Saudi utility company ACWA Power signs $1.5bn wind energy deal with Egypt
Described as the largest project of its kind in region, each year it is expected to cut carbon emissions by 2.4m tons, save 840,000 tons of fuel and supply power to 1 million homes
Updated 12 January 2024
SPA
RIYADH: The Egyptian government signed an agreement on Wednesday with a consortium led by Saudi utility company ACWA Power for wind energy production in the Gulf of Suez and Gulf of Zeit.
The project aims to generate 1.1 gigawatts of power and is worth $1.5 billion in terms of investments, the Saudi Press Agency reported.
Mohammed Shaker, the Egyptian minister of electricity and renewable energy, said the venture is the largest wind energy project in the region and ranks among the top onshore initiatives of its kind globally. Each year it is expected to cut carbon emissions by 2.4 million tons, save about 840,000 tons of fuel, and supply power to a million homes in Egypt.
ACWA’s Chief Investment Officer Thomas Brostrom said the project will incorporate 220-meter-tall wind turbines featuring cutting-edge technology.
The agreement was signed in Cairo by Mohammed Al-Khayyat, the chair of Egypt’s New and Renewable Energy Authority; Mohammed Hamdouche, ACWA’s vice president for business development; and Hassan Amin, the director of ACWA Power Egypt.
Saudi Arabia records 16% surge in credit card loans in Q1 2024
Updated 19 sec ago
Dayan Abou Tine
RIYADH: Saudi Arabia recorded a 16 percent annual surge in credit card loans in the first quarter of 2024 to reach SR27.25 billion ($7.3 billion), the latest central bank data showed.
The Saudi Central Bank, also known as SAMA, figures indicate a shift in consumer behaviors about cashless payment options and show that the Kingdom is on track to become a cashless society.
In an April report by GlobalData, Ravi Sharma, a banking and payments analyst, emphasized the transition from cash to electronic payments, noting: “While cash has traditionally been a preferred method of payment in Saudi Arabia, its usage is on the decline in line with the rising consumer preference for electronic payments.”
GlobalData’s payment card analytics revealed that card payments value in Saudi Arabia registered a growth of 17.8 percent in 2022, followed by 9.7 percent in 2023 to reach SR511.5 billion.
Commenting on the payments trend in Saudi Arabia, Sharma said: “The country has a robust digital payment infrastructure, supported by a developing card market and a well-established card acceptance infrastructure. The government is taking steps to enhance the infrastructure in the country by encouraging merchants to adopt at least one electronic payment option apart from cash.”
The increase in credit card loans can also be attributed to recent collaborations to introduce new credit card offerings and payment solutions across the Kingdom.
One such collaboration involves Mastercard partnering with a digital payments technology company Loop to issue Bank Identification Numbers for credit cards. A BIN is used to determine the issuing financial institution that a credit card belongs to. They also help in the speedier execution of financial transactions and offer a shield to cardholders from identity theft and fraud.
These innovative payment solutions are expected to facilitate seamless and secure digital payments for consumers, merchants, and fintechs, thereby driving digitization in daily transactions.
This move comes at a time when the Kingdom’s small and medium enterprises and fintech community are thriving, presenting a favorable environment for digital payment solutions.
On the contrary, SAMA data revealed a slight 1 percent uptick in consumer loans, totaling approximately SR451 billion in the three months ending March. Within this category, education loans surged by 24 percent to SR8 billion, while travel and tourism loans saw a 19 percent increase to SR990 million.
Consumer loans typically involve borrowing a specific amount of money, to be repaid over a fixed period with interest. One advantage of consumer loans is that they often come with lower interest rates compared to credit card loans, making them a cost-effective option for large purchases or long-term financing needs. Additionally, consumer loans provide borrowers with a structured repayment plan, allowing them to budget and manage their debt more effectively.
On the other hand, credit card loans do not have a fixed repayment period, and borrowers can repay the borrowed amount over time, as long as they make at least the minimum monthly payments. One of the key advantages is the convenience and flexibility they offer, allowing individuals to make purchases and manage expenses without the need to carry large amounts of cash.
Additionally, they come with rewards programs, cashback incentives, and other perks that can provide additional benefits to cardholders.
Oil Updates – prices rise on US crude storage draw, China imports show year-on-year gain
Updated 09 May 2024
Reuters
SINGAPORE: Oil prices rose on Thursday as falling US crude inventories amid rising refinery intake and a year-on-year increase in Chinese imports last month supported higher demand expectations for the world’s two largest crude consuming nations, according to Reuters.
Brent crude futures for July rose 27 cents, or 0.3 percent, to $83.85 a barrel by 9:50 a.m. Saudi time. US West Texas Intermediate crude for June was up 34 cents, or 0.4 percent to $79.33 per barrel.
“Oil markets were buoyed by a larger-than-expected draw in the US inventory data. The improved China’s trade balance data added to the upside momentum,” said Tina Teng, an independent market analyst, adding that crude prices may continue to track economic factors looking ahead.
Crude inventories in the US, the world’s biggest oil user, dropped last week by 1.4 million barrels to 459.5 million barrels, according to the Energy Information Administration, more than analysts’ expectations for a 1.1 million-barrel draw. Stockpiles fell as refinery activity increased by 307,000 barrels per day in the period.
This caused gasoline stocks to swell by more than 900,000 barrels to 228 million barrels, while distillate stockpiles including diesel and heating oil rose by 600,000 barrels to 116.4 million barrels.
“The market shrugged off the builds in gasoline and distillate fuels as refiners ramp up for the upcoming driving season,” analysts at ANZ Research said in a note on Thursday.
Shipments of crude in April to China, the world’s biggest oil importer, were 44.72 million metric tons, or about 10.88 million bpd, according to China’s customs data released on Thursday. That was up 5.45 percent from the relatively low 10.4 million bpd imported in April 2023.
Hopes for a ceasefire in the Israel-Hamas conflict Gaza kept oil prices from moving higher. The US said earlier in the week that negotiations should be able to close the gaps between Israel and Hamas.
“While there may be some short-term relief for oil prices, it may be difficult to return to April’s high above the $90 per barrel level, where geopolitical tensions were at its peak,” said Yeap Jun Rong, market strategist at IG.
Egypt’s headline inflation slowed to 32.5% in April
Updated 09 May 2024
REUTERS
CAIRO: Egypt’s annual urban consumer price inflation rate decreased to 32.5 percent in April from 33.3 percent in March, slowing slightly more than analysts had expected, data from the country’s statistics agency CAPMAS showed on Thursday.
Month-on-month, prices rose by 1.1 percent in April, up from 1.0 percent in March. Food prices declined in April by 0.9 percent, though they were 40.5 percent higher than a year ago.
A poll of 17 analysts had expected annual inflation to dip to a median 32.8 percent, continuing a slowing trend that started in September when inflation reached a peak of 38.0 percent.
The central bank has tightened its monetary policy, hiking interest rates by 600 basis on March 6, the same day it signed a $8 billion financial support package with the International Monetary Fund and let the currency plummet.
Egypt promised the IMF in the March agreement it would resume tightening if necessary to prevent further erosion of the purchasing power of households.
The government last month also increased the price of a range of petrol, diesel and other fuels, as part of a commitment made to the IMF.
Inflation has been elevated for the past year, driven largely by rapid growth in the money supply.
Meanwhile, Egypt’s non-oil private sector continued its contraction in April, with the S&P Global Purchasing Managers’ Index for the country edging down to 47.4 from 47.6 in March. This marks the 41st consecutive month below the 50.0 threshold, which separates growth from contraction.
The employment sub-index slipped to 49.7 in April from 50.8 in March, stated the rating agency.
However, the output sub-index climbed to 44.8 in April from 44.5 in March and the new orders index improved to 45.5 from 45.0. Business sentiment also improved, with the future output expectations index climbing to 55.3 in April from 52.2 in March.
Meanwhile, global ratings agency Fitch last week revised Egypt’s outlook to positive from stable.
The agency affirmed Egypt’s rating at ‘B-,’ citing reduced external financing risks and stronger foreign direct investment.
Foreign investors have poured billions of dollars into Egyptian treasury bills since the country announced the IMF loan program. After the investment in the country’s foreign portfolio and the support from the UAE, Egypt’s net foreign assets deficit shrank by $17.8 billion in March.
Fitch said that initial steps to contain off-budget spending should help to reduce public debt sustainability risks.
Saudi Arabia’s industrial production remains steady in March: GASTAT
Updated 09 May 2024
ARAB NEWS
RIYADH: A surge in the production of paper and related products meant manufacturing activities in Saudi Arabia saw a month-on-month increase of 0.2 percent in March, according to official data.
The 1.2 percent rise in this sub-sector helped balance out drops in other areas, but the Kingdom’s overall Industrial Production Index still posted a marginal slip of 0.2 percent compared to the previous month.
According to the General Authority for Statistics, the manufacturing of chemicals and chemical products, as well as the production of basic metals, witnessed declines of 2.6 percent and 0.6 percent, respectively.
Additionally, the sub-index for electricity, gas, steam, and air conditioning supply decreased by 3 percent in March compared to the previous month, while water supply, sewage, and waste management activities saw an increase of 2.1 percent.
The report, however, revealed that Saudi Arabia’s overall IPI in March experienced a decline of 8.7 percent compared to the same month in 2022. This decrease was primarily attributed to a downturn in mining and quarrying activities.
“Given the relative weights of the mining and quarrying activity which reached 61.4 percent, the trend of the industrial production in the mining and quarrying sector dominates the trend in the general IPI,” stated GASTAT in the report.
It added: “The sub-index for mining and quarrying activity in March 2024 decreased by 14.2 percent compared to the same month of the previous year, as Saudi Arabia decreased its oil production to 8.9 million barrels per day in March 2024.”
Compared to February, mining activities declined by 0.4 percent, the GASTAT report noted.
The dip in mining activities was driven by Saudi Arabia’s decision to reduce oil output, aligned with an agreement by the Organization of the Petroleum Exporting Countries, and its allies, collectively known as OPEC+.
In a bid to maintain market stability, Saudi Arabia decreased its oil output by 500,000 barrels per day in April 2023, a measure that has now been extended until December 2024.
Meanwhile, the manufacture of paper and paper products recorded an annual increase of 8.2 percent, while the production of beverages surged by 6.5 percent.
Earlier this month, another report released by GASTAT revealed that Saudi Arabia’s real gross domestic product increased by 1.3 percent in the first three months of this year compared to the previous quarter.
The authority further revealed that this rise in real GDP was driven by an increase in oil and non-oil activities which went up by 2.4 percent and 0.5 percent during the period.
Hong Kong and Saudi Arabia expand ETF collaboration as economic ties strengthen
Updated 09 May 2024
Nirmal Narayanan
RIYADH: Hong Kong is in the process of developing an exchange-traded fund in collaboration with Saudi Arabia, which will track the former’s local stock indices, said a senior official.
During his address at the Capital Market Forum in Hong Kong, Michael Wong – deputy financial secretary of the administrative region – revealed plans for establishing a trade base in Riyadh.
This move aims to bolster economic relations not only between Hong Kong and Saudi Arabia but also with mainland China.
Wong said: “We are working with several financial institutions on the listing of an ETF in the Middle East to track Hong Kong’s stock indices. The Hong Kong government is also considering establishing an economic and trade office in Riyadh.”
Michael Wong, deputy financial secretary of Hong Kong.
This development comes on the heels of Hong Kong’s November 2023 launch of an ETF that tracks the performance of the Saudi Arabia Index.
“Just a few weeks ago, the China Securities Regulatory Commission announced a series of measures to further expand mutual access, which will make it even easier for Saudi companies to access Chinese capital,” he added.
During his speech, Wong disclosed that Cathay Pacific Airways will commence flights from Hong Kong to Riyadh by the end of 2024, reducing flight time to six hours.
“Cathay Pacific, within a few months time, will relaunch direct passenger flights between Hong Kong and Riyadh. And I have been told that it will happen in the fourth quarter of this year,” noted the deputy financial secretary.
He added: “The friendship and partnership between Hong Kong and Saudi Arabia will go very far and will endure the test of time.”
Saudi-Hong Kong ties
Khalid Al-Hussan, CEO of Saudi Tadawul Group.
Speaking at the opening ceremony of the event, Khalid Al-Hussan, CEO of Saudi Tadawul Group, emphasized that the hosting of the Capital Market Forum in Hong Kong signifies a deepening connection between the two nations.
Al-Hussan further elaborated that the two-day forum, which commenced on May 9, has drawn together over 1,000 investors, listed companies, and financial pioneers. Their aim is to explore the critical challenges and opportunities that are shaping the contemporary market landscape.
“This forum is not just a meeting point, but a crucial bridge for investors from Hong Kong and mainland China to connect directly with Saudi issuers. By uniting the two dynamic economies of Saudi Arabia and Hong Kong, we are strengthening financial bonds and synergies between two of the most promising and rapidly evolving markets,” said Al-Hussan.
He added: “The convergence of Hong Kong’s technological evolution and Saudi Arabia’s economic diversification has set the stage for a fresh era of knowledge sharing and collaboration that extends far beyond capital markets.”
The CEO of Tadawul Group added that Saudi Arabia’s stock exchange has undergone significant transformations since the launch of Vision 2030.
He further emphasized the Kingdom’s aspiration for an open market that is fully integrated with the rest of the world.
“Before Vision 2030, the Saudi capital market was a closed market focused on local issuers as well as serving local investors. Vision 2030 came to the scene with a wider range of goals. Vision 2030 clearly has set goals for the Saudi capital market. We want an open and attractive capital market that is integrated with the rest of the world,” said Al-Hussan.
He further noted that the average daily trading volume in Saudi Arabia’s stock exchange has doubled over the last two years.
“The average daily trading this year has almost doubled compared to the average of the last two years, reaching in Q1 around SR9.5 billion which is roughly around $2.3 billion on a daily basis which is a significant liquidity,” added Al-Hussan.
Abdulaziz bin Hassan, a board member of Saudi Arabia’s Capital Market Authority, highlighted that the Kingdom is undergoing a significant transformation, with its market ranked among the top 10 globally in terms of market capitalization.
He also noted a surge in initial public offerings within the Kingdom’s market, accompanied by rapid expansion in the asset management sector.
“Currently, we have an average of around 40 IPOs every year, compared to one or two in the whole year in the past, and that shows the attractiveness of the market,” said Hassan.
He added, “Our asset management has grown significantly from $100 billion to $130 billion. The number of participants in asset management used to be 250,000, and right now we have more than a million. This growth happened within five years.”
For her part, Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing Ltd, remarked that Saudi Arabia’s economic diversification journey is advancing steadily, with the Kingdom’s capital market presenting significant potential for investors.
She further emphasized the pivotal role of capital markets in bolstering and expanding global connectivity.
“China and Saudi Arabia are both undergoing fantastic economic transformations that bring toward very interesting opportunities. On the Saudi side, the key thing is the diversification. Instead of focusing on the oil industry, we are seeing fantastic developments in the Kingdom,” noted Chan.
Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing Ltd.
Aim for $3.2 trillion capital formation
During a panel discussion, Saleh Al-Khabti, Saudi Arabia’s deputy minister of investment transactions, revealed that the Kingdom has set a target for fixed capital formation of more than $3 trillion.
We have an ambitious plan for Vision 2030. We are at the halfway mark. We are very proud of what we have achieved so far. We have a target for fixed capital formation of $3.2 trillion,” said Al-Khabti.
The deputy minister added that Saudi Arabia possesses all the elements necessary to capture investor appetite.
He further observed that inflation in Saudi Arabia remains healthy, and the Kingdom’s banking sector continues to maintain a strong footing with robust credit demand.
“We have seen more than two years of non-oil sector growth, which is above its long-term average, with non-oil growth reaching 4.4 percent. We had a gross fixed capital formation last year of about $300 billion, and that’s a rise of 70 percent in five years, and equivalent to 28 percent of our GDP,” said Al-Khabti.
He added: “We have a healthy market and strong economy. Unemployment has fallen from 12 percent to 7.7 percent, while female labor force participation has reached the high twenties, and that’s well ahead of our 2030 targets. So, invest in Saudi and you are welcome.”
The deputy minister also welcomed Chinese participation in various sectors including automobile, mining, technology and tourism.
“We welcome more Chinese participation in the automobile sector, EV sector, and its value chain. We are also aiming high on the tourism front. We had a target of 100 million visitors by 2030. The bad news is we reached it last year. So, our colleagues in the tourism sector were given a new stretched target of 150 million visitors by 2030,” added Al-Khabti.
