LuLu Group eyes Tadawul, ADX dual listing

1

WHAT WE’RE TRACKING TODAY

THIS MORNING: Saudi’s first Hong Kong-focused ETFs to debut on Tadawul by year-end

Good morning, ladies and gentlemen. This hump day is proving to be somewhat of a news dump day, bringing us a healthy mix of IPO news, big investment plans, some M&A, and startup funding to round things out.

But before we get started: We’re exactly a week away from this year’s EnterpriseAM Finance Forum in Cairo, taking place on Tuesday, 24 September. We’ll be joined for the first time on stage by a senior government official, who’s joining us to outline a vision for where we’re going as a community and as an economy. The keynote interview will get underway at 9am sharp, and you won’t want to miss our exclusive networking breakfast from 8am.

Among the topics on the agenda, which you can view here:

Welcome to the hot seat — top industry CEOs set the tone by addressing the biggest (and toughest) questions of the day.
Looking from the outside in — what foreign investors and strategics think about Egypt right now.
The only asset class in town — It’s real estate or nothing. We’ll get into the ins and outs of the industry, how it’s financing itself, which areas (and price points) are next, and more.
Gazing into that crystal ball — The outlook for dealflow in 2025, from M&A and IPOs to securitization, FX and more.
A once in a generation opportunity? — A deep dive into the promise and pitfalls of the emerging energy economy.
Do we really love banking SMEs? — With NBFIs and fintech players staking their claims, banks are starting to take the SME market seriously.
The NBFI panel — The resilience of the Egyptian consumer is the business story of the decade. How are banks and NBFS players building sustainable businesses? What are the opportunities — and credit worries — in the B2B space?

Haven’t requested an invitation yet? Do it today — space is limited. Tap or click hereto let us know you’re interested.

** IMPORTANT NOTE — If you’ve already received your invitation on email, you *must* click through to confirm you’re attending.

HAPPENING THIS WEEK-

Shares in homegrown glass maker Arabian United Float Glass (UFG) will begin trading on Tadawul’s parallel market Nomu tomorrow, according to a Tadawul statement. UFG’s shares will be allowed to trade within a ±30% range for the first three days before being capped at no more than 10% up or down when circuit breakers kick in. All shares on Tadawul are subject to the 10% up-or-down rule.

REFRESHER- The company is floating a 7% stake at SAR 54 per share, aiming to raise some SAR 64.3 mn.

WEATHER- Riyadh’s mercury will peak at 41°C, before dropping to a low of 28°C. Meanwhile, Jeddah will continue to see some rainfall, with a high of 37°C, and a low of 32°C.

PSAs-

#1- Jaheziya 2024 results are out: The Education and Training Evaluation Commission released the 2024 results of its Jaheziya program, which is designed to improve higher education graduates’ readiness for the job market, the commission said in a post on X. The average scores for students in specialized fields were the highest in Strategic Management, Integrated Marketing Communication, and Principles of Marketing, while students scored the lowest in the MIS Foundation and Technology, Business Finance, and Economic Foundation.

About Jaheziya: The program is in collaboration with the Council of Universities’ Affairs, and aims to evaluate academic programs in the Kingdom, across 50 universities and colleges and more than 450 programs.

#2- Arabic-speaking writers will have until the end of this month to submit their literary works for the Golden Pen Award, according to Asharq Al Awsat. The awards are grouped into six categories, with a total award pool of USD 740k. A preliminary shortlist of finalists will be out on 30 November, followed by a final list on 30 December. The awardwinners will be announced next February.

#3- You no longer need a visa to travel to Pakistan: Under Pakistan's newly amended visa policy, citizens of GCC countries (Saudi Arabia, Kuwait, UAE, Oman, Qatar, and Bahrain) are now eligible for a visa-on-arrival in Pakistan, valid for 90 days with possibility for renewal, according to Pakistan’s Interior Ministry.

WATCH THIS SPACE-

#1- Saudi’s first ETFs investing in the Hong Kong equities market are set to debut on Tadawul by year-end, the FT reports. This follows last year’s listing of the first Saudi-focused ETF on the Hong Kong exchange, with the CSOP Saudi Arabia ETF seeing its assets boosted to some USD 1.3 bn since listing on the back of strong interest from institutional investors. The fund’s manager CSOP was mulling a cross-listing on the Chinese mainland at the time of launch. Hong Kong is eyeing “some reciprocal moves” from Saudi’s capital markets including the listing of a pair of Hong Kong-focused ETFs on Tadawul in response, Hong Kong’s Financial Secretary Paul Chan said, according to the salmon-colored paper.

#2- The Kingdom plans to step up its nuclear oversight and has submitted a request to the International Atomic Energy Agency (IAEA) to implement the Comprehensive Safeguards Agreement (CSA), and withdraw from the less-strict Small Quantities Protocol (SQP), Reuters quotes Saudi Energy Minister Prince Abdulaziz bin Salman as saying during the IAEA annual General Conference. The new agreement is scheduled to be in place by the end of the year, the minister said.

What this means: Implementing the CSA would allow for more thorough inspections into the Kingdom’s nuclear facilities to ensure they are used only for peaceful purposes. The move, which follows a formal request made by Riyadh in July, plays into the government’s long-term nuclear ambitions, which include sensitive uranium enrichment. Saudi qualified for the SQP — which exempts states with less nuclear advanced technology from certain obligations and inspections — because it has not yet launched its first nuclear reactor.

REMEMBER- Cooperation with the US is also on the cards: Members of the US Congress were briefed on a proposed Saudi-US nuclear agreement back in June as part of what officials hope will be a landmark series of agreements between Riyadh and Washington. Energy Minister Prince Abdulaziz bin Salman also signed an energy cooperation roadmap earlier in May with US Energy Secretary Jennifer Granholm including a nuclear energy pact.

#3- Saudi real estate financing firm Areeb Capital purchased a 32 mn sqm plot in Dammam for SAR 12 bn to develop a multi-use project, according to Asharq Business. The purchase was made through one of Areeb Capital’s investment funds and is one of the Eastern Province’s largest real estate acquisitions to date. The land plot is located in the Al Naseem district on King Faisal Road, the land will be developed into a multi-use project. The agreement was financed by major investors and Shariah-compliant facilities from a group of local banks.

#4- The Commerce Ministry cracked down on 44 businesses for running promotional events and offering price cuts without proper licensing, it said in a news release. The cases, referred to the Public Prosecution for further action, could face up to three years in prison, fines as high as SAR 1 mn, or both for violating the Anti-Commercial Fraud Law.

#5- Architects have until Monday, 30 September to register in Roshn’s Sedra Pedestrian Spine competition to redesign key community spaces. The designs should include key spaces like mosques, convenience centers, and parks, emphasizing local materials and cultural elements. Participants will submit their designs between 15 October and 20 January, 2025, with the top redesign plan set to be announced in February. Registration is open until the end of the month here.

DATA POINTS-

#1- Saudi crude production fell 12.9% y-o-y to 61.7 mn barrels per day (bbl / d) in 1H 2024, according to the latest data from the Joint Organizations Data Initiative. Demand for Saudi oil products inched down 0.6% over the same period to 13.9 mn bbl /d of observed gross inland deliveries.

#2- Some 90% of industrial and mining companies in Saudi are SMEs, Mubasher quotes Industry and Mineral Resources Minister Bandar Al Khorayef as saying. “The industry is no longer limited to big players, and there is great integration in the system through the services provided, from licensing to financing,” Al Khorayef said.

#3- Islamic banking has an 85% market penetration rate in Saudi Arabia, with strong growth potential in the UAE, Oman, Kuwait, and Qatar, according to a Moody’s report. Moody’s also forecasts that the profitability of Islamic banks across the GCC will remain robust over the next 12-18 months.

***You’re reading EnterpriseAM Saudi, your essential daily roundup of business, economics, and must-read news about Saudi, delivered straight to your inbox. We’re out Sunday through Thursday by 7am Riyadh time.

EnterpriseAM Saudi is available without charge thanks to the generous support of our friends at Cenomi.

Want to send us a story idea, request coverage, ask for a correction, or otherwise get in touch? Reach out to us on saudi@enterpriseAM.com.

DID YOU KNOW that we also cover Egypt, the UAE, the MENA logistics and climate industries?

Were you forwarded this email? Tap or click here to get your own copy of EnterpriseAM Saudi delivered every weekday.
***

THE BIG STORY ABROAD-

Away from the wall-to-wall coverage trying to figure out who the man accused of trying to assassinate Trump is and what drove him, the business papers and corners of the international press are gearing up for the US Federal Reserve’s two-day policy meeting, set to begin today.

Naturally, all eyes are on Wall Street in the run-up to the Fed’s decision, with the S&P 500 closing essentially flat yesterday while the Nasdaq fell slightly. The S&P’s tech index saw the steepest declines among the S&P’s 11 major sectors yesterday, with some commentators chalking up the drop to investors’ desire to generate quick returns selling high-value tech stocks ahead of the Fed’s rate-cut decision.

Analysts remain torn between the arguments for a 25 bps cut and a more aggressive 50 bps cut amid persistent inflation and a cooling job market. Market expectations tilted toward a larger cut over the weekend, buoyed by signals from former Fed officials — meaning the central bank has the chance to take bold action without spooking investors.

WHILE IN BIG ENERGY NEWS- BP is now taking offers for its USD 2 bn bp Wind Energy, its onshore wind business in the US, as the energy giant seeks to offload underperforming assets and focus on its upcoming solar project Lightsource bp.

AND OVER IN AVIATION NEWS- Over 30k Boeing workers are on strike for the first time since 2008 after rejecting the terms of the company’s proposed contract, in a move that could cost the company over USD 100 mn in daily revenue, Reuters reports. A prolonged strike may also mean a credit rating downgrade, the “big three” credit ratings agencies have warned, making accessing financing even more expensive for the already indebted airplane manufacturer.

PLUS- Amazon has informed its staff that all employees will be expected to work from the office five days a week beginning next year — one of the starkest reversals of pandemic-era remote work policies seen in the corporate world thus far. In an internal memo, CEO Andy Jassy justified the move by saying that “We’ve observed that it’s easier for our teammates to learn, model, practice, and strengthen our culture” in a work environment more similar to the one that existed pre-Covid.

CIRCLE YOUR CALENDAR-

The Saudi Women’s Premier League kicks off on Friday, 27 September with the return of Al Nassr, Al Ahli, Al Shabab, Al Qadisiyah, Al Hilal, Al Ittihad and Eastern Flames. New to the League are AlUla, Al Taraji, and Al Amal.

LuLu Group reportedly planning dual listing on ADX + Tadawul in November

Lulu Group reportedly gears up for Tadawul + ADX dual listing: Supermarket chain LuLu Group is planning to list its shares on the Tadawul and ADX by the last week of October or early November, Zawya reports, citing people familiar with the matter. The IPO is expected to raise between USD 1.5-1.85 bn, the sources said.

We knew this was coming: Earlier in March, LuLu Group reportedly tapped advisors to work on its planned initial public offering on the ADX this year. The offering was said to potentially raise as much as USD 2 bn. Bloomberg reported in February that the IPO was expected to happen in 2H 2024, with the company considering a potential dual listing on the ADX and Tadawul.

ADVISORS- Emirates NBD Capital, HSBC Holdings, Abu Dhabi Commercial Bank, and Citigroup are acting as joint bookrunners for LuLu’s IPO. Moelis & Company is an independent financial advisor for the IPO.

IN OTHER IPO NEWS-

Homegrown marketing company Amaz plans to go public on the Saudi exchange, it said in a post on X. No further details were provided on the size and value of the IPO, or if it will be on Tadawul or Nomu. Amaz is a subsidiary of Ahmed Al Muhaysini Holding Co.

Crown Prince directs PIF to invest USD 5 bn in Egypt

Crown Prince Mohammed bin Salman directed the Public Investment Fund (PIF) to facilitate USD 5 bn in investments into Egypt as part of the “first phase” of a larger program of investment, the Crown Prince told Egyptian Prime Minister Moustafa Madbouly, according to an Egyptian cabinet statement. No details were disclosed on the timeline of the investments or their targeted areas. The story got ink from the National, Reuters, and Bloomberg, among others.

This has been in the works: Saudi Arabia is looking to turn its deposits with the Central Bank of Egypt into investments, Investment Minister Khalid Al Falih first told the Egyptian prime minister in August. Saudi is the second-largest contributing country to Egypt’s long-term deposits, making up USD 5.3 bn of the USD 14.9 bn long-term deposits currently sitting at the Central Bank of Egypt at the end of 2023. Yesterday’s statement did not confirm whether this is how the USD 5 bn from the PIF will be funded.

Remember: Madbouly touched down in Riyadh yesterday alongside Egypt’s Finance Minister Ahmed Kouchouk and Investment Minister Hassan El Khatib for talks with their Saudi counterparts aimed at strengthening trade and investment between the two countries.

The PIF is no stranger to Egypt: The sovereign fund’s most recent moves in the country saw it join up with CIRA Education’s majority shareholder in May to acquire up to 100% of the company. A little later on in the month, the fund — which ranked as the world’s highest-spending sovereign wealth fund in 2023 — began negotiations to acquire a minority stake in local agriculture firm Daltex. In 2022 alone, the PIF through its Saudi Egyptian Investment Company invested over USD 1.3 bn via SEIC to acquire stakes in state-held EGX-listed companies. Its holdings in Egypt include a 25% stake in Mopco, a 19.82% stake in Abu Qir Fertilizers, a 27% stake in E-finance, and a 20% stake in Alexandria Container and Cargo Handling.

Egypt is keen to signal it’s ready for business: In his meeting with the Crown Prince, and in an earlier speech to private sector players, the Egyptian prime minister noted that the majority of the approximately 90 problems identified by Saudi investors have already been sorted out. The 14 remaining issues will be solved by the end of the year, Madbouly added.

A bilateral investment agreement to push everything along will also soon be in place: The Agreement on Promotion and Mutual Protection of Investments between the two countries, which aims to help protect Saudi investors as Egypt looks to double their investments in the country, will be put into effect in two months or less after both sides sort out the necessary legislative and regulatory issues.

As will a coordination council currently in the works: The crown prince said he wants to hold the first meeting of a coordination council between the two sides in October.

Circle K Alsulaiman acquires major stake in Mazaya Fuel

Circle K Alsulaiman has acquired a majority stake in fuel services company Mazaya Fuel, which has upwards of 130 fuel stations across the Kingdom, Alsulaiman Group said in a statement. The move comes as part of Circle K Alsulaiman’s plan to establish more than 500 Circle K fuel stations across Saudi by 2030, with targeted investments of SAR 700 mn in the fuel sector.

What we don’t know: No information was disclosed on the size or value of the transaction.

The rationale: Alsulaiman Group will rebrand Mazaya Fuel stations under the Circle K name, as part of an Energy Ministry-backed agreement signed in June “to establish a network of Circle K-branded fuel stations,” the statement says. Circle K — founded in Texas in 1951 — operates over 13k stations across 31 countries. Alsulaiman Group is a key player in Saudi’s retail, logistics, and real estate sectors.

IN OTHER M&A NEWS-

Ma’aden eyes stake in Aluminum Bahrain via share swap: Saudi Arabian Mining (Ma’aden) has inked non-binding terms to acquire a 51% stake in Bahrain Bourse-listed Aluminum Bahrain (Alba), it said in a filing to Tadawul. The transaction — which is pending regulatory approval, due diligence and cross-listing Alba’s shares on Tadawul — would involve Ma’aden swapping its full share capital of subsidiaries Ma’aden Aluminum, Ma’aden Bauxite and Alumina, for new shares in Alba.

ADVISORS- Ma’aden tapped Merrill Lynch as its financial advisor, with AS&H Clifford Chance serving as its legal advisor, while Moelis & Company UK is advising Alba on the transaction.

Warehousing space rents rise as industrial growth spurs demand

Rents for warehousing facilities in Saudi Arabia continued to rise in 1H 2024 on the back of rising demand, according to a report (pdf) from London-based real estate consultant Knight Frank. Investments have been plugged into expanding warehousing facilities in KSA in a bid to leverage higher demand and surging rents, with capacity boosted in Riyadh and Jeddah.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

The lay of the (rented) land: There was a 10.4% increase in average lease rates for light industrial units and grade B facilities over the past 12 months in Riyadh, settling at SAR 210 per sqm. Average lease rates in Jeddah reached SAR 208 per sqm — a 1.5% y-o-y increase in 1H of this year — with a 97% occupancy rate. Meanwhile, average rents in the Eastern Province were higher at SAR 228 per sqm, while lease rates in the Dammam Industrial and Al Taawun districts range between SAR 280 per sqm and SAR 300 per sqm.

Driving the growth in demand: Investments in Saudi’s industrial sector hit SAR 7 bn in 1Q 2024, after growing 63% in 2023 to SAR 15 bn, Knight Frank notes. Manufacturing activity in the Kingdom has been growing for most of the year, according to the local industrial production index, which saw the sub-index for manufacturing rise for six consecutive months. The Kingdom’s growing e-commerce industry — spurred by covid-era boom — drove demand for “modern warehousing and logistics solutions,” the report says. E-commerce is currently Saudi’s second-highest VC funded sector in the Kingdom.

Supply hasn’t been keeping pace with demand growth, creating a shortage of warehousing space across the Kingdom. The shortage is “exacerbated by the cautious behavior of landowners … [who] are hesitant to develop speculatively due to their lack of experience in creating a real estate that meets international standards,” said Mikhail Vereshchagin, associate partner at Knight Frank.

REMEMBER- These dynamics aren’t unique to warehousing: Office spaces in Saudi are also undergoing similar growing pains, with rental prices climbing 10.5% y-o-y in May with increasing demand for office space amid Saudi’s regional headquarters program driving up prices amid supply coming up short. Real estate rents are consistently a major driver for inflation in Saudi.

CAPACITY BREAKDOWN BY GEOGRAPHY-

Riyadh’s warehouse and logistics capacity has grown to 28 mn sqm over the past 12 months, with most of the new facilities located in the Industrial Gate City (IGC). There’s another 820k sqm of industrial and logistics space under construction in Riyadh, with the majority again in IGC, followed by Jabal Ali. Meanwhile, ASMO — a supply chain JV between Aramco and DHL Supply Chain — marks some of the efforts to meet the rising demand in the energy, chemical, and industrial sectors. However, much of the supply currently under construction is meant for light industrial use, Knight Frank notes.

Over in Jeddah: Capacity at the Red Sea city has grown to 19.6 mn sqm, driven by key projects including Maersk’s logistics park, and Aramex’s warehouse at Jeddah Islamic Port. Projects in the port city’s pipeline include joint venture Jeddah Logistics Park by Mawani and DP World. The project — slated for completion in 2Q 2025 — will add 185k sqm of warehousing space to the city’s capacity, and stands to become DP World’s largest warehousing space in the region. German shipping giant Maersk and the Saudi Ports Authority (Mawani) also jointly inaugurated a SAR 1.3 bn logistics zone at Jeddah Islamic Port last month, spanning a 225k sqm area.

And in Dammam: The Dammam Metropolitan Area’s industrial and logistics infrastructure supply remain “relatively unchanged due to a lack of major completions” over the past year, Knight Frank says. Stock in the area remains at 7.96 mn sqm, with occupancy rates standing at 96%. High-quality warehouse facilities were in greater demand on the back of new industrial cities being set up, including King Salman Energy Park and the Industrial Valley. “These industrial zones house numerous manufacturing and petrochemical companies that require extensive storage and logistics support,” according to the report.

The upshot: With key areas like Riyadh currently “starved of supply” of warehouse space and logistics solutions, international developers now have an appealing window to enter the market through partnerships with local players. However, Knight Frank expects the supply crunch to persist for some time, as “the construction and availability of new warehouse spaces would likely take around two years from the time the partnership is established.”

Pilgrim financing fintech UmrahCash lands USD 500k boost

Fintech startup UmrahCash secured a USD 500k investment from Singapore-based VC and accelerator Adaverse, according to a press release.

Where the money is going: The homegrown currency-exchange app (Google Play) will use the proceeds to expand its operations and boost its offerings at key pilgrimage sites Mecca, Medina, and Jeddah.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

About UmrahCash: Established in 2024 by William Phelps (LinkedIn), UmrahCash gives pilgrims an online prepay option to put down money in their local currency and seamlessly collect SAR upon arriving in Saudi to streamline currency exchange for religious tourism. UmraCash links liquidity providers, agents, and pilgrims providing thorough FX solutions to pilgrims. The app is geared primarily towards visitors from emerging countries such as Pakistan and Nigeria, which must first convert their national currencies to USD before exchanging for SAR when they arrive at the Kingdom.

More on the world’s largest inferencing data center by Aramco and Groq

Pitching Aramco Digital + Groq’s inference data center partnership: California-based chip and AI player Groq is looking to “partner with Aramco Digital for quite a bit of our deployment in this region and anywhere we can,” Groq CEO Jonathan Ross tells Bloomberg. Groq and Aramco Digital — Aramco’s tech arm — signed an agreement last week to build the world’s largest inference data center in the world. The data center is expected to cost “in the order of nine figures,” Ross says, with plans for the center to be up and running before the close of the year.

Part of Saudi’s diversification plans: The state-owned oil giant is “planning to do massive capital deployments for this, and it is a way to help diversify the economy away from oil,” Ross added. Meanwhile, Groq is looking to double down on the Kingdom’s low energy costs, available land plots, “and access to 4 bn people within a 100 millisecond ping — a measure of how quickly data can travel between processing location and users,” the business news information service explained.

Meanwhile, the Guardian is out with a piece on the Kingdom’s call for action to block Iranian weapon shipments to the Houthis as tensions grow over the Iranian-backed militia’s missile capabilities.

AMAK begins commercial production at Al Masan Mine expansion

MINING-

Commercial production kicks off at Al Masane Mine Expansion Project: Al Masane Al Kobra Mining Company (AMAK) successfully completed the Al Masane Mine Expansion Project with the beginning of commercial operations at the Moyeath orebody and related processing plant, according to a disclosure to Tadawul. The new plant has an annual capacity of some 400k tonnes and leverages advanced technologies to increase zinc concentrate output by 80% and copper concentrate output by 40% while lowering production costs. The Moyeath Plant initially started production in March.

INFRASTRUCTURE-

Gov’t receives one bid for the Jubail 4&6 Independent Water Plant: A consortium of Acwa Power, Haji Abdullah Alireza & Co., and Al Sharif Contracting was the sole bidder for the development of the Jubail 4&6 Independent Water Plant (IWP), which aims to produce 600k cubic meters of potable water a day, according to a statement from the Saudi Water Partnership Co. (SWPC). Commercial operations for the new plant are expected to begin in 1Q 2028.

REMEMBER- SWPC is also weighing bids for its Jubail-Buraydah water pipeline project: A consortium featuring Aljomaih Energy and Water Company, Buhur for Investment Company, and Nesma and another one comprising Vision Invest and Taqa are in the running for the 587-km water pipeline which will have a transmission capacity of 650k cubic meter per day, and is scheduled to come online in 1Q 2029.

Kindasa extends lease of desalination plant at Jeddah Islamic Port: Potable water distribution firm Kindasa Water Services renewed its lease with the Saudi Port Authority (Mawani) for its desalination plant at the Jeddah Islamic Port for 10 years through November 2041, according to a statement (pdf) from Kindasa’s parent company Sustainable Infrastructure Holding Co.

EDUCATION-

Danfoss partners with Imam Mohamed bin Saud University for research, educational projects: The Saudi arm of industrial equipment supplier Danfoss and Imam Mohamed bin Saud University signed an MoU to collaborate on research and educational programs, according to a statement from Danfoss Saudi Arabia. The agreement will facilitate joint research projects, conferences, seminars, and workshops while promoting the exchange of knowledge and digital resources. It will also cover programs to improve institutional performance and faculty member development.

DEBT WATCH-

Fesh Fash to get SAR 4.7 mn loan from SIDF: Nomu-listed snackmaker Fesh Fash received the green light from the Saudi Industrial Development Fund (SIDF) on a SAR 4.7 mn loan, according to a filing to Tadawul. The eight-year funding will cover 50% of the cost of a SAR 9.7 mn revamping plan for upgrading production lines, machines, and facilities.

CONSTRUCTION-

Chinese state-owned contractor awarded EPC contract for Aramco’s staff housing complexes: China’s state-owned Shaanxi Construction Engineering Group (also known as Top International Engineering Corporation) was awarded a SAR 1.5 bn engineering, procurement, and construction (EPC) contract for Aramco’s new staff housing complexes, according to Trade Arabia.

The contract for the Haradh and Wudaihi complexes was awarded by Lamar Holding and Asyad Group, the primary developers of the project, which is set to house 2.8k Aramco staff members.

Islamic bond market may see shift from asset-based to equity-like sukuk

Sukuk shake-up in the works? The normally steady Islamic bond market may be gearing up for a major overhaul as the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) reviews a proposal that could shift sukuk from asset-based debt instruments to equity-like, asset-backed ones, IFR reports.

Background: First proposed in November 2023, the draft for Sharia Standard 62 has been in the feedback stage, with the deadline extended twice — most recently to 31 July. There has been no update yet on a third extension.

What’s the difference? Currently, the structure of sukuk differs from bonds as they rely on an underlying asset, commonly real estate, to generate returns. The new standard, on the other hand, would give sukuk holders asset ownership, exposing them to risks like defaults. Investors would need to assess “the credit risk of the asset, rather than the credit risk of the obligor,” said Bashar Al Natoor, global head of Islamic finance at Fitch Ratings.

Issuers would also bear more risk: Issuers could face added costs from asset transfers and legal documentation, in addition to the fact that they tend to prefer retaining full control over their assets, according to a Baker McKenzie report. This shift could fragment the market or delay new sukuk issuances until a more balanced structure emerges, S&P said in a report.

Some markets could push back: AAOIFI’s standards are mandatory in countries like the UAE, Qatar, and Bahrain, but some markets might resist. UAE banks, with one of the largest sukuk markets globally, could reject the standard if it restricts liquidity access, IFR notes. This could also mean that the AAOFI’s guidelines could begin to be sidelined, with parallel markets emerging and the AAOFI potentially becoming obsolete, Mehdi Popotte, fixed-income portfolio manager at Arqaam Capital said.

GCC sukuk are having a moment: This comes as GCC sukuk are seeing their longest winning streak since early 2021, with 11 consecutive weeks of gains, according to Bloomberg’s GCC sukuk gauge. With expectations of a US Fed rate cut, investors are flocking to GCC bonds and sukuk, which have outperformed global bonds this year, the business information service reports.

MARKETS THIS MORNING-

It’s another mixed morning for Asia-Pacific markets — tracking similar movements over on Wall Street as investors prepare for the Federal Reserve to make a rate cut decision in its meeting today and tomorrow. Japan’s Nikkei is down 0.4%, while the Topix is down 0.3%. Meanwhile, markets in South Korea, mainland China, and Taiwan are closed for the mid-Autumn festival.

Wall Street futures were again flat, with the Nasdaq adding less than 0.1% and S&P 500 futures hovering near the flatline.

TASI	11,867	-0.3% (YTD: -0.8%)
MSCI Tadawul 30	1,477	-0.1% (YTD: -4.8%)
NomuC	25,734	-0.1% (YTD: +4.9%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	6.5% repo	5.5% reverse repo
EGX30	30,260	-0.8% (YTD: +21.6%)
ADX	9,389	+0.4% (YTD: -2.0%)
DFM	4,395	+0.3% (YTD: +8.3%)
S&P 500	5,633	+0.1% (YTD: +18.1%)
FTSE 100	8,278	+0.1% (YTD: +7.1%)
Euro Stoxx 50	4,828	-0.3% (YTD: +6.8%)
Brent crude	USD 72.94	+1.9%
Natural gas (Nymex)	USD 2.37	+3.0%
Gold	USD 2,608.90	-0.1%
BTC	USD 57,855.20	-3.0% (YTD: +36.5%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.3% yesterday on turnover of SAR 5.4 bn. The index is down 0.8% YTD.

In the green: Al Baha (+5.9%), Riyadh Cement (+4.5%) and Rasan (+4.3%).

In the red: Sfico (-5.3%), Saico (-4.6%) and MedGulf (-4.1%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.1% yesterday on turnover of SAR 32.7 mn. The index is up +4.9% YTD.

In the green: Al Modawat (+11.2%), Meyar (+8.1%) and Apico (+7.4%).

In the red: Azm (-4.6%), Qomel (-4.3%) and Al Rasheed (-4.3%)

CORPORATE ACTIONS-

Savola Group’s SAR 6 bn rights issue was 94.2% subscribed, with the remaining 35.1 mn shares placed in a rump sale on Sunday, according to Zawya citing the International Financing Review. The shares were offered at SAR 10 each on a 1.12-for-1 basis and traded between SAR 26.6 and SAR 28.2 during the subscription period. The offering was two-thirds underwritten by Riyad Capital and one-third by ANB Capital. Post-issuance, Savola plans to distribute its 34.5% stake in Almarai, valued at SAR 18.6 bn.

Paper Home’s board recommended offloading assets worth SAR 29.3 mn, it said in a disclosure to Tadawul. The transactions proposed include two agricultural land plot sales to the company’s chairman Yaqoub Al Mughrabi for SAR 7.1 mn and SAR 7 mn, in addition to a separate SAR 15.1 mn sale of company branch United Industrial Refreshments.

Egypt-born Ades Holding will distribute dividends of SAR 237.5 mn at SAR 0.2 apiece for 1H 2024 on 1 October, it said in a disclosure to Tadawul.

Top Saudi and US generals meet, Saudi + Guinea ink security pact

KSA + US top military brass meet: Joint Forces Commander Fahad Hamad Al Salman met with Deputy Commander of US Naval Forces Central Command Vice Admiral Charles Cooper, state news agency SPA reported. The pair discussed bilateral relations and topics of mutual concerns, as well as means to boost partnerships.

Commerce Minister Majid Al Kassabi met with UK Secretary of State for Business and Trade Jonathon Reynolds in Riyadh to discuss deepening economic ties, state news agency SPA reports. The talks focused on expanding British business operations in the Kingdom, and boosting cooperation in startups, research, and innovation, with Al-Kassabi noting that bilateral trade between the Kingdom and the UK increased 30% between 2018 and 2023 to USD 103 bn. The event marked Reynolds’ first overseas visit since taking office.

Saudi + Guinea sign security cooperation agreement: Interior Minister Abdulaziz bin Saud and Guinean security and civil protection minister Bashir Jallow inked a security cooperation agreement between the Kingdom and the Republic of Guinea, state news agency SPA reports. The pair also discussed means to boost security cooperation as well as matters of mutual concern.

CALENDAR

SEPTEMBER

15-19 September (Sunday-Thursday): SRMG Academy Technology Journalism Workshop, Riyadh.

15-19 September (Sunday-Thursday): Muntada FAA, Riyadh.

16 September (Monday): The Federation of Saudi Chambers’ meeting on iron and steel, Riyadh.

16-17 September (Monday-Tuesday): MEP International Conference 2024, Hilton, Jeddah.

16-17 September (Monday-Tuesday):Building Envelope Design and Insulation Conference (Bedic) 2024, Hilton, Jeddah.

16-19 September (Monday-Thursday): Foodex Saudi, Riyadh.

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

17-19 September (Tuesday-Thursday): Hotel & Hospitality Expo, Front Exhibition & Conference Center, Riyadh.

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

18-19 September (Wednesday-Thursday): IDC Saudi Arabia CIO Summit 2024, Riyadh.

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

24-25 September (Tuesday-Wednesday): CX & Loyalty Summit & Awards, Riyadh.

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

24-26 September (Tuesday-Thursday): Smart Cities Saudi Expo 2024, Riyadh Front Exhibition & Conference Center.

25-26 September (Wednesday-Thursday): Kingdom Business and Luxury Travel Congress, Crowne Plaza Riyadh RDC Hotel and Convention.

26 September-5 October (Thursday-Saturday): AlUla Skies Festival, AlUla.

27 September (Friday): CAF Super Cup Final 2024, Riyadh.

27 September (Friday): Saudi Women’s Premier League starts.

29 September-1 October (Sunday-Tuesday): Jeddah Construct Expo, Jeddah.

29 September (Sunday): Start of Digital Chip Design Technologies training program.

OCTOBER

1-3 October (Tuesday-Thursday): Intersec Saudi Arabia 2024, Riyadh.

5-7 October (Saturday-Monday): Middle East Education & Training Exhibition 2024, Jeddah.

12 October (Saturday): Riyadh Season.

12 October (Saturday): Shakur Stevenson x Joe Cordina, Riyadh.

12-14 October (Saturday-Monday): Global Logistics Forum, Riyadh.

15-16 October (Tuesday-Wednesday): Solar & Storage Live KSA, Riyadh.

16-17 October (Monday-Tuesday): Global Airport & Aviation Forum, Jeddah.

19 October (Saturday): Battle of the Giants, Mayadeen Hall, Riyadh.

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

21-22 October (Monday-Tuesday): Aussie Expo, King Abdullah Financial District Conference Center, Riyadh.

21-23 October (Monday-Wednesday): Global Health Exhibition 2024, Riyadh.

23-24 October (Wednesday-Thursday): UNIDO’s Multilateral Industrial Policy Forum (MIPF), Riyadh.

26 October (Saturday): Donor Conference to Support Refugees in Sahel and Lake Chad Regions, TBD.

27-28 (Sunday-Monday): The Global PropTech Summit, Movenpick Hotels & Resorts, Riyadh.

29-31 October (Tuesday-Thursday): Future Investment Initiative Conference, Riyadh.

30 October-3 November (Wednesday-Sunday): Hia Hub 4.0, Riyadh.

31 October (Thursday): No-visa travel for Saudis to Montenegro on charter flights expires.

NOVEMBER

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

3-23 November (Sunday-Sunday): NEOM Beach Games, Neom.

4-7 November (Monday-Thursday): Saudi Build, Riyadh.

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

11-12 November (Monday-Tuesday): World Advanced Manufacturing Logistics Summit & Expo, Riyadh.

11-12 November (Monday-Tuesday): Saudi Airport Exhibition, Riyadh.

11-12 November (Monday-Tuesday): Expenditure Efficiency Forum, The Hilton, Riyadh.

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

16 November (Saturday): Latino Night at Riyadh Season, Riyadh.

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

19-20 November (Tuesday-Wednesday): The Women's Economic Forum 2024, Dammam.

19-21 November (Tuesday-Thursday): Saudi International Maritime Forum, Dammam.

23 November (Saturday): Red Sea 600, Jeddah Yacht Club and Marina.

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

26-28 November (Tuesday-Thursday): Future Power Expo, Riyadh.

29 November-2 December 2024 (Sunday-Wednesday): World Sailing Youth Match Racing World Championship, Jeddah Yacht Club and Marina.

DECEMBER

1 December (Sunday): Opec+ to meet.

2-3 December (Monday-Tuesday) Wings of Change Middle East, Riyadh.

3-5 December (Tuesday-Thursday): The International Business Exchange – IBEX EVENTS, Riyadh.

11 December (Wednesday): Billboard Arabia Music Awards (BBAMAs), King Abdullah Financial District, Riyadh.

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

5-8 December (Thursday-Sunday): World Sailing Women’s Match Racing World Championship, Jeddah Yacht Club and Marina.

11 December (Wednesday): FIFA Congress, which will decide the hosting countries for the FIFA World Cup 2030 and 2034

15-19 December (Sunday-Thursday): Internet Governance Forum, King Abdulaziz International Conference Center, Riyadh.

23-26 December (Monday-Thursday): Aqarat Expo, Riyadh.

Signposted to happen sometime in 2024:

The AFC Champions League Elite

2025

JANUARY 2025

14-16 January (Tuesday-Thursday): Future Minerals Forum, King Abdulaziz International Conference Center, Riyadh.

27-29 January (Monday-Wednesday): Real Estate Future Forum, Four Seasons Hotel, Riyadh.

28-29 January (Tuesday-Wednesday): Sustainability Forum Middle East, Riyadh.

29-30 January (Wednesday-Thursday): Global Labor Market Conference, Riyadh.

FEBRUARY 2025

6-8 February (Thursday-Saturday): Liv Golf season opener, Riyadh Golf Club, Riyadh.

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

14-15 February (Friday-Saturday): Formula E, Diriyah.

JUNE 2025

26 June (Thursday): 2024-2025 academic year ends.

2026

UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia.

2027

The World Water Forum takes place in Riyadh.

Sections

About

Privacy & Support

Get EnterpriseAM daily