FDI figures decline in 2023

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Bin Farhan heads to BRICS

Good morning, ladies and gentlemen. We’re rounding out the week with an issue that is heavy on both macro news and diplomacy, as US Secretary of State Antony Blinken paid another visit to Riyadh yesterday and US Senator Lindsey Graham suggests a normalization pact with Israel could be within reach.

HAPPENING TODAY-

#1- Foreign Minister Prince Faisal bin Farhan is in Russia’s Kazan to attend the Brics Summit, which is on its final day today. The foreign minister landed in Russia overnight, according to state news agency SPA.

#2- It’s day four of the World Bank and IMF annual meetings: The world’s finance ministers, central bank governors, and other big names in finance and policy are in Washington for the International Monetary Fund and World Bank Group Annual Meetings. The six-day meetings kicked off last Monday, and will run all the way to Saturday. Check out the full meeting schedule on the event’s official website.

WATCH THIS SPACE-

#1- Saudi-Israel normalization pact could close in 2024: Saudi Arabia and Israel may reach an agreement on normalizing ties before the year is out, US Senator Lindsey Graham tells Reuters. The senator — an ardent supporter of Israel — told the newswire that Israeli Prime Minister Benjamin Netanyahu signaled in a conversation earlier this week that an agreement could be within reach by 2024-end. The US is looking to push forward on the normalization pact, which Graham said is more likely to close under the current Biden administration.

REFRESHER- The agreement would see Washington provide security assurances to Riyadh, along with cooperation on the development of a domestic nuclear power industry, as well as on artificial intelligence and other technologies. Saudi has been adamant in its stance that there would be no normalization with Israel without a credible pathway to a Palestinian state.

#2- Canada’s First Quantum Minerals is still in talks over its Zambian copper and nickel assets, with CEO Tristan Pascall saying on an earnings call that the business is “open to more partnerships,” Reuters reports. Pascall did not name the companies First Quantum is in talks with, nor did he provide further details on the negotiations or where they currently stand.

REFRESHER- Reuters reported last week that PIF-backed Manara Minerals is closing in on a USD 1.5-2 bn acquisition of a 15-20% stake in First Quantum’s Zambian copper and nickel assets. Manara — a JV between the Public Investment Fund (PIF) and mining giant Ma’aden — has been eyeing a stake in the assets since earlier this year, with an eye on copper mines Sentinel and Kansanshi.

#3- Investors will reportedly have until 16 November to bid on a contract to build the King Abdullah Road-Falasteen Road (Kafa) storm sewer tunnel, after the Jeddah Municipality relaunched a tender for the project in late September, according to Meed. The two-phase project will see the construction of two tunnels over three years in the first phase, and the construction of a terminal pumping station, a marine outfall, and shafts in the second. No further details were given on the financial ticket or timeline for the project.

PSAs-

Unified charging ports for mobile phones + electronic devices: Phones and other electronic devices sold in the Kingdom will be required to have Type C charging ports next year, according to new regulations. The move is part of a broader initiative led by the Communications, Space and Technology Commission (CST) and the Saudi Standards, Metrology, and Quality Organization (SASO). The move was first announced in August 2023.

What to expect:

Phase 1: From January 2024, the rule will apply to phones, tablets, digital cameras, e-readers, portable game consoles, headphones, earphones, portable speakers, keyboards, computer mice, navigation systems, and wireless routers.
Phase 2: Laptops will be included starting 1 April, 2026.

The rationale: The decision aims to “reduce the local consumption of charging ports for mobile phones and electronic devices by over 2.2 mn units each year. It is also expected to minimize consumers’ spending in Saudi Arabia by more than SAR 170 mn annually, which in return supports the Kingdom's sustainability goals in the tech sector by reducing electronic waste by nearly 15 tons per year.”

WEATHER- Riyadh is looking at a high of 34°C and a low of 22°C today. Over in Jeddah, the temperature will peak at 36°C before dropping to 28°C. Meanwhile, Madinah will see a high of 37°C and a low of 25°C.

SPORTS-

The Riyadh Season Snooker Championship is returning in December. The two-day tournament which ran in its maiden edition last March, will be coming back to Riyadh Season on Wednesday, 18 December, according to a statement.

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THE BIG STORY ABROAD-

It’s the first time in a long time that business news makes it to most front pages of the foreign press, as earnings season heats up and aircraft maker Boeing faces its toughest time yet with factory workers set to vote on a contract that could end a five-week strike.

#1- Boeing reported USD 6 bn in losses that its new CEO Kelly Ortberg chalked up to “serious performance lapses” and an erosion of investor confidence, as factory workers vote on new wage terms that could end their ongoing strike. (Reuters | Financial Times | Wall Street Journal)

#2- Tesla’s earnings are also getting a lot of ink, with the EV maker reporting a higher than expected bottom line and profitability for its cybertruck, marking a turnaround after a few disappointing quarters. The EV maker now expects 20% growth in vehicle sales next year. Its shares jumped 12% in extended trading on the news. (FT | CNBC | CNN)

#3- Apple is gearing up to launch its updated Macbook Air with the M4 chip, and its low-end iPad and revamped iPhone SE, in early 2025, Bloomberg reports.

ALSO GETTING ATTENTION- The US elections are still looking as tight as ever with the two candidates statistically tied among likely voters in the seven swing states in the Bloomberg News/Morning Consult poll, leaving it up to the final weeks of rallies and campaigns to decide who will come out on top.

AND- Israel continued to strike Beirut’s southern suburbs yesterday, as Hezbollah said it fired precision guided missiles at Israeli targets for the first time. One strike hit the office of Al-Mayadeen, killing at least one person and wounding five others. (Reuters)

CIRCLE YOUR CALENDAR-

The two-day Multilateral Industrial Policy Forum will kick off in Riyadh tomorrow. The forum will address global industrial challenges, focusing on topics like industrial policy, clean energy, and advanced manufacturing tech. The forum is organized by The Industry and Mineral Resources Ministry in partnership with UNIDO. The Kingdom will also host the UNIDO General Conference in 2025.

The Human Resources and Manpower Expo kicks off on Sunday, 27 October at the Riyadh International Exhibition and Convention Center, expecting over 1k exhibitors and 22k visitors.

The five-day Jeddah International Motor Show revs up on Tuesday, 29 October, running through Saturday, 2 November. The event will showcase motorcycle and drift shows, sim and kart racing, a lineup of custom-tuned cars, and more.

WWE Raw is coming to Riyadh for the first time ever on 2-3 November, kicking off on the back of the WWE Crown Jewel event the day prior, Turki Alalshikh said in a post on X. You can book your Raw tickets here, and your Crown Jewel tickets here.

The Energy Localization Forum locks in agreements worth SAR 104 bn on the first day

Businesses signed 107 agreements worth a combined SAR 104 bn on the first day of the Energy Localization Forum in Riyadh, state news agency SPA reports. The forum continues for its second and last day today.

Aramco inked a total of 15 agreements: The oil giant secured 10 agreements on drilling equipment and chemicals with global companies including Baker Hughes, Schlumberger, and Weatherford International. Aramco also signed five agreements on gas monitoring and control systems with Honeywell and Emerson, according to Arab News. No details were publicly available on the exact value of each contract at the time of publishing.

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ALSO- The Saudi Electricity (SEC) signed two agreements with Siemens Energy and Hitachi Energy on high-voltage gas-insulated switchgears — which are utilized in the Kingdom’s power grid — as well as 7 more agreements for the localization of electrical component production.

Welcoming the Nuwatin initiative: The forum also saw the launch of the Nuwatin initiative, which aims to promote localization in the energy sector through closing the gap between suppliers, investors, and other sector stakeholders. The initiative currently involves 63 suppliers and 59 energy components, aiming to boost the localization of energy products by as much as 20% in certain sectors.

AND- The GCC Lab Company for Technical Services, run by Sabic and SNB Capital and others was launched at the event. The company is meant to advance the localization of advanced energy technologies.

Saudi Arabia’s foreign direct investment declined 14.7% y-o-y in 2023

Foreign direct investment (FDI) net inflows declined to SAR 85.5 bn in 2023, down from SAR 100.2 bn in the previous year, according to an Investment Ministry bulletin (pdf). The Kingdom is looking to attract SAR 388 bn of FDI inflows by 2030 (5.7% of GDP), according to a separate ministry report (pdf).

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Investments worth SAR 32.1 bn went into the manufacturing sector in 2023, followed by the financial and ins. sector (SAR 14.7 bn), and the construction sector (SAR 10.9 bn). The financial and ins. sector attracted the most investments in 2022.

Riyadh attracted the largest share of the Kingdom’s net FDI, locking in SAR 28 bn last year, followed by the Eastern Region (SAR 24.6 bn), and Al Madinah (SAR 22.5 bn). The Eastern Region attracted the highest net FDI in the previous year.

Emirati investors contributed the lion’s share to the Kingdom’s net FDI last year, with investments valued at SAR 16 bn. This was followed by French investors at SAR 10.9 bn, and the English investors at SAR 6.4 bn. UAE investors have been the biggest contributor to Saudi Arabia’s net FDI on record since the ministry began releasing annual FDI figures in 2016.

Saudi GDP growth to hit 4.4% in 2025 -Reuters poll

Economists downgrade Saudi’s 2025 growth outlook: The Saudi economy is expected to record 4.4% growth in 2025, according to the latest Reuters poll of economists. The results of the October poll mark a slim downward revision from the July poll, which saw economists penciling in a 4.5% growth rate for the Kingdom next year.

This year is still on track: The economists polled maintained their expectations of the country’s economy growing at a 1.3% clip in 2024 on the back of higher oil output as Opec+ scraps voluntary cuts which have been in place since late 2022.

REMEMBER- Saudi’s GDP shrank 0.4% in 2Q 2024, marking the fourth consecutive quarter of contraction. Figures for 3Q are not yet available.

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More conservative than the IMF and gov’t: The IMF trimmed Saudi Arabia’s 2024 growth forecast to 1.5% earlier this week, while tweaking 2025’s projection to 4.6%. These numbers

align with the Finance Ministry’s pre-budget forecast for FY 2025 which sees the economy growing 0.8% this year and 4.6% in the next, on the back of an uptick in non-oil activities.

The majority of economists polled expect the non-oil sector to grow at a similar rate to the oil sector and to contribute to economic growth this year and the next. Nevertheless, non-oil revenues are not set to replace oil revenues just yet.

Oil prices are expected to remain “broadly weak” at a USD 76.8 / bbl average next year, according to a separate poll from the newswire. Nonetheless, higher production volumes are expected to offset the fall in prices and yield gains, head of MENA economics at S&P Global Market Intelligence Ralf Wiegert suggested.

IN CONTEXT- Opec+ is planning to phase out supply cuts by December, putting it on course for a 180k barrel per day (bbl / d) hike by the end of the year, the group said previously. Lack of compliance by certain member states could also push the Kingdom to ditch an unofficial USD 100 / bbl price target and boost production at a quicker rate, leveraging its considerable spare capacity to make a play for market share.

Saudi closes SAR 7.8 bn in October sukuk issuance

The Finance Ministry has closed its October sukuk issuance, raising SAR 7.8 bn from fixed-income investors, up from SAR 2.6 bn last month, according to a National Debt Management Center (NDMC) statement (pdf). This is part of the government’s SAR-denominated sukuk program.

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The month saw yields on shorter tranches increase on a monthly basis, while yields for longer tranches declined. The issuance was structured in five tranches:

A 5-year tranche valued at SAR 823.2 mn with a 4.7% yield;
A 7-year tranche valued at SAR 319.5 mn with a 4.8% yield;
A 10-year tranche valued at SAR 2.2 bn with a 5.0% yield;
A 12-year tranche valued at SAR 1.4 bn with a 5.1% yield;
A 15-year tranche valued at SAR 3.1 bn with a 5.2% yield.

A snapshot of gov’t debt obligations in 2024: Debt maturities in 2024 stand at c. SAR 21 bn, down from SAR 40 bn on the back of NDMC’s “successful execution of liability management transaction in 2023,” according to the center’s annual borrowing plan report for 2024 (pdf). The government’s total debt portfolio is expected to reach SAR 1.1 tn by year-end, placing the debt-to-GDP ratio at 26.2%.

The macro picture: The budget’s deficit for this year is projected to reach SAR 79 bn, putting our financing needs at around SAR 86 bn. Up to 35% of those needs will be financed through domestic SAR-denominated instruments, while up to 40% is expected to be raised in international markets, and up to 50% through the government alternative funding channel, which aims at financing the government’s capex and infrastructure projects.

By the numbers: Trading volumes in Tadawul’s sukuk/bond market logged SAR 16 bn across 119 negotiated trades in 9M 2024, an Argaam survey reported earlier this month. July emerged as the top-performing month, with transactions worth SAR 8.5 bn.

Aramco + the private sector have been loving sukuks: State owned oil giant Aramco raised USD 3 bn from a USD-denominated sukuk issuance in late August and Al Rajhi Bank secured a USD 1.92 bn Shariah-compliant sustainability-linked syndicated loan early this month. Meanwhile, the previous two weeks saw Riyad Bank close a USD 750 mn additional tier 1 (AT1) sustainable sukuk issuance and Tamweel Aloula close an undisclosed sukuk issuance as part of SAR SAR 500 mn AT1 sukuk issuance program.

Saudi-headquartered mobility startup invygo raises USD 8 mn in series A extension round led by STV’s NICE Fund

Mobility startup invygo closed a USD 8 mn series A extension round, led by STV ’s newly established NICE Fund with follow-on investments from Al Rajhi Partners, Arab Bank Ventures, SPV, MEVP, and C5, according to a press release (pdf). The company expects to achieve profitability by the close of FY 2024. The statement did not disclose details on how proceeds from the round will be used or the breakdown of each investor’s contribution to the round.

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The pitch: Co-founded in the UAE in 2019 by Eslam Hussein (Linkedin) and Pulkit Ganjoo (Linkedin), the Saudi headquartered company has topped USD 100 mn in yearly gross merchandise value (GMV) and has raised upwards of USD 22 mn to date from regional and multinational investors. The platform operates in Saudi Arabia, the UAE, and Qatar and allows users to pick, drive, swap, and attain ownership of cars by deploying non-traditional funding models.

Al Bilad Bank reports 3Q 2024 earnings

Al Bilad Bank’s net income was up 14% y-o-y to SAR 702.7 mn in 3Q 2024, on the back of an 8% rise in income from investing and financing assets, it said in a disclosure to Tadawul. These gains outweighed declines in net gains on FVSI instruments and dividend income. The lender’s total income from financing grew 11.3% y-o-y to SAR 1.8 bn, while total income from investment rose 13.4% y-o-y to SAR 363.3 mn over the same period.

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On a 9M basis: Al Bilad Bank’s bottom line logged a 14.4% y-o-y increase to SAR 2.0 bn in the first nine months of the year. Total income from financing grew 14.8% y-o-y to SAR 5.3 bn, while its total income from investments saw a 19.1% y-o-y uptick to SAR 1.1 bn.

Awards for Stc + the Grace Preservation Foundation + Riyadh Governorate

Stc Group landed two Global Carrier Awards at the Capacity Europe 2024 event in London, state news agency SPA reports. The two awards were Best Sales Team Globally and Best Middle Eastern Connectivity Provider. Capacity Europe is a telecommunications conference that gathers service providers from around the world.

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The Grace Preservation Foundation received the Platinum award at the Global ESG Awards in the UAE for advancing the circular economy aligned with the UN’s 17 Sustainable Development Goals, according to a post on Linkedin.

Riyadh was named the Arab Environment Capital for the second consecutive year, overtaking 10 competing cities, according to state news agency SPA. The award was announced during the 35th session of the Council of Arab Ministers for Environmental Affairs in Jeddah. During the session, the Saudi Green Initiative also secured the award for Distinguished Environmental Project in the Arab government sector.

** Our Thursday Kudos section recognizes companies that are doing well — or doing well by others. Have something you want us to consider? Email ksa@enterprise.news

Mastercard launches a new payment solution for the local ecommerce sector

FINTECH-

Mastercard launched its Mastercard Gateway payment infrastructure in the Kingdom to support local e-commerce transactions with the backing of the Saudi Central Bank (Sama), according to a press release. The Mastercard Gateway is a payment solutions platform that supports over 30 payment methods, with fraud detection tools to ensure secure and efficient transaction processing.

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CAPITAL MARKETS-

Sab Invest lined up approval from the Capital Market Authority (CMA) to offer its Hang Seng Hong Kong ETF on Tadawul, the authority said in a statement. This marks the second Hong Kong-focused ETF to be cleared by the CMA, following the Albilad CSOP MSCI Hong Kong China Equity ETF, which received clearance last month. The ETFs are expected to raise USD 500 mn each, Bloomberg reported last month.

HOSPITALITY-

Thailand-based Six Senses Hotels plans to launch Six Senses Amaala in 2H 2025, featuring 64 rooms, six suites, 30 villas, and 25 residences, according to a press release. No details were provided on the investment ticket. This will be the brand’s second venture in Saudi, following its existing oasis resort Southern Dunes, The Red Sea in Umluj, according to the company’s website.

EDUCATION-

King Abdulaziz University is now accepting female students into the faculty of maritime studies, according to state news agency SPA. The university has also created a student affairs agency to help women enter these specializations.

TRANSPORTATION-

The Transport General Authority (TGA) signed two MoUs on using hydrogen vehicles and sustainable mobility solutions, it said in posts on X (here and here). The TGA signed an agreement with Abdullah Hashim Industrial Gases and Equipment (AHG Group) to cooperate on testing hydrogen-powered vehicles and supplying hydrogen fuel for testing. Meanwhile, it signed another agreement with Abdul Latif Jameel Company to promote the use of hydrogen vehicles, carry out research on eco-friendly vehicles, and launch training programs for those working in the sustainable mobility sector.

ALSO- The TGA rolled out a pilot run for the Kingdom’s first hydrogen-powered taxi, it said in a separate post on X.

ECB’s easing cycle is continuing, but pace is still uncertain -Lagarde

The European Central Bank (ECB) will continue cutting interest rates but the pace of rate cuts is yet to be determined, ECB President Christine Lagarde told Bloomberg TV on the sidelines of the IMF / World Bank meetings in Washington (watch, runtime: 29:11). Despite inflation moving in the right direction, other data including backward and forward-looking figures are also factored into decisions on the pace of monetary easing, Lagarde said.

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REMEMBER- The ECB trimmed interest rates last week for the third time this year as the central bank looks to curb potential for “downside surprises” in the eurozone economy. The move was the bank’s first back-to-back rate cut in 13 years, five weeks after a previous rate cut. The ECB’s monetary easing cycle comes amid decelerating inflation across the bloc and what could be the second straight year of contraction in Germany, the eurozone’s largest economy. Inflation dropped below the eurozone’s 2% target to 1.7% in September, its lowest level in three years.

The inflation outlook may look rosy, but the ECB is keeping a watchful eye: The ECB is confident the eurozone will reach its inflation target “on a sustainable basis” by 2025, Lagarde said, but called for attention for certain markers citing possible leeway in energy and services prices — which she deemed as lower “to where they could be.”

Other central banks are on the same wavelength, with the US Federal Reserve spearheading the global policy-easing cycle and cutting interest rates by half a percentage point in September. Meanwhile, a surprisingly upbeat US September jobs report has reinforced economists’ hopes that the Fed is on track to pull off a “soft landing.”

What the pundits think: Investors are putting their money on quarter-point reductions from the central bank’s next four meetings and deposit rates reaching 2% by mid-2025, according to Bloomberg. Money markets followed suit, increasing their expectations for rate cuts and loosening bets to a 32 bps cut in December — up from the previously forecasted 30 bps — and 58 bps by January — up from 56 bps. This shift suggests a 28% chance of a half-point rate cut in December, according to the business information service.

MARKETS THIS MORNING-

Early trading in Asia-Pacific markets is showing another mixed morning, with Japan’s Nikkei clawing its way back from losses earlier in the day to rise 0.4%. The Hang Seng Index and mainland China’s Shanghai Composite are both in the red.

Meanwhile, futures suggest Wall Street could continue to see selling pressure today, as Dow Jones futures remain firmly in the red after the index closed yesterday with its worst performance in over a month.

TASI	11,902	-0.5% (YTD: -0.6%)
MSCI Tadawul 30	1,495	-0.4% (YTD: -3.6%)
NomuC	26,380	-0.1% (YTD: +7.6%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	5.5% repo	5.0% reverse repo
EGX30	30,414	0.0% (YTD: +22.2%)
ADX	9,205	-0.5% (YTD: -3.9%)
DFM	4,465	-0.1% (YTD: +10.0%)
S&P 500	5,797	-0.9% (YTD: +21.5%)
FTSE 100	8,259	-0.6% (YTD: +6.8%)
Euro Stoxx 50	4,923	-0.3% (YTD: +8.9%)
Brent crude	USD 75.26	-1.0%
Natural gas (Nymex)	USD 2.41	+4.4%
Gold	USD 2,729	-1.1%
BTC	USD 66,603	-1.40% (YTD: +57.7%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.5% yesterday on turnover of SAR 4.7 bn. The index is down 0.6% YTD.

In the green: Al Baha (+3.5%), UACC (+2.4%) and Spimaco (+2.2%).

In the red: East Pipes (-4.5%), Bupa Arabia (-3.5%) and Al Arabia (-3.1%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.1% yesterday on turnover of SAR 50.3 mn. The index is up 7.6% YTD.

In the green: Meyar (+7.3%), Keir (+5.7%) and Sama Water (+4.5%).

In the red: Paper Home (-8.9%), Rawasi (-4.2%) and Saudi Top (-4.1%)

Blinken talks Gaza + Lebanon ceasefires with Crown Prince Mohammed bin Salman

US Secretary of State Anthony Blinken and Crown Prince Mohammed bin Salman discussed working towards ceasefires in Gaza and Lebanon and means to handle the humanitarian fallout during a meeting in Riyadh yesterday, state news agency SPA reports.

Blinken’s latest Saudi visit follows a stopover in Tel Aviv, where he urged Israeli Prime Minister Benjamin Netanyahu and Israeli officials to wind down military operations, permit humanitarian access to Gaza, and temper their response to Iran’s most recent missile attack, Bloomberg reported.

Saudi + Italy talk defense: Defense Minister Khalid bin Salman met with his Italian counterpart Guido Crosetto in Rome on Tuesday to discuss bilateral relations, cooperation on defense, and regional developments, state news agency SPA reports.

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