Gigaprojects can’t be allowed to “overheat” economy –Al Jadaan

1

WHAT WE’RE TRACKING TODAY

THIS MORNING: Have talks on a GCC-China trade pact ground to a halt?

Good morning, wonderful people. Three big stories are driving the conversation on the Kingdom on this fine Wednesday morning:

#1- Officials don’t want gigaprojects to “overheat” the economy, Finance Minister Mohamed Al Jadaan said yesterday.

The domestic positioning: Al Jadaan’s remarks suggest the Kingdom will “optimize economic plans to withstand global shocks,” Arab News writes. The daily, which frequently telegraphs government policy, said the finance minister had “urged economic planners to optimize their strategies to curb ‘economic leakage’ and prevent resources or funds from being wasted.”

Why it matters: There’s an argument to be made that Al Jadaan’s remarks represent a shift in policy. The finance minister was the first official to talk openly about pacing out some aspects of gigaprojects even as he noted that the treasury would run modest deficits to continue investing in economic diversification. Others, including Economy Minister Faisal Alibrahim, have joined him — Alibrahim recently called gigaprojects “modular.” Officials have also flagged that it is important that state borrowing activity not crowd the private sector out of the domestic debt market.

AND- Al Jadaan was speaking at a forum in Qatar. While on-stage content at the forum was produced by Bloomberg, the event itself is put on by the Qatari government. Al Jadaan’s appearance there — and his choice of the venue to make a significant policy statement — speaks to consistently warming ties between Doha and Riyadh.

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

#2- Joe Biden’s national security advisor, Jake Sullivan, is coming back to Saudi this weekend, a senior White House official said yesterday in remarks that got wide pickup in the global business press overnight. He’ll also be heading to Israel, where he’s expected to focus on the IDF’s ramp-up of its assault on Rafah.

Sullivan’s visit will raise expectations that there may be progress on a series of key agreements between the two countries covering defense, artificial intelligence and advanced technologies, and the creation of a domestic nuclear power industry. He had been scheduled to travel to Riyadh a few weeks back, but canceled at the last minute after cracking a rib in an accident.

SOUND SMART- Washington had originally hoped to sign the three pacts as part of a wider series of accords that would see Saudi normalize ties with Israel, but some in the Biden administration are pushing to close the bilateral agreements now to put pressure on Israel to come to the table on Gaza. While Axios is positioning that as a “long shot,” it also notes that “US and Saudi officials say they've made significant progress in their talks.”

Sullivan will be the third senior US official to stop in Riyadh in less than a week. Energy Secretary Jennifer Granholm is due here shortly (she’s a key player in the nuclear pact) and Nasa chief Bill Nelson will also be here this week.

#3- It’s the second and final day of a high-profile Saudi-UK business summit. Saudi Great Futures, a UK government-sponsored investment conference, is backed by our friends at HSBC and brings together as many as 450 executives from some 300 British companies. We have chapter and verse on the first day of the conference in this morning’s news well, below.

WEATHER- There’s a chance of rain in Riyadh with a daytime high of 41°C and a low of 25°C. Makkah is set for a clear sky and a cooler day with a high of 39°C and a more pleasant low expected at 30°C, while windy weather is in the cards for Jeddah with a high of 36°C and a low of 26°C.

HAPPENING THIS WEEK-

Red Sea Fashion Week will get underway tomorrow and run until Saturday, 18 May at the St. Regis Red Sea Resort, according to state news agency SPA. The event, organized by the Saudi Fashion Commission, will feature an opening show on the first day, followed by two days of runway shows showcasing collections from both Saudi and international designers.

JOIN US IN CAIRO?

Egypt’s top executives and business owners will gather in Cairo on Wednesday, 5 June for the Enterprise Optimism Forum.

On the menu: Blunt talk about a future that sees Saudi Arabia, Egypt, and the UAE at the heart of a more vital Middle East economy.

The goal: To provide an early, actionable roadmap for those who are “long Egypt.”

** Interested in attending? Tap or click here to let us know. ** Seating is limited and available on an invitation-only basis.

WATCH THIS SPACE-

#1- China-Gulf trade agreement in jeopardy? Trade talks between the Gulf Cooperation Council (GCC) and China are hitting a wall as Saudi remains concerned that low-cost Chinese products could hinder its efforts to boost domestic manufacturing and become an industrial powerhouse, Reuters reports, citing sources it says are in the know. The agreement is not yet entirely off the table, but will require compromises from both sides of the table to move forward, the sources said.

The last stretch is proving the hardest: Chinese officials said earlier this year that while talks were “90%” of the way there, a number of difficult issues were still on the table. Trade talks first began 20 years ago but lapsed without a conclusion.

Speaking of China: Local real estate developers expect freshly-inked agreements between the Housing Ministry’s real estate investment arm, National Housing Company (NHC), and Chinese contractors will help to provide high-quality housing at affordable price points, Aleqtisadiah reported. The agreements will help accelerate the pace of construction and halve costs, Riyadh-based real estate developer Menassat Realty CEO Khaled Al Mobid told Aleqtisadiah.

IN CONTEXT- NHC signed a cooperation agreement with Chinese-state owned conglomerate Citic to establish an industrial city and logistics zones for building materials and another with Chinese contractor China Machinery Engineering to build 20k homes in NHC projects.

SOUND SMART- With multiple USD bn gigaprojects in the works and a push to add housing in Riyadh and beyond, officials are increasingly wary of ensuring that building materials are available — and that the Kingdom has the construction players able to execute.

#2- WHISPERS- It looks like merger talks between PIF-backed Liv Golf and the PGA Tour are still on. “We’re working on negotiations with PIF. It’s ongoing; it’s fluid; it changes day-to-day. We’re making steps and it may not be giant steps, but we’re making steps,” golf star Tiger Woods said yesterday, according to Reuters. Woods, a member of two key PGA boards, suggested that talks between the two sides meant that he may not have time to captain the US Ryder Cup team this year.

#3- You can now spend up to SAR 3k at dutyfree shops on arrival: The Zakat, Tax and Customs Authority (Zatca) signed off on new regulations for dutyfree purchases on arrival at air, sea, and land ports across the country, capping spending at SAR 3k per person, Zatca said in a statement yesterday. The new rules also cap the number of smokes each person can purchase at 200.

Zatca has begun receiving licensing requests from operators interested in establishing dutyfree stores within arrival halls, according to the statement.

OIL WATCH-

Opec’s forecast for strong global oil demand in 2024 remain “broadly unchanged,” itsaid in its monthly report (pdf), saying it expects oil demand to grow by 2.25 mn barrels per day (bbl / d) this year and 1.85 mn bbl / d next year. This is the last report to be released by the Vienna-based group before OPEC+ meets on 1 June to decide on whether to extend voluntary oil cuts into the second half of the year.

The calculus for forecasting world demand on crude is changing a little: Opec said it will scrap a previous approach to calculating the world’s demand of its own crude, and will instead use forecasts on “demand for DoC crude” in reference to the OPEC+ framework. The move “not only demonstrates solidarity and unity…but also helps eliminate the potential for misunderstanding and/or misinterpretations.” An OPEC+ source told Reuters last week that OPEC+ demand was more relevant since its framework was the main forum for cooperation on the oil market.

***
DID YOU KNOW that we also cover Egypt and the UAE?

Were you forwarded this email? Tap or click here to get your own copy of EnterpriseAM Saudi delivered every weekday before 7am Riyadh time — without charge, thanks to our friends at Cenomi.
***

THE BIG STORY ABROAD-

It’s a mixed bag on global front pages this morning as a number of stories captivate the attention of the business pages.

The US has imposed a series of new tariffs on Chinese imports, including a 100% tariff on Chinese EVs as part of “ a package of measures designed to protect US manufacturers from cheap imports.” Also on the list: semiconductors. We have the details in this morning’s Planet Finance, below.

YOUR DAILY DOSE OF AI NEWS- Google introduced its AI assistant Project Astra. Think of Project Astra as your personal assistant who can help you find the keys you misplaced or explain a complicated piece of code. It will be powered by an upgraded version of Google’s Gemini and eventually be available across all of Google’s software. Like OpenAI’s Scarlett Johansson-sounding model yesterday, Project Astra can interact with users through text, audio, and video. The Verge’s David Pierce has a solid rundown here if you want more.

Google is also going to start to roll out AI search summaries to its users, starting in the US.

AND- OpenAI cofounder’s and chief scientist is out. Ilya Sutskever leaves six months after he participated in a palace coup that saw CEO Sam Altman briefly kicked out of the hot AI startup.

MEANWHILE- THE MEME STOCK FRENZY CONTINUES as Roaring Kitty and his army of winged monkeys pushed Reddit shares up 7% to USD 62.34 during trading yesterday. It’s reddit’s second-highest close since it made its market debut.

Want the backstory? Check out yesterday’s Planet Finance, where we dove into the return of Roaring Kitty and its impact on meme stocks. The Wall Street Journal is not along in wondering whether Kitty coming “out of hibernation” means meme stocks are a thing again — or if this is just a blip.

ALSO- Mining group Anglo American is planning to break up after rejecting second BHP offer in a bid to retain control of its most profitable companies, including its copper mining outfit — a smart move given the current copper boom.

CIRCLE YOUR CALENDAR-

Riyadh will host the Saudi Energy Convention from Sunday, 19 May to Tuesday, 21 May. The convention will see energy and utilities industry leaders advance collaborative decarbonization efforts and identify innovation areas. It will also host the Saudi Utilities Convention and Saudi Hydrogen Convention to address the role and challenges of rolling out hydrogen, water and utility projects that are in line with the global energy transition. Over 10k energy professionals and 200 industry speakers will be present at the event.

The Future Aviation Forum will get underway on Monday, 20 May and run until Wednesday, 22 May at the King Abdulaziz International Conference Center in Riyadh. The event, organized by the General Authority of Civil Aviation, will see the Kingdom showcasing some USD 100 bn worth of investment options in the aviation and logistics sector at large.

Riyadh will host the annual conference of the Airports Council International — also known as WAGA — from Tuesday, 21 May to Thursday, 23 May. The global gathering brings together leading senior executives from around the world to cover topics that shape the aviation industry. The event’s speakers include PIF-owned airline Riyadh Air CEO Rony Douglas, Saudi Air Connectivity Program Majid Khan, Riyadh Airports CEO Ayman Aboabah and others.

Demo day for the final round of the Sanabil 500 MENA seed accelerator will kick off on Wednesday, 29 May in Riyadh with seven finalists. Applications for the next batch are now open and will close on 6 August 2024.

Riyadh will host a Global AI Summit from 10-12 September, state news agency SPA reported yesterday. The event, which is organized by the Saudi Authority for Data and Artificial Intelligence, will focus on key AI topics and trends, delving into its local and global adoptions, ethics, and infrastructure.

Dammam will host the Saudi Maritime and Logistics Congress from Wednesday, 18 September to Thursday, 19 September. The two-day event looks to gather up to 10k attendees and 200 exhibitors, and will discuss topics including interlinked logistics, developments in supply chains, digitalisation, decarbonisation, the energy transition, and workforce development.

Gov’t doesn’t want mega projects to “overheat” the economy, says FinMin

The local economy should be given time to catch up with the significant investments needed to implement gigaprojects, Finance Minister Mohamed Al Jadaan said at the Qatar Economic Forum yesterday, according to Bloomberg. The government should be cautious about “overheating” the economy, Al Jadaan said, using the same term as Economy and Planning Minister Faisal Alibrahim last month to provide assurances on the economy’s capacity to fund projects.

In his words: “If you don’t allow your economy to catch up with your projects, basically what will happen is you’ll import a lot more,” Al Jadaan said, warning that overheating the economy could lead inflation to accelerate and result in what he called “economic leakage,” suggesting that pushing ahead with the projects without the domestic capacity to support implementation would end up incurring higher costs. “So giving it more time is actually wise,” he said.

IN CONTEXT- Officials have lately hammered the idea of preventing the economy from overheating on the back of its economic diversification push. It coincides with reports of a slower buildout of Neom, which drove officials at the project to assure contractors and bankers that the buildout of the city was proceeding on schedule. Neom also recently came off the road in China with officials looking to rally interest from Hong Kong, Beijing, and Shanghai. It is looking to diversify its funding sources away from PIF, securing a fresh revolving credit facility worth SAR 10 bn from local banks and reportedly planning what could be its first-ever sukuk sale.

Al Jadaan first alluded to this view on allowing the economy to catch up with the government’s projects in December, when he hinted that the government could strategically slow down the execution of some of its economic transformation projects, meaning some could wrap past their initial 2030 deadlines. “Certain projects can be expanded for three years — so it’s 2033 — some will be expanded to 2035, some will be expanded even beyond that and some will be rationalized,” Al Jadaan said late last year.

SOUND SMART- Officials don’t want government borrowing to soak up liquidity the private sector needs to grow. Access to debt for both private companies and citizens is key to growth, Al Jadaan said, noting that the government has no interest in crowding out the private sector. Policymakers have also considered the delay in terms of how much international debt the Kingdom wants to take on, emphasizing the need to stay below a sustainable debt ceiling measured against both GDP and non-oil GDP, the minister added.

REMEMBER- The Kingdom reported its sixth consecutive quarter with a budget deficit, posting a deficit of SAR 12.4 bn in the first quarter of 2024 — four times higher than its shortfall in 1Q 2023. Officials had accepted that they may have to accept modest fiscal deficits as the price of pursuing growth.

A wave of optimism: Al Jadaan said he was positive on plans remaining on track despite higher spending to implement projects. “We are very conservative in our projections and therefore our plans on how the oil revenue will cover that expenditure,” he said.

UK seeks “stronger than ever” ties with Saudi at Great Futures conference

The business ties between Saudi and the UK were the big theme of the first day of the Saudi Great Futures investment conference, with several British officials saying that ties between Riyadh and London are “stronger than ever.”

REFRESHER- Execs from hundreds of British companies are in town as part of a delegation led by UK Deputy Prime Minister Oliver Dowden, to “connect with senior government and business decision-makers from Saudi Arabia’s ultra-ambitious giga-projects, and establish long-lasting relationships,” according to the summit’s webpage, in addition to mulling over “how to make Vision 2030 a reality,” the Prime Minister added. The two-day Saudi-UK investment conference — which is backed by our friends at HSBC— is set to wrap up today.

The UK wants to be a part of Vision 2030: “Our collaboration across the breadth of the relationship is remarkable. Britain doesn’t just endorse Saudi Arabia’s Vision 2030, we want to be a part of it," UK Deputy Prime Minister Oliver Dowden said. “We participate in leading the economic and social elements of our relations as a means of work, execution and transformation,” Dowden added. Check out his full remarks here.

A new, deeper friendship: “Over the next two days, we will hear from Saudi leaders and companies about how to make Vision 2030 a reality, and the tremendous opportunities it presents to all of us,” UK Prime Minister Rishi Sunak said during a virtual appearance. The push for closer cooperation comes as the UK looks to “[launch] the next phase of the deep and growing partnership” between the two countries, Sunak said.

With an ambitious goal for bilateral trade: The UK wants to see bilateral trade between London and Riyadh to hit GBP 30 bn by 2030, with bilateral trade “already growing quite rapidly,” Dowden told Arab News. Trade exchange between the two countries surpassed the GBP 17 bn mark in 2023, Sunak said.

Saudi wants to venture into trade across new industries as it diversifies its economy, including culture, sports, entertainment, and ins., Commerce Minister Majid Al Qasabi said during a panel with Dowden. Dowden said he sees technology and artificial intelligence a potential area of cooperation due to Saudi’s “huge expertise” in the industry.

INVESTMENT WATCH-

WATCH THIS SPACE- Al Qasabi and Dowden agreed to boost cooperation in conventional energy, renewable energy, petrochemicals, green hydrogen, carbon capture and storage and others.

PLUS- Investment in film, entertainment, and esports? UK Culture Minister Lucy Frazer is also in Riyadh. In a keynote yesterday, she talked up prospects for Saudi-UK cooperation in esports, film and television, the museum space, education, and training for the tourism industry, among other sectors. Read her full remarks here.

Saudi Arabia has invested USD 21 bn in the UK since 2017, according to a joint statement from the conference’s partnership board, led by Al Qasabi and Dowden. Some 52 British companies have opened regional offices in Riyadh, with the PIF and Neom opening offices in the UK.

The UK accounted for some 52% of investments made in Saudi during 1Q 2024, making it Riyadh’s second-largest investor, Investment Minister Khaled Al Falih said during the conference. Saudi is actively looking to unlock more capital from the UK, Al Falih said.

ALSO- UK-based sustainable chemicals player Johnson Mathey is setting up an office in Riyadh “very soon,” it said in a statement. “JM technologies will support KSA as it seeks to diversify its energy sources and reach its sustainability goals,” the company’s CEO for Catalyst Technologies Maurits van Tol said.

Fakeeh Group sets final IPO price at the top of the range

The IPO of private healthcare provider Fakeeh Care Group saw strong demand from institutional investors with a 119x oversubscription rate, according to a press release. The institutional portion of the offering drew orders worth a combined SAR 341 bn (USD 91 bn).

Share price set: The company set its final IPO price at the top of its initial price range at SAR 57.50 per share, which would give the family business a market cap of SAR 13.3 bn post-listing. The pricing means Fakeeh is set to raise SAR 2.9 bn from the offering.

What’s next? The two-day retail subscription period starts on Tuesday, 21 May. Final allocations are slated for Monday, 27 May, and refunds, if any, by Tuesday, 4 June.

Background: The group is taking a 21.5% stake to market through an offering of both new and existing shares. It plans to offer 30 mn new shares and 19.8 mn existing shares held by the Fakeeh family.

ADVISORS- Our friends at HSBC are acting as sole financial adviser. HSBC is joint bookrunner together with our friends at EFG Hermes as well as ANB Capital. Moelis is advising the selling shareholders, while AlRajhi Bank, Saudi National Bank, Arab National Bank, SAB, Alinma Bank and Bank Aljazira are serving as receiving banks.

Poultry industry majors sign SAR 4 bn in agreements at Middle East Poultry Expo

Local, regional, and international poultry players signed agreements worth a collective SAR 4 bn at the Middle East Poultry Expo, which kicked off yesterday, state news agency SPA reports. This is the “largest exhibition specialized in the poultry industry,” featuring some 207 exhibitors from 37 countries and over visitors from 54 countries, according to the expo’s page. The event wraps up today.

The market, by the numbers: Saudi is the Middle East and Africa’s top poultry producer and the third-largest consumer of poultry and meat products globally. The local industry hit a record high production level with 100 mn kilograms of poultry produced in February 2024.

Almarai had a busy day: Food and dairy giant Almarai inked several agreements at the event, including two with Swiss company Bühler to establish feed mills, one with Belgium’s Petersime to set up hatcheries, and another agreement with Germany’s Big Deutschmann to work together on supplying feed equipment to serve the sector.

Feed supply and hatcheries: Saudi Balady Poultry and Danish company Baader Food Processing agreed to set up a poultry processing plant with a maximum capacity of 25k chickens per hour. This is in addition to another agreement with China’s Famsun Group to establish a feed factory with a production capacity of 60 tons per hour. Assir Cooperative Poultry Processing Plant also signed an agreement with Canadian firm Jamesway for a 15k per hour poultry processing plant and local hatcheries.

ALSO-

Jeddah-based Radwa Chicken penned an installation agreement with Esco Construction ;
Homegrown Cavalo Contracting inked two broiler supply agreements with Al Naqaa and VDL Agrotech for projects in a combined 8 farms, 108 broiler barns;
Assir Cooperative signed three supply and installation agreements with Dutch companies Marel Food Technology and Van Aarsen Group ;
Riyadh-based Abdulmohsen Alsahli Holding, and Chinese company Shenzhen IMP agreed to locally set up a poultry lighting line and greenhouses;
Golden Chicken inked a poultry equipment supply agreement with US-based Chore-Time and one with Dutch company Mavitec to develop a solid-waste treatment plant.

Saudi airports’ passenger traffic grew 26% y-o-y to 112 mn passengers in 2023

Passenger traffic at the nation’s airports rose 26% y-o-y to 112 mn passengers in 2023, according to data released yesterday by government statistics agency Gastat (pdf). International passengers arriving at the Kingdom’s airports rose 46% y-o-y last year to 61 mn passengers, while domestic flight passengers domestic rose 9% y-o-y to 51 mn.

The number of international flights arriving at and departing from airports in the Kingdom grew 36% y-o-y to 394k last year, while the number of domestic flights inched up 2% y-o-y to 421k, according to the report. Local airports saw 62k private international flights and 14k domestic flights during the year.

Growing capacity to handle more: Total capacity across all of Saudi’s airports reached 116 mn passengers annually in 2023. Jeddah’s King Abdulaziz International Airport led the list with a capacity of 45 mn passengers annually, followed by Riyadh’s King Khalid International Airport (37 mn) and Dammam’s King Fahd International Airport (13 mn).

The gong for the largest number of global routes went to King Abdulaziz Airport, which had 365, up 20% y-o-y. Madinah’s Prince Mohammed bin Abdulaziz Airport came in second with 258, up 21% y-o-y, followed by King Khalid International Airport (176) and King Fahd International Airport (92).

REMEMBER- The government aims to open up its aviation sector to turn it into a USD 2 bn industry, and the country is extending air connectivity to a total of 250 countries by 2030. This also plays into the government’s tourism target, which was more than doubled aiming to lure 150 mn tourist trips by 2030, after hitting an earlier target of 100 mn last year ahead of plan.

Keep an eye out for a flurry of aviation news next week: Riyadh is hosting two major, overlapping aviation events: The Future Aviation Forum (FAF) — where investment projects worth USD 100 bn will be up for grabs — and the International Civil Aviation Organization’s (ICAO) Facilitation 2024 Global Summit. The FAF is set to run from Monday, 20 May, through to Wednesday, 22 May, while the two-day ICAO summit is scheduled for kickoff on Tuesday, 21 May.

Self-storage startup Wheekeep closes USD 8 mn series A round led by US-based Fintech Collective

Logistics and self-storage startup Wheekeep raised SAR 30 mn (USD 8 mn) in a series A round led by New York-based venture capital firm Fintech Collective, it said on X. Unnamed local and international investors also participated in the round.

Use of proceeds: The funding will finance the company’s short-term growth in the local market, especially in the Eastern and Western regions, Aleqtesadiah quotes unnamed company executives as saying. They also have plans for franchising and expansion into the GCC in the medium term, the sources added.

What we don’t know: There’s no publicly available information on the equity the investors received in return for their investment.

What’s Wheekeep? Founded in 2020, the storage solutions provider caters to individuals and businesses alike by delivering its mobile storage units to their customers’ doorstep to fill up, and then takes them back to their storage facilities. The startup also offers a space calculator to allow customers to gauge exactly how much space they need before delivery.

Fintech Collective’s portfolio in the region: The VC participated last year in a USD 25 mn funding round by fintech player Qlub which offers in-store payment solutions here, in the UAE, Turkey, Indian, Japan, Australia and Brazil. Fintech Collective also participated in a USD 12 mn seed round in 2022 for spend-management platform Pemo which is based out of the UAE but also has operations in the Kingdom, Egypt, Kuwait, Bahrain, Oman, and Pakistan. Also part of their portfolio is the UAE-based peer-to-peer payment app Ziina.

IN OTHER STARTUP NEWS-

500 Global is kicking off the final round of its latest batch of the Sanabil 500 MENA seed accelerator in partnership with PIF-owned Sanabil Investments, it said in a press release. The accelerator supports pre-seed and seed-stage startups that scale up through a 12-week mentorship program that focuses on “business strategy development, fundraising, and growth.” It also offers equity investment of more than USD 100k to selected startups.

The final stage will culminate in a demo day slated for Wednesday, 29 May, at the Four Seasons Hotel, Riyadh, and will feature seven finalists. Applications for the next batch are now open and will close on 6 August.

Meet the finalists: Saudi startups include Agile Loop, Doos, Fai, and Sweply. Meanwhile, hailing from UAE are Comfi, Metric, Octa, Poultry Sync, Reno, and Sav. MLNetworks is from Morocco and Desert Farms from the US.

Some 2.6 mn Saudi shoppers made at least one online purchase

Some 2.6 mn Saudi shoppers make online purchases at least once per day as the boom in the Kingdom’s e-commerce industry continues, according to Checkout.com’s State of Digital Commerce in MENA 2024 report (pdf). Saudi Arabia is seeing “staggering” growth in online shopping with the number of Saudi consumers shopping online daily growing 90% in the past four years, according to the report. This is 10 percentage points above the regional average, according to the report. The growth rate of Saudi shoppers online jumps to 180% when measured weekly.

The methodology: Global payment service provider Checkout.com and British market research firm YouGov collected and analyzed data on the region over the past four years. The report analyzes data from 19k consumers across Saudi, UAE, Kuwait, Qatar, Bahrain and Egypt. Surveys for the latest report were conducted in September 2023, covering the first half of 2023.

Spend, spend, spend: Online shoppers from the region expect even more online spending in the future with 54% of Saudi consumers anticipating an increase in their e-commerce engagement, followed closely by Kuwait at 53%. Some of that engagement will likely be directed abroad with 34% of Saudi shoppers citing cross-border transactions as a leading incentive for e-commerce shopping. Saudi leads the region in terms of cross-border transactions in absolute value, but comes fourth in terms of consumers percentage after Qatar, Kuwait and Bahrain.

Cashless is the way to go: Preference for cash on delivery has more than halved in the region from 41% in 2020 to 20%, the report showed. Only 10% of shoppers in Saudi, Kuwait, and UAE opt for cash when making online purchases, it said.

Cabinet gives the go-ahead for MoU with US Department of Justice

Cabinet mandated the Interior Ministry to discuss and sign a cooperation agreement with the US Department of Justice on exchanging criminal information, state news agency SPA reported yesterday. No further details were disclosed.

Ministers also approved an amendment restructuring the National Authority to Implement Conventions on the Prohibition of Chemical and Biological Weapons to be chaired by the Foreign Ministry. The authority’s board will include representatives of a number of entities, the Cabinet said, without providing further details.

AND- The government’s State Properties General Authority (SPGA) has gotten cabinet approval to allocate state property to the non-oil sector under rules approved by the authority’s board. No further details were provided. The SPGA was formed by the Cabinet in 2018 to help “optimize the use of state properties and transform the government's properties into developmental and economic opportunities.”

Also approved at yesterday’s Cabinet meeting:

Two separate agreements on mutual exemptions of visa requirements for holders of diplomatic, service and special passports with Costa Rica and Malta;
An agreement with Slovakia to avoid double taxation and prevent tax evasion;
Mandating the Industry and Mineral Resources Minister to discuss and sign a MoU with Vietnam on mineral resources.

L'azurde CEO resigns

The CEO of Tadawul-listed jewelry maker L’azurde, Sélim Chidiac (Linkedin), resigned due to “personal reasons,” L’azurde said in a disclosure to Tadawul yesterday. Chidiac will continue in his role for six months before ending his 14-year tenure at the company.

Drama ahead of Usyk-Fury boxing match makes the rounds

The long-anticipated Usyk-Fury boxing match is dominating coverage of Saudi in the foreign press this morning, but with Fury Senior grabbing the spotlight this time after he headbutted someone from the Usyk camp, leaving him with a bloody gash on his forehead. If there are no further delays, the heavyweight fight will happen at The Kingdom Arena in Riyadh this coming Saturday, 18 May. (The Sun | Dailymail | BBC Sport | Sky Sports)

AND- The Financial Times has joined the “Saudi is pacing out the gigaprojects” bandwagon. Bloomberg has been setting the tone for the rest of the global business press with its reports that officials at Neom may be scaling back their ambitions. Read: Saudi Arabia grapples with tough choices over cost of flagship projects, which was out just as Saudi Great Futures — the UK-Saudi business forum — got underway yesterday morning.

ALSO- Qiddiya Investment Company adding PIF-owned Saudi Entertainment Ventures (Seven) to its portfolio is getting ink from Reuters.

SVC invests in General Atlantic fund. Plus: Telecoms, financial services and earnings

INVESTMENT WATCH-

Saudi Venture Capital (SVC) has made a SAR 112.5 mn investment in a fund managed by US-based private equity giant General Atlantic, state news agency SPA reports. The fund will focus on high-growth firms operating in technology, life sciences, healthcare, financial services, and consumer products, which “aligns with [SVC’s] strategy to attract leading global fund managers to invest in Saudi companies and stimulate investment in later stages,” CEO Nabeel Koshak said. No further details were provided.

SPEAKING OF WHICH- General Atlantic plans to open offices in the Gulf as it looks to plant deeper roots in the Middle East, where it has been investing since 2015, Bloomberg reported, citing statements by General Atlantic’s Global Head of Capital Solutions Chris Kojima during the Qatar Economic Forum. “Certainly in Qatar, Saudi Arabia, and the United Arab Emirates we are seeing government policies incredibly supportive, political dynamics very stable and capital market formation encouraging,” Kojima said.

BACKGROUND- General Atlantic said earlier this year it was acquiring our friends at Actis, the emerging markets PE giant, with a view to creating a USD 96 bn asset manager. Actis will become General Atlantic’s sustainable infrastructure arm and will retain its name and ability to make its own decisions on where it deploys capital.

DEBT WATCH-

Zain KSA secured two financing facilities from Al Rajhi Bank, including a 10-year vendor financing facility worth up to SAR 1.13 bn for upgrading the company’s network infrastructure, according to a disclosure on Tadawul. The second loan is a one-year revolving receivables discounting facility worth up to SAR 500 mn, which will go towards boosting the telecom company’s working capital.

FINANCIAL SERVICES-

Asfa Ventures’ fintech arm Qsalary and Itqan Capital launched a SAR 300 mn investment fund aimed at providing innovative financial solutions to streamline salary payments and the management of administrative expenses associated with payroll processing for investors seeking growth, it said in a post on LinkedIn.

HEALTHCARE-

International Medical Supplies — a unit of Arabian International Healthcare Holding (Tibbiyah) — was awarded a SAR 87 mn contract from the National Guard Ministry to provide orthopedic and spine consumables, according to a filing to the exchange. The contract is yet to be signed.

MANUFACTURING-

Arabian Pipes will supply steel pipes to Aramco after signing a 10-month, SAR 107 mncontract, it said in a disclosure to Tadawul yesterday.

EARNINGS WATCH-

Petro Rabigh extended its net losses by 41.6% y-o-y to SAR 1.4 bn in 1Q 2024 on the back of lower sales volumes resulting from an unplanned shutdown of a number of its refinery conversion units, it said in a disclosure to Tadawul yesterday. Meanwhile, revenues fell 27.3% y-o-y over the same period to c. SAR 8 bn. Petro Rabigh is a joint venture between Aramco and Japan’s Sumitomo Chemical.

US quadruples tariffs on Chinese EVs to 100%

The US has gone on the offensive in the trade war with China, with the White House yesterday announcing a raft of tariff increases on USD 18 bn worth of Chinese imports that will each begin taking effect between 2024 and 2026.

Biden has his eyes set on green tech, deciding thattariffs on Chinese EVs will quadruple to 100%, those on lithium-ion EV batteries to more than triple to 25%, those on solar cells to double to 50%. And he hasn’t forgotten about semiconductors, as tariffs on chips from the world’s second biggest economy are set to double to 50%.

Biden’s tough talk seems to be directed to US voters as much as it does to China, warning the world’s factory yesterday that “when you make tactics like this, you’re not competing, it’s not competition, it’s cheating. And we’ve seen damage here in America” (watch, runtime: 22:30). The US is a minor market for Chinese EVs today.

YOU HAVE TO LOVE IT- Evli Emerging Frontier Fund has beaten 99% of its peers over the past five years. Its next big thing? small-cap stocks, this time in Turkey. An ambitious fund manager that’s building a story about a great segment of the economy in a country that has plenty of challenges — and tons of potential? What’s not to like? Bloomberg has more.

ALSO- BlackRock is making its presence felt in the crypto space after building up USD 16.7 bn in assets since the launch of its crypto exchange-traded fund (ETF) in January 2024. Despite initial reluctance to move into crypto — which CEO Larry Fink called “an index of money laundering” in 2017 — BlackRock is now the second-largest BTC fund after market leader Grayscale. The asset manager has also rolled out a crypto treasury fund that is already being used by hedge funds and money markets to source collateral for crypto trades.

MARKETS THIS MORNING-

It’s a mixed morning in Asia: The Shanghai Composite is down, the Nikkei is up, and markets in both Hong Kong and South Korea are closed in observance of Buddha’s birthday. Futures suggest European and US markets will open in the green later today as traders wait for a key US consumer price report later today.

TASI	12,120	-1.1% (YTD: +1.3%)
MSCI Tadawul 30	1,519	-1.1% (YTD: -2%)
NomuC	26,659	-0.8% (YTD: +8.7%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	6.5% repo	5.5% reverse repo
EGX30	25,339	-0.2% (YTD: +1.8%)
ADX	9,058	-0,4% (YTD: –5.4%)
DFM	4,136	-0.9% (YTD: +1.9%)
S&P 500	5,247	+0.5% (YTD: +10.0%)
FTSE 100	8,428	+0.2% (YTD: +9.0%)
Euro Stoxx 50	5,080	0.0% (YTD: +12.4%)
Brent crude	USD 82.38	-1.2%
Natural gas (Nymex)	USD 2.34	-0.2%
Gold	USD 2,363	+0.1%
BTC	USD 61,595	-2.1% (YTD: +45.9%)

THE CLOSING BELL: TADAWUL-

The TASI fell 1.1% yesterday on turnover of SAR 7.3 bn. The index is up 1.3% YTD.

In the green: Al Jouf (+7.6%), BCI (+7.4%) and Al Babtain (+3.9%).

In the red: Saptco (-9.9%), 2P (-9.9%) and Medgulf (-9.9%).

THE CLOSING BELL: NOMU-

The NomuC fell -0.8% yesterday on turnover of SAR 30.3 mn. The index is up 8.7% YTD.

In the green: Al Qemam (+4..7%), Mayar (+4.6%) and Nofoth (+4.5%).

In the red: Tam Development (-10%), AZM (-7.1%) and Rawasi (-6.9%)

CORPORATE ACTIONS-

The Capital Market Authority has cleared Saudi Ceramic to raise its capital by 25% toSAR 1 bn, it said in a statement yesterday. The capital increase will see the transfer of SAR 200 mn from the company’s retained earnings to the company’s capital. This will bring Saudi Ceramic’s total shares up to 100 mn.

The authority also gave Riyadh Steel the green light to increase its capital by 40% to SAR 70 mn, it said in a statement yesterday. The capital increase will be executed through the transfer of SAR 20 mn from the company’s retained earnings to its capital. This will bring the steel maker’s total shares up to 7 mn shares.

CALENDAR

MAY

13-15 May (Monday-Wednesday): Smart Future Expo, Riyadh.

13-15 May (Monday-Wednesday): Poultry Expo Riyadh.

14-15 May (Tuesday-Wednesday): Saudi Great Futures, Riyadh.

15-16 May (Wednesday-Thursday): Arab Forum of Anti-Corruption, Riyadh.

16-18 May (Thursday-Saturday): Red Sea Fashion Week, The St. Regis Red Sea Resort.

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

20-21 May (Monday-Tuesday): Future Projects Forum, Four Seasons Hotel, Riyadh.

20-22 May (Monday-Wednesday): Future Aviation Forum, Riyadh.

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

21-23 May (Tuesday-Thursday): WAGA 2024, Riyadh.

25 May (Saturday): Bidding deadline for Duba’s seawater reverse osmosis desalination plant in Tabuk.

27-28 May (Monday-Tuesday): Smart Data & AI Summit Saudi, JW Marriott Hotel, Riyadh.

29 May (Wednesday): Sanabil 500 MENA seed accelerator demo day, Four Seasons Hotel, Riyadh.

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

1 June (Saturday): OPEC+ meeting.

2-3 June (Sunday-Monday): Global Project Management Forum, Riyadh.

4-7 June (Tuesday-Friday): Saudi Sports Show, Riyadh.

4-7 June (Tuesday-Friday): Aqarat Expo, Riyadh.

5 June (Wednesday): World Environment Day.

5 June (Wednesday): The Optimism Forum, Cairo, Egypt.

5 June (Wednesday): Digital Transformation Summit, Riyadh.

14-22 June (Friday-Saturday): Banks and capital markets closed for Eid Al Adha holiday.

AUGUST

12-15 August (Monday-Thursday): The Saudi Food Expo, Riyadh

SEPTEMBER

10-12 September (Tuesday-Thursday): Global AI Summit, Riyadh.

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

17-19 September (Tuesday-Thursday): EV Auto Show, Riyadh.

18-19 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam.

24-26 September (Tuesday-Thursday) Saudi Infrastructure Expo, Riyadh International Convention and Exhibition Center, Riyadh.

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

OCTOBER

21-22 October (Monday-Tuesday): Smart Ports & Logistics Transformation Summit, Riyadh.

NOVEMBER

2-9 November (Saturday- Saturday): WTA Finals, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

11-14 November (Monday-Thursday): Cityscape Global, Riyadh.

18-20 November (Monday-Wednesday): The Heavy Equipment and Truck Show, Dammam.

25-27 November (Monday-Wednesday): World Investment Conference, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

DECEMBER

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

Signposted to happen sometime in 2024:

The AFC Champions League Elite

2025

FEBRUARY 2024

10-13 February (Monday-Thursday): Leap 2025, the Kingdom’s premier tech investment conference.

Sections

About

Privacy & Support

Get EnterpriseAM daily