The landscape for Saudi corporates through year’s end

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WHAT WE’RE TRACKING TODAY

Nomu-listed delivery app Jahez wants to move to Tadawul’s main market

Good mornings, friends. It’s another busy news morning, with everything from thoughts on the corporate landscape through year’s end to another IPO announcement, Jahez looking to upgrade to Tadawul’s main market, and the dawn of “data sovereignty” regulations.

But first:

MORNING MUST-READ- Sometimes, generative AI is brilliant. Other times, it lies to you with both great confidence and all of the skill of a not-so-bright intern. (Obligatory footnotes to Nilay Patel and Ben Evans.)

Yesterday, we asked you to read A16Z co-founder Marc Andreessen’s essays on why AI will save the world alongside his Techno-Optimist Manifesto.

This morning: For a reminder of the current limits of the technology — and why you really don’t want your junior staff using it without training and supervision — go check out Bloomberg’s report on how it’s not exactly fit to run your recruitment program. “Recruiters are eager to use generative AI, but a Bloomberg experiment found bias against job candidates based on their names alone.” The story is brilliantly illustrated on the web and really well-reported.

Read: OpenAI’s GPT is a recruiter’s dream tool. Tests show there’s racial bias.

DIPLOMACY- Crown Prince and Prime Minister Mohammed bin Salman held discussions with US Secretary of State Antony Blinken yesterday for yet another round of discussions on normalizing relations between Riyadh and Tel Aviv along with the prospects of a ceasefire and the release of Israeli hostages in Gaza. Riyadh has on several occasions made it crystal clear that a Palestinian state and an immediate ceasefire to the war in Gaza are prerequisites for any substantial progress on normalization.

Blinken lands in Cairo today where he will be meeting with senior officials in the Sisi administration before making his last stop in Israel. This is Blinken’s sixth visit to our corner of the world — he’s accumulating frequent-flyer points faster than he’s making progress on his foreign policy agenda.

WEATHER- There’s a chance of showers in Riyadh today, with a 23°C high and a low of 14°C.

Look for meh weather over the weekend and into next week: The capital city will see cloudy skies with a chance of rain and an occasional thunderstorm on Friday, mostly cloudy skies with a chance of rain on Saturday, and high winds on Sunday with a chance of rain and thunder in the evening.

In Makkah, it’s going to be sunny today with scattered clouds. The holy city will see a high of 35°C before cooling down to 22°C.

Meanwhile, Madinha is in for a cloudy day and quite possibly some rain with a high of 30°C and low of 16°C.

So, when do we eat? Maghrib prayers are at 6:05 pm in the capital city, and you’ll have until 4:37 am tomorrow to hydrate and caffeinate ahead of fajr. Today is day 11 of Ramadan — we’re almost halfway there.

WATCH THIS SPACE-

#1- IPO WATCH- Nomu-listed food delivery app Jahez (our personal favorite) is gearing up to transition to the main market Tadawul, it said in a filing to the exchange. Jahez has already listed a 13% stake on Nomu, according to its prospectus (pdf).

2023 KPIs: The company’s net income rose 10% y-o-y to SAR 58 mn in 1H 2023, and its revenue increased 13% y-o-y to SAR 835.6 mn, according to its latest results (pdf).

About Jahez: The startup offers on-demand services, quick commerce and last mile delivery through its online application (App Store | Google Play). Jahez has three “substantial corporate shareholders” who together hold a combined 48% of the company. Jahez claims to have served 1 mn customers with 45k drivers across the Kingdom, according to its website.

#1- The folks at US investment manager Franklin Templeton have taken out Capital Market Authority (CMA) licenses to run investment management, fund operations, and securities advisory operations in the Kingdom, according to a statement by the CMA. Franklin Templeton is one of the world’s largest asset managers with USD 1.5 trn in assets under management.

#2- King Abdullah Financial District (KAFD) plans to launch a monorail project in 2026 in a bid to facilitate movement around the financial district, its CEO Gautam Sashittal told Al Eqtisadiah yesterday. The move comes under KAFD’s planned 10-minute city concept, which includes 40 pedestrian crossings connected to the district’s buildings and metro station. No further details were provided on the six-station monorail project.

#3- Some 17 new laws and programs have been put up on the government’s survey platform Istitlaa for public consultation, state news agency SPA reported. The list includes executive regulations for the sale and leasing of real estate projects.

#4- The government is looking to change how it regulates freelance and other “flexible” work: The Human Resources and Social Development Ministry plans to unveil amendments to a freelance and flexible work system sometime between next week and just after Eid Al Fitr, Al Eqtisadiah reported yesterday. The report, which provided little in the way of detail, positioned the move as part of a drive to boost employment in the Kingdom.

In perspective: Companies inked some 2.3 mn freelance services contracts in the first half of 2023, according to ministry data. Businesses also signed some 377k flexible-work contracts and employed 115k remote workers, it said.

#5- Talks are currently ongoing with the Saudi Central Bank to set up an awqaf bank, Al Eqtisadiah reported yesterday, citing statements by Rajis Al Dosari, the general supervisor of the awqaf center in the Riyadh Chamber of Commerce. The proposal is among a number of solutions that he said could help “resolve funding problems” for religious endowments. He added that the set-up of an awqaf bank is “still challenging,” but didn’t unpack what he meant.

DATA POINTS-

The Industrial production Index (IPI) was up 0.3% m-o-m in January 2024, state news agency SPA reported yesterday. The marginal monthly increase came on the back of a rise in mining and quarrying activity, which accounts for 61.4% of the index weight.

Speaking of mining: Four salt ore exploration licenses will be up for grabs at the Eastern Province’s Ras Al Quraya complex, according to a statement on X by the Industry and Mineral Resources Ministry yesterday. The ministry will begin receiving applications for the tender starting Sunday, 24 March until Thursday, 18 April, it said.

Sound smart: Salt ores are refined to produce everything from table and industrial salts to road salt and salts used in chemical processes. Major producers include the United States, Canada, China, India, and Poland.

PSAs-

Companies have until Sunday, 31 March tofile their tax returns for February 2024, according to the Zakat, Tax and Customs Authority (ZATCA). The requirement applies tobusinesses that are subject to value-added tax (VAT) and have annual revenues of more than SAR 40 mn. Late filers will face 5-25% surcharges.

SPORTS-

The national U-23 football team tied 1-1 against Jordan yesterday in the West Asian Football Federation (WAFF) Championship held in Al Ahsa.

THE BIG STORY ABROAD-

The US Federal Reserve’s guidance that it’s on track to deliver as many as three rate cuts this year is the big story in the global business press. We have the rundown in this morning’s Planet Finance, below.

Also worth knowing about:

Reddit has priced its IPO at the top of the range on which it had guided. Shares start trading this afternoon in New York. (Financial Times)
PE giant Apollo Global is offering USD 11 bn for Paramount Global’s film and TV studio, the owner of broadcast outlet CBS and producer of the Top Gun franchise. (Wall Street Journal)

And Tim Cook isn’t having a great morning: The Apple CEO is dealing with a report that the US government could sue the company as soon as today for alleged antitrust violations. Meanwhile, rivals Meta, Microsoft, X, and Match have joined Epic Games in claiming that Apple isn’t playing ball with a court ruling on in-app payments.

FINALLY- Of Black Nazis and other AI faux pas: Semafor writes that Adobe AI model Firefly is as bad as Google’s Gemini was a couple of weeks back.

The misstep: “I asked Firefly to create images using similar prompts that got Gemini in trouble. It created Black soldiers fighting for Nazi Germany in World War II. In scenes depicting the Founding Fathers [of the United States] and the [US] constitutional convention in 1787, Black men and women were inserted into roles. When I asked it to create a comic book character of an old white man, it drew one, but also gave me three others of a Black man, a Black woman and a white woman. And yes, it even drew me a picture of Black Vikings, just like Gemini.” Read more.

Webinar report: From oil to real estate, banking, and education, where’s what S&P says Saudi corporates can expect through the end of 2024

A look at the big themes for GCC corporates through year’s end, including why Riyadh will lead growth in Saudi real estate to the outlook on appetite for s-linked debt, here’s a look at what S&P Global thinks will be the big themes for GCC corporates through year’s end.

The webinar: An S&P Global Ratings gathering yesterday headlined “GCC Corporate Outlook 2024” that dove into sectors including oil and petrochem, real estate, capital markets, and banking, along with forecasts for macro indicators.

The speakers: Rawan Queidat, director of corporate ratings, Tatjana Lescova, associate director of corporate ratings, Trevor Cullinan, director and lead analyst of GCC sovereign ratings, and Mohamed Damak, managing director of financial institutions ratings. Sapna Jagtiani, director and lead analyst for GCC corporate ratings, was moderator.

Among the key takeaways:

OUTLOOK-

The GCC region is in for a moderate expansion of 2-3% on average, while non-oil activity in Saudi Arabia and the UAE are poised for robust growth at around 5%, driven primarily by the tourism, hospitality, retail, and aviation sectors.

Growth drivers in Saudi: The education sector is expected to expand primarily due to population growth, and sectors of consumer products and healthcare are also forecast to perform well. The strong momentum in M&A activity will boost otherwise slow-growing telecoms, while construction remains resilient due to a strong pipeline of massive infrastructure projects.

OIL + PETROCHEMICALS-

Higher earnings + capex: The EBITDA of oil and petrochem companies in the region are expected to rally, with 5-10% annual increases in EBITDA, recovering from a 2023 hiccup. Expect subdued demand at least in 1H 2024, with oversupply easing compared to last year’s levels. Corporate capex is expected to fal in the range of USD 45-50 bn.

The sector rallies on low-cost production + healthy balance sheets: Rated chemical producers in the GCC enjoy a competitive advantage in the market since they benefit from low-cost production and healthy balance sheets, allowing them to swiftly dodge inflation risks–especially in Saudi Arabia where profitability manages to survive the price hikes in these sectors.

Downside risks include geopolitics, potential delays in investment plans, and slower than expected economic growth.

REAL ESTATE-

S&P Global Ratings sees growth in the Saudi real estate sector being driven by a significant relocation to Riyadh and other large cities along with mortgage schemes that are part of a government policy of raising home ownership by 70% by 2030. Growing inflows of skilled expats and the introduction of a premium residency scheme will also have a positive impact on the sector.

The downside risks: The ratings agency highlighted that demand in Saudi is particularly sensitive to interest rates — causing affordability issues especially in Riyadh. Still, the impact on demand could be marginal and we could be heading into a cycle that sees three rate cuts this year led by the US Federal Reserve (see this morning’s Planet Finance, below).

BANKING-

A slowdown in lending growth for Saudi and the UAE is imminent, said Damak. While lending activity could grow a robust 8-9% this year, it would still be slower than 2023 due to tighter liquidity.

The specifics: Corporate lending is expected to increase on the back of mega- and gigaprojects, while mortgage lending will drop on the back of higher rates and market maturity. Local banks stood out with a capital adequacy ratio at almost 20% last year as they continued to be profitable.

DEBT-

The decline in global issuances in 2023 was mainly driven by a drop in sales by Saudi Arabia — particularly local currency issuances — given that most buyers of the Kingdom’s lCY issuances are local lenders that have been facing tighter liquidity conditions. This was balanced by a rise in foreign-currency issuances amounting to USD 50 bn.

Saudi Banks have experienced a slight decline in liquidity in recent years. To foster growth, these banks will need to mobilize resources and will have to resort to external funding. There’s a possibility that Saudi banks might reorganize their balance sheets, potentially divesting from mortgage lending, depending on interest rates.

REMEMBER- Global sukuk issuance (in local and foreign currencies) declined 6% y-o-y to USD 168 bn in 2023.

The outlook: Higher financing needs are expected to trigger market growth. The global FCY sukuk market is expected to expand, propelled by higher financing needs in Riyadh and other Islamic finance countries.

Lack of a standardized interpretation of Sharia could continue to be an obstacle: Unexpected liquidity shortages along with issues caused by the complexity of sukuk issuances compared to regular bonds continue to introduce limitations to sharia-complaint issuances. Also, the potential upcoming adoption of the accounting and auditing organization for Islamic financial institutions' Sharia standard 62 might reduce issuance volumes because it could materially alter the nature and risk characteristics of sukuk instruments.

^^ Check out our past coverage of the downside risks of standard 62 in the link above.

CAPITAL MARKETS-

S&P Global expects green, social, and sustainability-linked bonds globally “to grow modestly” in 2024 at around the USD 1.1 tn level, slightly higher than in 2023, S&P analysts forecast. They expect a continued growth in issuances in the region after bond issuances more than doubled last year to reach USD 23 bn. Sustainable bonds issuances in the Middle East account only for less than 3% of total bond issuances globally.

Saudi and the UAE will remain top issuers of the bonds in the region driven by government-related entities in order to help meet sustainability targets and commitments. “Given the exposure of these two nations’ exposure to hydrocarbons and water scarcity, we expect green bond issuances to remain prevalent,” they said.

INFLATION + INTEREST RATES-

Geopolitical tensions are poised to cause risks on corporate operations in sectors such as oil and gas, shipping, and beyond. Sticky global inflation, supply chain kinks, and delays in interest rate cuts — were they to come to pass — could present operational challenges including higher freight costs and insurance premiums, delivery delays, and even harm consumer confidence, suggests Oueidat.

Disruptions in the Red Sea are not a significant concern since GCC hydrocarbons primarily flow through Asia.

DIVERSIFICATION-

Saudi’s diversification strategy under Vision 2030 has helped bolster economic resilience, they said. “However, a consideration that we have come to in regards to the funding of Vision 2030 [as a whole]: We think there would be something like a weakening in the net external and the net asset position of the government,” they said. The gap would be mainly funded by debt that isn’t necessarily government debt. “The Public Investment Fund is borrowing, potentially it will borrow more towards the end of the year,” they said.

REMEMBER- The PIF is stepping in as the Kingdom’s treasury prepares to run deficits through 2026 and pace out the implementation of some aspects of select Vision 2030 projects.

Aramco eyes expansion into fuel retail in Southeast Asia and Africa to boost downstream value globally

Aramco is looking to enter the fuel retail sector in Southeast Asia and Africa as it looks to tap countries with fast-growing economies, it told Al Eqtisadiah yesterday. The markets are part of the company’s current operations and its expansion strategy in the future, it said.

The oil giant has been eyeing the fuel retail market for sometime: It set up its subsidiary Saudi Aramco Retail (RetailCo) in 2018 under its strategy to bolster its downstream value globally. Locally, it launched in 2021 with French oil giant TotalEnergies a joint retail network under a 50-50 JV that plans to invest USD 1 bn through 2025. The Aramco-TotalEnergies JV aims to expand fuel retail offering here, acquiring an existing network of 270 service stations from local Tas’helat Marketing Company and Sahel Transport Company.

And some moves overseas: Aramco completed earlier this month its acquisition of a 100% equity stake in Chile’s fuel distributor Esmax Distribución, marking its entry into fuel retailing in South America. The move came months after Aramco made its first move into Pakistan’s retail fuel market after signing a binding agreement in December to acquire a 40% stake in oil marketing company Gas & Oil Pakistan (Go).

ALSO FROM ARAMCO- The state oil giant plans to raise natural gas output by 60% by 2030, Reuters reported yesterday, citing statements by Aramco’s Executive VP for Strategy and Corporate Development Ashraf Al Ghazzawi at an energy summit. His statements came weeks after Aramco shelved investment plans in new production capacity on the back of an increasing emphasis on cleaner energy.

Water treatment company Miahona cleared for 30% offering on Tadawul’s main market

Water treatment firm Miahona has gotten regulatory approval to sell a 30% stake on Tadawul’s main market, according to a statement yesterday. The Capital Market Authority did not provide further details other than to offer its standard note that Miahona’s prospectus would be published “within sufficient time prior to the start of the subscription period.”

About the firm: Established in 2008, Miahona is a local developer and operator of sustainable solutions in urban water and wastewater projects. It has over SAR 1 bn worth of investments in water and wastewater assets here. It is a fully owned portfolio company of local investment holding company Vision Invest.

We’ve been expecting this: Word that Miahona might go public first surfaced in October, with sources telling Bloomberg last year that the water treatment firm could raise up to a couple hundred mn USD from the offering.

The IPO pace is picking up: Modern Mills is close to finalizing its IPO as it looks to list a 30% stake on the main market. The Fourth Milling Company is seeking a market debut before the end of June. Other listings in the pipeline include a 30% stake in electronic retailer eXtra’s highly profitable consumer finance arm, and labor agency Smasco. A unit of Singapore’s Olam Group, hypermarket operator Lulu, and Aster DM Healthcare are all exploring potential dual listings here.

A bunch on Nomu too: The CMA approved local contractor Al Ashghal Almoysra ’s offering of a 20% stake on parallel market Nomu, according to a statement. Last week, it approved Neft Alsharq for Chemical Industry and ASG Plastic Factory Co.’s offering of stakes of 20% and 10.6% on Nomu, respectively.

SDAIA proposes new “data sovereignty” policy, regulations to protect public and personal data

Fresh regs to regulate the sharing of Saudi data outside the Kingdom: The Saudi Data and AI Authority (SDAIA) has launched public consultations on a draft policy to regulate access to and the sharing of Saudi data outside of the Kingdom. The policy and proposed changes to data privacy regulations are now out for comment on the government’s Istitlaa platform.

The rationale: SDAIA is introducing the new regulations against the backdrop of the increasing downside risks that arise with tech advancements. The rules regulate how public and personal data must be handled during its collection, storing, processing, dissemination, and use, with an emphasis on the who, what, when, where, why and how of sharing data with parties outside the Kingdom.

Regulating, not banning: While the draft data sovereignty policy (pdf) aims to protect public data against breach as well as illegal access, utilization, and distribution, the government plans to do so in a manner that follows international best practices and safeguards the principles of data transparency and availability.

Sharing personal data outside the Kingdom:SDAIA aims to enforce additional rules and procedures to regulate the sharing of the personal data (pdf) of Saudi nationals with national and foreign institutions outside the Kingdom. The government will task the relevant authorities to compile a list of countries and foreign organizations that are up to standard in terms of handling and protecting the data shared with them. This list can be edited at any given time, but is periodically reviewed every four years.

So, might Saudi data be shared with parties outside the Kingdom? According to the proposals, it might be allowed when:

The transfer of data is between local and foreign public entities that are collaborating on a convention in which Saudi is a party;

When primary operations cannot be completed without the transfer of personal data;
When the transfer of data is in the interest of the subject citizen;
For activities of scientific academic research and studies;
If the transfer of non-sensitive data will be infrequent or for a definite period and for a limited number of data owners.

Acwa Power refinanced old debt for its Bahrain desalination plant

Acwa Power refinances existing debt for Bahrain desalination plant: Renewable energy giant Acwa Power has refinanced USD 580 mn worth of existing debt for its Al Dur Phase II independent water and power project (IWPP), it said in a statement.

About Al Dur IWPP: The project, which has an investment value of over USD 1 bn, achieved financial close in 2019 before it launched operations in June 2022. It was officially inaugurated in May last year. It is 60% owned by Acwa Power, 30% by Japan’s Mitsui and 10% by Bahraini contractor Almoayyed Contracting Group.

The banks: The refinancing included several regional and international banks, including Ahli United Bank, Apicorp, Al Rajhi Bank, Arab National Bank, Banque Saudi Fransi, Gulf International Bank, KfW Ipex-Bank, National Bank of Bahrain, Riyad Bank and Standard Chartered Bank.

What they said: “The Al Dur Phase II IWPP demonstrates Bahrain’s dedication to sustainable infrastructure development and not only meets the growing demand for electricity and desalinated water but also contributes significantly to the economic and social development of the region,” said Thomas Brostrom, chief business development and investment officer at Acwa Power.

More earnings…

An avalanche of earnings news dominated by the ins. sector.

GROUP FIVE-

Group Five Pipe Saudi turned into the black with net income of SAR 9.2 mn in 2023, and revenues doubled y-o-y to SAR 455 mn, it said in a disclosure to Tadawul.

JAHEZ-

Jahez International’s net income doubled y-o-y to SAR 125 mn in 2023, and revenues were up 11.4% y-o-y to SAR 1.8 bn, it said in a disclosure to Tadawul.

MEDGULF-

The Mediterranean and Gulf Ins. and ReIns. turned into the black with net income of SAR 201.5 mn in 2023, and revenues were up 26% y-o-y to SAR 3.3 bn, it said in a disclosure to Tadawul.

DAR ALARKAN-

Dar Alarkan Real Estate Development’s net income increased 38.3% y-o-y to SAR 610.8 mn in 2023, while revenues were down 31% y-o-y to SAR 2.7 bn, it said in a disclosure to Tadawul.

UCA-

United Cooperative Assurance turned into the black with net income of SAR 5.3 mn in 2023, and revenues were up 67.4% y-o-y to SAR 1.1 bn, it said in a disclosure to Tadawul.

SAICO-

Saudi Arabian Cooperative Ins. turned into the black with net income of SAR 71.1 mn in 2023, and revenues were up 14.6% y-o-y to SAR 1 bn, it said in a disclosure to Tadawul.

RAWASI-

Nomu-listed Rawasi Albina Investment’s net income increased 8.6% y-o-y to SAR 22.7 mn in 2023, and revenues were up 21.5% y-o-y to SAR 164.2 mn, it said in a disclosure to Tadawul.

ALMUNAJEM-

Almunajem Foods Company’s net income dipped 2.8% y-o-y to SAR 282 mn in 2023, while revenues were up 11.3% y-o-y to SAR 3.3 bn, it said in a disclosure to Tadawul. On a quarterly basis, their bottom line grew 5x y-o-y to SAR 81.6 mn in 4Q 2023, and its top line increased 11% y-o-y to SAR 829.2 mn.

Crown Prince, Blinken sit-down drive the conversation for the global press

MEANWHILE- Bloomberg is taking note of UAE’s Mubadala following in the PIF’s footsteps in tapping Islamic debt markets. Mubadala is looking to raise c. USD 1 bn in its first USD-denominated Islamic bond sale, sources told Bloomberg. The PIF raised last month USD 2 from a sukuk sale that saw strong demand as it looks to accelerate the pace of investment.

And a little tennis: Three-times Grand Slam champion Andy Murray seems to be undecided on Saudi’s tennis push. “I genuinely don’t know all of the details on…what the Saudi offer is, but we’ll see what happens in the coming weeks,” he told Sky News in an interview yesterday (watch, runtime: 1:21). Meanwhile, football is getting attention from the Associated Press and Le Monde.

Eastern Province Cement gets finance, SVCP wraps up acquisition. PLUS: Healthcare, tourism, and energy

DEBT WATCH-

#1- Tadawul-listed Eastern Province Cement has obtained SAR 1 bn in Shariah-compliant credit facilities from Banque Saudi Fransi (BSF) to fund a new production line, it said in a disclosure to Tadawul yesterday. The planned production line will have a capacity of 10k tons per day to replace some existing production lines. It will also finance the cement producer’s working capital.

#2- The National Debt Management Center (NDMC) has closed its SAR 4.4 bn March 2024 sukuk issuance, state news agency SPA reports. The issuance included three tranches with varying maturities: SAR 203 mn maturing in 2029, SAR 3.7 bn maturing in 2034, and SAR 540 mn maturing in 2039.

M&A WATCH-

Saudi Vitrified Clay acquires cement products company: Tadawul-listed Saudi Vitrified Clay Pipe (SVCP) has completed procedures for an all-share acquisition of Saudi Land Factory for Cement Products in a SAR 25 mn transaction, it said in disclosure to Tadawul yesterday. The acquisition was paid from the company’s own resources, it said.

The transaction will allow SVCP to add concrete pipes, manholes, and box culverts to its product lineup.

TOURISM-

#1- The 100-key Wellness Hotel Abha by Cloud 7 is slated to open in 2025, according to a post on LinkedIn. The retreat is operated by Kerten Hospitality.

#2- Jabal Omar obtains license to operate third tower of five-star Makkah hotel: Jabal Omar Development — one of the Kingdom’s largest listed property developers — has obtained an operating license from the Tourism Ministry for the third tower of its Jabal Omar Jumeirah hotel, it said in a disclosure to Tadawul yesterday. The third tower is home to 244 rooms and suites, meeting rooms, a business center service and others.

HEALTHCARE-

Al Modawat sets out to expand its hospital building facility to accommodate the high occupancy rates, it said in a filing to Tadawul. The SAR 3.2 mn project will be self-financed and is expected to wrap up in a 10 months period.

FINANCIAL SERVICES-

Saudi Reins. has signed resins. contracts with Probitas Corporate Capital at an estimated gross written premium of SAR 135 mn, it said in a disclosure to Tadawul yesterday. It highlighted an indirect interest where its Chairman and Managing Director and CEO are BoD members at parent company Probitas Holding, it said. Its Chief Financial Officer is also a board member at Probitas Corporate Capital.

OIL & GAS-

Nomu-listed Natural Gas Distribution (NGDC) was notified by the Energy Ministry of a 4.6% hike in natural gas service tariff prices to SAR 1.2 per mn British thermal units (Btu), it said in a disclosure to Tadawul yesterday. It expects the adjustment in prices to have a “positive financial impact” on increasing the company’s net income in the coming period. It will take effect once published in the official gazette Umm Al Qura.

The US Federal Reserve signals rate cuts are coming, sending markets soaring

Fed signals it will stay the course on rate cuts: The US Federal Reserve left rates unchanged at 5.25-5.5% in line with expectations, citing solid expansion of economic activity, elevated but easing inflation, strong job gains, and low unemployment, the central bank said in a press release.

Bullish on growth: The Fed raised its forecast for US economic growth this year, saying that it expects GDP to expand by 2.1% this year, compared to previous forecasts of 1.4%. “The economy is performing well,” Fed chair Jerome Powell said during a presser (watch, runtime: 1:11:22) after the Fed wrapped up its two-day meeting. That said, he added that there will be challenges before the economy moves into a soft landing, with core inflation projections currently sat at 2.6% in 2024, above the Fed’s 2% target.

Sit tight for rate cuts this year: Policymakers signaled that the central bank is still on track for rate cuts this year, with a three-quarters of a percentage point cut expected before the end of 2024. More officials are now expecting three cuts in 2024.

Market reax: The Fed’s meeting sent investors to market, leading to a spike in the S&P 500, which closed at a record 5,225 on Wednesday. Tech-heavy Nasdaq 100 rose 1.2% while gold rose 1.6% to as much as USD 2,200 per ounce for the first time. Two-year Treasury yields fell 0.09 percentage points to 4.60%.

THE MARKET THIS MORNING-

Traders this morning welcomed the US Federal Reserve’s guidance: All of our the major Asian benchmarks we follow are up in early trading — and three of them are soaring, up nearly 2%: The Nikkei, Kospi, and Hang Seng.

Sound smart: The Nikkei has just hit an all-time high. Traders were already in a good mood, having welcomed the Bank of Japan’s move earlier this week to raise interest rates for the first time since 2007. Prior to the move, Japan was the world’s last remaining negative-rates regime.

Futures are also up, with everything from S&P, Nasdaq, and Dow futures to wagers on European equities and oils on the rise.

TASI	12,739	-0.5% (YTD: +6.5%)
MSCI Tadawul 30	1,599	-0.6% (YTD: +3.1%)
NomuC	27,229	+0.3% (YTD: +11%)
USD : SAR (SAMA)	3.75 Sell	3.75 Buy
Interest rates	6% repo	5.5% reverse repo
EGX30	28,589	-0.3% (YTD: +14.8%)
ADX	9,270	+0.1% (YTD: -3.2%)
DFM	4,291	+0.4% (YTD: +5.7%)
S&P 500	5,224	+0.9% (YTD: +9.5%)
FTSE 100	7,737	-0.01% (YTD: +0.1%)
Euro Stoxx 50	5,000	-0.2% (YTD: +10.6%)
Brent crude	USD 85.95	-1.6%
Natural gas (Nymex)	USD 1.70	+0.2%
Gold	USD 2,230.90	+2.2%
BTC	USD 67,752	+7.6% (YTD: +148.1%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.1% yesterday on turnover of SAR 8.2 bn. The index is up 7% YTD.

In the green: Saudi Cable (+10%), Middle East Specialized Cables (+9.9%) and Sumou (+9%).

In the red: Saudi Steel Pipe (-7.8%), Enaya (-5.4%) and SICO Saudi REIT (-4.9%).

THE CLOSING BELL: NOMU-

The NomuCrose 0.3% yesterday on turnover of SAR 49.7 mn. The index is up 11% YTD.

In the green: Jahez (+9.7%), Amwaj (+4.9%) and Balady (+4%).

In the red:Group Five (-14.9%), Future Care (-11.3%) and Osool and Bakheet (-7.3%)

CORPORATE ACTIONS-

#1- Saudi Cable will submit its financial restructuring procedure proposal to Riyadh’s commercial court within a “week or less,” the company’s Chief Financial Officer Abdulaziz Batarfi told Al Arabiya in an interview yesterday (watch, runtime: 9:38). The move comes as part of its strategy to restructure capital and liabilities. He estimated the company’s debt pile as SAR 1 bn with the list of creditors including Al Rajhi Bank and Asia’s Noble Resources International.

ICYMI- Shares of Saudi Cables resumed trading on the main market yesterday after Tadawul lifted a near two-year suspension imposed due to a delay in disclosing financial statements. Its shares were up 10% at SAR 62.9 by the closing bell.

#2- Saudi Enaya Cooperative Ins. will hike its capital by SAR 150by way of a rights issue, it said in a filing to Tadawul. The hike would bring the company’s total capital to SAR 380 mn.

#3- Gulf General Cooperative Ins. BoD has reversed Tuesday’s recommendation for a capital hike in favor of a 40% capital reduction, it said in a disclosure to Tadawul. This would be by way of share cancellation at a discount of 0.4 shares for each share in a bid to restructure and write off SAR 200 mn in accumulated losses, bringing down the company’s total capital to SAR 300 mn, down from SAR 500 mn.

#4- Nomu-listed Saudi Advanced Industries (SAIC) BoD has scrapped an earlier proposal to distribute some of its shares in subsidiary Obeikan Glass due to “difficulty” in distributing shares to shareholders not eligible to trade on the parallel market, it said in a disclosure to Tadawul yesterday. Instead, SAIC raised its dividend payout to SAR 59 mn at SAR 1 apiece for FY 2023.

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.

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