JEDDAH: Saudi Arabia’s consumer inflation slowed in December 2016, losing speed for the first time at least since 2012, said a report issued by Al-Rajhi Capital.
Analysts said that inflation in December last grew by 1.7 percent year-on-year versus 2.3 percent year-on-year in November, mainly owing to the fall in food prices. On a month-on-month basis, prices continue to fall with the index dropping by 0.5 percent in December compared to November.
Economists at Al-Rajhi Capital said that the total value of point of sale (POS) transaction declined 5.9 percent year-on-year in December 2016 compared to 3 percent year-on-year in November 2016, while ATM cash withdrawals dropped by 4.5 percent year-on-year in December, higher than 2.2 percent year-on-year fall in November.
According to the data released by the Saudi Arabian Monetary Agency (SAMA), annual value of POS transactions fell by 4.7 percent in 2016, the first drop since the publication of the data in 1993. Similarly, aggregate annual ATM withdrawals fell by 3 percent in 2016, first time since 2013 indicating the ongoing weakness in consumer spending.
The report said that the non-oil private sector’s Purchasing Managers’ Index (PMI) expanded to 55.5 in December 2016, as against 55 in November, backed by a rise in output.
The report said that real estate prices in Saudi Arabia dropped 6.1 percent in 2016, versus a yearly fall of 2.6 percent in 2015, as per the new real estate price index published by GASTAT.
The loan-to-deposit ratio recorded its lowest mark in 11 months as Saudi banks’ claims on the private sector rose at a slower pace of 2.4 percent year-on-year in December while deposits grew marginally in December. On an annual basis, credit growth to private sector slowed down to 2.2 percent in 2016, compared to 9.8 percent in 2015 and last five years’ average growth rate of 12.3 percent.
Saudi Arabia’s foreign reserve assets dropped in December 2016, albeit at a slower pace on a monthly basis.
The Kingdom used around SR300 billion in 2016 (SR435 billion in 2015), mainly to plug fiscal deficit.
On the equity front, the Tadawul All Share Index (TASI) dropped 1.5 percent in January 2017, as compared to a rise of 3 percent month-on-month in December 2016.
The report quoted Saudi finance minister as saying the GDP growth is expected to be higher than 1 percent in 2017, as against 0.4 percent revised by the International Monetary Fund (IMF), largely due to the planned investments in renewable energy coupled with a stimulus package for the private sector.
In a note issued on Saturday, Moody’s Investor Service said that the liquidity pressures on Saudi banks are likely to moderate primarily as a result of subdued credit growth, which will, however, reduce banks’ profit.
Last week, the three-month Saudi Interbank Offered Rate (SAIBOR) fell below the central bank repo rate of 2 percent, its lowest levsel since April 2016. This is credit positive for Saudi banks’ funding costs and confirms that liquidity conditions in Saudi Arabia have eased since the third quarter of 2016 after significant tightening last year because of falling oil prices, the report said.
Saudi inflation slows in December
Saudi inflation slows in December
Closing Bell: Saudi main index closes in red at 10,947
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Thursday, losing 208.20 points, or 1.87 percent, to close at 10,947.25.
The total trading turnover of the benchmark index was SR4.80 billion ($1.28 billion), as 14 of the listed stocks advanced, while 253 retreated.
The MSCI Tadawul Index decreased, down 25.35 points, or 1.69 percent, to close at 1,477.71.
The Kingdom’s parallel market Nomu lost 217.90 points, or 0.92 percent, to close at 23,404.75. This came as 24 of the listed stocks advanced, while 43 retreated.
The best-performing stock was Musharaka REIT Fund, with its share price up 2.12 percent to SR4.34.
Other top performers included Al Hassan Ghazi Ibrahim Shaker Co., which saw its share price rise by 1.18 percent to SR17.20, and Saudi Industrial Export Co., which saw a 0.8 percent increase to SR2.51.
On the downside, Abdullah Saad Mohammed Abo Moati for Bookstores Co. was among the day’s biggest decliners, with its share price falling 9.3 percent to SR39.
National Medical Care Co. fell 8.98 percent to SR128.80, while National Co. for Learning and Education declined 6.35 percent to SR116.50.
On the announcements front, Red Sea International said its subsidiary, the Fundamental Installation for Electric Work Co., has entered into a framework agreement with King Salman International Airport Development Co.
In a Tadawul statement, the company noted that the agreement establishes the general terms and conditions for the execution of enabling works at the King Salman International Airport project in Riyadh.
Under the 48-month contract, the scope of work includes the supply, installation, testing, and commissioning of all mechanical, electrical, and plumbing systems.
Utilizing a re-measurement model, specific work orders will be issued on a call-off basis, with the final contract value to be determined upon the completion and measurement of actual quantities executed.
The financial impact of this collaboration is expected to begin reflecting on the company’s statements starting in the first quarter of 2026, the statement said.
The company’s share price reached SR23.05, marking a 2.45 percent decrease on the main market.
