International air travel on Middle Eastern airlines is expanding at a rate well above the global pace, with a growth of 12.1 percent, the International Air Transport Association (IATA) says in its latest report .
Domestic air travel was up in all markets again in June, IATA said.
Global revenue passenger kilometers (RPK) were up 6.0 percent in June compared to a year ago, slightly up on May growth of 5.8 percent.
For Middle Eastern airlines, the strategy to increase network and capacity has been met with strong demand, since the convenient location facilitates development of trade links with Africa and Asia as well as economic activity between those two regions.
African air travel has also benefited from growing domestic demand, with Ghana, Nigeria, Ethiopia and the Democratic Republic of Congo posting some of the fastest GDP growth rates globally.
Regional airlines have also made steady progress with load factors through tighter capacity management over the year.
Although African airlines still trail the global average load factor by about 10 percentage points, they continued to make solid progress each month in 2013 compared to the year ago period. In June, load factors on international air travel improved by almost 3 percent points compared June 2012.
Finally, international air travel on Latin American carriers is receiving support from strong business-related travel demand, with the region posting
the strongest trade growth momentum in Q2 compared to any other region.
Global air travel volumes showed an accelerated rate of increase in June. While current levels of business confidence and emerging market growth support air travel expansion at the rate seen so far this year (4.8 percent), there is little evidence to explain the acceleration in growth in June.
Business confidence showed no change in June compared to May and trade growth in advanced economies remains weak.
The acceleration in air travel growth in June has been caused by a pickup in RPKs for Asia-Pacific airlines, who carried half of the global rise in air travel in June compared to May.
However, the recent performance of Asia-Pacific carriers and the slowdown in China’s economy and Asian trade this year suggests this is a result of
volatility in travel volumes rather than acceleration in the growth trend. Growth in Asia-Pacific international RPKs has been 3.6 percent year-to-date, down on the +5 percent expansion in 2012.
Airlines in other emerging regions continue to post the strongest results in international air travel, supported by continued growth in trade activity. International air travel on Middle Eastern, African and Latin American airlines is expanding at rates well above the global pace, with growth of 12.1 percent, 11.2 percent and 8.7 percent, respectively.
European airlines recorded a second month of solid growth in international RPKs, up 4.7 percent in June compared to a year ago. This is consistent with recent improvements in European consumer and business confidence.
China’s market remains strong, up 14.6 percent on a year ago, despite reported slowdowns in economic growth in H1.
Air travel in Japan continues to reflect current improvements in economic performance, with growth of 6.9 percent in June on a year ago. The market has now recovered to pre-tsunami levels.
Air travel within Brazil is the only market to show a decline year-to-date, reflecting a combination of sluggish growth and significant capacity cuts by local airlines.
Passenger load factors reached a new record high in June, slightly above 80 percent on a seasonally adjusted basis.
Airlines in all regions achieved higher load factors over the month, consistent with strong growth in demand.
Tighter capacity management has helped African airlines record some of the biggest increases in load factors.
Global business confidence continues to flatline, but a recent easing in the rate of decline in the Eurozone could help reduce downward pressure on global growth.
Nonetheless, the Eurozone remains in recession and while continued growth in emerging markets should sustain growth in air travel, acceleration is unlikely in the near-term.
Mideast carriers gaining from strong demand
Mideast carriers gaining from strong demand
Saudi Influence expands as 8 new firms join MSCI’s Global and Small Cap Indexes
RIYADH: Eight new Saudi companies have joined MSCI’s global and small capital indexes, highlighting the Kingdom’s growing influence on the international investment landscape.
According to an official document, the financial solution provider has included SAL Saudi Logistics Services Co. in the MSCI Global Standard Index.
MSCI has also added seven stocks to the Small Cap Index, including Al-Babtain Power & Telecommunication, Etihad Atheeb Telecom, and the Mediterranean and Gulf Insurance and Reinsurance Group.
Additional inclusions comprised Middle Mast Pharmaceutical Industries Co., known as Avalon Pharma, Saudi Advanced Industries Co., Saudi Paper Manufacturing Co., and Walaa Cooperative Insurance Co.
Conversely, MSCI has removed six companies from the Small Cap Index: Amlak International for Real Estate Development & Finance Co., known as Amlak, Fawaz Abdulaziz Al Hokair & Co., known as Cenomi Retail, Methanol Chemicals Co., and Riyad REIT.
Additionally, Saudi Co. for Hardware and Saudi Arabian Refineries Co. have also been excluded.
As a result, the number of Saudi companies listed on the Small Cap Index now stands at 80, while the Global Standard Index includes 41 companies. MSCI stated that these changes will be implemented at market close on May 31.
The Saudi companies included in the MSCI Global Standard Index reflect the diverse and robust economic landscape of the Kingdom, with the oil giant Aramco leading the list.
The banking sector is represented by Al-Rajhi Bank, Riyad Bank, and Alinma Bank. It also includes Bank AlJazira, Bank AlBilad, and Saudi French Bank, as well as National Commercial Bank, SABB, and Saudi Investment Bank.
Industrial and petrochemical giants such as SABIC, Advanced Petrochemical, and Saudi Basic Industries Corp., as well as SABIC Agri-Nutrients, Kayan, Yansab, and Ma’aden, feature prominently in the global index, underscoring the Kingdom’s leadership in these fields. Telecommunications and technology are highlighted by stc and solutions by stc.
The healthcare sector includes Bupa Arabia for Cooperative Insurance Co., Dr Sulaiman Al Habib Medical Services Group Co., and Al-Mouwasat, as well as Dallah Healthcare, and Al-Nahdi Medical Co.
Retail and consumer goods are represented by Jarir Marketing Co., Almarai Co., and Savola Group, while the energy sector features Saudi Electricity Co., ACWA Power, and Power and Water Utility Co. for Jubail and Yanbu.
Additional key players include Saudi Research and Media Group, known as SRMG, Tadawul Group, and Luberef. The list also features the Co. for Cooperative Insurance, ADES Holding Co., and SAL Saudi Logistics Services Co., illustrating the wide-ranging and dynamic nature of Saudi Arabia’s corporate environment.
The Saudi companies in the MSCI Small Cap Index also represent diverse sectors, including Saudi Cement, Ataa Educational Co., Al-Rajhi Takaful, eXtra, and Arriyadh Development Co., known as Tameer.
MSCI stands as a premier provider of essential decision support tools and services for the worldwide investment community, according to its website.
GCC bank’s profitability to remain strong in 2024 due to delay in US Fed’s rate cut
RIYADH: A delay in interest rate cuts by the US Federal Reserve will see Gulf Cooperation Council banks’ profitability remain strong in 2024, according to S&P Global Ratings.
This comes as most GCC central banks typically mirror the Fed’s rate movements to preserve their currency pegs.
In a statement, the US credit rating agency revealed that it also expects asset quality to remain robust despite the prolonged high interest rates, thanks to supportive economies, contained leverage, and a high level of precautionary reserves.
“We anticipate a slight deterioration in profitability in 2025, as the Fed could start cutting rates in December 2024, and most GCC central banks are likely to follow suit to preserve their currency pegs,” the statement said.
“However, we believe that several factors will mitigate the overall effect,” it added.
Moreover, S&P disclosed that every 100-basis point drop in rates cuts an average of around 9 percent off the region’s banks’ bottom lines.
This is based on the GCC banks’ December 2023 disclosures and assumes a fixed balance sheet and a parallel shift in the yield curve.
Pakistan shares hit fresh record on rate cut hopes, IMF talks
- Pakistan last month completed a short-term, $3 billion IMF program, seeking fresh, longer-term bailout
- IMF mission is in Pakistan to discuss financial year 2025 budget, policies, reforms under potential new program
Pakistan’s benchmark share index touched a lifetime high on Wednesday, breaching the key level of 75,000, on hopes that easing inflation could pave the way for interest rate cuts as early as June.
Still attractive stock valuations, expectations of more foreign inflows, and the start of talks with the IMF on a new loan program added to the bullish sentiment.
The index was trading at 75,013 points at 0531 GMT, up 0.7 percent, after hitting an intraday high of 75,115. It has surged 80 percent over the past year, and it is up 16.1 percent year-to-date after an IMF rescue last summer helped the government avert a debt default.
On Monday, the index closed at a record of 73,822, up 1 percent.
Mohammed Sohail, CEO of Topline Securities, said Wednesday’s gains were fueled by foreign fund buying.
On Tuesday, the MSCI index added a Pakistani bank, National Bank of Pakistan, to the MSCI frontier market index. Its shares rose 1.6 percent on Wednesday, outperforming the benchmark index.
“We estimate Pakistan’s weight will also increase, thereby having the potential to attract more passive foreign funds,” said Sohail.
The market is picking up steam due to an anticipated decline in inflation to 13.5 percent for May and expectations of a monetary easing cycle starting in June, said Shahid Habib, CEO of Arif Habib Limited.
Investors were also optimism about discussions on a new International Monetary Fund financing program and the economic roadmap ahead, Habib said.
Pakistan last month completed a short-term, $3 billion IMF program, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term program.
An IMF mission is in Pakistan to discuss the financial year 2025 budget, policies, and reforms under a potential new program.
Wall Street bank Citi expects Pakistan to reach a four-year agreement with the IMF worth up to $8 billion by end-July, and recommends going long on the country’s 2027 international bond.
Global conference in Riyadh spotlights procurement and supply chain challenges
RIYADH: Key issues concerning procurement and supply chains will take center stage at a global conference in the Saudi capital, featuring over 35 international speakers.
The upcoming CIPS MENA Conference and Excellence in Procurement Awards, slated to be hosted by the Government Expenditure and Projects Efficiency Authority on May 16 at the Hilton Riyadh Hotel and Residences, reflects the Kingdom’s position as a hub of expertise in procurement and supply chains, according to the Saudi Press Agency.
The agenda will address critical topics, including building sustainable supply chains, enhancing local content, and promoting industry localization. It will also tackle current supply chain challenges and discuss the digital transformation in procurement and corruption in public procurement.
The conference will also focus on building partnerships between organizations in the private sector and government agencies, targeting specialists in the field of procurement and supply chains in the public and the private sectors, decision-makers in the field, and procurement technical systems companies.
Oil Updates – prices rise on US inventories drawdown expectations, CPI focus
SINGAPORE: Oil prices rose on Wednesday on expectations for higher demand as the US dollar weakened and a report showed US crude and gasoline inventories fell while the release of inflation data may point to a more supportive economic outlook, according to Reuters.
Brent crude futures were up 51 cents, or 0.6 percent, at $82.89 a barrel at 9:30 a.m. Saudi time. US West Texas Intermediate crude futures rose 55 cents, or 0.7 percent, to $78.57 a barrel.
US crude oil inventories fell 3.104 million barrels in the week ended May 10, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 1.269 million barrels and distillates rose by 673,000 barrels.
US government inventory data is due later on Wednesday and are likely to also show a drop in crude stockpiles as refineries increase their runs to meet increased fuel demand heading into the peak summer driving season.
“Expectations of another drawdown in US oil inventories should support oil prices,” ANZ Research said in a note.
US consumer price index data is also due on Wednesday and should give a clearer indication whether the Federal Reserve may cut interest rates later this year, which could spur the economy and boost fuel demand.
Oil prices also found support from a softer US dollar and stimulus measures from China, said independent market analyst Tina Teng, with a weaker greenback making dollar-denominated oil cheaper for investors holding other currencies.
Teng was referring to China’s plans to raise 1 trillion yuan ($138.39 billion) in long-term special treasury bonds this week to raise funds to stimulate key sectors of its flagging economy, which is the world’s largest oil importer.
“The US CPI and China’s economic data are key to driving oil prices for the rest of the week,” she added. China will release economic activity data on Friday.
Prices were also supported by concerns around Canadian oil supply, a key exporter to the US
A large wildfire is approaching Fort McMurray, the hub for Canada’s oil sands industry that produces 3.3 million barrels per day of crude, or two-thirds of the country’s total output.
