU with Acwa Power to develop more efficient solutions for water treatment and desalination systems, it said in a press release.
  • De Nora + Saudi Water Authority: De Nora also inked an agreement with the Saudi Water Authority to establish three pilot plants. The first plant will boost chlorine dioxide efficiency for water disinfection, the second will study PFAS treatment, and the third will focus on recovering hydrogen emitted from electro-chlorination systems.
  • Ansaldo Energia + Nomac: Italian power engineering company Ansaldo Energia signed a two-year agreement with Acwa Power’s subsidiary Nomac Holding to expand service capabilities in gas turbine parts maintenance and mull potential joint projects in Africa, Acwa said in a statement.

DATA POINTS-

PoS transactions in the Kingdom fell 3.6% w-o-w to 191.5 mn SAR last week, according to Sama’s weekly transaction report (pdf). The value of transactions also dropped 5.1% w-o-w to SAR 11.2 bn during the same period.

Breakdown: Restaurants and cafes saw the highest spending during the week at SAR 1.654 bn, falling 4.6% w-o-w, followed closely by beverages and food at SAR 1.65 bn (down 5%). Meanwhile, Riyadh had the highest value of PoS transactions at SAR 4 bn (down 3.5%), followed by Jeddah at SAR 1.6 bn (down 5.9%), and Dammam at SAR 572.5 mn (down 5%).

BUT- 22% of our consumer transactions are still conducted in banknotes, despite a marked growth in digital payments, according to Visa’s Where Cash Hides survey. Banknotes remain common in peer-to-peer (P2P) transactions, accounting for 24% of payments in the category, down from 33% in 2023.

SPORTS-

#1- Neymar leaves Al Hilal: Brazilian footballer Neymar and Al Hilal agreed to terminate their contract under mutual consent, the SPL club said in a statement on X, following the winger’s injury-induced disappointing spell at the club. There were reports last week that Brazilian club Santos is eyeing his return, as well as rumors that Al Hilal is eyeing Liverpool’s Mo Salah as a replacement.

#2-Matteo Dams could join Al Ahli: PSV is reportedly looking to sell 20-year-old Belgian defender Matteo Dams to Al Ahli for a transfer value between USD 8-10 mn, ESPN reports. The agreement seems to be appealing to Al Ahli as players under 21 don’t count as foreign players, which makes Dams a valuable option.

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THE BIG STORY ABROAD-

Another day, another erratic move from US President Donald Trump is taking up the global press’ attention.

Trump attempted to freeze hundreds of bns of USDs in federal aid — spanning anti-poverty initiatives and Medicaid to thousands of institutions reliant on federal loans — in order to make sure federal agencies align with his Make America Great Again agenda, before the decision was blocked seconds before it was set to take effect by a judge. The decision will now be deferred to a hearing on 3 February. The 24-hour chaos before the decision was blocked is getting attention everywhere: Reuters | Bloomberg | Financial Times | New York Times | AP | WSJ.

In business news, Trump said Microsoft is in talks to buy TikTok ahead of its impending ban in the US, Reuters reports. The tech giant was previously in talks to acquire a US unit of TikTok that would be separate from its Chinese parent ByteDance in 2020 before talks collapsed.

ALSO- US tech shares recovered some of their losses after the DeepSeek selloff a day earlier, with AI chip giant Nvidia gaining 8.9%. (Reuters | FT)

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