PIF eyes Saudia and inches closer to golf win

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WHAT WE’RE TRACKING TODAY

PIF and the PGA Tour will meet today in Miami in a bid to kickstart talks on a PGA-Liv merger

Good morning, wonderful people. The Public Investment Fund is still dominating the conversation on an otherwise quiet Ramadan morning, but the big news is that the non-oil economy now accounts for 50% of GDP — a welcome milestone on our journey to build a resilient, diversified economy.

Also worth reading this morning: Our Formula 1 explainer, which breaks down Aramco’s Aston Martin title partnership.

WEATHER- We’re in for light rain in Riyadh today, with a daytime high of 34°C falling to 21°C overnight. It’s shaping up to be a mostly cloudy week in the capital, with some sun peeking out on Wednesday.

In Makkah, expect brisk winds through tomorrow with temperatures reaching a high of 40°C before cooling off to 28°C overnight.

Meanwhile in Madinah, brace for some scattered thunderstorms today with the weather peaking at 34°C before dropping to 24°C at night.

So, when do we eat? Maghrib prayers are at 6:04pm in the capital city, and you’ll have until 4:40am tomorrow to hydrate and caffeinate ahead of fajr.

HAPPENING TODAY-

#1-A meet-and-greet between the PIF and PGA Tour: Representatives from the Public Investment Fund and the PGA Tour will meet today in Florida for what will be “more of a meet-and-greet than a substantive discussion” on outstanding issues, PGA Tour Policy Board member Patrick Cantlay told Sports Illustrated yesterday. “Well, I’ve gotta hear out what they have to say, and I will always do my best to represent the entire membership whenever I am in a meeting in that capacity,” Cantlay said. “I think more information is always better,” he added.

It remains unclear if PIF boss Yasir Al Rumayyan will attend today’s meeting at the Ponte Vedra Beach in Florida despite earlier whispers that he could personally be the key to moving forward the merger of the tour and PIF-backed LIV Golf.

#2- It’s a big week for the global hydrocarbon industry as S&P Global’s CERAWeek kicks off in Houston, Texas, running through Friday. Saudi Aramco CEO Amin Nasser will be on stage along with the chiefs of ExxonMobil and BP. They’ll be joined by a who’s who of senior US and international policymakers, global energy and services executives, leaders of national oil companies.

This year’s big themes: The outlook for energy markets, policy and geopolitics, net-zero supply chains, the green transition in power markets, paying for the transition to greener energy, and climate and sustainability. Check out the full agenda here and the live stream here.

ALSO THIS WEEK- The US Federal Reserve’s Federal Open Markets Committee meets on Tuesday and Wednesday. Market watchers will be parsing every word when the Fed updated economic projections public after the meeting.

At issue: How soon will the Fed cut rates — and how many times this year. Pundits now see the Fed leaving rates higher for longer than markets anticipate, according to economists surveyed in the latest Financial Times-Chicago Booth poll. Most respondents think we’ll see a maximum of two cuts this year. When? July or September, they say.

The fear: Acting too soon will not entirely snuff out inflation as the “last mile” battle looks tougher than originally thought after a surprise uptick in inflation last month.

It’s a huge week for central bank watchers: In addition to the Fed, we’ll see rate decisions or speeches from the Bank of Japan and the Bank of England. There will also be a barrel of economic indicators to parse, including consumer price or economic sentiment data from Canada, Germany, China, the EU and the United Kingdom.

EM watchers will be keeping an eye on: Turkey (Thursday interest rate announcement), Russia (Friday rate announcement), Brazil (Wednesday announcement), and Indonesia (also Wednesday).

WATCH THIS SPACE-

#1- Egypt’s EGAS is expanding to Saudi Arabia. The new venture, dubbed Modern Gas Saudi Arabia, will be 80% held by units of the state-owned natural gas player, Egypt’s oil ministry said in a statement. EGAS is responsible for the development and management of natural gas in Egypt, where it oversees everything from exploration and production to the transportation and distribution of natural gas as well as LNG imports and exports.

The Saudi Basira Company will hold a 20% stake in the venture, which looks set to focus on contracting as well as natural gas distribution to industrial, commercial, and residential clients.

DATA POINTS-

The value of residential mortgage loans written to individuals hit an 11-month high in January 2024 to SAR 7.5 bn, Arab News reported yesterday, citing data by central bank Sama. The loans in January are up 21% m-o-m.

The Kingdom was the region’s largest diesel exporter to Europe in February 2024 at 192k barrels per day (bpd), data from S&P Global Commodities at Sea showed last week. Kuwait’s shipments came in second, with exports more than doubling to an average of 114k bpd. The region sent an average of 374k barrels per day to Europe, the highest in two months, the data showed.

PSAs-

#1- Be safe out there: The Roads General Authority (RGA) is urging folks to drive with caution after fatal traffic accidents spiked 27% during the iftar rush last week, Saudi Gazette reported.

#2- Pilgrims can only perform Umrah once in Ramadan, Okaz reported, citing statements by the Hajj and Umrah Ministry. Permits issued through the pilgrimage itineraries booking platform Nusuk will be limited to one per person during the fasting month to help alleviate congestion.

#3- Prosecutors will use AI to help translate in cases involving foreign pilgrims, deploying an AI agent called Turjman that will be used be a special unit following up on cases involving hajj and umrah pilgrims, local media reports.

#4- King Salman has ordered the disbursement of over SAR 3 bn in Ramadan aid to social security beneficiaries, state news agency SPA reported yesterday.

SPORTS-

Joy Joyce wants to show banking heavyweights who’s boss in the Kingdom as he looks at planned fight cards in town for a chance of a comeback, talkSport reports. “Any opportunities in Saudi, we’ll see. Here in the UK and America. The world is my oyster, especially as a heavyweight. I’m really excited to get these big fight nights,” he said in a statement after putting down Kash Ali in Birmingham on Saturday

And some football whispers: Atletico Madrid midfielder Rodrigo De Paul could be on the Saudi Pro League’s radar for a summer transfer, according to Spanish media. A financial offer of c. EUR 40 mn could prove tempting for the club, which is looking to clear its debts.

THE BIG STORY ABROAD-

It’s another sleepy Monday in the global business press, with geopolitics (Putin just won reelection, getting six more years in power) and tech (the White House is pushing the Senate to take up without delay a bill that would ban TikTok) taking center stage.

Sign of the TImes- So. Much. AI. Anxiety. This time, physical robots take center stage:

AI-powered robotics will fuel jobs disruptions in ways we don’t realize, writes Semafor’s Alastair Clements and Reed Albergotti.
The New York Times worries about how “the AI that drives ChatGPT” will impact the physical world with the rise of robots.
Elon has released the source code for Grok, his AI chatbot.

Happening today: Super Micro Computer becomes an S&P 500 constituent. The server maker will instantly become the index’s top one-year performer when it does. The Wall Street Journal has the rundown on why. (Hint: Lots to do with the AI revolution.)

What’s a little xenophobia among friends? Republicans in the US Congress are probing whether Qatari funding for US universities has contributed to what they claim is a rise of antisemitism on college campuses. The catch: Most of the money they’re talking about was spent to build outposts for US universities in Doha. The Financial Times has the story.

CIRCLE YOUR CALENDAR-

The four-day Townhall Expo is slated for Thursday, 2 May, at Holiday Inn Hotel in Riyadh, featuring over 200 projects from Saudi-Egyptian real estate developers and investors who are aiming to wrap up EGP 2 bn in real estate transactions during the expo.

The three-day Smart Future Expo will open its doors on Monday, 13 May, at the Riyadh Front Exhibition and Convention Center. The gathering will include execs, investors, startups, and exhibitors, offering insights into smart tech including AI, AR, digital twin, cybersecurity, cloud computing, blockchain, business intelligence, IoT solutions, big data, and 3D printing. You can register here.

Projects tracking and analysis platform Meed is hosting the Saudi Giga Projects 2024forum on Monday, 13 May, at Crowne Plaza Riyadh, convening contractors, suppliers and top industry execs. The summit will provide an overview of the USD 870 bn mega projects currently under development across the Kingdom including Qiddiya, Roshn, and Neom. You can register here.

Meed will also be hosting its annual MENA Construction Summit 2024 on Tuesday, 14 May, at the same venue, where industry leaders will have a chance to network and discuss the challenges and potentials of construction tech, climate change resilience and sustainable development in the digital economy. You can register here.

The two-day Future Projects Forum kick starts on Monday, 20 May, at the Four Seasons Hotel in Riyadh, where contractors and investors will be able to meet 40 project owners including Aramco, the PIF, Investment Ministry, Asir Municipality, Mawani, Modon, and the Transport General Authority. The forum is expected to feature projects worth SAR 1 tn where contractors and investors can access information about these projects and weigh their bidding success chances.

^^ Check out our full Calendar on the web for links to all of these conferences.

Saudi Arabia’s non-oil economy accounted for 50% of GDP last year — a record high

Non-oil activity accounted for 50% of the Kingdom’s real GDP in 2023, fueled by a sharp increase in investments, consumption and export volumes, according to the Economy and Planning Ministry’s analysis of data by the General Authority for Statistics (Gastat). This marks the highest-ever recorded contribution of the non-oil sector to local economic growth. The new figure values the non-oil economy at SAR 1.7 tn.

Background: The Kingdom’s real GDP dipped 0.8% y-o-y in 2023 on the back of a 9% fall in oil activity. Non-oil activity rose 4.4% y-o-y and government expenditure grew 2.1% y-o-y over the same period.

THE BREAKDOWN- 2023 vs. 2022: Crude petroleum and natural gas activities delivered the highest contribution to GDP in 2023 at a 25.4% (down from 32.7%). Next up:

Government services at 15.7% (down from 14.2%);
Wholesale and retail trade, restaurants and hotels at 9.7% (down from 8.2%);
Manufacturing (excluding petroleum refining) at 8.8% (up from 8.6%);
Petroleum refining at 6.0% (unchanged);
Real estate at 5.9% (up from 5.2%).

(Here’s the 2022 report (pdf) for reference if you want to dive deeper)

Growth drivers: Social and personal services including health, education and entertainment grew 10.8% in 2023, followed by transportation and telecoms (7.3%) and trade, restaurants and hotels (7%), financial, ins. and business services activities (6.8%), and mining and quarrying activities rose 5.7%.

Falling oil activity: Crude petroleum and natural gas activities fell 9.4% y-o-y in 2023, while petroleum refining activities declined 7.4% y-o-y. The Kingdom cut oil production by 500k barrels per day in April 2023 in a bid to arrest falling oil prices. That figure became a 1 mn bpd voluntary cut by June. Though originally seen ending in December 2023, the government extended the 1 mn bpd cut through 1Q 2024 and now seems poised to continue it through June 2024, maintaining production at 9 mn bpd.

What the pundits are penciling in for 2024 and beyond:Rating agency Moody’s forecasts the Kingdom’s non-oil sector to grow at 5.5% this year on the back of major development projects and a robust economic environment, according to a recent report. S&P Global is expecting non-oil sector investments and high consumption to sustain GDP growth at 3.3% average through to 2027, according to a recent statement. Also, the IMF has cut its 2024 growth forecast for the Kingdom to 2.7%, pointing to the combined effects of lower oil prices and production cuts.

MEANWHILE- The Finance Ministry is targeting GDP growth of 4.4% in its budget for the current fiscal year, Finance Minister Mohamed Al Jadaan said in December.

PIF eyes acquisition of Saudia as part of privatization drive

PIF wants to take Saudia: The Public Investment Fund (PIF) is reportedly in early talks to acquire the Kingdom’s national carrier Saudia as soon as next year to add it to its aviation assets portfolio, Bloomberg reported yesterday, citing sources close to the matter.

What we know: The ownership of the flagship airliner would be taken over by PIF from the government with the intention of improving its efficiency and net income, the sources said. The flagship carrier could be either privatized or merged with Riyadh Air — a second flagship carrier being set up by PIF, they added.

Details are still scant: There is no clarity as to how Saudia would be valued by PIF — which has in the past been given state assets in straight transfers — as part of preparation for privatization, according to Bloomberg. Talks are preliminary and it’s entirely possible that the transaction doesn’t go forward.

The PIF wants Riyadh Air to be the Gulf airlines boss: The sovereign wealth fund launched Riyadh Air in March last year as it looks to challenge its regional rivals Emirates and Qatar Airways. It is set to kick off its operations next year and has a target of operating flights between 100 destinations by 2030. Saudia will also bid adieu to capital Riyadh by 2030 to make way for Riyadh Air and will instead shift its focus towards operations in Jeddah’s King Abdulaziz International Airport.

One for pilgrims, another for tourists: If the plan materializes, Saudia would shift focus on transporting pilgrims to holy sites, while Riyadh Air will focus on tourists, including international transit passengers, Reuters reported yesterday, citing two sources close to the talks. The transfer of ownership would also include Saudia-owned budget carrier flyadeal, the sources said.

REMEMBER- The Tourism Ministry recently more than doubled its target for 2030, hoping now to be host to 150 mn tourist trips after it hit its target last year ahead of schedule. The new 2030 target sees 80 mn by domestic travelers and 70 mn by international travelers.

Breaking down Aramco’s Aston Martin title partnership

Aramco and Aston Martin are set to bring the heat to Formula 1 in 2024 after signing a five-year partnership in December to make the state-owned oil giant sole title partner of the Aston Martin F1 team. The team hit the tracks for the first time this season earlier this month in Jeddah under its new name Aston Martin Aramco Formula One Team.

WHY IT MATTERS:

While financial details of the partnership weren’t disclosed, F1 is all about the big bucks: F1 teams are estimated to spend around USD 150 mn in a single season excluding driver salaries, according to AS. F1 teams raked USD 30 bn from sponsorships in the 15 years ending 2019, according to Forbes, and the sport has only grown in popularity since.
Besides the big spenders, the exposure is huge: Some 1.55 bn people tuned into F1 in 2021 as cumulative TV audience rose 4% y-o-y from a year earlier, according to F1 data. A F1 Netflix series titled “Drive to Survive” is also seen as a gateway to the sport, with a survey in 2022 suggesting that more than half of F1 fans in the US say the show was the reason behind their fresh fandom of the motorsports. The hit series also catalyzed a 2.3% growth worldwide in F1 live event viewership, according to a Nielsen study in 2022.

Aston Martin had a blockbuster 2023 season, finishing fifth in the constructor standings with Fernando Alonso bringing home the most podiums among non-Red Bull drivers and finishing fourth in the drivers’ championship to cap off the team’s best ever season. Aramco first partnered up with Aston Martin for the 2022 season alongside IT company Cognizant and saw results after just one season. The partnership helped transform the team from a bottom five contender rarely in the points to a top five team that is fighting for podiums every weekend.

A brief history lesson on the Aston Martin Aramco F1 team: The Sahara Force India

Formula One Team went into administration in 2018. This brought in Canadian b’naire Lawrence Stroll, who offered it a way out of bankruptcy by buying the team and rebranding it to Racing Point F1 team in a bid to keep the pink livery alive for the season. In 2021, the team was rebranded again to Aston Martin after Stroll became the majority shareholder in the British luxury car maker.

Aramco is also F1’s global energy partner undera sponsorship agreement struck in 2020 to mark the oil giant’s first global sponsorship of a major sporting event. The sponsorship came on the cusp of F1’s Sustainability Strategy (pdf) which was launched in 2019.

A look at F1’s sustainable fuels sandbox: F1 plans to deliver 100% sustainable fuels to its constructors’ cars by 2026 as part of its plan to be Net Zero Carbon by 2030. It is set to rely heavily on Aramco with whom they “tested 39 surrogate blends of fuels,” according to F1 CTO Pat Symonds who is quarterbacking this project. Aramco will be making the fuels at two of its plants, one here in Saudi and one in Spain. It will be up to constructors to figure out how they can use this fuel in the most efficient (and fast)way and design their cars accordingly.

It’s much bigger than just racing cars: F1 is not just a weekly or bi-weekly event that involves cars going around the track at blinding speeds — it also doubles up as a research lab for industrial car manufacturing, with technology transfer between the two abundant but is “subtler than bolting bits from one car onto another,” according to Paddy Lowe to Eurosport, former executive director at multi-championship winning Mercedes’ F1 team.

REMEMBER- The Public Investment Fund (PIF) upped its stake in British luxury car maker Aston Martin to 20.5% in November. It also doubled up its stake in Aramco to 16% earlier in March, a transfer of stock worth about USD 164.

Al Taqat Mineral’s IPO was fully covered ahead of its debut on parallel market Nomu

The Nomu IPO of scrap-metal recycler Al Taqat Mineral saw strong investor demand, generating an order book of SAR 48 mn, according to a filing to Tadawul. The subscription period for qualified investors wrapped up on Wednesday, 13 March, and was fully covered. Eech investor has the chance to subscribe for a minimum of 10 shares and a maximum of 609k shares.

Background: Al Taqat offering a 20% stake on Nomu, Tadawul’s parallel market, at SAR 18 a piece.

Use of proceeds: The companywill use the IPO proceeds to finance its expansion and growth plans, while SAR 3.4 mn of the proceeds are earmarked to cover the transaction’s expenses, according to the prospectus (pdf).

Lock-up period: The company’s two main shareholders will won’t be able to sell shares for a period of 12 months starting from the date of listing on Nomu.

Meet Al Taqat: Founded in 2017, the Riyadh-based company specializes in metal gathering and recycling, according to its website. Clients include manufacturing heavyweights Sabic and Watania Steel. Al Taqat has also been involved in a handful of notable ventures including the Riyadh train, Aramco Dhahran, and Terminal 5 at King Khalid International Airport in Riyadh.

2023 KPIs in a snapshot: Al Taqat accumulated net losses of SAR 2.8 mn in 1H 2023, while it was in the black in 1H 2022 with a net income of SAR 2.6 mn. Revenues fell 45% y-o-y to SAR 78 mn in 1H 2023.

ADVISORS- Miyar Capital is quarterbacking the transaction as financial advisor, while Alinma Investment is the underwriter, and Mazar is acting as auditor.

Still more earnings…

Earnings from the ins. sector are in the spotlight today.

ALLIANZ SF-

The net income of Allianz Saudi Fransi Cooperative Ins. rose 4x y-o-y to SAR 37 mn in 2023, and revenues were up 17.3% y-o-y to SAR 862.6 mn, it said in a disclosure to Tadawul. The ins. provider attributed its top and bottom line growth to better performance in its motor and medical segments.

ARABIAN SHIELD-

The net income of Arabian Shield Cooperative Ins. increased to SAR 65 mn in 2023, up from SAR 406k in 2022, while revenues were up 24.7% y-o-y to SAR 1.1 bn, it said in a disclosure to Tadawul.

SALAMA-

Salama Cooperative Ins. turned into the black with a net income of SAR 51 mn in 2023, and revenues increased 34% y-o-y to SAR 802 mn, it said in a disclosure to Tadawul.

FIPCO-

Filing and Packing Materials Manufacturing’s net income increased 22.5% y-o-y to SAR 12 mn in 2023, while revenues were down 8.7% y-o-y to SAR 238 mn, it said in a disclosure to Tadawul.

SPCC-

Southern Province Cement’s net income decreased 35% y-o-y to SAR 195 mn in 2023, and revenues were down 12.4% y-o-y to SAR 1.1 bn, it said in a disclosure to Tadawul.

SAUDI CABLE-

Tadawul-suspended Saudi Cable turned into the black with a net income of SAR 33.5 mn in 9M 2023, after accumulating net losses worth SAR 117.5 mn in 9M 2022, it said in a disclosure to Tadawul. Meanwhile, revenues were down 69% y-o-y to SAR 19 mn. On a quarterly basis, the cable manufacturer’s net losses declined to SAR 4.3k in 3Q 2023, down from SAR 35 mn in 3Q 2022. Its top line was down 42% y-o-y to SAR 3.5 mn in 3Q 2023.

CHEMANOL-

Tadawul-listed chemicals manufacturer Chemanol turned into a net loss of SAR 177.8 mnin 2023 due to a drop in average selling prices and sold quantities, it said in a disclosure to Tadawul yesterday. Its revenues were down 32.4% y-o-y during the year to SAR 723 mn.

Fahad Misfer Al-Battar tapped as CEO of Sabic Agri-Nutrients

Sabic Agri-Nutrients gets new CEO: Fertilizers maker Sabic Agri-Nutrients has appointed Fahad Misfer Al Battar (Linkedin) as its new CEO, it said in a disclosure to Tadawul last week. He is succeeding Abdulrahman Ahmed Shamsaddin (bio), who has been nominated for a top executive position at parent company Sabic. Al Battar’s appointment is effective 1 April, according to the disclosure.

Al Battar is no stranger to the company: He brings over 25 years of experience in executive leadership with positions at Sabic and its subsidiaries since 1997, having most recently been COO at SABIC Agri Nutrients.

Cenomi Centers redeems another FCY sukuk. Plus: News from First Mills, EdfaPay, Roshn, and more

RETAIL-

#1- Our friends at Cenomi Centers have fully redeemed sukuk worth USD 209 mnbefore their originally scheduled maturity on 26 November 2024, the lifestyle centers operator said in a filing to Tadawul yesterday. The sukuk was issued in November 2019 and listed on the International Stock Exchange. The move saw the franchise retailer redeem 42% of its issued sukuk, with our friends at HSBC quarterbacking the transaction.

#2- Our friends at First Mills have established a SAR 100k trade and investment armdubbed First Food Supplies in a bid to fuel its expansion plans. The wholly-owned subsidiary will manufacture bakery, grain mill, and other starch products, it said in a disclosure to Tadawul. It will also be tasked with the storage, transportation, wholesale trade, and retail sale of agricultural raw materials, live animals, food and beverages.

FINTECH-

Local fintech outfit EdfaPay receives accreditation from UK’s Discover Global Network: Riyadh-based fintech EdfaPay has received accreditation from leading global payments network Discover Global Network, it said in a statement (pdf) yesterday. The accreditation paves the way for EdfaPay to expand to new markets after setting up shop in South America and Pakistan.

About EdfaPay: Set up in 2022, EdfaPay is a fintech that uses software point of sale (softPoS) and payment gateway services for online and offline merchants. It raised USD 1.6 mn in a pre-seed round to help boost its progressive softPoS technology, which allows merchants accept card payments directly through their phones. It also raised USD 3.2 mn last year in a seed round to help fuel its expansion overseas.

HEALTHCARE-

Nomu-listed Canadian Medical Center signed a one-year contract worth SAR 11.3 mn with industrial group We Build to operate and manage its clinics in Neom’s Trojena mountain resort, it said in a disclosure to Tadawul yesterday. Separately, it signed a one-year lease contract worth SAR 109.5k with Bayat Real Estate to rent its office in Tabuk to manage and run its projects in Neom for one year, it said in a separate disclosure.

MANUFACTURING-

Alujain Corp to manufacture engineering plastics with India’s Samvardhana Motherson:Tadawul-listed industrial investment firm Alujain Corp has signed a two-year MoU with Indian auto parts maker Samvardhana Motherson International to set up an engineering plastics facility, it said in a disclosure to Tadawul yesterday. The complex will manufacture plastic compounds for the automotive and other specialized manufacturing industries under a localization push. No further financial details were provided.

All under a big plan for Alujain: The Riyadh-based company said the MoU comes under its expansion plans and ongoing efforts to boost localization in manufacturing industries. It said its plan sees it entering strategic partnerships with global players to help improve local content and the competitiveness of local manufacturing industries.

AGRICULTURE-

Nadec to set up livestock JV with United Feed: Tadawul-listed Natural Agricultural Development Company (Nadec) signed a partnership agreement with United Feed Co — a subsidiary of local private equity investment firm Al Muhaidib Group — to set up a joint venture for livestock and meat production, it said in a disclosure to Tadawul yesterday. Nadec will have a 51% stake in the planned JV’s capital.

What we know: The agreement outlines terms and conditions to set up, manage and operate the JV and transactions between the two parties, Nadec said, without providing further details. It is set to help boost food security in the Kingdom though setting up high-tech farms to ensure the availability of high-quality local red meat to consumers.

FINANCIAL SERVICES-

Kuwait’s Al Ahleia Ins. raised its direct ownership in Khobar-based Al Etihad Cooperative Ins. to 28.7% from 10%, it said in a disclosure to Boursa Kuwait (pdf). Its ownership was up after transferring its shares in Trade Union Holding, a major shareholder in Al Etihad, as part of a voluntary liquidation process by Trade Union. It said there was no impact on the company’s financial position given that the ownership was only direct now.

TECH-

Roshn taps into cybersecurity: Real estate developer Roshn — a wholly owned unit of the PIF — signed a MoU during LEAP with the Saudi Federation for Cybersecurity, Programming and Drones to explore technologies to establish smart buildings using network solutions and IoT technologies, according to a statement yesterday. Roshn will also look into employing drones in its real estate operations, it said.

US investors, beware Chinese zombie companies

US investors in Chinese companies are stuck in zombieland: US investors are increasingly unable to repatriate returns in what the New York Times refers to as the Chinese version of “zombie” companies. Like TikTok parent company ByteDance — where some USD 8 bn of capital is stuck — these are Chinese firms, often booming, that are caught in geopolitical crosshairs, preventing investors from receiving returns.

ICYMI- The US House of Representatives last week voted to give ByteDance six months to sell TikTok or face a ban in the US over concerns about the Chinese government’s access to US user data.

It’s much more complicated than it may seem: Export control rules on tech imposed by China in 2022 mean that even if TikTok gets sold, its recommendation algorithm — the app’s most valuable feature — is unlikely to be included in the sale. Buying TikTok without the algorithm would be akin to acquiring Hulu without the rights to its content, said Columbia Business School professor Jonathon Knee. “It’s not completely clear what you’re buying,” he explained.

Chinese companies aren’t as attractive as they once were: China’s regulatory crackdowns, coupled with falling company valuations triggered by the country’s economic slowdown, have made acquisitions less tempting for US buyers. Some 3.2k Chinese companies were acquired last year, half of what was bought in 2019.

And less Chinese companies are IPOing in the US: Chinese companies have grown wary of listing in the US since ride hailing app Didi delisted from the New York Stock Exchange in 2022 due to regulatory pressure by China. Only three Chinese startups listed in the US in 2022, down from 18 per year between 2018 and 2021.

THE MARKET THIS MORNING-

Asian markets are mixed and stock futures little changed in trading early this morning as traders take a breather ahead of fresh economic guidance from the US Federal Reserve and other central banks this week, as we note in this morning’s What We’re Tracking Today, above.

TASI	12,762	+0.3% (YTD: +6.6%)
MSCI Tadawul 30	1,605	-0.1% (YTD: +3.5%)
NomuC	27,280	+1.1% (YTD: +11.2%)
USD : SAR (SAMA)	3.75 Sell	3.75 Buy
Interest rates	6.5% repo	5.5% reverse repo
EGX30	31,062	-0.8% (YTD: +24.8%)
ADX	9,221	-0.4% (YTD: -3.7%)
DFM	4,263	-0.7% (YTD: +5%)
S&P 500	5,117	-0.7% (YTD: +7.3%)
FTSE 100	7,727	-0.2% (YTD: -0.1%)
Euro Stoxx 50	4,986	-0.1% (YTD: +10.3%)
Brent crude	USD 85.34	-0.09%
Natural gas (Nymex)	USD 1.66	-4.94%
Gold	USD 2,155	-0.3%
BTC	USD 68,507	+2.4% (YTD: +150%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.3% yesterday on turnover of SAR 9 bn. The index is up 6.6% YTD.

In the green: Saudi Steel Pipe (+10%), Saudi Advanced Industries (+10%) and Wafrah for Industry and Development (+10%).

In the red: East Pipes (-4.6%), Arabian Shield (-4.2%) and MBC Group (-3.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 1.1% yesterday on turnover of SAR 41 mn. The index is up 11.2% YTD.

In the green: Banan (+19.2%), Apico (+7.5%) and Raoom (+5%).

In the red: Ngdc (-8%), Leen Alkhair (-6.5%) and Aldawliah (-5.3%).

CORPORATE ACTIONS-

#1- Nomu-listed Saudi Advanced Industries (SAIC) is mulling the distribution of part of its stake — 300k shares — in Obeikan Glassto its shareholders in a bid to meet the liquidity requirement for transitioning to main market Tadawul, it said in a regulatory filing. SAIC owns a 34.56% stake in the company.

ALSO- SAIC plans to pay out SAR 44.3 mn in dividends at SAR 0.75 per share for 2023, it said in a disclosure to Tadawul.

#2- Leejam Sports is set to buy back up to 200k of its shares to allocate them to its employee stock ownership program, it said in a disclosure to Tadawul.

Crown Prince affirms support to Pakistan in congratulatory phone call with reelected Pakistani PM

Crown Prince Mohammed bin Salman stressed the Kingdom’s support to cash-strapped Pakistan during a phone call to congratulate recently reelected Pakistani PM Shehbaz Sharif, according to a statement from Pakistan’s Information Ministry.

REMEMBER- The Kingdom has been among key backers of the financial crisis-hit Pakistan struggling from depleted foreign reserves. It extended the term for its USD 3 bn in deposits at the State Bank of Pakistan for an additional year maturing in December this year. The country also received last year USD 2 bn in financial assistance from the Kingdom to shore up finances.

The Foreign Ministry welcomed a UN resolution aimed at combating Islamophobia, the ministry said in a statement on X. “The Kingdom permanently supports the consolidation of a culture of mutual respect between followers of religion and sects and promotes the culture of coexistence…,” it said. The adopted UN resolution, which was tabled by Pakistan, will see the UN appoint a special envoy to combat Islamophobia.

CALENDAR

APRIL

8-11 April (Monday-Thursday): Saudi Super Cup, Abu Dhabi.

10 April (Wednesday): Eid al-Fitr

14-21 April (Sunday-Monday): IMF and World Bank spring meetings, Washington, DC

16 April (Tuesday): FEI World Cup Equestrian, Riyadh.

28-29 April (Sunday-Monday): World Economic Forum Special Meeting, Riyadh.

29 April-1 May: Future Hospitality Summit at Al Faisaliah Hotel, Riyadh.

MAY

2-5 May (Thursday-Sunday): Townhall Expo, Riyadh.

6-9 May (Monday-Thursday): Saudi Smart Manufacturing, Riyadh.

6-9 May (Monday-Thursday): Saudi Smart Logistics, Riyadh.

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

13 May (Monday): Saudi Giga Projects, Riyadh.

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

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

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

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

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

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

5 June (Wednesday): World Environment Day.

Signposted to happen sometime in June:

Eid Al-Adha (national holiday)

AUGUST

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

SEPTEMBER

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

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

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

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

NOVEMBER

26-28 Novemeber ( 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

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

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