Pakistan stocks hit record high on budget, IMF optimism

Stockbrokers monitor the latest share prices at the Pakistan Stock Exchange (PSE) in Karachi on July 3, 2023. (AFP/File)
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Updated 20 June 2024
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Pakistan stocks hit record high on budget, IMF optimism

  • Pakistan released tax-heavy budget last week which investors believe will strengthen case for new IMF bailout
  • Market breached 78,000 level for first time during intraday trade as it reopened after five-day break on Thursday

KARACHI: Pakistan’s benchmark share index rose 2.8 percent to a new record high on Thursday, driven by expectations last week’s budget will strengthen the case for a new bailout from the International Monetary Fund.

The government’s budget was welcomed by investors as it avoided an anticipated increase in capital gains tax, despite an ambitious tax revenue target.

The market extended its post-budget rally on Thursday when it reopened after a five-day break, which included a public holiday, and breached the key 78,000 level for the first time during intraday trade.

Foreign portfolio investment in the market is at the highest in almost ten years, with inflows of $83 million as of June 14, data compiled by Topline Securities and JS Global Capital showed.

Sohail Mohammed, CEO of Topline Securities, said that a statement from credit rating agency Fitch that the budget would strengthen the prospects for an IMF deal would help to bring more foreign inflows.

The benchmark share index is up 26.2 percent year to date and has almost doubled since Pakistan signed a nine-month standby arrangement with the IMF last summer.

“Pakistani equity investors are driving the PSX higher, continuing to unlock valuations on better sentiment, which is a trend that began when Pakistan signed its last IMF deal last summer,” said Amreen Soorani, head of research at JS Global Capital.

“The trend paused briefly on anticipation of stricter capital gains taxes, which did not materialize,” she said, adding that the index is trading at a four times price to earnings ratio despite the recent rally and offers attractive dividend yields.

The financial sector was up 4.4 percent, with banks like UBL, HBL, MCB, Bank Alfalah, Habib Metropolitan Bank, Allied Bank, up more than 4 percent.

Adnaan Sheikh, assistant vice president of research at Pak Kuwait Investment Company, said that foreign investor interest and the central bank’s decision to cut its key rate by 150 basis points last week — its first rate cut in nearly four years — had pushed the market up.

Apart from the capital gains tax, analysts said the budget and other revenue measures were in line with expectations and key to sealing a new IMF program. This will include a challenging tax target of a near-40 percent jump from the current year and a sharp drop in the fiscal deficit to 5.9 percent of GDP from 7.4 percent for the current year.

Sheikh said the strict budgetary measures to secure new IMF funding will be likely to attract more foreign investors to the market, in addition to the current inflows.

Pakistan’s lower house of parliament is set to meet later on Thursday to debate the budget that the government presented last week. 


Closing Bell: Saudi main index rose to close at 11,881

Updated 14 July 2024
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Closing Bell: Saudi main index rose to close at 11,881

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 89.14 points, or 0.76 percent, to close at 11,881.55.

The total trading turnover of the benchmark index was SR6.36 billion ($1.69 billion) as 154 of the stocks advanced, while 68 retreated.  

On the other hand, the Kingdom’s parallel market Nomu slipped 79.18 points, or 0.31 percent, to close at 25,696.86. This comes as 34 of the listed stocks advanced while 36 retreated. 

Meanwhile, the MSCI Tadawul Index gained 15.65 points, or 1.06 percent, to close at 1 1,488.02.

The best-performing stock of the day was Miahona Co. The company’s share price surged 9.96 percent to SR37.00.

Other top performers include MBC Group Co. as well as Al Taiseer Group Talco Industrial Co.

The worst performer was Al-Rajhi Co. for Cooperative Insurance, whose share price dropped by 7.27 percent to SR209.20. 

Other worst performers were Saudi Advanced Industries Co. as well as Arabian Pipes Co.

On the announcements front, ADES Holding Co. has announced that it has amended its existing syndicated facility, securing an additional equivalent to $3 billion, with the majority of existing lenders participating along with new, leading local and regional financial institutions.

According to a Tadawul statement, the new upsized financing is divided into the equivalent of a $2.7 billion standby term tranche to finance the group’s expansion plans and an additional $300 million revolving credit facility tranche to be applied toward the general corporate purposes of the company.

While the financing duration of the standby term tranche is eight and a half years, with a final maturity in December 2032, that of the RCF tranche is eight years, with a final maturity in June 2032. 

The financing entities include Saudi Awwal Bank, Riyadh Bank, Al Rajhi Banking and Investment Corp., and Arab National Bank, as well as the Saudi National Bank, Alinma Bank, Banque Saudi Fransi, and Aljazira Bank. Arab Petroleum Investments Corp. and Commercial Bank of Dubai PSC are also included.

The bourse filing also revealed that the guarantees offered for the financing entail mortgages over offshore rigs, share mortgages or pledges over entities that hold onshore or offshore rigs as applicable, and security over the collection accounts and debt service accrual account. 

They also include assignment of receivables under client contracts, assignment of receivables under insurance contracts in respect of financed rigs as well as promissory notes.


Saudi Arabia and Thailand strengthen economic ties with new investment office in Riyadh

Updated 53 min 7 sec ago
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Saudi Arabia and Thailand strengthen economic ties with new investment office in Riyadh

RIYADH: Saudi Arabia is set to enhance private sector cooperation with Thailand as the Southeast Asian nation opens its first Board of Investment office in Riyadh, a top official announced. 

On the sidelines of a business forum in the Saudi capital, Minister of Investment Khalid Al-Falih highlighted that this marks Thailand’s inaugural office in the Middle East, encouraging stronger bonds and new investment opportunities in both countries. 

This came as the minister lauded the steady trade relations, that saw business soar to $8.8 billion in 2023, up from $7.5 billion following the nations’ restored ties in 2022. This represents nearly 22 percent of Thailand’s total trade with the Middle East, underscoring a flourishing economic partnership. 

 

 

Addressing the business delegation at the Saudi-Thailand Investment Forum, Al-Falih said: “Representative offices from the Kingdom of Saudi Arabia and your country will do a great deal of facilitating private sector to private sector cooperation and allowing us to reach the potential that I mentioned.”  

He added: “I believe it will continue to grow at double digits as it has been the last couple of years. In investment, we’ve also seen growth, although from very small numbers, with FDI (foreign direct investment) stock doubling since 2019 in the Kingdom of Saudi Arabia.”  

The minister added that travel and tourism are returning to previous levels, with close to 200,000 tourists and visitors traveling from Saudi Arabia to Thailand. He also noted that over 30,000 Thai visitors had come to the Kingdom the previous year to experience Saudi Arabia. 

The Thailand BOI office will cover a total of 13 countries in the Middle East, including Bahrain, Qatar, Kuwait, Turkiye, and the UAE. 

The Riyadh headquarters is Thailand BOI’s 17th overseas office, with two additional locations in China and Singapore set to be added soon.  

“We hope investors from Saudi Arabia and the Middle East will consider making Thailand an investment base to expand business in ASEAN (Association of Southeast Asian Nations) and take advantage of Thailand’s membership in the RCEP (Regional Comprehensive Economic Partnership) agreement, the world’s largest free trade area,” said Narit Therdsteerasukdi, secretary-general of the Thailand BOI. 

He added: “We believe there is a strong potential for investment and cooperation in several key sectors, including agriculture, processed food, renewable energy, healthcare and medical services, as well as automotive, especially electric vehicles.” 

Additionally, Al-Falih explained that the Thailand BOI office will boost areas of cooperation between both countries in several areas. 

“Before I do that, let me assure you — and this is not just me, not our Ministry of Investment, not the government, but the entire Saudi Arabia — we are very bullish on Thailand and indeed very impressed with your achievements,” the minister said.  

He continued: “Your GDP (gross domestic product) per capita has tripled in 20 years, while your export structure has evolved significantly into increasingly sophisticated products in the same time frame.” 

Furthermore, the minister recognized Thailand as one of the founding members of ASEAN, a significant economic alliance that holds importance not only in Asia but globally. 

Due to Thailand’s strategic location and economic strength — the second-largest economy in ASEAN with a GDP exceeding half a trillion dollars — it is a crucial partner for Saudi Arabia.  

“Especially as you are bolstered by ASEAN free trade agreements with most major economies, as you outlined to me this morning. These agreements include big economies in East Asia, as well as South Asian economies. Of course, anchored by India,” Al-Faih said. 

The minister stressed common parallels between the two countries, noting they share a “great deal of complementarity.” Thailand has its National Strategy 2037, whereas Saudi Arabia has its Vision 2030. 

“Which naturally leads me to emphasize the energy sector, including its multifaceted branches downstream: biofuels, biochemicals and CCUS (carbon capture utilization and storage), hydrogen, and renewables,” he said. 

Al-Falih added: “This is obviously an area where we share common ambitions, and the Kingdom has unique capability, creating numerous investment opportunities for both countries in terms of supply chain products as well as project development.” 

Saudi Arabia’s demand for agricultural and food processing products is expected to reach over $130 billion by 2030, with a compound annual growth rate of 7.5 percent.  

Meanwhile, Thailand’s agricultural and food processing sectors were robust in 2022, with exports totaling $45 billion. 

“This presents a huge area of complementary that would boost trade and investment as well as enhance food security in both nations,” Al-Falih underscored. 

Moreover, during the event’s opening speech, Thailand’s Minister of Foreign Affairs, Maris Sangiampongsa, underscored the robust private sector collaboration between both countries, noting the success of the International Mega Fair organized by the Thai Chamber of Commerce in Saudi Arabia. 

This event featured over 30 Thai businesses showcasing 1,000 products from 200 brands, significantly boosting Thailand’s presence in Saudi Arabia. 

Looking ahead, Sangiampongsa announced the upcoming International Mega Fair 2024 in Riyadh, scheduled for November. This event aims to promote trade across diverse sectors, such as construction materials, hospitality, and defense technology. 

The minister expressed confidence in Thai investment representatives’ readiness to strengthen cooperation with their Saudi counterparts, building on the momentum of past successes.  

“As both our nations are located strategically at the crossroads of continents, we recognize that connectivity and efficiency are part and parcel of any feasible development strategy,” Sangiampongsa stated. 

He continued: “That is why, as part of our plan, Thailand launched our flagship Landbridge Project, which will connect the Gulf of Thailand with the Andaman Sea and the Indian Ocean. This bold initiative will reduce commuting time and costs by 15 percent.” 

The forum saw the signing of 11 memoranda of understanding between Thai and Saudi companies, covering cooperation in areas including energy, infrastructure, engineering, agriculture, and forestation. 

The event also featured bilateral meetings and discussions between private sector representatives, which reviewed developments in the investment environment in Saudi Arabia and Thailand. 

Additionally, Saudi Assistant Minister of Investment Ibrahim Al-Mubarak met with Therdsteerasukdi to discuss ways of cooperation and developments in the work of the Saudi-Thai Coordination Council. 

Further, a meeting was held between Saad Al-Khalb, CEO of Saudi EXIM, and Senior Executive Vice President of Export-Import Bank of Thailand Benjarong Suwankiri, discussing areas of cooperation aimed at enabling promising investment opportunities. 

In 2023, Thailand’s applications for investment promotion surged to a nine-year peak of 848.3 billion baht (approximately $24 billion), marking a 43 percent increase from the previous year. 

This growth was driven by significant foreign direct investments primarily in five key sectors outlined in the BOI’s new Investment Promotion Strategy: green industries, automotive (including electric vehicles), and semiconductors. Additionally, investments in advanced electronics, digital and creative industries, and international business centers contributed significantly.  

These sectors accounted for more than half of the total investment pledges. Leading sources of investment included China, Japan, Singapore, and the US. 


NWC initiates $150m in projects to enhance water services in Qassim region 

Updated 14 July 2024
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NWC initiates $150m in projects to enhance water services in Qassim region 

RIYADH: Saudi Arabia’s Qassim region is set to see improvements in water services, with the National Water Co. initiating 14 projects valued at over SR561 million ($150 million). 

The state-owned firm announced that its Northern Cluster has initiated the implementation of water and environmental projects across various parts of the region. These initiatives aim to enhance water and wastewater services, improve their quality, and meet the growing demand. 

Saudi Arabia ranks among the world’s largest water consumers. With limited natural resources, the country continues to rely on the construction of desalination facilities to meet its increasing water demands. The Ministry of Environment, Water, and Agriculture has announced several investments in water projects scheduled for the coming years. 

These projects are part of its strategic goals to expand water and environmental services, meet growing demand, and enhance the quality of life and services for the population in line with the Kingdom's Vision 2030. 

The Public Investment Fund-owned company noted that the initiative includes seven projects worth about SR283 million. These include sewerage channels and networks totaling over 329,000 meters and the construction of a lifting station capable of handling 1,350 cubic meters per day. 

Additionally, the company outlined seven water projects valued at over SR278 million. These initiatives involve networks and pipelines spanning more than 833,000 meters and the establishment of a water distribution system for the Al-Mukharram and Umm Hazm well areas. 

On July 10, the company announced that its northern cluster had initiated 12 water and environmental projects across various parts of the Hail region, amounting to over SR531 million in total costs. 

Five of these projects, totaling about SR238 million, will focus on pipelines and networks spanning more than 226,000 meters, alongside the construction of a lifting station capable of handling over 3,900 m3 per day. 

Also, the NWC has commenced seven water projects aimed at supplying regional customers, involving the construction of reservoirs, water pipelines of various diameters, and water pumping stations, totaling more than SR293 million. 

The network lengths exceed 374,000 meters, complemented by 56 operational reservoirs with a combined capacity of 33,500 m3.  

The projects also include three pumping stations with a total capacity exceeding 53,600 m3 per day, along with multiple water tanker filling stations, as reported by the NWC.


Oman’s Islamic banks report 13.2% asset growth to $19.5bn

Updated 14 July 2024
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Oman’s Islamic banks report 13.2% asset growth to $19.5bn

RIYADH: Islamic banks in Oman reported total assets of about 7.5 billion Omani riyals ($19.5 billion) by the end of April, a 13.2 percent increase from the previous year. 

According to official data, this represents 17.7 percent of the country’s total banking sector capital, highlighting the growing influence of Islamic finance in the nation. 

The total financing extended by these Shariah-compliant units increased by 12 percent annually, amounting to 6.3 billion riyals by the end of April, according to the Central Bank of Oman. 

In tandem, deposits at these banks and windows saw a 15.9 percent annual increase, reaching about 5.8 billion riyals.  

The broad money supply in Oman experienced a 12 percent year-on-year growth, reaching approximately 23.6 billion riyals by the end of April.  

This boost was driven by a 7 percent rise in the narrow money supply and a 13.9 percent increase in quasi-money, which includes total savings and time deposits in riyals, certificates of deposit issued by banks, margin accounts, and all foreign currency deposits within the banking sector.  

However, cash held by the public decreased by 7 percent, while demand deposits rose by 11.2 percent.  

The weighted average interest rate on deposits in riyals at conventional commercial banks rose from 2.19 percent in April 2023 to 2.58 percent by April 2024. 

Similarly, the weighted average interest rate on loans in riyal rose from 5.36 percent to 5.60 percent during the same period.  

On the industrial front, the total output of refineries and petroleum industries in Oman saw a slight decline of 0.4 percent by the end of May compared to the same period in 2023, reported the Oman News Agency, citing preliminary statistics from the National Centre for Statistics and Information.  

Despite this overall decrease, the production of automotive fuel increased by 1.8 percent.  

Breaking down the figures, the production of regular 91-octane automotive fuel decreased by 5.2 percent, totaling approximately 6.67 million barrels, with sales of 5.67 million barrels.  

In contrast, the production of premium 95-octane automotive fuel rose by 12 percent, recording 5.40 million barrels, with sales reaching 5.30 million barrels. The production of diesel fuel fell by 8.8 percent to 13.28 million barrels, with sales amounting to 5.68 million barrels.  

Conversely, jet fuel production increased by 13.5 percent, reaching 4.75 million barrels with sales of 1.666 million barrels. The production of liquefied petroleum gas stood at 3.78 million barrels, with sales reaching 4.25 million barrels.


Iraq seeks Egyptian and Saudi investment for developing new cities

Updated 14 July 2024
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Iraq seeks Egyptian and Saudi investment for developing new cities

RIYADH: Iraq has unveiled plans to attract Egyptian and Saudi investment for five new cities in Baghdad and other governorates, as part of efforts to address the housing shortage. 

Iraqi Prime Minister Mohammed Shia Al-Sudani presented these projects under the government’s initiative to launch 11 new cities, emphasizing their crucial role in addressing the urban housing challenge, especially for low-income groups, according to an official statement. 

The country has long been affected by political instability, impacting its economy and infrastructure, and faces a significant housing shortage. 

The prime minister highlighted Iraq’s rapid growth and recovery phase, noting numerous promising investment opportunities, particularly in housing and new city projects.  

With a demand for around 3 million housing units, he emphasized the government’s commitment to developing integrated cities that incorporate all sectors, services, entertainment, and commercial facilities, linked to Baghdad through a strong transportation network. 

The prime minister hosted a delegation of Egyptian, Saudi, and Iraqi businessmen, including Hisham Talaat Moustafa, chairman of TMG Holding; Sulaiman Al-Muhaidib, group chairman of Al Muhaidib Group; and businessman Ahmed Talaat Hani. The delegation specializes in real estate development and the establishment of integrated and smart residential cities. The meeting was attended by the Saudi Ambassador to Iraq, Abdulaziz bin Khalid Al-Shammari. 

Al-Sudani urged Egyptian and Saudi company owners to invest in resorts, hotels, and entertainment facilities, highlighting Iraq’s diverse tourist destinations. He emphasized that Iraq’s development and progress align with the economic interests of other Arab countries. 

Earlier this month, Mohammed Al-Khareef, chairperson of the Saudi-Iraqi Business Council, said a new law will protect Saudi investments in Iraq, with trade between the two countries witnessing an annual growth rate of 12 percent. 

Al-Khareef noted that the body is actively working to enhance funding from the Kingdom to Iraq, coinciding with Saudi Arabia’s private and governmental sectors showing interest in investing in the country. 

The new law, set to potentially be enacted in the coming months, aims to bolster economic cooperation between the two countries — with trade between the nations reaching SR5 billion ($1.33 billion), according to Al-Khareef. 

The announcement came during a meeting between Hassan Al-Huwaizi, chairman of the Federation of Saudi Chambers of Commerce, and Shalan Al-Karim, head of the Saudi-Iraqi Friendship Committee in the Iraqi Parliament, as part of an official visit to the Kingdom. 

In April, Saudi Arabia and Iraq signed 12 memorandums of understanding for quality investment projects to further strengthen economic ties.