Good morning, wonderful people. We feel a busy news day coming up, so we’re going to jump straight into this morning’s report:

HAPPENING TODAY-

#1- Bankers are due to price MBC’s initial public offering on the Tadawul later today. Look for it to be priced at the top of the SAR 23-25 range on which they guided (pdf). The sale was fully covered in the first hour of the bookbuilding period. Some 90% of the offering is earmarked for institutions, with individual investors set to place bids after the offering is priced today.

#2- OPEC’s top Arab energy ministers are in Doha for day two of the Arab EnergyConference. Energy Minister Prince Abdulaziz bin Salman flew into Doha from Dubai, where he was attending COP28. Also joining are ministers from Iraq, Kuwait, Algeria, Libya as well as Oman, which is not an OPEC member. UAE Energy Minister Suhail Mohamed Al Mazrouei is not expected to attend. The conference is organized by the Organization of Arab Petroleum Exporting Countries.

#3- Nato Secretary General Jens Stoltenberg will arrive in town for a two-day visit. On the agenda: meetings with Defense Minister Prince Khalid bin Salman and other high-level officials, Nato said in a statement. He’ll appear tomorrow at a discussion at Saudi Arabia National Defense University.

#4- It’s crunch time on the final day of COP28 in Dubai,where fierce divisions over a draft agreement could still see the conference going into overtime.

The sticking point: It’s all about oil and gas, as we’ve been reporting since last week. Tensenegotiations have resulted in a draft agreement that would commit countries to “reducing” the consumption and production of fossil fuel use in a “just, orderly and equitable manner” to achieve net zero “by, before, or around” 2050.

There won’t be a blanket call to triple renewable energy production, instead presenting it as an “option” and not a “prescribed step,” alongside doubling energy efficiency.

It would be the first time a COP agreement calls for a reduction in the use of oil and gas, but falls far short of the “phase out” language sought by European negotiators and a group of small island nations.

On one side: Saudi Arabia and most other Arab oil producers, who are flatly opposed to calls to phase out hydrocarbons.

On the other: The draft agreement is “unacceptable … We will not go silently to our watery graves.” –John Silk, minister of natural resources and commerce, Marshall Islands.

What happens now: Delegates from each participating country are lobbying and being lobbied on the final language, with the EU, small nations, and the United States firmly in one camp, and Saudi and producing countries in the other. If there’s no agreement today, talks go into overtime. Under UN rules, any single country can block the adoption of the agreement.

Need to go deeper?Enterprise Climate has the lowdown, calling the draft agreement a “mixed bag of compromises.”

#5- The US Federal Reserve begins its two-day policy meeting today where for the first time in almost two years the key question is not when the central bank will raise interest rates, but when it will cut them. Don’t expect any firm indicators about when this might happen, though: the key task for Fed officials is to temper the recent overexcitement in the financial markets, which are pricing in rate cuts earlier in 2024, according to the Financial Times.

The Fed will make its rate announcement tomorrow evening (KSA time), and you can expect SAMA will follow suit before long. The central bank has yet to announce when it will next meet to consider rates.

Sound smart: With the SAR pegged to the USD, we typically import US interest rate policy. That doesn’t mean SAMA always follows the Fed’s lead: SAMA raised rates twice in 2018 — even though the Fed left rates on hold — in a bid to tamp down inflation.

PSA- Tenants in the Kingdom need to pay rent through the government’s Ejar platform starting in January, Real Estate General Authority (REGA) Tayseer Al Mufarrej told Rotana Khalejia (watch, runtime: 0:33). The move aims to limit the involvement of brokers and ensure the soundness of financial transactions within the real estate property market, Al Mufarrej said in separate statements picked up by Argaam.

Fast fact: Some 6.6 mn residential contracts and 1.3 mn rental agreements for commercial properties have been registered on the system since it launched in February 2018.

WEATHER- Riyadh and Dammam are set to enjoy a daytime high of just 25°C, according to our favorite weather app, but expect some low-lying fog in Dammam early in the morning. Jeddah will see a high of 31°C with extreme humidity and the possibility of drizzle in the afternoon.

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DATA POINTS-

#1- The Industrial Production Index (IPI) dropped 12.3% y-o-y in October, continuing its downward trend for the sixth consecutive month, data (pdf) issued by the General Authority for Statistics (Gastat) showed yesterday. The decline in the indicator, which reflects the relative changes of the volume of industrial output, came on the back of a fall in mining and quarrying activity — which account for 74.5% of the index’s weight.

The upside: Manufacturing as well as activity in electricity and natural gas supply both rose, the figures show.

ON A RELATED NOTE- The number of industrial licenses issued by the Investment Ministry almost doubled on an annual basis to 412 in 3Q 2023, according to the latest ministry figures (pdf). Capital allocation for newly licensed factories was basically flat at SAR 8.1 bn.

#2- Foreign reserve assets rose 3% m-o-m in November, despite declining on an annual basis, closing the month at SAR 1.6 tn, according to the latest figures. On an annual basis, foreign reserve assets fell 7% y-o-y in November. Foreign currency reserves constitute 94% of the Kingdom’s foreign reserve assets.

#3- Saudi Arabia ranked first among G20 countries and second globally in the growth rate of international tourist arrivals, according to a report by Al Eqtisadiah that picked up figures from the the World Tourism Barometer released by the United Nations World Tourism Organization (UNWTO). International tourist arrivals grew 50% in 9M 2023 compared to same period in 2019.

Sound smart: Tourism revenues more than tripled in the first quarter of 2023 to SAR 37 bn. The Tourism Ministry recently updated its target for total annual tourist trips to 150 mn by 2030, with an equal split between domestic and international travelers. The ministry wants to see the industry account for 10% of GDP by 2030.

THE BIG STORY ABROAD-

The two big stories this morning vying for your attention aren’t business-related.

#1- Arab world steps up diplomatic pressure for Gaza ceasefire: The UN General Assembly will convene today to vote on a non-binding resolution demanding an immediate ceasefire in Gaza as the humanitarian crisis on the ground reaches catastrophic levels. The emergency meeting was called by Egypt and Mauritania after the US blocked another resolution at the Security Council last week despite the UN and aid agencies warning of starvation conditions and the imminent collapse of public order.

The UAE flew a dozen envoys of UN Security Council members into Rafah, on Egypt’s border with Gaza. Several reiterated calls for an immediate ceasefire after the visit. China, Russia, and the UK were among the P5 members to attend. The US and France gave the visit a pass.

WAIT — we’re going to … what? Israeli Prime Minister Benjamin Netanyahu has apparently told a powerful group of legislators that Saudi Arabia (along with the UAE) will be stepping in to pay for the reconstruction of Gaza, the Times of Israel reports.

#2- It’s the third and final day of voting in Egypt’s presidential race, where incumbent President Abdel Fattah El Sisi is expected to cruise to victory. Officials are reporting high voter turnout.

Why this matters: There’s broad consensus that Egypt needs not to devalue its currency, but to fully float it — probably accompanied by a jumbo-sized rate hike.

When it could happen: Election results are due on Monday, 18 December — and the Central Bank of Egypt’s monetary policy committee has a regularly scheduled interest rate meeting on the calendar for Thursday, 21 December.

IN BUSINESS news:

• Google has lost a big antitrust suit after a jury in California found the tech giant used its Play Story to unfairly profit at the expense of game maker Epic. (The Verge)
• Competition watchdogs in the US and UK are looking at OpenAI and Microsoft, precursors to potential antitrust probes. (Financial Times)
• India has overtaken Hong Kong to become the world’s seventh-largest stock market by market capitalization as “optimism grows” about the country’s economy. (CNBC)

MARKET WATCH-

PETCHEM WATCH- Local chemical manufacturers are in for a bumpy ride next year. The sluggish recovery in global demand for chemicals used in industries including plastics, cars, mobile phones has drawn a bleak picture for local chemical manufacturers including Aramco subsidiary Saudi Basic Industries (Sabic), Bloomberg, reports quoting Sabic CEO Abdulrahman Al Fageeh.This “was a bad year for the chemical industry,” Al Fageeh said last week. “I’m not sure whether 2024 is going to have any pickup. It does not seem to be.”

OIL WATCH- Chinese demand for Aramco crude oil hit a five-month low on the back of higher than forecast prices, Reuters reported yesterday, citing people in the know.

FOOTBALL-

National team to play three friendlies ahead of Asian Cup: The Green Falcons will play friendlies three friendlies before the Asian Cup kicks off in Qatar next month, the national team announced on X, including:

• Lebanon — 4 January
• Palestine — 9 January
• Hong Kong — 10 January

The Asian cup runs 12 January through 10 February. Saudi has won the cup three times.

SIGN OF THE TIMES-

Abu Dhabi just licensed the Mideast’s first brewery outside of Egypt. The restaurant Craft by Side Hustle is set to produce up to 25k pints of beer a month from its site on Abu Dhabi’s Al Maryah Island site, Bloomberg reports. Abu Dhabi’s Department of Culture and Tourism issued a rule change in 2021 that allowed license holders to ferment alcoholic drinks on-site.

CIRCLE YOUR CALENDAR-

The FIFA Club World Cupwill kick off for the first time in the kingdom today, running through Friday, 22 December in Jeddah. You can buy tickets here.

The Fintech Tour wraps up tomorrow. The fintech-focused gathering includes more than 15 events, presentations, and meetups involving key local and international speakers in eight cities across the country.

The International Arabian Horse Show kicks off tomorrow and continues through Saturday, 16 December at the King Abdulaziz Center for Purebred Arabian Horses’ headquarters in Riyadh.

Metallica is coming to Riyadh on Thursday as part of the eclectic musicfestival Soundstorm. Soundstorm runs 14-16 December with a lineup that also includes Pharrell Williams, Chris Brown and Her, DJs Tiesto and David Guetta, Black Eyed Peas, and others.

The Jeddah Book Fair will run until Saturday, with over 1k publishing houses set to attend.

Cycling fans have just three days left until the Arab Road Cycling Championship comes to Riyadh, with the event running 15-23 December.

Riyadh will host theTurkish Super Cup finalbetween Galatasaray and Fenerbahçe on Friday, 29 December at Alawwal Park Stadium as part of the Riyadh Season.

Tickets are on sale for the 2024 Saudi Arabian Grand Prix with less than 100 days to go until the racetrack roars to life in Jeddah from 7-9 March. Grandstand, premium hospitality, and general admission tickets are now available.

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