Oil prices extend rapid slide on demand worries | Reuters
Oil prices fell about 2% on Thursday, extending the previous session's losses of nearly 6%, as worries about fuel demand outweighed an OPEC+ decision to maintain oil output cuts, keeping supply tight.
Global benchmark Brent crude futures and U.S. West Texas Intermediate crude futures have declined about $10 a barrel in less than 10 days after edging close to $100 in late September.
The combined percentage drop over the last two days was the steepest since May for both crude benchmarks.
Brent futures settled $1.74, or 2.03%, lower at $84.07, while U.S. West Texas Intermediate crude futures were $1.91, or 2.3%, lower at $82.31.
Investors are worried that peak demand for fuel consumption is behind us, said Dennis Kissler, senior vice president of trading at BOK Financial.
Thursday, 5 October 2023
World Bank sees #Saudi economy contracting in 2023, MENA growth sharply lower | Reuters
World Bank sees Saudi economy contracting in 2023, MENA growth sharply lower | Reuters
The World Bank expects Saudi Arabia's economy to contract by 0.9% in 2023, it said in a report on Thursday, revising its growth forecast for the world's top oil exporter sharply lower on the back of production cuts and lower prices.
Overall growth in the Middle East and North Africa (MENA) region is also expected to slow, now forecast at 1.9% in 2023, down from 6% last year and lower than the 3% the World Bank forecast in April.
Saudi Arabia, the Arab world's largest economy, has cut its oil production in a preemptive move it says is intended to stabilise the oil market. Oil prices remain below last year's average of $100 a barrel.
The Saudi government expects GDP growth to slow to 0.03% in 2023, from 8.7% last year, according to revised forecasts released by the finance ministry last week, narrowly avoiding a contraction.
The World Bank's latest economic update, released on Thursday, attributed the "abrupt decrease" in Saudi economic activity to "lower oil production levels amidst subdued prices." It had forecast Saudi GDP growth at 2.9% in 2023 in its April update.
Growth for the six-member Gulf Cooperation Council (GCC) of oil and gas exporters is expected to decelerate to 1% in 2023, down from 7.3% last year, and sharply below the 3.2% forecast in the World Bank's April update. It is expected to rebound to 3.6% in 2024.
The World Bank expects Saudi Arabia's economy to contract by 0.9% in 2023, it said in a report on Thursday, revising its growth forecast for the world's top oil exporter sharply lower on the back of production cuts and lower prices.
Overall growth in the Middle East and North Africa (MENA) region is also expected to slow, now forecast at 1.9% in 2023, down from 6% last year and lower than the 3% the World Bank forecast in April.
Saudi Arabia, the Arab world's largest economy, has cut its oil production in a preemptive move it says is intended to stabilise the oil market. Oil prices remain below last year's average of $100 a barrel.
The Saudi government expects GDP growth to slow to 0.03% in 2023, from 8.7% last year, according to revised forecasts released by the finance ministry last week, narrowly avoiding a contraction.
The World Bank's latest economic update, released on Thursday, attributed the "abrupt decrease" in Saudi economic activity to "lower oil production levels amidst subdued prices." It had forecast Saudi GDP growth at 2.9% in 2023 in its April update.
Growth for the six-member Gulf Cooperation Council (GCC) of oil and gas exporters is expected to decelerate to 1% in 2023, down from 7.3% last year, and sharply below the 3.2% forecast in the World Bank's April update. It is expected to rebound to 3.6% in 2024.
Major Gulf markets drop on lower oil prices | Reuters
Major Gulf markets drop on lower oil prices | Reuters
Major stock markets in the Gulf tumbled on Thursday, following declines in oil prices as an uncertain demand outlook and concern over higher-for-longer interest rates by the U.S Federal Reserve dampened investor sentiment.
Oil prices - a key catalyst for the Gulf's financial markets - settled more than $5 lower on Wednesday, its biggest daily drop in over a year, as a bleaker macroeconomic outlook and fuel demand destruction came into focus following a meeting of an OPEC+ panel.
Brent crude was down 0.7% on Thursday to trade at $85.17 a barrel by 1300 GMT.
Dubai's benchmark index (.DFMGI) slumped 1.2%, the sharpest fall in over six months. The index was dragged down by losses in all sectors with real estate developer Emaar Properties (EMAR.DU) and Emaar Development (EMAARDEV.DU) dropping 1.8% and 3.9%, respectively.
The emirate's largest lender Emirates NBD (ENBD.DU) declined 2.2%.
The Qatari index (.QSI) slipped 1.2%, the steepest drop since August end, weighed down by losses in all sectors with Qatar Gas Transport (QGTS.QA) falling 2.7% and Mesaieed (MPHC.QA) sliding 3.2%.
Among the losers, index heavyweights Qatar Islamic Bank (QISB.QA) and Commercial Bank (COMB.QA) lost 2.2% and 2.1%, respectively.
Saudi Arabia's benchmark index (.TASI) was down 0.7%, extending its losses to a sixth straight session, with oil major Saudi Aramco (2222.SE) falling 1% and Atheeb Telecom (7040.SE) dropping 2.7%.
The kingdom's biggest lender by assets Saudi National Bank (1180.SE) slipped 1.1% and Riyad Bank (1010.SE) dipped 3.4%.
In Abu Dhabi, the benchmark index (.FTFADGI) retreated for a second consecutive session and ended 0.6% lower, pulled down by a 0.8% drop in conglomerate International Holding Company (IHC.AD) and 1.7% fall in Aldar Properties (ALDAR.AD).
The UAE's largest lender First Abu Dhabi Bank (FAB.AD) lost 0.3% and Abu Dhabi Islamic Bank (ADIB.AD) shed 1.3%.
U.S. yields have been rising in recent weeks as investors reprice the chance of the Fed keeping rates elevated for longer, if inflation remains above target and the economy continues to show resilience.
Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed policy because most regional currencies are pegged to the U.S. dollar.
Major stock markets in the Gulf tumbled on Thursday, following declines in oil prices as an uncertain demand outlook and concern over higher-for-longer interest rates by the U.S Federal Reserve dampened investor sentiment.
Oil prices - a key catalyst for the Gulf's financial markets - settled more than $5 lower on Wednesday, its biggest daily drop in over a year, as a bleaker macroeconomic outlook and fuel demand destruction came into focus following a meeting of an OPEC+ panel.
Brent crude was down 0.7% on Thursday to trade at $85.17 a barrel by 1300 GMT.
Dubai's benchmark index (.DFMGI) slumped 1.2%, the sharpest fall in over six months. The index was dragged down by losses in all sectors with real estate developer Emaar Properties (EMAR.DU) and Emaar Development (EMAARDEV.DU) dropping 1.8% and 3.9%, respectively.
The emirate's largest lender Emirates NBD (ENBD.DU) declined 2.2%.
The Qatari index (.QSI) slipped 1.2%, the steepest drop since August end, weighed down by losses in all sectors with Qatar Gas Transport (QGTS.QA) falling 2.7% and Mesaieed (MPHC.QA) sliding 3.2%.
Among the losers, index heavyweights Qatar Islamic Bank (QISB.QA) and Commercial Bank (COMB.QA) lost 2.2% and 2.1%, respectively.
Saudi Arabia's benchmark index (.TASI) was down 0.7%, extending its losses to a sixth straight session, with oil major Saudi Aramco (2222.SE) falling 1% and Atheeb Telecom (7040.SE) dropping 2.7%.
The kingdom's biggest lender by assets Saudi National Bank (1180.SE) slipped 1.1% and Riyad Bank (1010.SE) dipped 3.4%.
In Abu Dhabi, the benchmark index (.FTFADGI) retreated for a second consecutive session and ended 0.6% lower, pulled down by a 0.8% drop in conglomerate International Holding Company (IHC.AD) and 1.7% fall in Aldar Properties (ALDAR.AD).
The UAE's largest lender First Abu Dhabi Bank (FAB.AD) lost 0.3% and Abu Dhabi Islamic Bank (ADIB.AD) shed 1.3%.
U.S. yields have been rising in recent weeks as investors reprice the chance of the Fed keeping rates elevated for longer, if inflation remains above target and the economy continues to show resilience.
Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed policy because most regional currencies are pegged to the U.S. dollar.
#SaudiArabia pours millions into digital theme park start-up | Financial Times
Saudi Arabia pours millions into digital theme park start-up | Financial Times
Saudi Arabia is investing in a three-year-old start-up that designs digital theme parks within shopping centres, in the Gulf kingdom’s latest move to break into the technology and leisure industries.
Riyadh Season, a government-backed entertainment initiative under the auspices of the sovereign wealth fund, has provided most of the $55mn of debt and equity raised by HyperSpace. Riyadh Season is led by Turki al-Sheikh, who chairs the General Entertainment Authority.
Shopping centres must find that “cool factor” to draw consumers in, Alexander Heller, co-founder and chief executive of HyperSpace, told the Financial Times. “Today, within that ecosystem, you’re looking at something that’s much more experience driven.”
Saudi Arabia is seeking to reduce its dependence on oil revenues and is investing in other areas, such as electric vehicle production, sports teams and tourism. It has set out a target to become a global gaming hub, and this year spent $4.9bn to acquire the US-based games developer Scopely.
The country is spending heavily on deals to pursue these goals, but there are questions about whether it can attract foreigners in large numbers. Saudi Arabia, which is not a traditional tourism destination, wants to lure 100mn visitors annually by the end of the decade.
First Middle Eastern SPAC Raises $200 Million in PIPE Financing - Bloomberg
First Middle Eastern SPAC Raises $200 Million in PIPE Financing - Bloomberg
The first blank-check company to list in the Middle East completed a 734 million-dirham ($200 million) fundraising following a recent merger with an identification card printing company.
ADC Acquisition Corp., backed by Chimera Investments and Abu Dhabi wealth fund ADQ, raised the funds via a private investment in public equity — or PIPE — financing that was oversubscribed by more than 10 times. Total demand from qualified and institutional investors exceeded 8 billion dirhams, according to a statement Wednesday.
The special purpose acquisition company is merging with Abu Dhabi-based United Printing & Publishing, a firm that prints ID cards, commercial products and operates a last mile delivery business. UPP will get 1.1 billion dirhams in proceeds, and its enterprise value will be 600 million dirhams, 5.2 times estimated 2023 earnings.
UPP was already a portfolio company of ADQ before the merger, its website shows. Its ownership was transferred to the wealth fund in 2019, according to its financial statements for 2022. While not unheard of, it is rare for a SPAC to acquire one of the portfolio companies of its backers.
“The fact that UPP is a portfolio company of one of the SPAC sponsors raises a potential conflict of interest,” said Josef Schuster, founder and chief executive officer of IPOX Schuster.
The first blank-check company to list in the Middle East completed a 734 million-dirham ($200 million) fundraising following a recent merger with an identification card printing company.
ADC Acquisition Corp., backed by Chimera Investments and Abu Dhabi wealth fund ADQ, raised the funds via a private investment in public equity — or PIPE — financing that was oversubscribed by more than 10 times. Total demand from qualified and institutional investors exceeded 8 billion dirhams, according to a statement Wednesday.
The special purpose acquisition company is merging with Abu Dhabi-based United Printing & Publishing, a firm that prints ID cards, commercial products and operates a last mile delivery business. UPP will get 1.1 billion dirhams in proceeds, and its enterprise value will be 600 million dirhams, 5.2 times estimated 2023 earnings.
UPP was already a portfolio company of ADQ before the merger, its website shows. Its ownership was transferred to the wealth fund in 2019, according to its financial statements for 2022. While not unheard of, it is rare for a SPAC to acquire one of the portfolio companies of its backers.
“The fact that UPP is a portfolio company of one of the SPAC sponsors raises a potential conflict of interest,” said Josef Schuster, founder and chief executive officer of IPOX Schuster.
#SaudiArabia's Budget Is Back to Old Ways as Oil Habit Proves Hard to Kick - Bloomberg
Saudi Arabia's Budget Is Back to Old Ways as Oil Habit Proves Hard to Kick - Bloomberg
Saudi Arabia’s new budget math is once more entrenching its reliance on high oil prices, in a riskier path for a country whose fiscal choices matter for politicians and consumers around the world.
Following the first surplus in nearly a decade last year, a costly economic makeover under Crown Prince Mohammed bin Salman has prompted a rewrite of projections that now assume deficits until at least 2026. It’s a stark change from plans to keep the budget in the black for years to come.
The upshot is that the kingdom would need crude at $91 per barrel to balance its books in the second half of the year, according to Bloomberg Economics, an increase of $10 from the first six months.
“Higher spending that becomes inflexible through oil price cycles may weaken the government’s currently strong balance sheet,” Moody’s Investors Service analysts including Christian Fang said in an Oct. 4 report.
Saudi Arabia’s new budget math is once more entrenching its reliance on high oil prices, in a riskier path for a country whose fiscal choices matter for politicians and consumers around the world.
Following the first surplus in nearly a decade last year, a costly economic makeover under Crown Prince Mohammed bin Salman has prompted a rewrite of projections that now assume deficits until at least 2026. It’s a stark change from plans to keep the budget in the black for years to come.
The upshot is that the kingdom would need crude at $91 per barrel to balance its books in the second half of the year, according to Bloomberg Economics, an increase of $10 from the first six months.
“Higher spending that becomes inflexible through oil price cycles may weaken the government’s currently strong balance sheet,” Moody’s Investors Service analysts including Christian Fang said in an Oct. 4 report.
#Oman’s OQ Gas Networks IPO Likely to Price at Top End of Range - Bloomberg
Oman’s OQ Gas Networks IPO Likely to Price at Top End of Range - Bloomberg
The $771 million initial public offering of OQ Gas Networks SAOG is likely to price at the top of a marketed range, setting it on track to be the country’s biggest listing on record.
Orders below 140 baisas per share risk missing out on the deal, according to terms seen by Bloomberg. Institutional investor books are multiple times oversubscribed at this level, the terms showed. The firm will continue taking institutional investor orders until Monday.
Omani state energy firm OQ SAOC is selling 2.12 billion shares, or a 49% stake, in the gas pipelines business at 131 baisas to 140 baisas per share. Fluxys Belgium SA, Saudi Arabia’s Public Investment Fund, and the Qatar Investment Authority are buying a combined 30% of the deal as anchor investors.
At the top end, OQGN will surpass Oman Telecommunications Co. SAOG’s $748 million IPO in 2005 as the sultanate’s largest.
Demand for OQ’s IPO is strong despite a recent global market rout due to concerns over persistently high interest rates and slowing economies. Volatile markets forced Triton to postpone the planned share sale of military gearbox maker Renk AG in Germany.
The Middle East has bucked much of the global activity, with listings in the region drawing billions of dollars in demand and rising on their debuts.
OQGN is the second IPO in Oman’s privatization program aimed at boosting state coffers and expanding its bourse. Similar listing drives in Saudi Arabia and the United Arab Emirates have raised billions of dollars over the last couple of years.
Bank Muscat SAOG, Bank of America Corp., and EFG Hermes are joint global coordinators on the deal.
The $771 million initial public offering of OQ Gas Networks SAOG is likely to price at the top of a marketed range, setting it on track to be the country’s biggest listing on record.
Orders below 140 baisas per share risk missing out on the deal, according to terms seen by Bloomberg. Institutional investor books are multiple times oversubscribed at this level, the terms showed. The firm will continue taking institutional investor orders until Monday.
Omani state energy firm OQ SAOC is selling 2.12 billion shares, or a 49% stake, in the gas pipelines business at 131 baisas to 140 baisas per share. Fluxys Belgium SA, Saudi Arabia’s Public Investment Fund, and the Qatar Investment Authority are buying a combined 30% of the deal as anchor investors.
At the top end, OQGN will surpass Oman Telecommunications Co. SAOG’s $748 million IPO in 2005 as the sultanate’s largest.
Demand for OQ’s IPO is strong despite a recent global market rout due to concerns over persistently high interest rates and slowing economies. Volatile markets forced Triton to postpone the planned share sale of military gearbox maker Renk AG in Germany.
The Middle East has bucked much of the global activity, with listings in the region drawing billions of dollars in demand and rising on their debuts.
OQGN is the second IPO in Oman’s privatization program aimed at boosting state coffers and expanding its bourse. Similar listing drives in Saudi Arabia and the United Arab Emirates have raised billions of dollars over the last couple of years.
Bank Muscat SAOG, Bank of America Corp., and EFG Hermes are joint global coordinators on the deal.
#Dubai Luxury Property: Demand for Luxury Homes in Dubai Remains Resilient - Bloomberg
Dubai Luxury Property: Demand for Luxury Homes in Dubai Remains Resilient - Bloomberg
Dubai cemented its status as the world’s busiest market for luxury homes with buyers pouring $1.59 billion into high end properties during the third quarter, according to Knight Frank LLP.
The number of sales for homes worth $10 million or more reached a record 277 in the first nine months of the year with $4.91 billion of transactions, putting the emirate firmly ahead of cities such as New York and Hong Kong, the property consultant said.
“Demand for luxury homes in Dubai remains resilient and supply continues to stubbornly lag demand,” said Faisal Durrani, head of Middle East research at Knight Frank. “The extraordinary run of price rises in this third market cycle has seen prices escalating for nine-consecutive quarters.”
Dubai’s property sector is booming as the government’s handling of the pandemic and its liberal visa policies attract more foreign buyers. The luxury end of the market — including waterfront villas on the city’s man-made palm-shaped islands — is benefitting from an influx of wealthy investors such as Russians seeking to shield their assets, crypto millionaires and rich Indians seeking second homes.
Dubai cemented its status as the world’s busiest market for luxury homes with buyers pouring $1.59 billion into high end properties during the third quarter, according to Knight Frank LLP.
The number of sales for homes worth $10 million or more reached a record 277 in the first nine months of the year with $4.91 billion of transactions, putting the emirate firmly ahead of cities such as New York and Hong Kong, the property consultant said.
“Demand for luxury homes in Dubai remains resilient and supply continues to stubbornly lag demand,” said Faisal Durrani, head of Middle East research at Knight Frank. “The extraordinary run of price rises in this third market cycle has seen prices escalating for nine-consecutive quarters.”
Dubai’s property sector is booming as the government’s handling of the pandemic and its liberal visa policies attract more foreign buyers. The luxury end of the market — including waterfront villas on the city’s man-made palm-shaped islands — is benefitting from an influx of wealthy investors such as Russians seeking to shield their assets, crypto millionaires and rich Indians seeking second homes.
Major Gulf markets fall on U.S. rate concerns | Reuters
Major Gulf markets fall on U.S. rate concerns | Reuters
Major stock markets in the Gulf fell in early trade on Thursday amid concerns about the Federal Reserve's interest rate path, with the Qatari index on course to post second weekly loss.
Hawkish rhetoric by the Fed and signs of resilience in the world's largest economy have raised expectations that rates in the U.S. may rise further.
Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually followed by Saudi Arabia, the United Arab Emirates and Qatar.
Saudi Arabia's benchmark index (.TASI) dropped 0.5%, weighed down by a 0.7% fall in oil giant Saudi Aramco (2222.SE) and a 3.1% drop in Arabian Internet and Communications Services (7202.SE).
Saudi Arabia and Russia on Wednesday said they were continuing voluntary oil cuts to year end as tightening supply and rising demand support oil prices.
In Abu Dhabi, the index (.FTFADGI) was down 0.5%.
Dubai's main share index (.DFMGI) declined 0.4%, with to lender Emirates NBD (ENBD.DU) losing 1.1%.
Separately, sales of homes worth $10 million or more in Dubai hit about $1.6 billion in the third quarter, according to an industry report published on Wednesday, up from $1.13 billion in the same period a year ago.
However, Union Properties (UPRO.DU) jumped more than 7%, after the firm announced that it will receive 650 million dirhams ($176.99 million) from its former chairman under a settlement agreement.
The Qatari benchmark (.QSI) retreated 0.5%, on course to post its second weekly loss, as most of the stocks on the index were in negative territory.
Major stock markets in the Gulf fell in early trade on Thursday amid concerns about the Federal Reserve's interest rate path, with the Qatari index on course to post second weekly loss.
Hawkish rhetoric by the Fed and signs of resilience in the world's largest economy have raised expectations that rates in the U.S. may rise further.
Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually followed by Saudi Arabia, the United Arab Emirates and Qatar.
Saudi Arabia's benchmark index (.TASI) dropped 0.5%, weighed down by a 0.7% fall in oil giant Saudi Aramco (2222.SE) and a 3.1% drop in Arabian Internet and Communications Services (7202.SE).
Saudi Arabia and Russia on Wednesday said they were continuing voluntary oil cuts to year end as tightening supply and rising demand support oil prices.
In Abu Dhabi, the index (.FTFADGI) was down 0.5%.
Dubai's main share index (.DFMGI) declined 0.4%, with to lender Emirates NBD (ENBD.DU) losing 1.1%.
Separately, sales of homes worth $10 million or more in Dubai hit about $1.6 billion in the third quarter, according to an industry report published on Wednesday, up from $1.13 billion in the same period a year ago.
However, Union Properties (UPRO.DU) jumped more than 7%, after the firm announced that it will receive 650 million dirhams ($176.99 million) from its former chairman under a settlement agreement.
The Qatari benchmark (.QSI) retreated 0.5%, on course to post its second weekly loss, as most of the stocks on the index were in negative territory.