Construction costs surge 2% in March

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WHAT WE’RE TRACKING TODAY

Saudi sukuk head to JPMorgan index next year + A rail link with Turkey?

Good morning, wonderful people. The welcome news of the extended ceasefire brought a sigh of relief and a calm end to the week.

Still, the ongoing drama around the Strait of Hormuz is keeping investors jittery, especially since the outlook for the next round of US-Iran talks seems murky, with Iran not yet confirming its plans to attend. Iran fired on three ships in the Strait again yesterday, making the situation even more alarming.

The closure’s effect is starting to show in the numbers: Construction costs inflation in March logged its highest rate in two years, as the crisis lifted energy prices and disrupted logistics. We have more on this in today’s news well, below.

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PSAs

VAT-registered businesses must file their VAT returns for March and 1Q 2026 by Thursday, 30 April, via Zatca’s website, the authority said on X. Businesses with annual revenues above SAR 40 mn are required to submit March returns, while those below that threshold must file 1Q 2026 returns. Late submissions will face a penalty of 5% to 25% of the tax due.

Watch this space

MARKETS — We’re joining JPMorgan’s EMGBI next year: The Kingdom’s SAR-denominated sovereign sukuk will be joining JPMorgan’s emerging markets government bond index (EMGBI) starting 29 January 2027, Reuters reports. The sukuk will be added incrementally to EMGBI, with the aim of eventually comprising 2.5% of the index. At the moment, eight Saudi sovereign sukuk — totaling nearly USD 69 bn — meet the requirements for inclusion.

We had an idea this was happening: Bloomberg first reported on the news last September, saying that JPMorgan was considering giving the Kingdom a 2% weighting on the index. At the time it was said that the move could attract some USD 5 bn in foreign inflows.

TRANSPORT — The Kingdom is expected to complete a study on the proposed rail link with Turkey before the end of the year, Transport and Logistics Services Minister Saleh Al Jasser told Al Arabiya. The project aims to support the movement of goods and services through an integrated regional transport network.

REMEMBER- Saudi Arabia and Jordan will activate a joint committee to study a rail link through Syria, calling for route option studies and technical alignments. The line would cover Jaber (Jordan-Syria) and AL Omari (Jordan-Saudi), plugging Jordan into a north-south freight spine.

Why it matters: The Kingdom aims to develop its regional supply chain and logistics network to counteract security threats created by the regional war, especially with the ongoing strait disruptions and the potential targeting of its ports.

MINING — Manara Minerals shifts gears: PIF-backed Manara Minerals is reportedly shifting from its global M&A agenda to pursue debt investments and JVs with global trading firms, unnamed sources told Bloomberg. The firm is in advanced talks with top global commodity houses as it aggressively expands into the trading sector, the sources said.

What will this look like? Manara will prioritize loans to miners in exchange for offtake rights, securing future production benefits without requiring upfront equity.

We knew earlier this year that Manara was in talks to enter metals trading with a partner. According to Bloomberg, the state-controlled entity was in talks with a handful of commodity traders, including Glencore, Mercuria, and Trafigura.

A new school of thought for Saudi investment: This move dovetails neatly with the PIF’s new strategy to prioritize investments that directly accelerate local economic growth, which should be the hallmark of the sovereign fund’s next five years.

Data point

SAR 12.3 bn — that’s the total value of consumer spending via points-of-sale (PoS) in the Kingdom in the week ending 18 April 2026, down 7.9% w-o-w, according to the Saudi Central Bank’s latest weekly report (pdf). The number of transactions also cooled, falling 4.5% w-o-w to 232 mn. This is another week of a dip in spending as nearly every major sector saw a decline in both volume and value.

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The big story abroad

US forces have attacked at least three Iranian-flagged tankers in Asian waters, signaling that Washington’s naval blockade is active despite its ongoing ceasefire with Tehran. Partly laden with crude, the vessels were rerouted from their locations off the coasts of India, Sri Lanka, and Malaysia.

Meanwhile, in the Strait of Hormuz, traffic halted after Tehran attacked three ships, escorting two of them into Iranian waters. The attacks do not constitute violations of the truce, since the vessels were not flying US or Israeli flags, White House Press Secretary Karoline Leavitt said.

Oil jumped in early trading amid maritime turmoil, with Brent crude rising above the USD 100 per barrel mark, reaching USD 101.91 per barrel — up 3.5% from Tuesday’s closing price.

With Hormuz still mired in conflict, Panama Canal transit charges have hit record highs as Asian buyers scramble for oil and gas amid the regional conflict. Daily auction bids have surged fivefold.

AND IN BUSINESS NEWS- Tesla’s 1Q results offered a mixed bag, with income topping analysts’ forecasts, despite revenues falling short of expectations.

Circle your calendar

Aramco will post its 1Q 2026 earnings on Monday, 11 May. We’ll be watching for the early impact of the Iran-US war on the energy giant’s bottom line, especially regarding output constraints and heightened price volatility. The alternative East-West pipeline only hit full capacity in the final days of the quarter.

Construction costs inflation hits two-year high

The Kingdom’s Construction Cost Index (CCI) rose 2.0% y-o-y in March 2026, accelerating at its fastest pace since January 2024, according to recent data (pdf) from the General Authority for Statistics. The uptick was driven by a 1.9% increase in residential construction costs and a 2.2% rise in non-residential costs.

An upward swing in man and machine: Residential construction costs rose on the back of a 4.5% rise in equipment and machinery rental prices, a 6.1% increase in rentals of equipment and machinery with operators, and a 2.7% increase in labor expenses. Meanwhile, non-residential construction costs jumped due to a 5.9% rise in equipment and machinery rental prices, a 7.8% increase in rentals of equipment and machinery with operators, and 2.9% growth in labor costs.

… and markups on fuel and materials: Energy prices jumped 3% in March 2026. For residential projects, basic materials prices edged up 0.3% y-o-y, supported by a 0.4% increase in cement and concrete and a 1.3% rise in timber and joinery. In the non-residential segment, prices for basic materials rose 0.3%, thanks to a 1.2% increase in timber and joinery prices and a 1.8% rise in plastic and glass products.

Why it matters: The CCI’s surge reflects a cost-push trap tied to the Strait of Hormuz crisis, which has lifted energy prices and disrupted logistics. Higher oil-linked input costs pushed up prices for cement, steel, and aluminum, while blocked Dammam and Jubail ports delayed imports. Unaccounted for in the index is the cost of volatility, which has raised project premiums and made it harder for contractors and clients to forecast costs and price projects with confidence, prompting contract delays.

On a monthly basis: The index rose by 0.6% in March 2026 compared to February 2026 — its strongest gain since July 2024 — with residential construction costs up 0.6% and non-residential costs up 0.7% m-o-m.

Sumou Holding’s EGP 70 bn Egypt debut

Sumou Holding officially stepped into the Egyptian market with the launch of Sumou Boulevard. The project is launched in partnership between investment arm Adeer International and Egyptian developer Paragon Developments with EGP 70 bn in total investment, according to a press release (pdf).

This has been in the works for a while: Back in July 2025, Adeer International and Paragon Developments launched the Paragon-Adeer JV, which is working with Egypt’s Midar to develop the project.

Who’s doing what? Sumou Investment, through Adeer International, is the project’s primary financial foundation and equity provider, while Paragon serves as the project’s developer of record, Adeer-Paragon CEO Bedeir Rizk tells EnterpriseAM.

The details: Located in Mostakbal City, New Cairo, the project covers over 500k sqm and is expected to bring in more than EGP 100 bn in revenue. Paragon-Adeer is currently focused on the first 100k sqm phase (Phases 1A and 1B), Rizk said. The development is centered around a 2 km walkable boulevard that includes branded residences, hotels, offices, standalone corporate headquarters, and lifestyle-focused retail shops.

Hospitality players are already on board, with agreements signed with several international groups, Rizk tells us. Formal announcements are expected in the coming weeks.

An AI campus within the project

Paragon-Adeer signed two MoUs to set up an AI Campus at Sumou Boulevard, developed with tech partner Plug and Play to link startups, corporates, and global networks. The first agreement with Schneider Electric launches the AI 100 program to support 100 AI startups over four years, forming the core of the campus by 2030. The second, with Orange Egypt, focuses on digital infrastructure for the campus, including 5G, IoT, and cloud systems to support AI workloads, Rizk tells us.

A “commercially integrated” AI program: Startups in AI 100 will be able to test solutions on the development’s energy and building systems and are being promised assured “commercial pipeline” access to pilot projects with corporate partners like Schneider Electric, Orange, and Mostakbal City, Rizk said. The most successful startups are also being positioned as potential long-term tenants by 2030.

Why it matters

This isn’t a one-off: Sumou Boulevard is part of a wider Sumou Investment push into Egypt’s real estate market and other fast-growing urban areas, with its Managing Director Abdulrahman Al Qahtani seeing Egypt as a long-term growth market within its regional expansion plans. Adeer International Global CEO Bassel El Serafy also said the Saudi capital-local developer mix could be used to replicate similar projects in the region.

Paragon has a presence in the Kingdom: The Egyptian developer opened its first regional office in Riyadh in June of last year, aiming to deliver 200k sqm of office space by 2027 — increasing to 500k sqm by 2030 — in cities including Riyadh and Jeddah.

PIF, State Street pitch Saudi alpha to Europe

Introducing SAQL: US-based asset manager State Street rolled out a Saudi-focused equity ETF in Europe — called Saudi Arabia Enhanced Active Equity UCITS ETF — which is anchored by the Public Investment Fund (PIF), according to a press release. The fund, which launched with USD 100 mn in assets, is cross-listed on Xetra in Germany and the London Stock Exchange under the ticker SAQL.

The move plugs Saudi equities into Europe’s institutional pipes, lowering the friction for foreign investors who would otherwise need to navigate local registration and custody requirements. It’s part of a broader push to turn Tadawul into a default allocation in emerging markets portfolios.

SOUND SMART- The ETF is structured as a UCITS vehicle, meaning it’s accessible to institutional and professional investors across Europe (including asset managers, pension funds, and private banks), as well as retail flows in the markets where it’s registered — namely Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden and the UK, according to the release.

State Street is staying the course: The fourth largest asset manager in the world flagged plans to ramp up its presence in Riyadh back in December to tap the growing ETF demand here at home. The strategy will see it build on a Saudi asset base of around USD 60 bn as it pushes intermediate global capital into the market.

Banks, banks, banks

Bank Albilad

Bank Albilad delivered a 5.1% y-o-y rise in net income to SAR 735.8 mn in 1Q 2026. The increase is owed to a 4% uptick in operating income — supported by gains on investments and financing assets — though partially offset by a similar increase in expenses. Financing income grew 7.8% y-o-y to SAR 1.9 bn, while investment income rose 16.1% to SAR 455.6 mn.

Saudi Investment Bank

Saudi Investment Bank (SAIB) logged a 3.2% y-o-y increase in net income to SAR 519.6 mn in 1Q 2026, it said in a filing to the exchange. Higher operating income — driven by stronger special commission income and banking service fees — supported the bottom-line growth, alongside a 4.7% decline in operating expenses. Meanwhile, financing income grew 4.2% y-o-y to SAR 1.8 bn, and investment income rose 11.4% to SAR 612.8 mn.

Ashmore’s education fund expands, Al Modawat resorts to sukuk issuance

Ashmore’s education fund expands portfolio

More Riyadh schools for Ashmore: Ashmore Investment Saudi Arabia’s Education Investment Fund completed its second acquisition under its K-12 education strategy, it said in a press release. The transaction includes Matrix International Schools and Wahat Al Alson School in eastern Riyadh. The fund’s first acquisition was Al Nobala Schools in Riyadh in July 2025.

What’s next? The fund plans to use these assets to build a scalable platform, with targets to partner with up to a handful of school operators in Riyadh offering both national and international curricula. It is also considering a potential listing on Tadawul by the end of its fund life, subject to market and regulatory conditions.

Part of Ashmore’s education push: Ashmore is looking to up its investment in the local education sector to roughly SAR 1 bn, its CEO Ahmed Al Mohaisen said in January. Both the education and industrial sector made up 20% of the firm’s SAR 7 bn portfolio at the time.

Al Modawat to issue SAR 30 mn Islamic sukuk

Al Modawat Specialized Medical Company is planning a SAR 30 mn Islamic sukuk issuance via a private placement, according to Tadawul disclosure. The offering aims to support the company’s strategy by developing its operational activities and enhancing the efficiency and quality of its healthcare services. The company previously raised its capital by 200% to SAR 71.3 mn via a bonus issuance through the Securities Depository Center.

ADVISORS- The firm appointed Sukuk Capital as the sole arranger for the structuring, issuance, and placement of the sukuk. The sukuk will be offered through Sukuk Capital’s platform.

Ades snaps up Thailand drilling contract

Ades Holding will provide offshore drilling services in Thailand for Valeura Energy under a SAR 345 mn (USD 92 mn), three-year contract, it said in a Tadawul disclosure. The contract includes a one-year optional extension, with operations expected to commence in 4Q 2026 following the completion of the current regional campaign.

SPPC invites bids for 3 GW of capacity across Kingdom

Interested parties can now apply to snap up one of six battery storage projects to be set up under a build-own-operate model after the Saudi Power Procurement Company (SPPC) opened the door to prequalification bids. The projects will have a combined capacity of 3 GW and will span Qassim, Makkah, Madinah, and the Eastern Province.

Warsh asserts Fed independence, vows reform

Warsh to Senate: No rate-cut promises, and the Fed needs an overhaul: Kevin Warsh made clear at his Senate Banking Committee confirmation hearing on Tuesday that lower rates are anything but a sure thing under his watch, pushing back hard on the idea that he’s been pre-wired to deliver what the White House wants.

No pressure? Trump “never asked me to predetermine, commit, fix, decide on any interest rate decision in any of our discussions, nor would I ever agree to do so,” the Fed chair nominee told the panel during a two-and-a-half-hour grilling (watch, runtime: 2:40:00). The line came just days after Trump told reporters he would be “disappointed” if his pick didn’t deliver cuts.

Elected officials voicing views on rates doesn’t, in itself, undermine Fed autonomy, Warsh argued. He drew a clear line, though, between monetary policy and everything else: on bank regulation, supervision, and the Fed’s non-monetary functions, he believes the president should have greater sway.

Regime change: Warsh argued that the Fed needs significant reform after committing policy mistakes during the post-Covid inflation surge, telling senators that once inflation takes hold, it becomes harder and more expensive to reverse — and that the errors of 2021-2022 are still weighing on US households today.

Cleaner inflation data is the top priority: Warsh floated a “new inflation framework” and said one of his first projects would be a joint public-private data effort to better capture underlying inflation trends. His preferred gauge? Trimmed-mean measures that strip out extreme price moves.

Rapid AI adoption could pull inflation lower — but proceed with caution: Warsh agreed that productivity gains from fast AI adoption could eventually bring down inflation and lift output, but stopped short of endorsing the Trump administration’s view that this justifies near-term rate cuts. The labor market effects and their timing remain uncertain and should be at the center of the Fed’s analysis, he said.

What’s next?

A committee vote isn’t coming soon — despite broad support. Warsh appears to have the backing of most committee members. Senator Thom Tillis has vowed to block the nomination for as long as the DOJ investigation into Powell remains open. With Tillis retiring at year-end, he has little incentive to back down — meaning the next move likely rests with Trump and the Justice Department, not the Senate.

MARKETS THIS MORNING-

Asia-Pacific markets are mixed in early trading this morning as surging oil prices and strong corporate earnings pull investors in different directions. Japan’s Nikkei and the Hang Seng are both down, South Korea’s Kospi is up 0.8%, and the Shanghai Composite is flat. Wall Street appears set for a more volatile trading day, with futures in the red.

TASI	11,245	-0.9% (YTD: +7.2%)
MSCI Tadawul 30	1,510	-0.8% (YTD: +8.9%)
NomuC	22,861	0.0% (YTD: -1.9%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	51,962	0.0% (YTD: +24.2%)
ADX	9,786	-0.8% (YTD: -2.1%)
DFM	5,816	-1.1% (YTD: -3.8%)
S&P 500	7,138	+1.1% (YTD: +4.3%)
FTSE 100	10,476	-0.2% (YTD: +5.5%)
Euro Stoxx 50	5,906	-0.4% (YTD: +2.0%)
Brent crude	USD 102.52	+0.6%
Natural gas (Nymex)	USD 2.73	+0.2%
Gold	USD 4,761	+0.2%
BTC	USD 78,248	+2.5% (YTD: -10.7%)
Sukuk/bond market index	918.58	-0.4% (YTD: -0.1%)
S&P MENA Bond & Sukuk	152.07	+0.1% (YTD: +0.1%)
VIX (Volatility Index)	18.92	-3.0% (YTD: +26.6%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.9% on Wednesday on turnover of around SAR 5.0 bn. The index is up 7.2% YTD.

In the green: Jahez (+9.9%), Tanmiah Food (+7.0%), and Saudi Enaya Cooperative Ins. (+6.4%).

In the red: Aldawaa Medical Services (-5.9%), Advanced Petrochemical (-4.1%), and Bank Albilad (-3.8%).

THE CLOSING BELL: NOMU-

The NomuC remained flat on Wednesday on turnover of SAR 15.7 mn. The index is down 1.9% YTD.

In the green: Lana Medical (+29.8%), Taqat Mineral Trading (+7.0%), and Natural Gas Distribution (+6.1%).

In the red: Naas Petrol Factory (-8.8%), Foods Gate Trading (-8.0%), and Munawla Cargo (-7.4%).

CORPORATE ACTIONS-

Alinma Bank’s shareholders approved a 20% capital increase, to be funded by tapping SAR 5 bn from reserves and retained earnings, according to a Tadawul disclosure (pdf). The move will raise the bank’s capital to SAR 30 bn, increasing the total number of shares to 3 bn from 2.5 bn. The shareholders are set to receive one bonus share for every five shares held.

CALENDAR

APRIL

20-22 April (Monday-Wednesday): Sports Investment Forum (SIF), Riyadh.

MAY

3-9 May (Sunday-Sunday): The Global Sustainability Expo, The Arena Riyadh Venue.

19-21 May (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

24-28 May (Sunday-Thursday): Eid Al Adha holiday.

JUNE

15-17 June (Monday-Wednesday): Aluminum Arabia, The Arena, Riyadh.

21-24 June (Sunday-Wednesday): Saudi Food Exhibition and Conference, Riyadh Front Expo.

21-24 June (Sunday-Wednesday): Saudi Print & Pack, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Riyadh International Industry Week, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Saudi Plastics & Petrochem, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Saudi Smart Logistics, Riyadh International Convention & Exhibition Center.

22-24 June (Monday-Wednesday): The Future Hospitality Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

JULY

6 July-23 August (Monday-Sunday): Esports World Cup, Riyadh.

AUGUST

31 August-3 Sep (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

9-10 September (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

9-10 September (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

OCTOBER

12-15 October (Monday-Thursday): World Energy Congress, Riyadh.

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

NOVEMBER

24-28 November (Tuesday-Saturday): Aero Middle East and Sand & Fun, Thumamah Airport, Riyadh.

Signposted to happen sometime in 2026:

2H: Sabic’s USD 6.4 bn Fujian project in China to start production;
September: Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center;
November: The UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia;
November: The Esports Nations Cup, Riyadh;
The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah;
SkyMove Air Cargo MENA, Riyadh;
The Intervision international music competition will take place in Saudi Arabia.

Signposted to happen sometime in 2027:

The World Water Forum takes place in Riyadh;
The Ocean Race finishes in Amaala on the Red Sea;
Riyadh-Kudmi transmission line to be completed;
Capital Markets Forum takes place in March in Riyadh.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

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