Saudi Arabia leads March PMI rankings among GCC nations

The economic index reached 57 in March, showing a slight decrease from 57.2 in February, according to a report by the Riyad Bank Saudi Arabia PMI by S&P Global. Shutterstock
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Updated 03 April 2024

Saudi Arabia leads March PMI rankings among GCC nations

RIYADH: Saudi Arabia’s non-oil private sector saw steady growth in March, with output accelerating to a six-month high, as reflected by the Kingdom’s Purchasing Managers’ Index.  

The economic index reached 57 in March, showing a slight decrease from 57.2 in February, according to a report by the Riyad Bank Saudi Arabia PMI by S&P Global.  

Any PMI reading above 50 indicates growth in the non-oil sector, while readings below that signal contraction.  

Saudi Arabia’s PMI in March surpassed that of other Gulf Cooperation Council countries such as the UAE, Egypt, and Kuwait, indicating that the Kingdom’s non-oil sector growth is in line with the goals outlined in Vision 2030. 

Strengthening the non-oil sector is crucial for Saudi Arabia as the Kingdom steadily diversifies its economy away from oil. 

The US-based firm reported that operating conditions in Saudi Arabia’s non-oil private sector exhibited robust improvement at the end of the first quarter, with companies emphasizing significant increases in order books and new customers.  

Naif Al-Ghaith, chief economist at Riyad Bank, said: “The PMI for Saudi Arabia showcased a notable upswing as the non-oil economy exhibited significant expansion in the most recent period. This expansion was primarily fueled by a surge in demand across various sectors, indicating a robust economic performance.”   

He added: “Business activity experienced a substantial uptick, marking the most significant growth in six months. The positive momentum also prompted accelerated purchasing activities and additional hiring, underscoring a buoyant market outlook.”   

According to the report, the rise in output levels among non-oil private sector firms was driven by robust new orders and strong demand conditions. 

Similarly, new orders placed at non-oil firms rose sharply in March, with the expansion rate accelerating for the second month in a row. 

The survey also revealed that demand from foreign customers increased in March. 

The report indicated rising optimism among businesses in the non-oil sector for the coming 12 months, driven by anticipations of growth in demand. 

“The surge in orders and customer acquisition not only bolstered current operations but also laid the foundation for continued expansion and potential business growth in the foreseeable future,” noted Al-Ghaith.  

He added: “Moreover, the concurrent easing of cost pressures, particularly in terms of wages, provided companies with greater flexibility and resources to invest in their operations and workforce, fostering a conducive environment for sustained economic progress and development in Saudi Arabia.”  

The report further noted that private sector firms in the Kingdom witnessed a decrease in cost inflation for the second consecutive month. 

UAE maintains growth 

Business conditions in the UAE non-oil private sector strengthened sharply in March, with optimism reaching its highest point in six months, as indicated by a survey.  

According to the latest S&P Global Purchasing Managers’ Index, the UAE’s PMI reached 56.9 in March, slightly lower than February’s 57.1 but well above the 50 mark denoting expansion in activity.  

David Owen, a senior economist at S&P Global Market Intelligence, said: “The overall picture for the UAE non-oil private sector remained rosy at the end of the first quarter. The latest PMI reading of 56.9 in March signaled a robust upturn in business conditions, with order book inflows and activity levels still growing sharply.”     

The US-based firm revealed that businesses in the Emirates faced significant pressure on their workloads, with reports of administrative delays and increased supply constraints due to the Red Sea shipping crisis.   

As a result, the data signaled the joint-fastest accumulation of backlogs of work in the survey’s 15-year history.  

“While the surge in backlogs is concerning as an indicator of business health, the pent-up demand should support activity growth for even longer once these issues are resolved,” added Owen.   

According to the report, strong demand remained a key feature of growth in the non-oil economy, as surveyed firms witnessed another sharp uplift in new order volumes. 

Moreover, the rate of expansion picked up from February’s six-month low, though it remained slightly softer than those recorded around the turn of the year. 

Additionally, optimism toward future business activity among non-oil firms in the UAE rose to the second-strongest level in four years. 

“While the surge in backlogs is concerning as an indicator of business health, the pent-up demand should support activity growth for even longer once these issues are resolved,” the economist added.  

Meanwhile, the Central Bank of the UAE revised down its economic growth projection, citing the decision of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. 

CBUAE now expects the country’s economy to expand by 4.2 percent in 2024, down from an earlier estimate of 5.7 percent. 

Kuwait records spike in new orders  

Kuwait, on the other hand, saw its fastest rise in new orders since 2020 in March, driving the PMI to 53.2, up from 52.7 in February.  

According to the report, rates of expansion in output and new orders quickened, while business confidence improved, although job growth remained only fractional. 

Andrew Harker, economic director at S&P Global Market Intelligence, stated that non-oil firms in Kuwait are currently experiencing a strong growth phase, with competitive pricing proving successful in attracting increasing numbers of customers. 

Due to the marginal rise in job growth, backlogs of work continued to build, with outstanding business accumulating for 14 consecutive months. 

“If new orders continue to flow in as they have been doing, firms will likely need to take on additional staff to prevent delays in the completion of projects,” said Harker.  

Qatar economy

Qatar witnessed a marginal decline in its PMI to 50.6 in March from 51 in February, indicating a sustained improvement in business conditions in the non-energy private sector economy. 

“The PMI remained firmly in stable territory in March, reflecting further growth in output, new orders and employment in the Qatari non-energy economy,” said Yousuf Mohamed Al-Jaida, CEO of Qatar Financial Center Authority. 

He added that in the first quarter of 2024, the headline index has trended in line with the average for the fourth quarter of 2023, indicating sustained economic growth. 

According to a press statement, in March, demand for goods and services in Qatar’s non-energy economy continued to expand, with local firms also extending their workforces, marking over a year of consecutive growth. 

Egypt sees fall in business activity  

Meanwhile, Egypt’s non-oil private sector continued to deteriorate in March, according to another report by S&P Global. The PMI reached 47.6, slightly higher than February’s 47.1, but remained below the expansion mark of 50. 

According to the report, non-oil private sector activities declined sharply in March as weak order books and elevated inflationary pressures continued to impact business output and confidence. 

“Businesses in Egypt’s non-oil private sector continued to come under pressure from the country’s recent currency crisis in March,” said Owen.  

He added that February’s PMI results had indicated a considerable downturn in business activity, and “March was little different, except for a modest reduction in the rate of decline.” 

Even though firms expressed positivity about the next 12 months, there were some concerns that economic headwinds might further reduce sales. 

“PMI survey data on prices suggests this may be the case, with rates of input cost and output price inflation slowing to three-month lows,” said Owen. 

On the other hand, he added that firms are still lacking confidence that activity will grow over the year ahead, suggesting that economic risks may take more time to disappear. 

Pakistan to enhance production of indigenous petroleum products— minister

Updated 7 sec ago

Pakistan to enhance production of indigenous petroleum products— minister

  • Cash-starved Pakistan spends over $20 billion each year on petroleum imports to meet energy demand
  • Pakistan welcomes foreign companies to invest in its oil and gas sector, says Petroleum Minister Musadik Malik

KARACHI: Pakistan wants to enhance the production of its indigenous petroleum products, Petroleum Minister Musadik Malik said on Wednesday, citing the financial burden that expensive crude oil imports have on the country’s fragile economy. 

Cash-strapped Pakistan relies heavily on imported petroleum products as its energy demands grow. Struggling with a balance of payments crisis, high inflation and steep currency devaluation, Pakistan is looking to secure cheaper energy imports and find alternate ways to lessen the cost of power generation. 

According to the Trade Development Authority of Pakistan (TDAP), the country’s indigenous oil production meets only about one-fifth of Pakistan’s current oil needs. The rest is met through high-cost imports.

Prime Minister Shehbaz Sharif has urged the government to turn toward renewable energy resources. Last month, he said the country currently imports oil worth $27 billion to meet its power and transportation needs, which puts a strain on the cash-strapped nation. 

Speaking at the Pakistan Energy Symposium, Malik said it would be difficult to manage the country with such a huge energy import bill when Pakistan’s exports were around $30 billion. 

“We want to first of all, produce as much of the petroleum products, including gas and crude, indigenously as much as possible,” the minister said, adding that the government has put blocks for bidding and is actively trying to attract global players in exploration activities.

Malik said the government is expediting oil and gas exploration within the country, adding that it welcomes foreign companies to invest in the sector.

“So, we are telling the world that Pakistan is open for business, our regulatory process, particularly the petroleum concession process is very dense and opaque,” he said. 

He said investment processes and information about oil and gas exploration have been digitized and simplified to facilitate the government’s aims to enhance indigenous production of energy resources. 

Malik advocated for increasing the utilization of Pakistan’s abundant renewable energy resources, pointing out that the country’s solar energy costs have significantly decreased. 

Closing Bell: Saudi benchmark index edges up to close at 12,157

Updated 29 min 18 sec ago

Closing Bell: Saudi benchmark index edges up to close at 12,157

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Wednesday, gaining 34.55 points, or 0.28 percent, to close at 12,157.03. 

The total trading turnover of the benchmark index was SR5.3 billion ($1.413 billion), as 54 stocks advanced while 136 retreated.    

Similarly, the MSCI Tadawul Index increased slightly by 3.54 points, or 0.23 percent, to close at 1,523.94. 

However, the Kingdom’s parallel market Nomu dipped by 88.34 points, or 0.33 percent, to close at 26,845. This comes as 25 stocks advanced while as many as 35 retreated.  

The best-performing stock was Naseej International Trading Co., whose share price surged 9.81 percent to SR81.70. 

Other top performers included Gulf General Cooperative Insurance Co. and Makkah Construction and Development Co., whose share prices soared by 6.68 percent and 6.01 percent, to stand at SR15.02 and SR97 respectively. 

Saudi Cable Co. and Saudi Ground Services Co. also performed well.

The worst performer was Amlak International Finance Co., whose share price dropped by 5.03 percent to SR11.34. 

Batic Investments and Logistics Co. as well as Al-Jouf Agricultural Development Co., share prices dropped by 4.94 percent and 4.37 percent to stand at SR3.27 and SR63.50, respectively. 

On the announcements front, Saudi IT company Rasan has set the final offering price for its upcoming initial public offering on the Kingdom’s stock market at the upper limit of SR37 per share. 

This follows the successful completion of the book-building process for institutional investors, which saw the offering oversubscribed approximately 129.1 times the total offer shares. 

Institutions subscribed to the entire offering, with 22.74 million ordinary shares allocated to them, representing 100 percent of the total holdings offered in the first phase. 

This information comes from a statement issued by Saudi Fransi Capital, the IPO manager, as well as the financial advisors and book-runners for the institutional tranche, Saudi Fransi Capital and Morgan Stanley Saudi Arabia. 

The statement on Tadawul added that following the successful completion of the book-building process, up to 2.274 million ordinary shares, representing 10 percent of the total holdings offered, will be allocated to individual investors in the second phase.

Saudi aviation sector surges with over $20bn in deals at Riyadh forum

Updated 22 May 2024

Saudi aviation sector surges with over $20bn in deals at Riyadh forum

RIYADH: Saudi Arabia’s aviation sector received a major boost with over 100 agreements, exceeding SR75 billion ($20 billion), signed during the first two days of the Future Aviation Forum. 

The Riyadh event saw the signing of 102 memorandums of understanding and deals, ranging from aviation services to aircraft procurement, cargo and logistics services, and advanced air mobility.  

Abdulaziz Al-Duailej, president of the General Authority of Civil Aviation, said that the outcomes of the forum have exceeded all expectations. 

“Over the first and second days, agreements, deals, and partnerships were established that will work toward enhancing global aviation connectivity. This underscores the international confidence in the Saudi civil aviation system and its capability to take on a leading role in this pivotal sector,” said Al-Duailej. 

The most significant agreement was signed between the Saudia Group and Airbus for an order to buy an additional 105 A320neo family planes, marking the largest aircraft deal with the European firm in the Kingdom’s history. 

The $19 billion deal, which includes A320neo and A321neo models, will see the aircraft distributed between Saudia and flyadeal, the group’s low-cost carrier. 

Meanwhile, Saudi oil giant Aramco signed a deal with Bombardier for the purchase of two new super mid-sized Challenger 3500 business jet aircraft, with delivery scheduled for 2025 and 2026. 

Additionally, BAE Systems inked a deal with the Saudi Academy of Civil Aviation to exchange experience in aviation science training. 

Other agreements included a five-year contract signed between Saudia Cargo and Saudia Technic to lease up to 8,474 sq. m. within the Saudia Technic premises located in King Abdulaziz International Airport, MRO Village. 

The deals also involved NEOM agreeing with Saudia Technic to engage in future discussions and collaboration in the field of aircraft maintenance, repair, and overhaul of heavy-lift Uncrewed Air System, or UAS, and passenger electric vertical take-off and landing, known as eVTOL, aircraft. 

Matarat Holding Co. and the Local Content and Government Procurement Authority agreed to foster collaboration to enhance opportunities and potential for the development and advancement of local content. 

Additionally, Dammam Airport Co. signed a consulting service contract with Hill International to manage DACO projects. It also sealed a cooperation agreement with the Bahrain Airport Co. Furthermore, it inked a training MoU with the Gulf Aviation Academy. 

The agreements also included Saudi Arabia signing air service deals with Mozambique, Cambodia, Eswatini, and Brunei, as well as Romania, Malawi, and Belize. Additionally, the Kingdom signed similar deals with Kiribati, Grenada, Lithuania, and Sao Tome and Príncipe, as well as Salvador and Albania. 

The forum witnessed a strong turnout, with over 30 ministers, 77 leaders of civil aviation authorities, CEOs from airlines worldwide, and 7,000 industry experts and leaders from over 120 countries. 

During the forum, GACA unveiled the inaugural edition of the “State of Aviation” report, showcasing the sector’s contribution to the Kingdom’s economy, totaling $53 billion, and its role in generating 958,000 jobs across different regions. 

GACA also hosted the first exhibition aimed at facilitating investment in the Saudi aviation sector, with a focus on the advanced air mobility pavilion being among the exhibition’s prominent pavilions. 

Qatar issues green bonds worth $2.5bn

Updated 22 May 2024

Qatar issues green bonds worth $2.5bn

RIYADH: Qatar has issued green bonds in two tranches totaling $2.5 billion, according to official data. 

Citing a release from the International Financing Review, Reuters reported that the operation is the Gulf state’s first external debt issuance in four years. 

According to the IFR report, Qatar sold five-year offerings worth $1 billion with a yield of 30 basis points above US treasury bonds, and ten-year debt securities worth $1.5 billion with a yield of 40 basis points.

This comes several months after global professional services network KPMG encouraged the Gulf country to issue green bonds and adopt sustainable financing mechanisms, saying that this step would help the country achieve its sustainability goals.  

The report also showed that Qatar reduced the initial indicative rate to 70 basis points over US treasury bonds for five-year debt securities and 80 basis points over US treasury bonds for 10-year offerings after receiving total orders exceeding $10.9 billion.

On another note, new data revealed that in the first quarter of 2024, Qatar recorded a merchandise trade balance surplus of 53.2 billion Qatari riyals ($14.6 billion), down from 68.4 billion riyals in the same quarter last year. 

Issued by the country’s National Statistics Center, the analysis also disclosed that the value of Qatar’s total exports, including foreign sales of domestic goods and re-exports, amounted to 87.6 billion riyals, reflecting an 8.6 percent drop compared to the corresponding period in 2023. 

On the other hand, during the same period, the value of Qatar’s imports stood at 34.4 billion riyals, reflecting a 25.4 percent surge in comparison to the first quarter of 2023. 

When asked about the issuance of external debt in January, Qatar’s Finance Minister Ali Al-Kuwari, said: “We’re ready to do it very soon.” 

Speaking to Bloomberg Television on the sidelines of the World Economic Forum in Davos at the time, the official highlighted that Qatar is “not hungry for money,” but it will pursue the issuance “mainly to send a strong statement” in combating climate change.  

One of the world’s biggest producers of liquefied natural gas, Qatar has not issued eurobonds since early 2020, when it sold $10 billion of debt.   

In 2022, the Gulf state’s central bank announced plans to implement strategic actions, including facilitating green bond issuance and advancing cooperation with the Qatar Development Bank, to promote diversification efforts. The aim is to fund projects to reduce carbon and other planet-warming emissions.

Saudi Arabia, China explore private sector investment opportunities during Beijing meeting

Updated 22 May 2024

Saudi Arabia, China explore private sector investment opportunities during Beijing meeting

 RIYADH: Chinese participation in Saudi Arabia’s private-sector projects is set to increase as the Kingdom’s Finance Minister Mohammed Al-Jadaan held meetings with top officials in Beijing. 

Al-Jadaan, who is also the chairman of the National Center for Privatization & PPP, led a roundtable meeting with senior officials of Chinese companies in cooperation with the Industrial and Commercial Bank of China to discuss partnership opportunities. 

In his opening address, the finance minister emphasized the depth of the bilateral relationship between the two nations, highlighting the trust and ongoing collaboration across diverse sectors, the Saudi Press Agency reported. 

He revealed that the NCP has so far awarded over 60 privatization and partnership contracts in eight key sectors since its establishment, totaling a capital investment exceeding $10 billion.  

Al-Jadaan also highlighted the NCP’s proactive measures in fortifying the ecosystem, including the adoption of privatization laws and complementary statutory frameworks aimed at expediting the implementation of PPP projects. 

During the meeting, participants emphasized the potential for PPP - public private partnership – ventures within the infrastructure sector, outlining pathways for companies and investors to engage in these initiatives across diverse domains. Special focus was placed on construction, transportation, water management, and airport development. 

At the close of the meeting, the minister commended the ICBC’s role in bolstering the NCP’s efforts to showcase privatization and partnership opportunities to Chinese investors and firms. 

NCP plays a key role in facilitating the privatization program, a key priority outlined in the realization of the Saudi Vision 2030, according to its website. 

The center assists in drafting regulations, establishing frameworks, and preparing government assets and services for privatization. Additionally, it is developing the privatization pipeline, proposing sectors and government assets and services for potential improvement through private sector involvement.  

In 2023, the NCP unveiled its privatization and PPP pipeline, featuring 200 approved projects spanning 17 sectors. This initiative was in alignment with the objectives of Vision 2030, aiming to elevate the private sector’s contribution to the gross domestic product from 40 percent to 65 percent by 2030.  

As of the same year, the pipeline encompassed over $50 billion in investments, with an additional 300 projects under evaluation, signifying promising growth prospects.