Mideast Stocks: #Saudi bourse at 18-month high, geopolitical tensions limit gains

Mideast Stocks: Saudi bourse at 18-month high, geopolitical tensions limit gains

Most stock markets in the Gulf ended higher on Tuesday, with the Saudi index at an 18-month high, although the gains were limited on geopolitical tensions in the region. 

The Iran-aligned Houthis continued their attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, with at least four more vessels hit by drone and missile strikes since Friday.

Houthi militants said on Monday they had attacked the Rubymar cargo vessel in the Gulf of Aden which was at risk of sinking, raising the stakes in their campaign to disrupt global shipping in solidarity with Palestinians in the Gaza war.

Saudi Arabia's benchmark index edged up 0.1%, closing at its highest since August 2022, helped by a 0.8% rise in Al Rajhi Bank. Elsewhere, Saudi Telecom advanced 2.5% after reporting an annual net profit of 13.30 billion riyals ($3.55 billion), up from 12.71 billion riyals a year earlier. The telecom firm also proposed a special dividend of 1 riyal per share for 2023, alongside a regular annual payout of 0.40 riyal per share.

The Qatari benchmark added 0.1%, helped by a 0.8% gain petrochemical maker Industries Qatar. The Qatari bourse was relatively stable after maintaining a strong rebound from the previous week, said Joseph Dahrieh, managing principal at Tickmill. "The market saw mixed performances among banking stocks and reacted to the geopolitical tensions and declining energy prices."

In Abu Dhabi, the index eased 0.1%.

Oil prices - a catalyst for the Gulf's financial markets - edged lower but remained near three-week highs on heightened Middle East tensions and as China showed some signs of economic recovery.

Dubai's main share index closed 0.1% higher, helped by a 3% rise in MashreqBank.

Outside the Gulf, Egypt's blue-chip index dropped 0.4%, hit by a 1.8% fall in Commercial International Bank .

Saudis Bolster Local Manufacturing Drive With SoftBank Venture - Bloomberg

Saudis Bolster Local Manufacturing Drive With SoftBank Venture - Bloomberg

Saudi Arabia’s new $100 billion investment firm announced a string of deals Tuesday, including a partnership with SoftBank Group Corp., aimed at transforming the kingdom into an industrial and manufacturing powerhouse.

The new vehicle, Alat, and SoftBank will invest up to $150 million to establish a fully-automated manufacturing and engineering hub in Riyadh, according to a statement. The venture will build industrial robots based on intellectual property developed by SoftBank and its affiliates, with the first factory set to open in December.

“With this initial set-up, we predict a contribution of $1 billion to Saudi Arabia’s GDP by 2025,” Alat Chief Executive Officer Amit Midha said in the statement. “Our ambition is to fundamentally transform industrial manufacturing by robots, manufactured in the kingdom.”

Chaired by Crown Prince Mohammed bin Salman and backed by the Public Investment Fund, Alat was created to sign deals with international players and invest in large industrial firms that the kingdom wants to see set up operations locally. The firm plans to invest $100 billion by 2030.

Tadawul Says Foreigners Missing Out on #SaudiArabia’s Peer-Beating Stock Returns - Bloomberg

Tadawul Says Foreigners Missing Out on Saudi Arabia’s Peer-Beating Stock Returns - Bloomberg

The operator of Saudi Arabia’s stock exchange said foreign investors’ exposure to the bourse isn’t high enough, showing that they’re missing out on returns that have beaten most emerging-market peers.

While flows have been positive for the the past five years, “the representation of foreign investors in the market is still, in my opinion, not at the level we would anticipate,” Khalid Al-Hussan, the chief executive officer of Saudi Tadawul Group Holding Co., told Bloomberg Television at the Saudi Capital Market Forum 2024.

The kingdom makes up 4.3% of the MSCI Emerging Markets Index, an increase from about 1.5% when it was first included in the benchmark in 2019 and has outperformed ever since. The Tadawul All Share Index’s gains have extended this year, with the benchmark rising for the past 13 days, the longest such streak since 2003.

Saudi Arabia’s market has been thrust into the spotlight amid a rush of in-demand initial public offerings which isn’t showing any signs of slowing down. The number of emerging-market funds with exposure to the country has been picking up amid plans to diversify the economy and a steady stream of reforms designed to encourage more foreign participation.

Still, these investors remain underweight relative to the benchmark.

The operator is doing what it can to promote Saudi Arabian stocks by informing international investors about the market and its regulatory and operating framework, Al-Hussan said. It is also expanding its offering of securities to add depth, such as last year’s introduction of single stock options contracts.

Al-Hussan said there is more than enough liquidity to support new listings, with almost 60 applications under review.

“The historical IPO coverages is just the testament of what is the capacity of the Saudi capital market,” Al-Hussan said. “What we have seen in previous IPOs, and the daily liquidity in the market gives us the confidence that the Saudi capital market, specifically the exchange, can strongly observe any required liquidity by any new IPOs coming.”

Mideast stocks - Major Gulf markets ease on regional tensions

Mideast stocks - Major Gulf markets ease on regional tensions

Most major stock markets in the Gulf fell in early trade on Tuesday on heightened tensions in the region, although the Dubai index bucked the trend.

The Iran-aligned Houthis continued their attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, with at least four more vessels hit by drone and missile strikes since Friday.

Houthi militants said on Monday they had attacked the Rubymar cargo vessel in the Gulf of Aden which was at risk of sinking, raising the stakes in their campaign to disrupt global shipping in solidarity with Palestinians in the Gaza war.

Saudi Arabia's benchmark index dropped 0.2%, on course to snap a 13-day winning streak, hit by a 0.9% slide in Al Rajhi Bank.

However, the index's losses were limited by a 3% rise in Saudi Telecom Co after reporting an annual net profit of 13.30 billion riyals ($8.00 billion), up from 12.71 billion riyals a year earlier.

The telecoms firm also proposed a special dividend of 1 riyal per share for 2023, alongside a regular annual payout of 0.40 riyal per share.

In Qatar, the index lost 0.3%, with Qatar Islamic Bank losing 0.7% and Qatar National Bank, the Gulf's biggest lender, retreating 0.5%.

Oil prices - a catalyst for the Gulf's financial markets - were broadly steady, hovering close to three-week highs on heightened Middle East tensions and recovering China demand.

The Abu Dhabi index eased 0.2%, weighed down by a 1.1% fall in the United Arab Emirates' biggest lender First Abu Dhabi Bank.

Dubai's main share index edged 0.1% higher, helped by a 3.2% rise in Commercial Bank of Dubai.

‘Strings attached’: #SaudiArabia steps up demands in tech deals with China

‘Strings attached’: Saudi Arabia steps up demands in tech deals with China

Saudi Arabia is mandating that leading Chinese technology companies invest in the Gulf kingdom in return for huge deals, as it leverages its petrodollar wealth to boost its domestic tech industry. 

Alibaba and SenseTime are among the top Chinese groups to have secured deals worth hundreds of millions of dollars with Saudi Arabia over the past three years, in exchange for setting up joint ventures in the country. 

According to five industry insiders, including fund managers, tech entrepreneurs and consultants working on the agreements, Saudi investors are applying increasingly stringent requirements to fund deals. 

In some cases, Chinese companies have to share technical expertise with their new Saudi partners. 

“They want your company and engineers to train their own talent,” said one Chinese consultant advising local tech companies on how to raise money from the kingdom. “It comes with strings attached.” 

The kingdom’s hunt for global tech companies to help upgrade its economy and diversify away from oil has coincided with a funding crunch and weak domestic sales for Chinese tech companies, which have turned to the Middle East for investment and new revenue streams.