{"id":82716,"date":"2023-12-12T00:00:00","date_gmt":"2023-12-12T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2023\/12\/12\/its-crunch-time-at-cop28\/"},"modified":"2023-12-12T00:00:00","modified_gmt":"2023-12-12T00:00:00","slug":"its-crunch-time-at-cop28","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2023\/12\/12\/its-crunch-time-at-cop28\/","title":{"rendered":"It\u2019s crunch time at COP28"},"content":{"rendered":"

Good morning, wonderful people. <\/strong>We feel a busy news day coming up, so we\u2019re going to jump straight into this morning\u2019s report:<\/p>\n

HAPPENING TODAY-<\/strong><\/p>\n

<\/a>#1- Bankers are due to price MBC\u2019s initial public offering on the Tadawul later today. <\/strong>Look for it to be priced at the top of the SAR 23-25 range on which they guided (pdf)<\/a>. The sale was fully covered in the first hour of the bookbuilding period. Some 90% of the offering is earmarked for institutions, with individual investors set to place bids after the offering is priced today.<\/p>\n

#2- OPEC\u2019s top Arab energy ministers are in Doha<\/strong> for day two of the Arab Energy<\/a>Conference<\/a>. Energy Minister Prince Abdulaziz bin Salman flew into Doha from Dubai, where he was attending COP28. Also joining are ministers from Iraq, Kuwait, Algeria, Libya as well as Oman, which is not an OPEC member. UAE Energy Minister Suhail Mohamed Al Mazrouei is not expected to attend. The conference is organized by the Organization of Arab Petroleum Exporting Countries.<\/p>\n

<\/a> #3- Nato<\/strong> Secretary General <\/strong>Jens Stoltenberg will arrive in <\/strong>town for a two-day visit<\/strong>. On the agenda: meetings with Defense Minister Prince Khalid bin Salman and other high-level officials, Nato said in a statement<\/a>. He\u2019ll appear tomorrow at a discussion at Saudi Arabia National Defense University.<\/p>\n

\n

\n

<\/a> #4- It\u2019s crunch time on the final day of COP28 in Dubai<\/strong>,where fierce divisions over a draft agreement could still see the conference going into overtime. <\/p>\n

The sticking point: <\/strong>It\u2019s all about oil and gas, as we\u2019ve been reporting since last week. Tense<\/a>negotiations<\/a> have resulted in a draft agreement<\/a> that would commit countries to \u201creducing\u201d the consumption and production of fossil fuel use in a \u201cjust, orderly and equitable manner\u201d to achieve net zero \u201cby, before, or around\u201d 2050.<\/p>\n

There won\u2019t be a blanket call to <\/strong>triple renewable energy production<\/a><\/strong>, instead presenting it as an \u201coption\u201d and not a \u201cprescribed step,\u201d alongside doubling energy efficiency.<\/p>\n

It would be the first time a COP agreement calls for a reduction in the use <\/strong>of oil and gas, but falls far short of the \u201cphase out\u201d language sought by European negotiators and a group of small island nations.<\/p>\n

On one side: Saudi Arabia and most other Arab oil producers<\/strong>, who are flatly opposed to calls to phase out hydrocarbons. <\/p>\n

On the other:<\/strong> The draft agreement is \u201cunacceptable \u2026 We will not go silently to our watery graves.\u201d \u2013John Silk, minister of natural resources and commerce, Marshall Islands.<\/p>\n

What happens now: <\/strong>Delegates from each participating country are lobbying and being lobbied on the final language, with the EU, small nations, and the United States firmly in one camp, and Saudi and producing countries in the other. If there\u2019s no agreement today, talks go into overtime. Under UN rules, any single country can block the adoption of the agreement.<\/strong><\/p>\n

Need to go deeper?<\/strong>Enterprise Climate<\/a> has the lowdown, calling the draft agreement a \u201cmixed bag of compromises.\u201d<\/p>\n

\n

\n

#5- The US Federal Reserve begins its two-day policy meeting today<\/strong> where for the first time in almost two years the key question is not when the central bank will raise interest rates, but when it will cut them. Don\u2019t expect any firm indicators about when this might happen, though: the key task for Fed officials is to temper the recent overexcitement in the financial markets, which are pricing in rate cuts earlier in 2024, according to the Financial Times<\/a>.<\/p>\n

The Fed will make its rate announcement tomorrow evening (KSA time)<\/strong>, and you can expect SAMA will follow suit before long. The central bank has yet to announce when it will next meet to consider rates. <\/p>\n

Sound smart: <\/strong>With the SAR pegged to the USD, we typically import US interest rate policy. That doesn\u2019t mean SAMA always follows the Fed\u2019s lead: SAMA raised rates twice in 2018 \u2014 even though the Fed left rates on hold \u2014 in a bid to tamp down inflation. <\/p>\n

\n

\n

<\/a> PSA- <\/strong>Tenants in the Kingdom need to pay rent through the government\u2019s Ejar platform <\/strong>starting in January<\/strong>, Real Estate General Authority (REGA) Tayseer Al Mufarrej told Rotana Khalejia (watch, runtime: 0:33<\/a>). The move aims to limit the involvement of brokers and ensure the soundness of financial transactions within the real estate property market, Al Mufarrej said in separate statements picked up by Argaam<\/a>. <\/p>\n

Fast fact: <\/strong>Some 6.6 mn residential contracts and 1.3 mn rental agreements for commercial properties have been registered<\/a> on the system since it launched in February 2018.<\/p>\n

WEATHER- Riyadh <\/strong>and Dammam <\/strong>are set to enjoy a daytime high of just 25\u00b0C, according to our favorite weather app, but expect some low-lying fog in Dammam early in the morning. Jeddah<\/strong> will see a high of 31\u00b0C with extreme humidity and the possibility of drizzle in the afternoon.<\/p>\n

** You\u2019re reading Zero Issue #12 of EnterpriseAM KSA. <\/strong><\/p>\n

** Think of a zero issue as a \u201cbeta.\u201d<\/strong> This issue has not been published or distributed to a wide audience. The sponsor logos above are not correct because we\u2019re still developing the new KSA template.<\/p>\n

** Did you receive this as a forward?<\/strong> Email editorial@enterprisemea.com and let us know if you\u2019d like to be added to our list of beta readers ahead of our launch.<\/p>\n

** Have a comment, criticism, or story tip? <\/strong>Hit up patrick@enterprisemea.com<\/a>. <\/p>\n

DATA POINTS-<\/strong><\/p>\n

<\/a> #1-<\/strong> The Industrial Production Index (IPI) dropped 12.3% y-o-y in October<\/strong>, continuing its downward trend for the sixth consecutive month, data (pdf) issued by the General Authority for Statistics<\/a> (Gastat) showed yesterday. The decline in the indicator, which reflects the relative changes of the volume of industrial output, came on the back of a fall in mining and quarrying activity \u2014 which account for 74.5% of the index\u2019s weight. <\/p>\n

The upside: <\/strong>Manufacturing as well as activity in electricity and natural gas supply both rose, the figures show. <\/p>\n

ON A RELATED NOTE- The number of industrial licenses issued by the Investment <\/strong>Ministry almost doubled<\/strong> on an annual basis to 412 in 3Q 2023, according to the latest ministry figures (pdf)<\/a>. Capital allocation for newly licensed factories was basically flat at SAR 8.1 bn. <\/p>\n

#2- Foreign reserve assets rose 3% m-o-m in November, despite declining on an annual <\/strong>basis<\/strong>, closing the month at SAR 1.6 tn, according to the latest figures. On an annual basis, foreign reserve assets fell 7% y-o-y in November. Foreign currency reserves<\/strong> constitute 94% of the Kingdom\u2019s foreign reserve assets.<\/strong><\/p>\n

#3- Saudi Arabia ranked first among G20 countries and second globally in the growth <\/strong>rate of international tourist arrivals<\/strong>, according to a report by Al Eqtisadiah<\/a> that picked up figures from the the World Tourism Barometer released by the United Nations World Tourism Organization (UNWTO). International tourist arrivals grew 50% in 9M 2023 compared to same period in 2019.<\/p>\n

Sound smart: <\/strong>Tourism revenues more than tripled<\/a> in the first quarter of 2023 to SAR 37 bn. The Tourism Ministry recently updated its target for total annual tourist trips to 150 mn by 2030, with an equal split between domestic and international travelers. The ministry wants to see the industry account for 10% of GDP by 2030.<\/p>\n

THE BIG STORY ABROAD-<\/strong><\/p>\n

The two big stories this morning vying for your attention aren\u2019t business-related.<\/strong><\/p>\n

#1- Arab world steps up diplomatic pressure for Gaza ceasefire:<\/strong> The UN General Assembly will convene today to vote on a non-binding resolution<\/a> demanding an immediate ceasefire in Gaza as the humanitarian crisis on the ground reaches catastrophic levels. The emergency meeting was called by Egypt and Mauritania after the US blocked another resolution<\/a> at the Security Council last week despite the UN and aid agencies warning of starvation conditions and the imminent collapse of public order. <\/p>\n

The UAE flew a dozen envoys of UN Security Council members into Rafah<\/strong>, on Egypt\u2019s border with Gaza. Several reiterated calls for an immediate ceasefire after the visit. China, Russia, and the UK were among the P5 members to attend. The US and France gave the visit a pass. <\/p>\n

WAIT \u2014 we\u2019re going to \u2026 what? <\/strong>Israeli Prime Minister Benjamin Netanyahu has apparently told a powerful group of legislators that Saudi Arabia (along with the UAE) will be stepping in to pay for the reconstruction of Gaza, the Times of Israel<\/a> reports.<\/p>\n

\n

\n

#2- It\u2019s the third and final day of voting in Egypt<\/strong>\u2019s presidential race, where incumbent President Abdel Fattah El Sisi is expected to cruise to victory. Officials are reporting high voter turnout. <\/p>\n

Why this matters: <\/strong>There\u2019s broad consensus that Egypt needs not to devalue its currency, but to fully float it \u2014 probably accompanied by a jumbo-sized rate hike. <\/p>\n

When it could happen: <\/strong>Election results are due on Monday, 18 December \u2014 and the Central Bank of Egypt\u2019s monetary policy committee has a regularly scheduled interest rate meeting on the calendar for Thursday, 21 December. <\/p>\n

IN BUSINESS news:<\/strong><\/p>\n