#SaudiArabia budget records surplus of $4.27 bln in 2023 - ministry | Reuters

Saudi Arabia budget records surplus of $4.27 bln in 2023 - ministry | Reuters

The Saudi Arabia 2023 budget recorded a surplus of 16 billion riyals ($4.27 billion) compared to the government's previous forecast deficit of 82 billion riyals, the investment ministry said on Monday, citing preliminary data.

The Saudi government had forecast the deficit for 2023 with lower crude production and prices weighing on revenue.

Saudi Arabia also turned a deficit of 35.8 billion riyals ($9.54 billion) in the third quarter of 2023 into a surplus of 60 billion riyals ($16 billion) in the fourth quarter.
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The surplus "might be due to the decline in the government's expenditure," which fell 40.7%, the investment ministry said.

Total revenues for 2023 were estimated in December, the latest forecast, at 1.193 trillion riyals despite extended voluntary oil production cuts by Saudi Arabia of 1 million barrels per day for much of this year.

Mideast Stocks: Gulf markets end mixed as traders temper rate cuts

Mideast Stocks: Gulf markets end mixed as traders temper rate cuts

Stock markets in the Gulf ended mixed on Monday after a robust U.S. jobs report dashed expectations of a near-term interest rate cut from the Federal Reserve.

Data on Friday showed U.S. job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labour market that encourage the Fed to start easing later rather than sooner.

Most Gulf Cooperation Council countries, including the United Arab Emirates (UAE), peg their currencies to the U.S. dollar and follow the Fed's policy moves closely. Fed chair Jerome Powell said in an interview aired on Sunday he wanted to wait to be a little more confident inflation was sustainably falling before moving interest rates lower.

Saudi Arabia's benchmark index gained 0.5%, with Saudi Telecom Co and a 1.3% increase in Saudi Arabian Mining Co. On the other hand, oil giant Saudi Aramco dropped 0.5%.

Oil prices - a catalyst for the Gulf's financial markets - slipped again on Monday as a strong U.S. job report which capped sharp falls last week dampened hopes of swift rate cuts, despite a U.S. pledge to continue air strikes in the Middle East which have kept geopolitical tensions high. Dubai's main share index edged 0.1% higher, helped by a 2.2% gain in Tecom Group.

In Abu Dhabi, the index dropped 0.3%. Non-oil business activity in the UAE eased to a five-month low in January, a survey showed on Monday, as the pace of growth in new orders and employment slowed.

The Qatari benchmark declined 1.5%, as almost all its constituents were in negative territory including Qatar Islamic Bank, which was down 2.5%. 

Outside the Gulf, Egypt's blue-chip index added 0.3%, helped by a 10.3% increase in Talaat Mostafa Group.

#Oman State Energy Firm OQ Asks Banks to Pitch for IPOs of Two Units - Bloomberg

Oman State Energy Firm OQ Asks Banks to Pitch for IPOs of Two Units - Bloomberg

Oman’s state energy firm OQ SAOC has asked banks to pitch for roles on the initial public offerings of two of its units, as the sultanate pushes ahead with an ambitious privatization strategy.

OQ plans to list its exploration and production business, as well as its methanol and liquefied petroleum gas unit, according to people familiar with the matter. OQ Exploration & Production could raise around $1 billion in the IPO, the people said, asking not to be identified as the information isn’t public.

The IPOs are slated for this year, although the timing is still preliminary and may change, the people said. A representative for OQ didn’t immediately respond to requests for comment.

The Gulf nation is in the midst of efforts to deepen its capital markets through a divestment drive as it chases an upgrade to emerging-market status and seeks to bolster state coffers. Oman’s plan comes amid a broader IPO boom in the energy-rich region, with similar privatization programs in Saudi Arabia and the United Arab Emirates raising billions of dollars in recent years.

Last year, OQ floated its gas pipelines business in a record $749 million IPO for the country, as well as its oil-drilling unit Abraj Energy Services SAOG. The Omani wealth fund said in December the divestment plan would include several dozen listings over the next five years.

OQ Exploration & Production is the upstream unit focusing on assets operated by OQ. The methanol and liquefied petroleum gas plants are in Salalah, in the south of Oman.

The Muscat Stock Exchange is among the smallest bourses in the region, with a market capitalization of just over $23 billion, according to data compiled by Bloomberg. In 2022, the Gulf state tapped advisers for its stock exchange.

Oman and Bahrain are the only countries in the six-nation Gulf Cooperation Council not classified as emerging markets by MSCI Inc.

#Saudi business conditions slowed to 2-year lows in January – PMI

Saudi business conditions slowed to 2-year lows in January – PMI

Business activities in Saudi Arabia have slowed to two-year lows, with increased cost pressures and softening demand affecting growth in the kingdom’s non-oil private sector, according to January’s Purchasing Managers’ Index (PMI).

The Riyad Bank Saudi Arabia PMI for January dipped to 55.4 from December’s 57.5, signalling a weak improvement in the health of the country’s non-oil economy.

Even though business activity levels expanded at their slowest pace since 2022, it continued to increase across sectors due to a rise in new business intakes. The rate of sales growth eased to a five-month low.

Several businesses reported a slowdown in demand amid competitive pressures, while new export work dropped for the fourth time in six months.

Increased levels of new business fuelled a rise in input demand as purchasing activity and inventory holdings grew. The rate of buying growth, though, slipped to an eight-month low as firms started to taper procurement trends amid tapered demand.

Meanwhile, purchase prices rose at the sharpest rate since May 2012. Strong demand, higher material prices and greater supply chain risk were behind the increase, with some mentioning higher shipping costs amid the ongoing Red Sea crisis.

Despite market conditions, output prices rose modestly as increased competition forced companies to avoid hiking fees.

“Despite cost increases, output prices have remained low, signalling a high level of competitiveness in the market. This suggests that businesses are absorbing some of the cost pressure rather than passing it on to consumers, which could indicate a strategy to maintain market share in a competitive environment,” Naif Al-Ghaith PhD, Chief Economist at Riyad Bank, said.

With rising staff costs, overall input price inflation rose to its highest level since August 2020, resulting in a muted labour demand and only a modest rise in staffing.

Firms also showed reduced optimism for the year ahead, with demand growth slowing and margins under pressure.

Business expectations for the upcoming year dropped to the second weakest since mid-2020 in January, as firms indicated that waning demand growth and renewed inflationary pressures could limit business expansion in 2024.

#UAE’s non-oil business activities slipped to 5-month low in January – PMI

UAE’s non-oil business activities slipped to 5-month low in January – PMI

The UAE's non-oil business activities slipped to five-month low in January due to a softening of output and new orders along with weak employment growth.

The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) dropped from 57.4 in December to 56.6 in January, the lowest reading in five months.

The PMI trend reflected a significant, but slower, expansion in non-oil output in January. The rate of growth eased to the least marked since August 2023.

Though strong demand conditions helped draw new customers and drive higher sales, the development was broadly domestic, and firms reported only a fractional increase in foreign new orders.

UAE non-oil businesses reported only a slight rise in their staffing levels during January as strong demand and business optimism failed to translate into greater hiring.

The PMI survey noted some evidence of growing supply-chain risks leading to delivery delays at some firms and increased shipping costs in January.

"Meanwhile, the disruption to supply lines resulting from the Red Sea attacks appeared to have a modest impact on the UAE non-oil sector in January, with a few firms noting delivery delays, aggregate backlogs rising, and reports of higher shipping costs by survey respondents," David Owen, Senior Economist at S&P Global Market Intelligence, said.

According to the survey, businesses also mentioned that greater material prices and salary adjustments pushed up expenses solidly.

"The impact on inflationary pressures so far has been notable but not severe, as input costs rose at a faster rate than in December but remained slower than in the preceding three months," Owen added.

The business confidence regarding year-ahead outlook for activity was positive and roughly on par with the 2023 average, the survey noted.

Mideast Stocks: #Saudi bourse gains on upbeat earnings; #Qatar retreats

Mideast Stocks: Saudi bourse gains on upbeat earnings; Qatar retreats

Saudi Arabia's stock market rose in early trading on Monday, driven by banking shares after upbeat earnings, while the Qatari benchmark extended losses in a broad-based retreat.

Saudi Arabia's benchmark index gained 0.6%, with Al Rajhi Bank rising 0.6%, while the country's biggest lender Saudi National Bank (SNB) was up 0.9%.

SNB made a net profit of 20.01 billion riyals ($5.34 billion) in 2023, beating an average analyst estimate of 19.5 billion riyals, according to LSEG data.

Among other gainers, Bank Albilad advanced 4.4%, after reporting a sharp rise in annual profit.

The lender also proposed a cash dividend of 0.50 riyal per share for 2023.

Separately, non-oil business activity in Saudi Arabia grew at its weakest rate in two years last month, a survey showed on Monday, as a sharp slowdown in new order growth indicated weakening demand.

Dubai's main share index edged 0.2% higher, helped by a 0.5% rise in blue-chip developer Emaar Properties .

In Abu Dhabi, the index rose 0.1%.

Oil prices - a catalyst for the Gulf's financial markets - nudged higher, recovering from sharp falls last week, after Washington pledged to launch further strikes on Iran-backed groups in the Middle East and as Ukrainian drones struck southern Russia's largest refinery.

The Qatari benchmark dropped 1.4%, as all its constituents were in negative territory including the Gulf's largest lender Qatar National Bank, which was down 2.3%.

Data on Friday showed U.S. job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labour market that could push the Federal Reserve to start its easing cycle a bit later in the year than markets anticipated.

Most Gulf Cooperation Council countries, including the United Arab Emirates (UAE), peg their currencies to the U.S. dollar and follow the Fed's policy moves closely.