IMF Says #Saudi Slump Matched Argentina Among Worst G-20 Laggards - Bloomberg

IMF Says Saudi Slump Matched Argentina Among Worst G-20 Laggards - Bloomberg

Saudi Arabia’s economy had one of its steepest contractions of the past two decades after reducing oil output to support crude prices, according to the International Monetary Fund, a slump matched only by crisis-stricken Argentina among the Group of 20 nations.

Gross domestic product slipped 1.1% last year, the IMF said in the World Economic Outlook on Tuesday, flipping its previous forecast for a small expansion. While expecting the kingdom to return to growth this year and next, its projection for Saudi Arabia saw the biggest downgrade for 2024 after Argentina in the G-20.

Seven years into Crown Prince Mohammed bin Salman’s campaign to diversify and open up the world’s largest crude exporter, the setback is a reminder of just how dependent the $1.1 trillion economy remains on the fortunes of the oil sector that accounts for about 40% of GDP.

It’s also a stark turnaround from 2022, when record crude output propelled Saudi Arabia to the fastest growth in the club of industrial and emerging economies with a surge of almost 9%. The Saudi government is forecasting much faster rebound than the IMF this year and estimates the economy narrowly avoided a contraction in 2023.

#Saudi leads most Gulf markets lower; Egypt gains | Reuters

Saudi leads most Gulf markets lower; Egypt gains | Reuters

Most stock markets in the Gulf ended lower on Tuesday amid escalating tensions in the region with the Saudi index leading the losses.

Washington vowed to take "all necessary actions" to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, the first U.S. military deaths since the Israel-Gaza war began, putting markets on edge.

Saudi Arabia's benchmark index (.TASI) declined 2.2%, dragged down by a 2.7% drop in Al Rajhi Bank (1120.SE) and a 10% slide in drilling service provider ADES Holding Co (2382.SE).

Saudi Aramco (2222.SE) on Tuesday said it was asked to cut its planned maximum sustainable oil production capacity to 12 million barrels a day (bpd), having raised it to 13 million bpd almost four years ago.

According to Farah Mourad, senior market analyst at EQUITI Group, the kingdom's decision to cut its planned maximum sustainable oil production capacity by one million bpd implies that the expected demand might not be as high as initially anticipated.

Also, supply disruptions in the Middle East have led to a decrease in investor confidence, said Mourad. While, the bleak economic outlook in China - the world's second-largest crude consumer - also added to the worries after a Hong Kong court ordered the liquidation of property company China Evergrande Group deepening its real estate crisis.

In Abu Dhabi, the index (.FTFADGI) eased 0.3%.

Dubai's main share index (.DFMGI) gave up early gains to close 0.1% lower, hit by a 0.8% fall in top lender Emirates NBD (ENBD.DU).

However, the index's losses were limited by a 13.2% surge in Mashreqbank (MASB.DU). The lender, which closed at its highest since Nov. 2008, reported a 150% surge in fourth-quarter profit.

The Qatari benchmark (.QSI) lost 0.4%, with petrochemical maker Industries Qatar losing 2.3%.

The Federal Reserve's policy meeting and Chair Jerome Powell's commentary will likely be the main event of the week, while investors will also watch out for the U.S. employment report this week to help gauge the direction markets will take in the months to come.

Outside the Gulf, Egypt's blue-chip index (.EGX30) advanced 3.8%, led by a 15% jump in Oriental Weavers Carpets (ORWE.CA).

Egypt's central bank is expected to leave overnight interest rates unchanged at a policy meeting on Thursday, according to a poll of analysts, who are on tenterhooks awaiting the outcome of talks with an International Monetary Fund team now in Cairo.

#Kuwait’s GDP to remain ‘flat to slightly negative’ in 2024: NBK

Kuwait’s GDP to remain ‘flat to slightly negative’ in 2024: NBK

Kuwait’s economic growth is likely to remain flat to slightly negative in 2024 on the back of additional oil sector cuts, the National Bank of Kuwait said in its latest quarterly economic brief.

The non-oil sector will likely rise over 3%, spurred on by refining gains and still-growing private consumption.

The recent GDP figures, published after a long delay, showed non-oil growth accelerating to 1.5% year-on-year (YoY) in Q2 2023, after several quarters of contraction. However, overall GDP growth was -1.3% due to declining oil sector output.

Growth in the second quarter was driven by solid gains in the transportation and construction sectors, with the latter reflecting the rebound seen in project awards in 2023.

#Saudi’s Albilad to debut its new ETF on Tadawul after $5mln IPO

Saudi’s Albilad to debut its new ETF on Tadawul after $5mln IPO

Albilad Capital, the investment arm of Islamic lender Bank Albilad, will start trading its exchange-traded fund (ETF) on the main market of Saudi Stock Exchange (Tadawul) on Wednesday.

The Albilad MSCI Saudi Growth ETF will trade with the symbol 9408 and ISIN Code SA160G54J043 with around 10% daily fluctuation limits, the Saudi Exchange said on Monday.

The fund raised SAR19 million ($5 million) in an initial public offering (IPO) that closed on January 24.

Saudi Arabia has recently dominated the region’s IPO market as it continues to implement its diversification strategy to reduce its dependence on oil.

In the third quarter of 2023 alone, the kingdom accounted for five out of the six IPOs in the region, with the highest proceeds from Lumi Rental Co ($291 million), which listed on the Tadawul main market, according to EY.

#Saudi Aramco ditches plan to lift oil production

Saudi Aramco ditches plan to lift oil production

Saudi Aramco has dropped a plan to boost its daily production capacity, in a big policy reversal by the world’s largest oil company. 

The state-run oil producer said on Tuesday that it had been asked by the energy ministry to abandon a plan to increase the kingdom’s maximum sustainable production capacity from 12mn barrels a day to 13mn b/d by 2027. 

The multibillion-dollar investment programme had set the company apart from much of the industry where spending on oil production is generally falling owing to concerns about climate targets and the strength of future demand. Saudi Aramco accounts for about 10 per cent of the world’s oil supply. 

The decision was taken by the ministry of energy and was not driven by any technical or operational issue at the company, which remains in a position to restart the investment programme if requested, according to a person familiar with the matter. 

Saudi Aramco is currently producing about 9mn b/d, following the kingdom’s decision to cut production as part of Opec’s efforts to support prices. That means the company already has 3mn b/d of spare capacity that it could bring online to meet any sudden spike in demand, reducing the immediate need to increase its maximum output further, the person said. 

Saudi Arabia expects to free up a further 1mn b/d of oil for export by displacing liquid fuels used in the kingdom for power generation with gas, the person added.

Mideast Stocks: Major Gulf markets in red; #Dubai gains

Mideast Stocks: Major Gulf markets in red; Dubai gains

Major stock markets in the Gulf fell in early trade on Tuesday ahead of the Federal Reserve's decision and rising tensions in the region, while the Dubai bourse rose on upbeat earnings.

The Federal Reserve's policy meeting and Chair Jerome Powell's commentary will likely be the main event of the week, while investors will also watch out for the U.S. employment report this week to help gauge the direction markets will take in the months to come.

Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed decisions as most regional currencies are pegged to the U.S. dollar.

Saudi Arabia's benchmark index dropped 0.5%, hit by a 10% fall in ADES Holding Co, and a 1.7% decline in ACWA Power Co.

On the Other hand, oil giant Saudi Aramco added 0.3%.

Oil prices - a catalyst for the Gulf's financial markets - gained following a more than 1% drop the previous session as escalating geopolitical tensions in major producing regions in the Middle East fuelled supply concerns.

Aramco, in an indication for the future demand outlook, said it had received a directive from the energy ministry to maintain its maximum sustainable capacity at 12 million barrels a day, and not to continue increasing it to 13 million barrels per day.

The Qatari benchmark dropped 0.6%, with Qatar Islamic Bank losing 1.3% and petrochemical maker Industries Qatar retreating 1.4%.

Washington vowed to take "all necessary actions" to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, the first U.S. military deaths since the Israel-Gaza war began, putting markets on edge.

In Abu Dhabi, the index eased 0.2%.

Dubai's main share index added 0.3%, with sharia-compliant lender Dubai Islamic Bank gaining 1% ahead of its earnings announcement.

Elsewhere, MashreqBank surged as much as 13.2% to 190.25 dirhams, its highest since November 2008, after reporting a 150% jump in fourth-quarter net profit.