The view from DC on our business ties with the US

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Aramco says a report it’s talking to Santos is “inaccurate” and Stc’s bid for Altice Portugal has reportedly failed

Good morning, friends, and welcome to a busy news day packed with M&A and investment news and an interview with Steve Lutes, the US Chamber of Commerce’s lead for our part of the world, on the state of play in the bilateral relationship. Let’s jump right in:

HAPPENING TODAY-

It’s wholesale and retail week, organized by the Small and Medium Enterprises General Authority (Monsha'at), the authority said in a statement. Networking between business owners and government officials is one of the key features of the event, which will see activities at SME support centers in Riyadh, Jeddah, Madinah, and Khobar running through Thursday, 11 July. You can register here.

Speaking of SMEs: They’re enjoying more access to credit. Credit facilities to micro, small and medium enterprises (MSMEs) in the Kingdom rose 16.3% y-o-y in 1Q 2024 to SAR 293.4 bn, according to Sama’s monthly bulletin (pdf). Banks provided 94% of that figure, while non-bank financial services firms accounted for the rest.

WEATHER- Expect hazy skies in Riyadh with a daytime high of 42°C, while Makkah will see the mercury will peak at 43°C. Expect some wind in Madinah today and a high of 44°C.

M&A WATCH-

#1- Oil giant Aramco said media reports of it exploring a bid for Australian oil and gas firm Santos were “inaccurate,” Reuters reported, citing an emailed statement. The remarks by an Aramco spokesperson came after Bloomberg reported Aramco and the UAE’s Adnoc were separately considering bids for Santos, company, which has liquefied natural gas projects in Australia, Papua New Guinea, and Timor-Leste, and a market cap of c. USD 17.4 bn

#2- Stc’s bid to buy Altice’s Portugal operations has reportedly failed. Telecoms giant stc and Patrick Drahi, the owner of European telecom group Altice, reportedly ended talks that would have seen stc buy Altice’s telecoms business in Portugal, Portuguese business newspaper Eco reports. Talks reportedly collapsed after the two parties disagreed on the final price, Eco cites sources as saying. Stc submitted two months ago the highest binding offer to acquire Altice Portugal, which Eco estimates is worth c. USD 8 bn.

BACKGROUND- Interest from STC, which is 64% owned by the Public Investment Fund, and others come as Drahi looks to sell shares in a bid to pay down debt. Drahi was hoping to bag a lofty EUR 10 bn from the sale, a price tag that scared off most potential buyers.

PIF WATCH

USD 500 mn investment in Hong Kong: The Public Investment Fund (PIF) signed a non-binding MoU with financial services outfit Hong Kong Chaoshang Group that could see the fund invest a total of USD 500 mn over a five-year period, according to a statement (pdf).

What’s Chaoshang? The Hong Kong-listed firm focuses on trading, lending and factoring, and financial leasing. It has lined up a USD 100 mn convertible and a USD 400 mn loan. They now have three months to ink a definitive agreement.

Where’s the money going? Chaoshang would use the funds to support its working capital and expand its business, as well as “undertake strategic initiatives including but not limited to investments into different industries such as mining and healthcare and / or other sectors as the opportunities arise.”

In context: Tadawul, the PIF, Aramco, and Neom are among the high-profile Saudi institutions that have led a steady charge to deepen business and investment ties between Saudi and China in the past 10 months or so.

RETAIL WATCH-

#1- US private equity firm L Catterton is mulling the full exit of its stake in gourmet food brand Bateel, the grower and retailer of our favorite brand of dates, Bloomberg reports citing people it says have knowledge of the matter.

How much is in play? The PE firm, which is backed by global luxury fashion house LVMH, is reportedly working with UBS to sell a stake of nearly 20% stake. L Catterton had initially bought into Bateel back in 2015 in an international expansion push.

And a capital increase? Bateel’s majority shareholders, Al Sudairi family, may sell more shares in the company as it looks to drum up capital to fund growth plans, the sources said. No further information was provided.

About Bateel: It started as a date farming business in 1936 before expanding to open boutiques for its premium dates and opening a number of cafes and restaurants here and globally.

#2- BinDawood to sell franchise rights in Qatar: Tadawul-listed supermarket group BinDawood Holding has inked a non-binding MoU with Qatar-based Regional Group Company to provide commercial franchise rights for the opening of eight branches under the "BinDawood" brand in Qatar, it said in a disclosure to Tadawul. BinDawood provided no further information on when the supermarkets might open, how much the agreement might be worth, or whether it was taking a stake or offering technical assistance as part of the potential transaction.

WATCH THIS SPACE-

Senegal looks set to scrap a planned desalination project by renewables giant Acwa Power, Reuters reported, citing statements by the West African country’s Water and Sanitation Minister, Cheikh Tidiane Diey. “The price of water will become more expensive in the long run because of the technology used to produce it,” the minister said in televised statements. “I said that it [the project] is not going to happen.”

Dakar would be turning its back on what could have been the Subsahara's largest desalination plant. Acwa Power signed the contracts for USD 800 mn project back in March.

OIL WATCH-

#1- Aramco slashed the official selling price for sales to its Asian customers for a second consecutive month, Bloomberg reported.

#2- The Kingdom’s overseas crude shipments hit a 10-month low in June at 168 mn barrels — about 5.6 mn barrels a day — as summertime demand for energy peaks, Bloomberg reports, citing vessel tracking data and other data providers. The figure for daily exports is only 250k barrels above the lowest level since the pandemic in 2020. Shipments of Saudi crude to China hit its lowest since mid-2020 with 1.27 mn barrels a day, with exports to India reporting its lowest since mid-2021.

SIGN OF THE TIMES- Is the pace of investment in new production slowing? That’s one way of interpreting the latest Baker Hughes Worldwide Rig Count Report, which shows that:

The Middle East added only one net new rig in June compared to the previous month, bringing the total deployed to 342 units (+13 units y-o-y). Saudi Arabia has 85 rigs in the field.
The total number of rigs deployed internationally rose by 32 units m-o-m in June to 1.7k, but by 93 units from the same month last year. Excluding Canada and the US, the international rig count grew only four units m-o-m to 957.

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THE BIG STORY ABROAD-

The US presidential election is once again front and center in the global business press, with pressure on Joe Biden to quit the race for the White House continuing to build nine days after his disastrous debate performance against Donald Trump. His first televised post-debate interview over the weekend with ABC News (watch, runtime: 31:23) failed to quell concerns about his age and ability to secure a second term in the White House, with the Wall Street Journal describing Biden’s defiant tone as a president in denial .

Major donors, political strategists, elected officials, and rank-and-file party members are calling on Biden to “pass the torch,” but Biden has knuckled down, telling ABC that only “the Lord almighty” could convince him to drop out of the race.

The year of elections is continuing to live up to its name elsewhere in the world, with Iran electing Masoud Pezeshkian to the presidency — the country first reformist president in two decades. Over in the United Kingdom, Keir Starmer has formed a government after a Labour Party landslide that saw the Conservative Party’s worst result in nearly two centuries.

In our corner of the world, a temporary Gaza ceasefire may once again be in reach, after Hamas accepted a US proposal to open talks on the release of Israeli hostages and dropped its long-standing demand that Israel agree to a permanent ceasefire before inking any agreement. Israeli and US delegations are set to arrive in Egypt to discuss a truce, an unnamed high-level government official told Al Qahera News.

With little to no business news in sight this morning, some outlets have picked on how European exports of cognac have allegedly become the latest casualty in the tit-for-tat trade war between the EU and China, according to comments yesterday from the finance head of luxury goods conglomerate and Hennesy cognac parent company LVMH. The EU’s third largest market for exports announced that it would hold a hearing on an anti-dumping probe into cognac from the bloc on Friday, two days after the bloc raised tariffs on Chinese-made EVs from some manufacturers by up to 38%.

The view from DC on our growing business ties with the United States

Coffee with: Steve Lutes, Vice President and Deputy Head for the Middle East, Central Asia, and Türkiye at the US Chamber of Commerce. His responsibilities include formulating and executing policies and programs that make it easier for US companies to invest and do business in Saudi Arabia, the UAE, Egypt, Iraq, Qatar, Kuwait, Oman, and Bahrain.

We sat down with Lutes to discuss the US investor sentiment toward Saudi Arabia, what sectors capture their attention, to what degree the legislative framework is supportive of foreign investments, along with the chamber’s future plans for the Kingdom. We spoke in the wake of a busy week for bilateral relations that saw a flood of meetings between businesses and government officials on both sides.

Enterprise: The US-Saudi bilateral investment relations have been gaining a lot of momentum recently. Tell us more about last month’s meetings.

Steve Lutes: We hosted an investment forum titled “Investing In Our Shared Future” in collaboration with the Saudi Ministry of Investment and the US Embassy in Riyadh along with two roundtables on the sidelines of the SelectUSA conference in Maryland. This was to leverage the presence of a substantial Saudi delegation. The forum showcased US business perspectives on Saudi Arabia and identified key growth areas in the bilateral economic relationship. We use these gatherings to engage the private sector on both sides and ensure their perceived challenges to trade and investment are highlighted to government officials.

E: What were the big topics? Who participated?

SL: We hosted panels on innovation in research and development, the future of healthcare with Pfizer on the panel, and I moderated a discussion on AI, digital, data governance with a panelist for Google. We also had a panel looking at sustainable, and advanced manufacturing and PepsiCo was on that one. Also KSA-based restaurant management and POS solutions provider Foodics was on the panels.

E: In which sectors are US businesses particularly interested?

SL: We see significant opportunities in the Saudi economy, particularly in sectors like the digital economy, where AI and fintech play crucial roles. Healthcare is also a major focus, especially in light of the pandemic, driving innovation in R&D, biopharmaceuticals, and medtech. Additionally, the Saudi Green Initiative and energy transition, alongside sustainable and advanced manufacturing, are areas of keen interest to US companies. Tourism is also on the list.

E: What regulatory policies would like to see that would create a more attractive business environment in Saudi? Is there anything currently in place that’s a barrier to investment?

SL: Big credit there to the National Competitiveness Center (NCC) and the Saudi government overall for establishing the public consultation platform Istitlaa to ensure there is a way businesses and the public can weigh-in on new policies. We refer people there all the time and we work hand in glove with the NCC.

The Personal Data Protection Law (PDPL) is another prime example of the kind of policies US investors want to see more of in the Kingdom. While the overarching piece of policy is in a very good place, we’re still trying to work through some industry-specific concerns. There's some very nuanced considerations when it comes to health data and payments data or financial data, because when you think about it a patient's data obviously is very important to that patient, but to really leverage the ability of large multinational companies that are operating in the Kingdom’s health ecosystem, you need to be able to do certain things with that data as well as in the research space.

Offset requirements imposed by government procuring bodies are another opportunity area. These policies require the bidders of contracts valued at SAR 100 mn or more to reinvest 35% of the contract value back into the Kingdom. While this could have been modeled off a long-standing practice in the defense sector, challenges arose when attempting to apply this model to sectors like healthcare and events, which have vastly different dynamics compared to defense. The policy prompted concerns about feasibility, compliance timelines, and the definition of investment. I think the intentions of the content authority and all the players involved are good and I understand what they're trying to accomplish — I think we can marry their objectives with the willingness of industry to come to the table.

E: How are US companies reacting to Saudi’s regional headquarters policy?

SL: The policy has seen considerable interest and success, with numerous companies engaging in extensive discussions and webinars facilitated by the Investment Ministry to address queries and concerns. Establishing regional offices involves complex decisions on relocating assets and personnel, with implications for long-term market commitment. The Ministry’s openness and responsiveness in addressing these complexities have been crucial, leading to several major US firms announcing their regional headquarters in the Kingdom. I think it's currently more a question of just fitting into the parameters of what constitutes a regional headquarter and working through some of those things and making sure that it matches up with US companies’ global plans and their business model.

E: What concerns do businesses on both sides have right now?

SL: One of the challenges mentioned by Saudi investors was the issue of visas. This was highlighted during discussions, particularly concerning delays and backlogs in visa processing. Attracting FDI to all 50 states, including heavyweights like Aramco and SABIC, necessitates business leaders' ability to travel to the US for meetings and site visits. The backlog, exacerbated by the pandemic globally, has affected visa issuance and other necessary travel documents. Efforts by the U.S. State Department and embassies worldwide are underway to address these issues and expedite visa processing, ensuring that Saudi businesspersons can attend conferences, meetings, and seize investment opportunities without delay. It is crucial to maintain focus and allocate resources to clear backlogs promptly, providing certainty and clarity to facilitate timely business engagements and partnerships.

E: You’ve mentioned R&D quite a few times — let’s unpack that.

SL: In many discussions, the focus often turns to the need for new manufacturing facilities. However, the real potential for growth lies in innovation in R&D. For example, in the pharmaceutical sector, companies allocate the vast majority of their investments to R&D, and the remaining to CapEx. When attracting investments, it's crucial for Saudi Arabia and governments worldwide to not solely focus on infrastructure, but also aim to attract investment in R&D. This underscores the importance of fostering favorable regulatory environments, nurturing human capital, and building supportive ecosystems to appeal to this substantial portion of investment.

E: You also mentioned tourism, which is currently a major focus in the Kingdom. Could you provide more details on how US companies are engaging in this sector?

SL: I find Saudi Arabia's burgeoning tourism sector particularly exciting due to its diverse attractions such as AlUla and the Red Sea. These destinations offer a unique blend of natural beauty and cultural richness. Notably, hospitality giants like Hilton and Marriott are expanding their presence to meet the growing demand for tourism infrastructure. Financial service providers like Visa and Mastercard are also playing a crucial role by introducing advanced payment technologies to enhance the tourist experience. These developments present numerous opportunities for US companies interested in contributing to the Kingdom’s evolving tourism landscape.

E: What’s next for the Chamber in Saudi?

SL: We are set to bring a US space delegation, comprising the whole spectrum of players in the space industry, to the Kingdom later this year, to learn more about the opportunities and objectives of the Saudi Space Agency and CST. We know that there's been a lot of government-to-government discussions and delegations visiting back and forth and a lot of conversation. But again, I think to completely build out the sector to take advantage of this, you want industry there and you want not just space companies, but there's many players across the ecosystem. We haven't formally come out with the dates, but we're going to be doing so soon.

Saudi’s non-oil private sector activity grew in June 2024 at the slowest pace in more than two years

Non-oil business activity remained in growth territory last month — but expanded at its slowest pace in two and a half years, according to the Riyad Bank Saudi Arabia PMI (pdf). The headline PMI figure came in at 55.0 in June from 56.4 in May driven by higher output levels despite a drop in new orders, input purchases, and employment. It remains well above the 50.0 threshold that separates growth from contraction.

New orders took a hit as demand softened in the Kingdom. Intake rates were partially buoyed by a strong boost to export sales, which jumped up at the fastest rate recorded this year. The subindex settled at 56.0 down from 59.5 the previous month, Reuters reported. June saw businesses’ reduce their purchasing activity, following a period of unparalleled inventory expansion in recent months, resulting in purchases growing at its weakest level since September 2021.

Output increased on the back of existing order books, cutting down backlog volumes in the Kingdom’s non-oil sector. Businesses reported a rise in their employment numbers, yet rates were “only modest and milder than in May”, tapered by wage pressures forcing constraints onto operational costs. Delivery speed continued to improve. Inflation declined, yet, overall input costs increased at their quickest pace in the last four months.

Optimistic despite the slowdown in growth: “Looking at the second quarter as a whole, the growth figures for Q2 still indicate a positive outlook for non-oil GDP in Saudi Arabia, with expectations of growth exceeding 3%,” Riyad Bank Chief Economist Naif Al-Ghaith is quoted as saying in the report.

REFRESHER- Non-oil growth is central to the Kingdom’s diversification strategy designed to reduce its reliance on oil revenues. The World Bank — and more recently Riyad Capital — expect the local non-oil economy to grow a strong 4.8% this year, up from 4.4% in 2023. Meanwhile, the government is gunning for a non-oil GDP of 4.5-5.0% in 2024.

FROM THE REGION-

Egypt’s PMI hit its highest level in three years at 49.9 in June (pdf) from 49.6 in May;

The UAE’s PMI slipped to 54.6 in June (pdf) from 55.3 in May;

Qatar’s PMI rose to a 23-month high of 55.9 in June (pdf) up from 53.6 in May.

Kuwait’s PMI inched down to 51.6 in June (pdf) from 52.4 in May;

14 sports clubs to be offered to local, foreign investors in second phase of privatization

More sports clubs up for grabs: Some 14 football clubs from various divisions are set to go private in the second phase of a privatization program aimed at lining up investment in the industry, according to a statement on X by the Sports Ministry. Both domestic and foreign investors will be invited to bid in the sale process, which the ministry is running with the National Center for Privatization and Public-Private Partnerships (NCP).

The first batch of clubs set in the second phase include Al Zulfi, Al Nahda, Al Okhdood, Al Ansar, Al Orouba and Al Kholoud, according to the statement. Investors looking to invest in the six clubs can register their interest starting in August, it added.

The second batch will include Al Shoulla, Hajar, Al Najma, Al Riyadh, Al Rawda, Jeddah, Al Taraji and Al Sahel. Those clubs will be offered to investors “at a later date,” the ministry said.

This has been in the works for a while: The second phase of the program was announced in December last year as officials look to open the sector to both global and global investors. The first phase helped rake in “significant commercial revenue growth” for the Saudi Pro League, AFP reported, citing statements from the ministry. The ministry was said to be looking to raise some SAR 1.8 bn (c. USD 480 mn) annually from the upcoming wave of privatization.

BACKGROUND- The first phase of the program saw top football clubs Al Ittihad, Al Ahli, Al Nassr, and Al Hilal transferred to the PIF in June last year under the program launched by Crown Prince and Prime Minister Mohamed bin Salman. Under the plan, the four clubs were transformed into companies with the PIF holding a 75% stake, with the remaining 25% being up for grabs via their general assemblies, Sports Minister Prince Abdulaziz bin Turki Al Faisal said at the time. The first stage of the scheme helped the four clubs sign some of the world’s top football stars (think Cristiano Ronaldo, Karim Benzema and others), with the league’s clubs collectively spending almost USD 1 trn in last year’s summer transfer window.

IN OTHER SPORTS NEWS-

Al Ittihad has parted ways with its coach Marcelo Gallardo after the club announced the termination of the Argentinian manager’s contract in a post on X. Gallardo had come in to replace the former English Premier League manager Nuno Espirito Santo in November in hopes to revive the team’s fortunes, but fell short of reversing results after finishing 5th in the league last season, Reuters reported.

PIF defense champion Sami inks manufacturing and tech agreements with Turkish companies

PIF defense manufacturing champion Sami has inked three localization agreements with Turkey: Saudi Arabian Military Industries (Sami) has inked MoUs with three Turkish defense firms aimed at the localization of defense industries, the PIF company said in a LinkedIn post. a Sami is a wholly-owned subsidiary of the Public Investment Fund (PIF).

Drone manufacturing facility: Sami said it signed an that will see Istanbul-based drone manufacturer Baykar “establish manufacturing capabilities” and develop systems for the Turkish firm’s unmanned aerial vehicles in Saudi. Baykar will develop the necessary technology and transfer intellectual property to the Kingdom, it said, without providing additional details.

Electronic warfare and space: A second MoU will see Sami and Ankara-based defense corporation Aselsan “explore opportunities” for the transfer, localization, and development of electronic warfare technologies here. Sami also signed an MoU with Turkish tech player Fergani Space to establish a “center of excellence” to locally develop emerging technologies to serve the global space sector.

It’s been a busy year for the defense industry: Some 61 contracts worth SAR 26 bn were signed at the World Defense Show in Riyadh in February. This is up from SAR 21 bn worth of purchase agreements signed in 2022. The event saw Sami signing multiple agreements or MoU with leading global defense firms, including US arms maker Lockheed Martin and others.

REMEMBER- The Kingdom has a target of localizing over 50% of its military equipment spending by 2030.

Will a reformist president in Tehran open the door to deeper ties?

King Salman and Crown Prince and Prime Minister Mohammed bin Salman have both congratulated Iranian president-elect Masoud Pezeshkian, state news agency SPA reported (here and here). King Salman said in a message that the Kingdom was “looking forward to continue developing relations between the two countries and continued consultations and dialogue to bolster regional and international peace and security.” The Crown Prince said he was keen on developing and deepening relations between Riyadh and Tehran.

Meet Iran’s next president: Pezeshkian, who is seen as a reformist, beat hardline rival Saeed Jalili in a second-round runoff that saw him secure 53.3% of the vote. No candidate was able to secure a majority in the first round of voting in late June. Pezeshkian, who is a member of the Iranian parliament, has been a vocal critic of Iran’s morality police and has vowed to deepen Iran’s ties with the international community.

Leadership reshuffle at four publicly listed companies

PIF-owned digital security firm Elm has appointed Mohammad Abdulaziz Alomair (Linkedin) as its new CEO, succeeding Abdulrahman Saad AlJadhai, according to a disclosure to Tadawul. Alomair will assume the responsibilities of his new position on Tuesday, 1 October 2024. He was previously Elm’s chief digital products officer.

Tadawul-listed Umm Al-Qura Cement tapped Abdullah Abdulaziz as its next chairman, and Saud Mohamed Al-Sabhan (Linkedin) as vice chairman, according to a disclosure to Tadawul. Abdulaziz currently holds positions at Saudi Telecom Company, Al-Abdullatif Holding Group, and Kayan Petrochemical Company. Al-Sabhan is currently the managing director of Bohoor International Investment Company and has previously worked at the Saudi Industrial Development Fund. More information on Umm Al-Qura’s new board members is available here.

Tadawul-listed Almasane Alkobra Mining Company (Amak) appointed Nihat Soyer (Linkedin) as its new acting CEO, succeeding Christopher Gerard Warwick (Linkedin), it said in a disclosure to Tadawul. Soyer brings 30 years of experience in the mining industry in the Kingdom, Turkey, Albania, and Kyrgyzstan.

The board of Tadawul-listed Tabuk Agricultural Development (Tadco) has reappointed Majid Al Suwaigh (Linkedin) as its chairman, according to a disclosure to Tadawul. Al Suwaigh has been serving as the company’s chairman since July 2021. He is also a board member at Tadawul-listed companies L’azurde and Middle East Specialized Cables. Tadco also named Ahmed Sirag Khogeer (Linkedin) as deputy chairman. He is board member at Tadawul-listed petrochemical firm Saudi Kayan and Tadawul-listed software company Arab Sea Information System among others.

Closer ties with Iran + Esports World Cup lead coverage

No single story dominated coverage of Saudi in the international press over the weekend, but Reuters and AFP are both picking up congratulations passed by King Salman and Crown Prince and Prime Minister Mohammed bin Salman to Iran’s new president-elect, Masoud Pezeshkian. (See more in this morning’s Diplomacy section, below.)

Meanwhile, the kickoff of the first Esports World Cup last week in the capital is getting ink from Bloomberg. The event, which runs until August, has been turning heads with record-setting USD 60 mn purse — that’s triple what was up for grabs at May’s PGA Championship and is on the same level as Wimbledon.

The goal: “We want Saudi to be a natural part of the conversation where you cannot talk about the gaming industry and especially esports without mentioning Saudi on the top of your mind,” Saudi Esports Federation Chairman Prince Faisal bin Bandar bin Sultan Al Saud told Bloomberg.

Remember- This is part of the Kingdom’s efforts to diversify its economy, with the industry expected to contribute SAR 50 bn to the economy, according to Crown Prince and Prime Minister Mohammed bin Salman.

One step closer to Sabic Agri-Nutrients’ sixth plant

RENEWABLES-

Sabic Agri-Nutrients gets locks in feedstock supply for sixth plant: Fertilizer maker Sabic Agri-Nutrients has received approval from the Energy Ministry on the allocation of the feedstock it needs for its new plant in Jubail Industrial City, its sixth overall, it said in a disclosure to Tadawul. The plant will produce 1.2 mn tons of blue ammonia per year, in addition to 1.1 mn tons of urea and specialized fertilizers. No financial details were provided.

ICYMI- Sabic Agri-Nutrients revealed plans earlier this year to launch several decarbonization projects in the decade starting 2026 in a bid to reach net zero by 2050.

REAL ESTATE-

Tadawul-listed Dallah Healthcare, Dallah Real Estate, Tatweer, and asset management firm AlJazira Capital will launch a real estate investment fund worth over SAR 1.2 bn with a focus on Riyadh, Dallah Healthcare said in a disclosure to Tadawul. The fund will seek the acquisition and development of plots in Riyadh. Sources unveiled plans for the fund to Aleqtisadiah in late June.

What we know: Both Dallah Healthcare and Dallah Real Estate will be contributing their owned plots as an investor in kind, while Aljazira Capital will act as fund manager. Tatweer will be investing funds and overseeing construction of a mixed-use project with commercial, office, hotel, and healthcare facilities.

INFRASTRUCTURE-

Jazan City for Basic and Transformative Industries awards infrastructure tenders: Jazan City for Basic and Transformative Industries has awarded tenders worth SAR 315 mn to three companies for infrastructure projects in Jazan Special Economic Zone, state news agency SPA reported. The contracts were inked with China Harbor Middle East Division, Al Dafe Trading and Contracting, and Walid Muyghashi. The timeline for the projects and breakdown of individual responsibilities was not specified.

What’s in the cards? The tenders cover the design and construction of three bridges to link the deposit and re-export areas in the Jazan Special Economic Zone (SEZ) to the port city, according to SPA. The projects also include the development of a service support warehouse and temporary storage facilities.

UTILITIES-

Alkhorayef awarded SAR 191 mn in contracts to install water, sewer connections in six regions: Alkhorayef Water and Power Technologies was awarded 36-month blanket purchase contracts worth SAR 190.8 mn by the National Water Company to install water and sewer service connections in six regions in the Kingdom, it said in a disclosure to Tadawul. The regions are Al-Qassim, Hail, Jazan, and the Eastern Region’s northern, central, and southern districts.

DEBT WATCH-

Tadawul-listed Saudi Paper Manufacturing Company (SPM) has signed a one-year, Shariah-compliant SAR 150 mn credit facility agreement with Emirates NBD Bank to fund its working capital needs and the purchase of raw materials ahead of starting commercial operations of its fifth production line, it said in a disclosure to Tadawul.

Remember: SPM signed two MoUs with Italian paper firm Toscotec to procure its fifth and sixth production lines, each with an annual capacity of 60k tons. A SAR 166 mn agreement was signed in 2022 for the company’s fifth production line, and a SAR 300 mn one was signed earlier this year for its sixth line. The new lines will help bring the paper manufacturer’s total capacity to 250k tons annually.

REAL ESTATE-

Sumou Real Estate to develop 1.1k residential units in Yanbu: Tadawul-listed Sumou Real Estate will build around 1.1k residential units in Yanbu Industrial City and develop the city’s infrastructure under a SAR 1.3 bn agreement it signed with Jubail and Yanbu Industrial Cities Services Company (Jabeen), according to a disclosure to Tadawul. Construction will take 36 months to complete. Jabeen is the investment arm of the Royal Commission for Jubail and Yanbu.

FINANCIAL SERVICES-

Amwal, Tradeweb obtain CMA licenses: Riyadh-based Amwal Capital AlMaliyah has been cleared by the Capital Market Authority (CMA) to manage investments in the securities business, according to a CMA statement. The market regulator also granted New York-based fintech firm Tradeweb a license to carry out securities exchange as an alternative trading system for sukuk and debt instruments, according to a separate statement.

TOURISM-

Flynas runs its first flight to Egypt’s New Alamein: Low-cost Saudi airline Flynas launched its first direct flight to El Alamein International Airport on Thursday, it said in a post on X.

The S&P 500 is on a tear, and a rate cut could fuel its run. Are US megacaps overvalued?

The S&P 500 remains on a tear, unbothered by drama surrounding the US elections: It has posted gains in nine of the last 11 weeks, Bloomberg notes, including 2% last week as a steady slowdown in the labor market boosted expectations the US Federal Reserve could start to cut interest rates as early as September.

By the numbers: The S&P 500 was up 0.54% on Friday to close at 5,567, while the Nasdaq Composite edged up 0.90% to 18,352.76. Both indexes ended the week at record highs after labor data released on Friday showed US unemployment up slightly at 4.1% — its highest November 2021.

Cooler US jobs data could prompt the Fed to start trimming interest rates in the fall, Reuters reported. “This report puts the Fed in a comfortable spot,” said Peter Cardillo, a chief market economist at institutional brokerage firm Spartan Capital Securities. “If this continues next month, with no increases in hourly wages, then I think we'll see a rate cut in September and another one in December.”

Remember: A rate cut will almost-inevitably see investors allocate more capital to equities.

But it may be time to to moderate your expectations for US equities in the coming decade. While valuations are admittedly bad tools to use when trying to time the market, Bloomberg still notes that that the S&P 500 is trading at 26x earnings — higher than on any single election day as far back as 1990. That suggests “the elevated state of equities may be reason to lower expectations for their performance under whoever wins the election in November,” it writes.

A decade of “Meh” in the making? “Today’s lofty valuations for US megacaps suggests significant underperformance over the coming decade, and because they make up such a dominant share, returns for the overall US market are also likely to be pretty muted,” Richard Bernstein Advisors’ deputy chief investment officer, Dan Suzuki, told the business information service.

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Euro Stoxx 50	4,979	-0.2% (YTD: +10.1%)
Brent crude	USD 86.54	-1.0%
Natural gas (Nymex)	USD 2.32	-4.1%
Gold	USD 2,398	+1.2%
BTC	USD 58,056	+2.5% (YTD: +38.1%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.6% at Thursday’s close on turnover of SAR 4.9 bn. The index is down 2.6% YTD.

In the green: Al Rajhi Takaful (+8.9%), Al Jouf (+6.2%) and Saico (+5.9%).

In the red: AlBaha (-7.7%), Miahona (-4.2%) and Smasco (-2.6%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.6% at Thursday’s close on turnover of SAR 44.9 mn. The index is up 5.6% YTD.

In the green: Apico (+11.2%), Group Five (+9.7%) and Armah (+7.9%).

In the red: Fadeco (-5.3%), Horizon Educational (-4.8%) and Pan Gulf (-4.7%)

CORPORATE ACTIONS-

Tadawul-listed telecom company Zain KSA will distribute a dividend of SAR 449.4 mn at SAR 0.50 per share for FY 2023 starting Thursday, 18 July, it said in a disclosure to Tadawul.

CALENDAR

JULY

4 July-25 August: (Thursday-Sunday): Esports World Cup, Boulevard Riyadh City, Riyadh.

7-11 July (Sunday-Thursday): Monsha'at’s wholesale and retail week, Riyadh, Jeddah, Madinah and Khobar SME support centers.

12 July (Friday): PFL MENA 2, The Green Halls, Riyadh.

10-11 July: (Wednesday-Thursday): Global EV & Mobility Tech Forum, Riyadh International Convention & Exhibition Center, Riyadh.

July 24 (Wednesday): Stc shareholders to vote on PIF acquisition of Tawal.

21-30 July (Sunday-Tuesday): International Chemistry Olympiad, King Saud University, Riyadh.

AUGUST

4 August (Sunday): Last day to apply to the Digital Government Authority (DGA) awards.

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

18 August (Sunday): New academic year begins.

27-29 August (Tuesday-Thursday): Saudi Fashiontex Expo, Riyadh.

SEPTEMBER

2-4 September (Monday-Wednesday): Saudi Warehousing & Logistics Expo, Riyadh.

2-4 September (Monday-Wednesday): Saudi Wood Expo, Riyadh.

3-5 September (Tuesday-Thursday): 24 Fintech, Front Exhibition & Conference Center, Riyadh.

9-11 September (Monday-Wednesday): International Manufacturing Congress, Riyadh.

10 September (Tuesday): Saudi Arabia Investors Forum, Riyadh.

10-12 September (Tuesday-Thursday): Saudi Sports Show, Riyadh.

10-12 September (Tuesday-Thursday): Global AI Summit, Riyadh.

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

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.

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

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

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

OCTOBER

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

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

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.

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

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

NOVEMBER

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

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

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

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

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

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

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

DECEMBER

1 December (Sunday): Opec+ to meet.

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

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

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

Signposted to happen sometime in 2024:

The AFC Champions League Elite

2025

FEBRUARY 2025

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.

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