PIF, I Squared partner on USD 2 bn infrastructure push

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WHAT WE’RE TRACKING TODAY

Saudi crude is struggling to make China’s August buying slate

Good morning, all. We lead today’s issue with news from the Public Investment Fund after it inked an MoU with I Squared to deploy up to USD 2 bn across the fund’s real estate and infrastructure assets.

PLUS- We also look at recent efforts by the government to cut costs — sources tell us public entities have been told to slash non-essential expenses by up to 50%.

Buyers are getting pickier, not scarcer

Saudi crude is struggling to make China’s August buying slate. At least two refiners have requested no term shipments next month, while others that sought cargoes have yet to receive provisional allocations, Bloomberg reports. Final volumes remain fluid as Aramco and buyers discuss ad-hoc spot sales, but the early nominations extend a sharp decline, with Saudi sales to China set at just 10-20 mn barrels over the past three months.

The pullback started earlier: Saudi allocations to China halved to around 20 mn barrels in May from 40 mn in April as China’s refiners turned to commercial inventories instead, with drawdowns estimated at up to 1 mn bbl / d through April-June.

This is no longer only a supply problem: China imported 29.3 mn tons of crude in June, down 41.3% y-o-y to its lowest level in almost a decade. Even Aramco’s decision to price its flagship Asian grade at a lower cost for the first time since 2020 hasn’t fully revived demand, with buyers saying competing prompt cargoes remain cheaper. Meanwhile, Rongsheng’s Petrochemical, which holds a long-term supply contract with Aramco, bought at least 6 mn barrels of Saudi crude on a spot basis for prompt arrival — a sign that buyers are becoming more selective about price, timing, and delivery terms.

Another tech wager on Tadawul

Joining the IPO queue: IT provider NourNet is working with Goldman Sachs and HSBC on a potential Tadawul listing that could happen this year, Bloomberg reports, citing unnamed sources. Investcorp Holdings, which acquired a majority stake in NourNet back in 2022, was reportedly already hooking up with the bank on a potential IPO.

The potential listing would add to Saudi’s robust IPO pipeline, which remains the strongest in the Gulf despite regional listing activity falling to a five-year low.

ALSO- Armah Sports applies to move to the main market: Saudi fitness club operator Armah Sports has submitted its application to transfer from the Nomu parallel market to the main market, the company said in a Tadawul filing. The move follows the board’s approval of the transfer plan in June 2025.

Lucid writes off take-private, bankruptcy rumor

PIF-backed Lucid Group has denied reports that it is weighing a take-private bid or bankruptcy filing, saying that it has enough funding through next year and hasn’t formed a committee to explore the reported scenarios, Reuters reports. The report — denied by Lucid as “completely false” — wiped over 50% off its stock in a record one-day plunge.

That said, Lucid has recruited help: Lucid has enlisted AlixPartner to improve its operations, but the consulting outfit has not recommended a bankruptcy filing, the company said. The restructuring adviser is optimizing Lucid’s business, trimming down costs, and assisting in rolling out a new mid-size vehicle, Bloomberg reports, citing unnamed sources.

The EV maker is looking to stabilize operations at a critical point, having received USD 550 mn in backing from the Public Investment Fund’s Ayar Third Investment and USD 200 mn from Uber last April. This coincided with the appointment of CEO Silvio Napoli, who will steer Lucid through a tough demand market following a turbulent 2025, production struggles, supply snags, and changing US EV regulations.

Data point

USD 47.2 mn — that’s what Saudi Arabia spent on Taiwanese drones last month, making the Kingdom Taiwan’s top drone market and marking the largest monthly haul by any country since at least June 2023, Bloomberg reports, citing Taiwanese Finance Ministry data. The nearly 3.3k units cost an average of USD 14.5k each, roughly 10 times the USD 1.5k other buyers pay for the same weight class.

Destination Sahel is back for a second edition — and this year, it's not just about the beach.

Gulf sovereign wealth funds are pouring billions into the North Coast, Gulf buyers keep showing up despite regional headwinds, and a new 400km master plan could reshape the whole coastline before summer’s out.

Over this season’s series, stay tuned to see who's really buying Sahel, where the money's coming from, and what could still go wrong.

Plus, the hotels, restaurants, and openings worth checking out this summer.

Tap or click here to subscribe to the Egypt edition, coming out today in your inbox.

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The big story abroad

International dailies have their hands full with geopolitical and business updates this morning. Here are the biggest developments.

Trump withdraws Hormuz cargo tax: Pressure from Gulf states prompted US President Donald Trump to walk back his proposed 20% fee on cargoes transiting the Strait of Hormuz, announcing that it would be replaced by direct Gulf investments in the US. The US military confirmed that its naval blockade on Iran took effect yesterday and that it launched fresh strikes on the Islamic Republic.

That’s not all — the US is also leading talks to revive a long-defunct Iraq-Syria oil pipeline to circumvent the Hormuz bottleneck and undermine Tehran’s leverage over global energy supplies. Washington is in talks with Baghdad, Damascus, and Chevron.

OpenAI’s first device will be an AI companion — a mobile, screenless speaker designed to answer questions, play media, and help control smart-home appliances. The product is still under development and is intended to be personalized and proactive, used primarily in users’ homes.

Could drugs be a new frontier for AI? Startup Chai Discovery, which specializes in using AI to pioneer new drugs, has secured USD 400 mn in fresh funding, valuing the company at USD 3.8 bn. The company also works with established pharma giants to help them to become post-AI companies, founder and president Jack Dent said.

US writers object to Warner Bros takeover: The Writers Guild of America has become the latest in a long line of challengers to Paramount’s Gulf-backed USD 110 bn acquisition of Warner Bros, insisting that the merger will harm competition and film and television writing quality. This week, 12 US states filed an antitrust lawsuit on similar grounds.

And over at the World Cup, Spain bested France 2-0 last night, marking its second time to book a spot in the tournament’s final showdown. They will play either Argentina or England in Sunday’s final in New Jersey.

PIF signs I Squared to co-invest up to USD 2 bn in Saudi digital infrastructure and cooling

PIF, I Squared target USD 2 bn infrastructure partnership: The Public Investment Fund (PIF) has signed a non-binding MoU with I Squared Capital, the global infrastructure investment manager, to deploy up to USD 2 bn across real estate and infrastructure assets held by the fund and its portfolio companies, according to a PIF statement. I Squared would target up to USD 1 bn each in digital infrastructure and district cooling, with room to expand into adjacent areas.

The USD 2 bn is a ceiling, not a commitment. This is an MoU, and PIF’s own statement notes that any transactions that follow remain subject to further assessment by both sides and regulatory clearance. No assets, timelines, or portfolio companies were named.

Why it matters: Bringing in a co-investor who supplies operating expertise alongside capital is the explicit aim of PIF's 2026-2030 plan, and it points to a fund managing the draw on its own balance sheet as it works through its reprioritized project pipeline.

Back for seconds: I Squared last year announced plans to invest more than USD 1 bn in the Kingdom over three years under an investment agreement with the PIF and signed a separate MoU to launch a Middle East-focused infrastructure strategy.

Tightening the belt

Ministries now have to spend less (in some cases, a lot less). Government entities have been instructed to cut non-essential expenditures by as much as 50%, people familiar with the matter tell EnterpriseAM.

What’s being cut? Education allowances previously paid to some government employees to cover their children’s school fees will not be renewed next year. New hiring has been paused at several government entities until further notice. Per diem travel allowances have been reduced, and non-essential business travel restricted, our sources tell us.

The targets: The cuts are targeting discretionary and operational spending across ministries, while strategic projects and capital investment in gigaprojects remain largely unaffected.

The reason

Tightening the belt: Riyadh is moving to contain costs following a budget deficit of USD 74 bn last year, more than double what the government had originally projected. Lower and more volatile oil prices have squeezed revenues, widening the fiscal gap as spending continued to rise.

Don’t blame the war: Regional tensions added a new layer of uncertainty, though the spending controls predate the current conflict and were introduced as part of a broader fiscal management effort.

Why it matters

For companies that depend on government procurement, travel budgets, or discretionary ministry spending, the tightening could weigh on activity over the coming months. Riyadh is becoming more selective about where public money goes, and day-to-day government operations are no longer insulated from that discipline.

Saudi housing markets diverge in 1Q as Riyadh slows, Dammam grows

The residential markets are splitting into two. Riyadh’s housing boom cooled in 1Q 2026, while Dammam’s rise accelerated, according to a Cavendish Maxwell report.

The breakdown: Riyadh logged some 8.8k residential sales in 1Q, down 64.4% y-o-y and worth SAR 13.4 bn, a 72.5% drop by value. Cavendish Maxwell reads the fall as a normalization from elevated activity in late 2024 and early 2025. Dammam ran the other way with some 2.9k transactions, up 24.7% y-o-y and worth SAR 3.6 bn, a 47.6% rise by value.

On a quarterly basis, the same pattern but softer: Dammam led, with volumes up 41.4% q-o-q and transaction value up 70.7%. Riyadh recovered more modestly at 11.6% q-o-q on volume and 4.3% on value.

Prices are diverging too: Riyadh apartment prices averaged c. SAR 6.2k per sqm, up 3.7% y-o-y but down 0.4% q-o-q. That quarterly dip points to weakening price momentum in the capital. Villas held at c. SAR 5.7k per sqm, up 6.9% y-o-y and flat over the quarter. Dammam kept climbing on both counts: apartments up 4.1% y-o-y, villas up 2.2%, each edging higher q-o-q.

Jeddah sat in between: Transactions came in at c. 5.8k, down 31.5% y-o-y, and were worth SAR 7.2 bn, a 30.5% drop by value. But prices held: apartments up 1.9% y-o-y, villas up 3.3%, both still rising over the quarter even as volumes fell.

Two variables shape the rest of 2026

The first is supply: A pipeline is arriving in Riyadh just as demand cools. The capital's residential stock reached c. 1.94 mn units, with 31k more expected by end-2026 and a further 24.5k and 37k in 2027 and 2028. Cavendish Maxwell expects that wave, supported by the expanded White Land Tax pushing underutilized plots into development, to put modest downward pressure on Riyadh prices through the year. Dammam's pipeline is far smaller: c. 4.8k units in 2026 against a 430k-unit base.

The second is foreign demand: Saudi Arabia’s geographic zones where non-Saudis can buy are now live, covering Qiddiya, New Murabba, and Kafd in Riyadh, more than 55 areas in Jeddah, and giga-projects including Neom, the Red Sea Project, and King Abdullah Economic City. Cavendish Maxwell says the effect on volumes and pricing depends on how much non-Saudi demand materializes and how quickly the framework translates into transactions.

Terminal 6 at King Salman airport gets SAR 800 mn construction package

One step closer to a bigger King Salman airport: PIF-backed King Salman International Airport Development Company (KSIADC) has awarded a joint venture of China Civil Engineering Construction and Mofarreh AlHarbi & Partners a SAR 800 mn (USD 213 mn) contract for the enabling and substructure works on Terminal 6 at King Salman International Airport, Meed reports. The terminal is expected to increase the airport’s capacity by 40 mn passengers annually.

The procurement is moving fast: The award follows KSIADC’s March selection of three consortia for Terminal 6’s main construction and its early July receipt of prequalification statements for two more packages — a permanent east-west corridor and landside access roads serving the north and south terminals.

What's next: The two packages prequalified this month are the next awards to watch, and the whole terminal is meant to be operational before Expo 2030 Riyadh opens.

Rate-hike wagers rebuild across the Fed, BOE, and ECB

Western central banks are edging toward tighter policy as an oil spike revives inflation fears on both sides of the Atlantic. Markets now put the odds of a July Fed hike at roughly even, up from less than 10% at the start of the month, with the two-year Treasury yield holding above 4.25%, widening its premium over the Fed’s policy rate, Bloomberg reports.

Early Fed signals fueled the shift: Odds firmed after Fed Governor Christopher Waller said the central bank should consider raising rates “in the near term” if core inflation delivers “another hot reading.”

Inflation is expected to cool for the first time since January: Economists see June CPI easing on both the headline and core measures for the first time since the start of the year, with annual inflation slowing to 3.8% from 4.2% and core to 2.8% from 2.9%. Headline prices are forecast to drop 0.1% m-o-m; core to rise 0.2%.

Traders want tightening anyway: Softer projections notwithstanding, the market reads higher rates as the price of getting inflation to target. Two forces are doing the work — crude climbing toward USD 90 a barrel as US-Iran tensions escalate, and Fed Chair Kevin Warsh’s refusal to signal his hand ahead of his semiannual testimony to Congress this week.

Markets see the tightening running well into next year: Rate futures now price one Fed hike by year-end and a second by mid-2027. Columbia Threadneedle’s Ed Al Hussainy expects more — a full unwind of all three quarter-point cuts the Fed made over the final four months of last year against a softening labor market, further than the market is pricing. Hike wagers have driven open interest in August fed funds futures up about 23% this month.

The Bank of England (BOE) and the European Central Bank (ECB) face the same pressure, with the oil run-up reviving inflation concerns across Europe. Markets are fully pricing a quarter-point BOE hike by September and another before year-end; the ECB is seen raising 25 basis points in September, with a second move by year-end all but locked in, Bloomberg reported separately.

Europe's exposure runs through energy imports: Swaps priced less than a quarter-point of combined BOE and ECB tightening through next year as recently as the start of this month. The blockade on shipping through the Strait of Hormuz changed that, leaving the import-dependent UK and Euro area squarely in the path of oil-driven inflation.

Conviction may not hold, though. BMO’s Ian Lyngen expects the market’s belief in a July move to soften after this week’s CPI print and Warsh’s testimony, held up only by Warsh's aversion to guidance. ING strategist Padhraic Garvey makes the threshold case: at today's crude levels, another hike is a high bar, but sustained higher oil would make one “more of a baseline outcome.”

What to watch: The July 29 FOMC meeting is where the market expects Warsh’s first hike to land (if it comes).

MARKETS THIS MORNING-

Asia-Pacific markets opened higher this morning as an unexpected drop in US inflation cooled interest rate hike fears, while oil stabilized following Washington’s move to drop a shipping levy it had threatened in Hormuz. South Korea’s Kospi led the regional rally, gaining 6.3%, while Japan’s Nikkei is up 0.7%.

TASI	10,716	-0.8% (YTD: +2.1%)
MSCI Tadawul 30	1,425	-0.9% (YTD: +2.7%)
NomuC	22,539	0.0% (YTD: -3.3%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	52,299	-0.6% (YTD: +25.0%)
ADX	9,852	-0.5% (YTD: -1.4%)
DFM	5,891	-1.3% (YTD: -2.6%)
S&P 500	7,544	+0.4% (YTD: +10.2%)
FTSE 100	10,529	+0.3% (YTD: +6.0%)
Euro Stoxx 50	6,280	+0.2% (YTD: +8.4%)
Brent crude	USD 85.60	+1.0%
Natural gas (Nymex)	USD 2.92	+0.4%
Gold	USD 4,060	-0.2%
BTC	USD 64,851	+3.7% (YTD: -25.9%)
Sukuk/bond market index	909.26	-0.1% (YTD: -1.1%)
S&P MENA Bond & Sukuk	151.53	+0.1% (YTD: -0.2%)
VIX (Volatility Index)	16.50	-3.9% (YTD: +10.4%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.8% yesterday on turnover of SAR 4.4 bn. The index is up 2.1%% YTD.

In the green: Red Sea International (+10.0%), Entaj (+10.0%), and Alakaria (+8.5%).

In the red: MBC Group (-4.4%), Banque Saudi Fransi (-3.9%), and Masar (-3.8%).

THE CLOSING BELL: NOMU-

The NomuC was flat yesterday on turnover of SAR 10.3 mn. The index is down 3.2% YTD.

In the green: Ratio (+7.2%), Sure Global Tech (+6.9%), and Alqemam (+6.4%).

In the red: Molan Steel (-8.6%), Al Razi (-8.1%), and Keir International (-7.5%).

CALENDAR

AUGUST

30 August-1 September (Sunday-Tuesday): Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center.

31 August-3 September (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

8-10 September (Tuesday-Thursday): The WTM Spotlight Riyadh, Riyadh Front Exhibition & Conference Center (RFECC), Riyadh.

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

28 September-1 October (Monday-Thursday): The International Conference on Theory and Practice of Electronic Governance (ICEGOV), Prince Sultan University, Riyadh.

OCTOBER

25-26 October (Sunday-Monday): The Global Proptech Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

26-29 October (Monday-Thursday): The Future Investment Initiative, King Abdulaziz International Conference Center, Riyadh.

28-29 October (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

28-29 October (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

30 October-1 November (Friday-Sunday): The New Global Sport Conference, Sofitel Hotel & Convention Centre, Riyadh.

NOVEMBER

11-12 November (Wednesday-Thursday): Aluminum Arabia, The Arena, Riyadh.

16-19 November (Monday-Thursday): Cityscape Global, Riyadh Exhibition and Convention Centre (Malham), Riyadh.

29 November-1 December (Sunday-Tuesday): The UN Trade and Development Global Supply Chain Forum, Riyadh.

Signposted to happen sometime in 2026:

2H: Sabic’s USD 6.4 bn Fujian project in China to start production;
November: The Esports Nations Cup, Riyadh;
The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah;

2027

FEBRUARY

1-3 February (Monday-Wednesday): Energy Regulators Regional Association annual conference, Riyadh.

MARCH

21-25 March (Sunday-Thursday):The World Water Forum, Riyadh.

22–24 March (Monday-Wednesday): Capital Markets Forum, Four Seasons Hotel, Riyadh

APRIL

26-29 April (Monday-Thursday): World Energy Congress, Riyadh.

JUNE

1-3 June (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

Signposted to happen sometime in 2027:

The Ocean Race finishes in Amaala on the Red Sea;
Riyadh-Kudmi transmission line to be completed;
Aero Middle East and Sand & Fun takes place in Thumamah Airport, Riyadh.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

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