Cut through the BS: Your essential (KSA-centric) COP28 primer

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WHAT WE’RE TRACKING TODAY

Riyadh Cement gets update to main market from Nomu

Good morning, wonderful people, and welcome to our sixth zero issue of EnterpriseAM KSA. We’ve got a packed issue for you this morning, so we’re going to dispense with the pleasantries and jump right in after this brief distraction:

A lesson on how to court clients, the Elon Musk Edition: “Don’t advertise. If somebody did try to blackmail me with advertising, blackmail me with money, go [redact] yourself. Go. [Redact]. Yourself. Is that clear?” Musk said on stage in New York yesterday after being asked about an advertiser walkout amid claims Musk was promoting anti-Semitism. The X boss then turned, looked for Bob Iger, whose Disney is among the brands that pulled ads, said, “Hey Bob.” Catch the video on Threads for yourself.

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HAPPENING TODAY-

At least two big stories are competing for your attention this morning: The kickoff of COP28 in Dubai and a virtual OPEC+ ministerial expected later today.

#1- To cut or not to cut, OPEC+ edition: OPEC+ member states are meeting today to discuss how the cartel of oil-producing nations will respond to falling oil prices, decide on next year’s production targets, and make a decision on whether to prolong production cuts.

Pundits are still banking on a cut: “With fundamentals softening and market sentiment bearish, OPEC+ may need to announce another formal cut,” analysts at Eurasia Group said in a report picked up by Bloomberg.

Crude prices on both sides of the Atlantic have been whipsawing all week long after the meeting to talk about output levels was postponed to today from Sunday to give the cartel time to get on the same page. Saudi and Russia want cuts, while Angola and Nigeria want to pump more in 2024.

It doesn’t look like another delay to the meeting is in the cards despite chatter earlier this week that could be the case. Reports out overnight all talk about the depth of possible cuts (here and here), not about postponing the virtual meeting.

MEANWHILE- There’s chatter ahead of the meeting that Saudi Aramco could drop the price to Asia of its flagship Arab Light grade of crude as it looks to fend off less-costly US and European offerings, Bloomberg reports.

#2- It’s finally COP28 o’clock: Dubai might seem a bit busier than usual this morning as a who’s who of business leaders, climate experts, NGOs, and journalists land in the emirate for two weeks of climate talks at COP28. World leaders will make their appearance for two days on Friday and Saturday.

What’s on the agenda for KSA? We’ve got you covered in this morning’s news well, below.

Want to go deeper? Enterprise Climate has got your back.

#3- Riyadh Cement gets its upgrade to the main market: Riyadh Cement said it has obtained Tadawul’s approval to transfer its shares from parallel market Nomu to the main market, it said in a disclosure to Tadawul yesterday. It said that Tadawul will suspend trading on the company’s shares starting today, and will announce the start of listing on the main market as soon as the transition procedures are completed.

That makes two upgrades from the baby bourse to the big show in as many weeks after homegrown burger chain Burgerizzr made the leap last week.

SIGN OF THE TIMES- That Saudi ETF that started trading in Hong Kong yesterday? China wants more. Hong Kong’s government has reportedly set up a taskforce to attract Mideast investors — and Mideast listings — to the financial hub, the Financial Times reports this morning. The Hong Kong Exchange is looking to make up for lost trading volumes as Western investors have shied away from Chinese equities listed in the city, and as fewer investors look to access mainland shares through Hong Kong’s “Stock Connect” program.

^^ We have more on the ETF in this morning’s news well, below

KSA: CENTER OF THE GOLF UNIVERSE?

We will be next week. That’s when PGA Tour chief Jay Monahan will be in Riyadh to meet with PIF boss Yasir Al-Rumayyan, Manahan said on stage yesterday at the New York Times’ DealBook conference. The PGA and PIF-backed LIV Golf have a 31 December deadline to consummate their marriage, turning a loose agreement into a final document.

Just about everything is still undecided with a month to go, the Wall Street Journal claims: “The format of a joint venture between the Tour and the Saudis, the involvement of other investors, the return of the LIV players — and even the deadline itself.”

Monahan says he’s actively talking with other investors who may want to join the investment agreement with PIF, CNBC reports.

A little bit of color: Tiger Woods (now the world’s 1,328th-ranked golfer) says of the lashup: “It’s murky,” reflecting the tizzy into which the potential merger has thrown the golf world.

WATCH THIS SPACE #1-A new investment law in the making:Cabinet is inching closer to a final draft of a new investment law to replace the current Foreign Investment Law, Al Eqtisadiah reports, quoting Deputy Investment Minister Baker Al Haboob. The law is expected to further open the kingdom to foreign investment. Information about the timeframe and the amendments targeted in the new legislation wasn’t made public.

BACKGROUND- The National Investment Strategy launched in 2021 aims to draw foreign investment worth USD 100 bn on an annual basis by 2030.

WATCH THIS SPACE #2-Close-out netting is coming to the derivatives market: The Saudi Central Bank (SAMA) is inching closer to issuing new rules on close-out netting and collateral arrangements, it said in a statement on Tuesday. The regs aim to “reduce credit risk in financial derivatives” and make it easier to hedge against both market movements and counterparty risk, SAMA said. SAMA is currently seeking feedback from the public on the regulation.

WATCH THIS SPACE #3- Sri Lanka wants KSA to agree to restructure its debt. The South Asian has already reached an agreement in principle with India, the Paris Club, and other creditors to restructure some USD 5.9 bn worth of debt and now needs to figure out fresh terms on anther USD 274 mn held by Saudi Arabia, Pakistan, Kuwait and Iran, according to Bloomberg.

In other debt news: The Saudi Fund for Development has rolled over a USD 3 bn deposit at the Central Bank of Pakistan for another year, media in Pakistan report.

PSA- Japan is relaxing visa requirements for Saudi nationals: Japan said it will relax visa requirements for nationals, introducing a multiple-entry visa scheme for those who meet “certain financial requirements” starting 4 December, the Japanese Embassy in KSA announced on X yesterday.

The details: The new visa covers short-term 90-day stays for the purposes of tourism, business and family visits with a validity for three years. You’ll need to apply at the embassy, though, if you want a multiple-entry visa — only folks opting for a single-entry visa for tourism can apply for a Japan eVisa, it said.

DATA POINT-

Remittances from expats living in the kingdom dropped 15.1% y-o-y in 10M 2023 to SAR 104.1 bn (c. USD 27.8 bn), Mubasher reported yesterday, citing figures by SAMA. Remittances in October fell 3.1% y-o-y to c. SAR 11 bn (c. USD 3 bn), down from SAR 11.2 bn in the same period last year, before spiking in in October to its highest monthly highest level in five months.

ICYMI: Remittances by expats in the kingdom fell in 2022 by 6.9% y-o-y to hit its lowest level in three years.

FOR FOOTBALL FANS-

⚽Al Hilal appoints Man. City’s Esteve Calzada as its new CEO:Esteve Calzada (Linkedin) will take the helm at Al Hilal as CEO starting January 2024, succeeding Abdullah Al Jarbou, the club announced on X yesterday.

THE BIG STORIES ABROAD-

#1- TRUCE EXTENDED- With just minutes to spare, Israel and Hamas agreed this morning to extend for one more day their temporary truce. Egypt and Qatar mediated the discussions.

Saudi pushed hard for another extension. Speaking in New York before going into a UN Security Council meeting, Foreign Minister Prince Faisal bin Farhan Al Saud said that if the truce expired, we would all see a “return to the killing at the scale that we have seen, which is unbearable. So we are here to make a clear statement that a truce is not enough.”

Standing with bin Farhan were Arab and Muslim foreign ministers including those of Egypt, Qatar, Jordan, Turkey, Indonesia and Malaysia. See more in the New York Times and the Saudi Gazette.

AND- Are we using economic muscle to keep Iran on the sidelines? That’s the claim in Bloomberg, which cites unnamed Arab and Western officials “close to the matter” as saying that we’re proposing a deepening of ties and possibly investment if Iran keeps its regional proxies, including armed groups in Lebanon, Palestine, Iraq, Syria, and Yemen, from turning Israel’s war in Gaza into a regional conflict.

#2- Kissinger dead at 100: Henry Kissinger, one of the most influential diplomats of the 20th century, has passed away at the age of 100, his consultancy said early this morning. A polarizing figure, the former US secretary of state is praised by his supporters for negotiating an end to the Vietnam War, ushering in warmer relations with the Soviet Union and China, and holding the Middle East together in the wake of the 1973 war. Among his critics, the Harvard University professor will be remembered for the brutal bombing of Cambodia and Laos, alleged complicity in Indonesia’s genocidal campaign in East Timor, and backing of General Augusto Pinochet’s seizure of power in Chile. (Associated Press | Reuters | Bloomberg | Washington Post | Wall Street Journal)

#3- Kuwait’s emir hospitalized: Kuwait’s ruling emir Sheikh Nawaf Al Ahmad Al Sabah was hospitalized yesterday due to an unspecified “emergency health problem.” The emir is now in stable condition. Sheikh Nawaf is 86 years old. (Associated Press | Reuters)

WHAT TO DO THIS WEEKEND-

The Red Sea Film Festivalkicks off in Jeddah today and runs through Saturday, 9 December.

This year’s Noor Riyadh festival also begins today, continuing until 16 December with an expanded roster of new and returning artists. More than 120 pieces from over 100 artists drawn from 35 countries around the world are set to participate.

Riyadh Laughs continues this weekend at Boulevard’s Muvi Cinemas. On stage:

NEMR (tonight)
Paul Chowdhry (Friday)
Alaa El Shaikh, Reem Nabil, Mohammed Moula (Saturday)

CIRCLE YOUR CALENDAR-

The International Conference on Air Services Negotiations (ICAN) 2023will take place from 3-7 December at the Hilton Riyadh Hotel and Residences. The General Authority for Civil Aviation is hosting the event as well as a networking platform for policy makers, regulators, air operators, service providers and other stakeholders.

The King Abdulaziz Falconry Festival will run until Thursday, 14 December with the participation of elite falcon owners from all around the world. The competition currently holds the Guiness World Record for the biggest falconry competition in the world.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

Your essential (KSA-centric) COP28 primer

We’re going to get beaten up about fossil fuels. Big surprise.

COP28 is underway this morning, and talks over the next 13 days will influence investment and divestment plans in renewables and hydrocarbons — and say a lot about policy directions in the Mideast as well as in key energy markets and investment partners.

WHAT TO WATCH FOR- Big themes include measures to better adapt to the impact of climate change and increase our resilience in the face of the human suffering inflicted by climate-triggered crises. An agreement to finally make real the USD 100 bn loss and damage fund could also be in the works, and food security is expected to take center stage since it has become a more pressing issue after Russia’s war in Ukraine disrupted supply chains. It would be naive not to expect disagreements on the timeframe for phasing out oil and gas.

THE KSA ANGLE- It’s not about phasing-out oil and gas — it’s about phasing-in new tech and renewables. Expect the Saudi delegation to push for policies and investments that focus on climate resilience and adaptation, while advocating for a move in a balanced direction that recognizes the pivotal role energy security plays in ensuring a gradual and sustainable transition toward a green future.

Minister of State for Foreign Affairs Adel Al Jubeir made that point last year, when he told CNBC in Davos that “we have the technology, we have the science, and we have the financial resources to deal with these issues [climate change]. What we are lacking is a rational debate based on science and reason. A non-emotional debate [not one] that’s driven by grandstanding and the desire to score political points.”

Will Saudi pay for climate damage? They want us to, but don’t hold your breath.Former UK prime minister Gordon Brown told the Guardian on Tuesday that “oil states” should be subject to a USD 25 bn levy on revenues to help pay for climate damage, a narrative that draws on Ireland’s Environment Minister Eamon Rya’s words during COP27 when he said that “large emerging economies with significant resources should be included” in funding the climate transition for less-developed countries.

We’re having none of it: Paying freight for less-developed countries “must be all the responsibility of the developed world,” a top Saudi official said at the time.

Maybe it’s worth getting the fund up and running before trying to squeeze KSA? The fund, which is supposed to disburse USD 100 bn to cover the cost of climate-related loss and damage, which was first proposed in 2009 only got buy-in last year. It still hasn’t received or disbursed a penny.

POLICY- A clear message for COP28: Given the Kingdom’s role as a major oil exporter, Saudi energy officials and climate envoys are expected to hold their ground by reiterating that energy security is a prerequisite to tackling climate change. “You can’t attend to climate change without getting energy security,” said Energy Minister Prince Abdulaziz bin Salman Al Saud at the World Government Summit last year (watch, runtime: 5:16). The minister went on to explain that ensuring energy security provides the means to tackle climate change.

INVESTMENT- The Saudi delegation will talk up investment in climate and climate-related projects aligned with the Kingdom’s Vision 2030 goals including attracting funding for initiatives related to renewable energy, green infrastructure, and other environmentally friendly projects. The goal is clear: To use conventional energy proceeds to diversify the economy and emerge on the other side a dominant player in the global (green) economy.

ZERO TOLERANCE- Delegations of OPEC+ member countries will push back on calls to divest from oil and gas assets just like they have recently accused the International Energy Agency (IEA) of vilifying the industry by saying it has to choose between shifting to clean energy or worsening the climate crisis. OPEC, de facto led by top oil exporter Saudi Arabia, also described the IEA’s prediction that world fossil fuel demand would peak by 2030 as “dangerous,” saying that this jeopardizes energy security by fuelling calls to stop new investment in oil and gas.

REMEMBER- The Kingdom has committed to have 50% of its power generated from renewable sources by 2030. And like Russia and China, we have a target to reach net-zero emissions by 2060, while the USA and the EU are aiming for 2050.

Some 13.76 GW of renewables are currently under development: The government along with its private sector partners are investing heavily in renewables with 13 solar projects, 4 wind projects and a green hydrogen plant in Neom currently under development. This is complemented with a plan to accelerate the implementation of the Circular Carbon Economy National Program to reduce, reuse, recycle and remove carbon emissions. We currently have 700 MW of renewable energy capacity connected to the grid.

Will you be in Dubai for COP? Make sure to stop by the Saudi Green Initiative Forum on Monday, 4 December, if you are.

First Saudi ETF in Asia closes up on day one, could cross-list in mainland China

CSOP’s Saudi Arabia exchange-traded fund (2830.HK on Reuters) aced its debut in Hong Kong, wrapping up its first trading day yesterday with a 0.8% gain to HKD 77.6 a piece at the market close, data from the HKEX showed. It’s the first ETF in Asia tracking Saudi equities.

FOR THE RECORD- “We think Saudi Arabia’s market is a rising star — and our investors love growth stories,” CSOP CEO Ding Chen (far right in photo above) told Bloomberg TV (watch, runtime: 7:42). “We’re bringing the opportunity to the doorstep for Asian and Chinese investors.”

Regional appetite for the ETF is strong, says Ding, noting it has already attracted assets of c. USD 1 bn and has “got a great response from regional investors in Japan, Korea, Taiwan, and mainland China.”

The ETF may also get listed on the mainland: “We’re working on that,” Ding said. “We hope to cross-list as soon as possible because we see a lot of demand there. A lot of mainland institutions are interested, they want to catch the tide.”

Roadshow coming? “We also see Saudi investors interested in Hong Kong and China equities, but they have limited knowledge of the market. We’re going to try to bring Hong Kong and China to Saudi and the Middle East in the new year.”

Tracking a heavyweight index: The CSOP Saudi Arabia ETF tracks the FTSE Saudi Arabia Index, which has some 56 constituents, according to the latest FTSE Russell factsheet (pdf). The index splits as 42% financials, 18% basic materials, 11% energy. Al Rajhi and Aramco lead the index by market cap, followed by SNB, Sabic, and STC.

IT LOOKS GOOD- The underlying index has a three-year return of 45.8% and a 3.57% dividend yield.

Boosting int’l appetite for our capital market: Debuting an EFT in Hong Kong is aligned with the goals of our Financial Sector Development Program which aims to to open our capital market to international investors through diversified offerings and it comes on the heels of Tadawul’s debut of single stock options earlier this week. The story got ink from Reuters and Bloomberg.

Brazil’s Embraer, JBS to invest more in KSA

From meat to aerospace, Brazilian companies want to do business in KSA as we end a week marked by a visit to Riyadh by Brazilian President Luiz Inácio Lula da Silva, or Lula, as he is better known.

#1- A Brazilian meat giant is mulling fresh investment in KSA. A member of the founding family of meat processor JBS, in town with Brazil’s president for meetings with top Saudi officials, said yesterday that, “Every day we become more interested in exploring the possibility of making much more relevant investments than we had been thinking about in the past.”

Background- JBS already has a plant in Dammam and is building a facility in Jeddah that will quadruple the company’s annual capacity to some 40k tons of chicken per year.

Sound smart- Away from the Kingdom, JBS’ parent company, J&F, also has units working food, mining, pulp, paper, and energy.

#2- Aerospace and defense stalwart Embraer is looking to line up new business and explore investment opportunities with SAMI, as PIF-backed Saudi Arabia Military Industries is better known. Embraer will make sure it has “comprehensive maintenance capabilities” for its aircraft in the Kingdom and is pushing hard for sales of its C-390 Millennium military multi-mission transport aircraft as well as to get in on contracts with the Ministry of Defense. The two companies will explore setting up a regional maintenance hub for the C-390 and may also set up a final assembly line for the aircraft here.

Kingdom Holding raises stake in Citigroup to 2.2% after acquiring USD 450 mn stake from Prince Alwaleed

Tadawul-listed KHC buys additional stake in Citigroup from Prince Alwaleed: The Kingdom Holding Company raised its stake in Citigroup to 2.2% after acquiring a stake worth SAR 1.7 bn (c. USD 450 mn) from its chairman, Prince Alwaleed bin Talal, a disclosure by KHC to Tadawul read yesterday.

What we know: Kingdom Holding said it acquired the shares from a related party, in reference to Prince Alwaleed, bringing its current ownership in the listed bulge bracket lender to 2.2% from 1.6%. It said the “transaction supports the company’s strategic plans,” but did not provide further details.

Alwaleed and Citigroup go way back: Alwaleed’s ties with Citigroup date back to the early 1990s, where he poured in USD 590 mn to become the investment bank’s largest shareholder.

About the company: KHC identifies itself as “one of the world’s leading and most successful diversified investment holding companies delivering continuous and sustainable growth that increases long-term shareholder value,” according to its website. Prince Alwaleed currently owns a 78.1% stake in the company, with 5% of its stock trading on Tadawul.

The PIF also owns a chunk: Last year, Prince Alwaleed signed an agreement with the Public Investment Fund to sell a 17% stake in his investment firm to the sovereign fund in a USD 1.5 bn transaction.

Our very own Warren Buffett: Prince Alwaleed is one of the kingdom’s most visible investors, rising to prominence, investing in holdings ranging from the Four Seasons to Uber and X.

The story also got ink from Reuters and Bloomberg.

PIF set to acquire 10% stake in London’s Heathrow airport as infrastructure giant Ferrovial offloads ownership

PIF set to grab 10% stake in lossmaking Heathrow airport: The Public Investment Fund is set to grab a 10% stake in London’s Heathrow airport as Spanish infrastructure company Ferrovial looks to offload stakes in the one of Europe’s busiest travel hubs that it has owned for nearly two decades. The PIF announced the transaction yesterday after news of it leaked the night before.

What we know: Ferrovial said it will be selling its entire 25% stake in FGP Topco, the airport’s parent company, for GBP 2.4 bn, according to a statement. It named the buyers as the PIF, which will be acquiring a 10% stake, and Paris-based equity firm Ardian which will be acquiring a 15% stake through separate vehicles, it said.

There are caveats, of course: Other shareholders have the right of first offer and could preempt the PIF, the fund said, and the transaction needs regulatory approval.

Ferrovial has been divesting bits and pieces: The Spanish company had an initial stake of 56% in Heathrow but had sold down to 25% by 2013. Aside from Heathrow, it owns a 50% stake in UK’s Aberdeen, Glasgow and Southampton airports. Further afield, it has stakes in facilities in Turkey and 49% of in New York JFK airport’s Terminal 1.

Heathrow had it coming: Ferrovial executives have reportedly been dissatisfied at the British regulatory scene after Heathrow was obliged to slash its landing charges by almost a fifth on the back of conflict with airliners, according to The Financial Times. The airport continues to be lossmaking this year on the back of a higher cost of servicing for its significant debt burden due to rising interest rates. It continues to turn in losses despite a recovery in passenger numbers to levels reported before the covid pandemic. The busy travel hub received 59.4 mn passengers in the first nine months of the year, up from 34.4% last year.

REMEMBER- We’ve been on an investments spree for prized assets: The PIF has been emerging as one of the most active sovereign wealth funds globally, grabbing multiple stakes in everything from golf to mixed martial arts to EV production among other ventures.

Other shareholders: FGP Topco counts Qatar’s investment authority (20%) alongside funds and other investors from Canada (12.6%), Australia (11.2%), China (10%), and other countries.

Neom unveils new tourist hub, Siranna

Neom unveils new tourist hub Siranna: Neom said it is launching new tourist destination Siranna, in the mega city’s northwest, a statement by Neom read yesterday. Located on the Gulf of Aqaba coastline, the new destination will be home to a 65-key hotel and 35 exclusive residencies. The launch follows similar announcements on sustainable tourist destinations Leyja and Epicon, also on the Gulf of Aqaba coast.

And that’s not all from Neom: Oxagon — Neom’s industrial city — said it signed agreements with Bosch and global consulting firm Bain & Co to “to accelerate advanced and clean industrial transformation,” Oxagon said on X on Monday. The contracts will help bring in investment in innovation, technology and talent development, it said, without providing further details.

It’s been a busy few months for Neom: The first batch of wind turbines have arrived in Neom’s port with dozens more expected by the year’s end, Neom Green Hydrogen Company CEO David Edmondson told AFP last month. Some 30 turbines are set to be delivered to Neom by the end of the year along with the ambitious project’s first solar panels.

Saudi Investment Recycling shuffles board of directors

PIF-backed SIRC reshuffles board of directors: The Saudi Investment Recycling Company (SIRC), a subsidiary of the PIF, said it has restructured its board of directors, according to its Linkedin. The waste management focused company will now be headed by Khalid Mohammed Al Salem (Linkedin), it said. Al Salem is currently the president of the Royal Commission for Jubail and Yanbu, which helps oversee development of the kingdom’s energy industry. He was also the former Executive Director of the Saudi Industrial Property Authority (Modon).

What’s SIRC? The company invests along waste management themes and aims to “create alliances with private-sector companies to establish recycling capacity in the Kingdom and build a circular economy for a sustainable future.”

It’s a busy morning of KSA in the global press

The PIF taking a stake in Heathrow and Riyadh hosting Expo 2030 dominate the conversation on Saudi in the international press this morning.

On Heathrow: The FT’s influential Lex column thinks Ferrovial’s exit was well-timed — for Ferrovial. PIF and French PE outfit Ardian bought in at an implied enterprise value of about GBP 26 bn, or 13x next year’s forecast EBITDA. Crunching the numbers, Lex looks ahead and suggests a single-digit IRR might be in the works come an eventual exit. Bloomberg, meanwhile, notes that the stake will add to a “growing European portfolio” that also includes Telefonica, Aston Martin, and Newcastle FC.

On Expo 2030: Taking home the “rights to host the major global event is a coup for Crown Prince Mohamed bin Salman’s efforts to remake the kingdom’s international image,” writes the New York Times.

ALSO GETTING ATTENTION: A 30 December deadline for the PGA and PIF-backed LIV golffranchises to reach a final agreement on combining their businesses (along with the European tour) and Saudi angling for oil production cuts heading into today’s OPEC+ meeting.

Debt, investment, real estate — we’ve got a bit of everything this AM

DEBT-

#1- Saudi Cable inks a debt-transfer agreement:Tadawul-listed Saudi Cable Company (SCC) has inked an agreement under which Al Rajhi Banking Investment agreed to transfer its rights to a SAR 232.7 mn debt owed by the cable manufacturer to Tathmeer Investment, according to a disclosure to Tadawul yesterday. Tathmeer plans to “capitalize this indebtedness later in exchange for ownership of shares,” in SCC, paving the way for SCC “to operate efficiently, reduce its debt and strengthen its position in completing the financial restructuring procedure successfully.””

REMEMBER- SCC has been suspended from trading on Tadawul since April 2022 for failure to comply with disclosure rules. Last week, the company submitted a request to the court to extend the suspension period, which will end on 4 December, for another 180 days, to complete its financial restructuring.

#2- Meyar secures financing from SACE-Rome for new production lines: Local construction company Meyar said it has obtained EUR 622.9 mn (c. SAR 2.5 mn) in financing from the Italian Export Credit and Insurance Agency (SACE-Rome) to procure new production lines from Italian concrete manufacturer Simem, a disclosure to Tadawul read yesterday.

INVESTMENT WATCH-

Jazan is set to be a hub for African trade, said Saleh Al Solami, an adviser to the Industry and Mineral Resources Minister during the Jazan Investment Forum, according to Arab News. He said the kingdom was developing the region as a special economic zone that serves the logistics industry — and said Jazan can develop a raw materials industry that serves both domestic manufacturers and African export markets.

A flurry of investments: Some 18 agreements worth SAR 31 bn (c. USD 8 bn) were signed during the Jazan Investment Forum yesterday, according to Asharq Al Awsat. They include a SAR 21.8 bn agreement between Saudi International Industrial Village Company (SSKIV) and several South Korean firms to set up a multi-facility industrial park. Others include a SAR 5 bn investment by Chinese ceramic group WangKang to set up a float glass plant.

REAL ESTATE-

Retal Urban, PIF’s Roshn partner up for Sedra residential units:Retal Urban Co. signed a SAR 374.8 agreement with PIF subsidiary Roshn Real Estate to purchase and develop residential units in Riyadh’s Sedra residential neighborhood, it said in a disclosure to Tadawul yesterday. Under the 36 months agreement, both real estate developers will build 363 units in Sedra. Retal expects a positive impact on the company’s financial results during the project development period over the years 2024, 2025, and 2026.

WASTE TREATMENT-

Alkhorayef Water secures O&M wastewater contract for Buraidah: Alkhorayef Water and Power Technologies Co. (AWPT) secured a SAR 87.2 mn contract from the National Water Company to develop water and sewage networks at the Buraidah region, it said in a disclosure to Tadawul yesterday. The three-year agreement involves the operation and maintenance of water and sewage networks in the region, it added.

This is AWPT’s second this month after earlier landing aSAR 2.2 bn O&M contract for sewage treatment plants in Riyadh.

STARTUPS-

Malaysian startup TheNour is moving its HQ to Madinahfrom Kuala Lumpur as part of its new partnership with Saudi tech-based investment arm Taibah Valley, the company said on social media platform X yesterday. The agreement falls under Taibah’s plans to become a catalyst for startups. Founded in 2022 by Malaysian influencer Noor Neloofa, the all-in-one platform brands itself as the ultimate Muslim lifestyle app with features such as a Quran media player, an e-wallet, and access to medical insurance services.

The OECD warns of higher-for-longer rates in 2024, contrary to bullish markets

Central banks could keep rates higher than expected in 2024: The OECD reckons that central banks will maintain a hawkish monetary policy despite a historic rally in financial markets, according to its most recent Economic Outlook.

What gives? Continuing cost pressures for businesses alongside rising food and energy prices for consumers could drive a tighter monetary policy than is currently projected for 2024, according to the report. Rising geopolitical tensions if the war in Gaza were to persist or become a wider conflict are also a concern, the OECD said.

Bullish market behavior is saying something else: The Bloomberg US Aggregate bond index has risen to 4.3% so far this month, putting bonds on track for their best monthly performance since 1985, as traders hedge their calls that the Federal Reserve has finally stopped raising interest rates. Markets picked up further speed this week after a Fed official hinted at the possibility of rate cuts in the coming months, sending the USD to its lowest level in three months.

Refresher: The Fed embarked on an aggressive monetary tightening policy in March 2022 in the wake of soaring inflation triggered by the Ukraine war. Its recent decision to hold rates steady at a 22-year high at 5.25-5.5% for the second consecutive month after encouraging inflationary data had pundits saying the Fed might have taken rates as far as it is willing.

Too much monetary tightening could risk an economic downturn, with a “more severe slowdown in spending, rising unemployment and higher bankruptcies,” the report warns.

And the US economy certainly seems to be in good shape, persistent hand-wringing about a recession notwithstanding: US GDP grew at a 5.2% clip in 3Q, slightly higher than the 5% analysts penciled in, despite persisting concerns about the possibility of a recession, Reuters and CNBC reported overnight.

The OECD sees global GDP growth slowing to 2.7% in 2024, down from the organization’s previous 2024 projection of 2.9%. G20 countries are expected to take a hit, with US growth in particular falling from 2.4% this year to 1.5% in 2024. That would present a challenge to policymakers who have been aiming for a “soft landing.”

But 2025 could be better, the group says, saying falling inflation and real income growth could see global output grow at a 3% clip in 2025.

On interest rates, a higher-for-longer approach would take a toll on emerging markets:Restrictive monetary policy would put pressure on debt repayments for emerging-market and developing countries with large stocks of FX debt, the OECD warned.

That’s a risk for us: Egypt’s external debt accounted for 41.8% of its GDP in 2023, and we’re due to cough up some USD 29 bn next year. With tighter rates translating to a stronger USD, a hawkish Fed would see imports even more expensive here at the same time as we look at the prospect of the EGP floating after December’s presidential poll.

!_InsertLIne_!

Dubai Taxi’s USD 315 mn IPO got USD 41 bn in orders: Dubai Taxi received AED 150 bn (USD 41 bn) in orders for its AED 1.2 bn (USD 315 mn) initial public offering, with orders from investors covering the transaction 130x, according to a statement (pdf) from the company. The appetite came from both institutional and individual investors, it said.

The transaction: The Dubai government is selling a 25% stake at AED 1.85 per share and has priced the offering at the top of the range it had initially offered on the back of strong demand, valuing the company at AED 4.6 bn (c. USD 1.26 bn).

More retail shares will be on offer after global coordinators retail tranche to 12% of the offering from 10% originally.

ADVISORS- Rothschild & Co. Middle East is serving as the financial advisor. CitiGroup, Merrill Lynch and Emirates NBD are global coordinators and joint bookrunners. Our friends at EFG Hermes and FAB are also bookrunners on the transaction.

GPCA to set up shop in Abu Dhabi: The Global Private Capital Association (GPCA) will collaborate with the Middle East Venture Capital Association (MEVCA), according to a press release. Under the partnership, New York and Singapore-based GPCA will set up its first Middle East headquarters in Abu Dhabi.

TASI	11,103.05	+0.02% (YTD: +6%)
MSCI Tadawul 30	1,430.21	-0.04% (YTD: -32%)
USD : SAR (SAMA)	3.75	–
Interest rates	6% repo	5.5% reverse repo
EGX30	24,759.16	-1.4% (YTD: +69.6%)
ADX	9,553.45	+0.1% (YTD: -6.4%)
DFM	3,999.58	-0.2% (YTD: +19.9%)
S&P 500	4,566.84	+0.3% (YTD: +18.9%)
FTSE 100	7,423.46	-0.4% (YTD: -0.4%)
Euro Stoxx 50	4,370.53	+0.5% (YTD: +15.2%)
Brent crude	USD 82.84	+1.4%
Natural gas (Nymex)	USD 2.82	-0.8%
Gold	USD 2,066	+0.3%
BTC	USD 37,745.02	-1.1% (YTD: +126.2%)

THE CLOSING BELL-

The TASI rose 0.02% yesterday on turnover of SAR 4.3 bn.The index is up 6% YTD.

In the green: Anaam Holding (+9.1%), SPIMACO (+8.3%) and Albaha (+7.1%).

In the red: SRMG (-4.3%), Naseej (-3.6%) and Lumi (-3.2%).

CORPORATE ACTIONS-

It’s official- Gulf General Cooperative Ins. is going to tighten up its capital:Gulf General Cooperative Ins. Co. said it has submitted the company’s capital reduction application file to the Capital Markets Authority (CMA) for approval, it said in a disclosure to Tadawul yesterday. The ins. company seeks a capital reduction of SAR 200 mn from accumulated losses through a write-off of 20 mn shares. The write-off will bring the company’s capital to SAR 300 mn, it said.

We’ve been expecting this: Earlier this month, Gulf General Cooperative Ins. appointed Yaqeen Capital as its financial advisor to help manage the capital production process.

CALENDAR

NOVEMBER

29-30 November (Wednesday- Thursday): Jazan Investment Forum, Jazan.

29-30 November (Wednesday- Thursday): Global Healthspan Summit, Jazan.

30 November (Thursday): Start of Noor Riyadh show, King Abdullah Financial District, Riyadh.

30 November – 9 December (Thursday-Saturday): Red Sea Film Festival, Jeddah

DECEMBER

3-7 December (Sunday-Thursday): The International Conference on Air Services Negotiations (ICAN2023), Riyadh.

4 December (Monday): Saudi Green Initiative Forum, Dubai.

4-7 December (Monday-Thursday): FIABCI Global Leadership Summit, Riyadh.

5 December (Tuesday): Taxcom Middle East, Riyadh.

5-6 December (Tuesday-Wednesday): Education Investment Saudi, Riyadh.

6-7 December (Wednesday- Thursday): Collection and Recovery Middle East Summit, Riyadh.

16 December (Saturday): end of Noor Riyadh show, segment “The Bright Side of the Desert Moon, Riyadh.

18-20 December (Monday-Wednesday): Smart Grid Conference, Riyadh.

19-20 December (Tuesday- Wednesday): Saudi Airport Exhibition, Riyadh.

19-21 December (Tuesday-Thursday): International Digital Signage Expo 2023, Riyadh.

2024

JANUARY

9-11 January (Tuesday-Thursday): Future Minerals Forum, Riyadh.

14-17 January (Sunday-Wednesday): The International Exhibition for construction and building materials (Saudi Projects), Jeddah.

28-31 January (Sunday-Wednesday): Saudi Franchise Expo 2024, Jeddah.

FEBRUARY

4-6 February (Sunday-Tuesday): SIMEC International Expo, Riyadh.

5-7 February (Monday-Wednesday): Saudi HORECA 2024, Jeddah.

12-14 February (Monday-Wednesday): The International Petroleum Technology Conference (IPTC), Riyadh.

22 February (Thursday): Founding Day (national holiday)

26-29 February (Monday-Thursday): Big 5 Construct Saudi, Riyadh.

26-29 February (Monday-Thursday): FM EXPO SAUDI, Riyadh.

26-29 February (Monday-Thursday): Stone and Service Saudi Arabia, Riyadh.

MARCH

2 March (Friday): end of Noor Riyadh show, segment “Refracted Identities, Shared Futures”, Riyadh.

4-6 March (Monday-Wednesday): International Conference on Sand and Dust Storms in the Arabian Peninsula, Riyadh.

4-7 March (Monday-Thursday): LEAP 2024, Riyadh.

11 March (Monday): Flag Day (national holiday)

Signposted to happen sometime in March:

Ramadan

APRIL

Signposted to happen sometime in April:

Eid Al-Fitr (national holiday)

MAY

19-21 May (Sunday-Tuesday): Saudi Energy Convention, Riyadh.

21-23 May (Tuesday-Thursday): The Saudi Food Show, Riyadh.

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

5 June (Wednesday): World Environment Day.

Signposted to happen sometime in June:

Eid Al-Adha (national holiday)

SEPTEMBER

11-12 September (Wednesday-Thursday): The Saudi Event Show, Riyadh.

23 September (Monday): National Day (national holiday)

DECEMBER

2-13 December (Monday-Friday): Conference of the Parties (COP16) to the United Nations Convention to Combat Desertification, Riyadh.

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