Saudi debt market liquidity soars to $666m in 2023

Mohammed El-Kuwaiz, chairman of the Capital Market Authority, speaks at the Derivative Market and Derivatives Forum 2024 in Riyadh on Sunday. AN photo
Mohammed El-Kuwaiz, chairman of the Capital Market Authority, speaks at the Derivative Market and Derivatives Forum 2024 in Riyadh on Sunday. AN photo
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Updated 08 September 2024
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Saudi debt market liquidity soars to $666m in 2023

Saudi debt market liquidity soars to $666m in 2023

RIYADH: The liquidity of Saudi Arabia’s debt market surged to SR2.5 billion ($665.9 million) in 2023, a significant increase from SR800 million in 2019, according to Mohammed El-Kuwaiz, chairman of the Capital Market Authority.

El-Kuwaiz made these remarks during a panel session at the Derivative Market and Derivatives Forum 2024 in Riyadh.

He said this growth reflects the sector’s expansion and its progress toward aligning with the scale of comparable global economies.

“Regarding liquidity, in 2019, the annual liquidity and trading volume in the debt market was approximately SR800 million. By 2023, this figure has grown to around SR2.5 billion, more than tripling despite a decrease from previous years due to rising interest rates,” El-Kuwaiz said.

He continued: “Currently, the debt market’s size relative to the Kingdom’s economy is less than 20 percent, specifically around 18-19 percent. In comparison, similar countries have debt markets that represent 30 percent or more of their economies.”

El-Kuwaiz said that, given the expected growth of the Saudi economy, the debt market has already experienced substantial expansion over the past four years.

To align with international markets and address the growing financial demands of the economy, the Saudi debt market is expected to at least double, if not more, over the next five years. This expansion is crucial for maintaining the market's competitiveness and supporting the country’s economic development.

El-Kuwaiz mentioned: “We anticipate releasing the final version of the new regulations next month. This will be the most significant update concerning issuance and offerings in the debt market. While we have made considerable progress, there is still much work ahead.”

He added that the Saudi debt market is more accessible to foreign investors compared to the stock market, which often requires specialized knowledge.

“Previously, Saudi issuers had to conduct debt issuances outside the Kingdom, often in foreign currencies. More than 80 percent of debt issuances by Saudi issuers were conducted abroad before 2019,” he explained.

However, following recent improvements in the system, the proportion of debt issuances occurring within Saudi Arabia has nearly doubled from about 20 percent to almost 40 percent. This shift indicates the increasing attractiveness and competitiveness of the local debt market. Additionally, for the first time in the past two years, bank ownership in the market has fallen below 50 percent, highlighting the entry of new investor categories.

El-Kuwaiz also pointed out that the global debt market is significantly larger than the global equity market. At the end of 2023, the total value of global stock markets was approximately $115 trillion, while the value of global debt markets ranged between $140 and $150 trillion. This disparity reflects the fundamental nature of debt markets.

El-Kuwaiz highlighted that the current conditions are ripe for advancing the debt market, thanks to recent developments such as the issuance of the bankruptcy law, the integration of the local market with international depositories to attract foreign investors, and reforms to the tax system for sukuk issuers, investors, and funds.

“We have embarked on the third wave of development for the Saudi financial market by activating debt instruments. The introduction of bankruptcy laws was crucial for energizing the debt markets,” he said.

International issuances planned

Majeed Al-Abduljabbar, CEO of the Saudi Real Estate Refinance Co., shared that in the past three years, his company has become the second-largest issuer in the Kingdom, following the Saudi government.

“In the last three years, we have issued approximately SR20 billion. This year, we plan to execute our first issuance in dollars, aiming to diversify our issuances between riyals and dollars,” Al-Abduljabbar said during the second panel session.

He added: “Our ambition is to significantly increase international issuances. We have made considerable progress in securitization and are focusing on ensuring that supply and demand are established from the outset.”

Al-Abduljabbar noted that to ensure the success of securitization in the Kingdom, it is essential to coordinate with banks and mortgage finance companies to create a robust supply. “We are collaborating with our partners to provide a supply that can be effectively utilized,” he said.

In the past two weeks, Al-Abduljabbar mentioned that agreements have been signed with major global firms, including BlackRock and King Street. He also hinted at forthcoming agreements with other companies to guarantee strong global demand rather than relying solely on local interest.

“Demand in Saudi Arabia is typically limited, often confined to commercial banks. Our issuances are predominantly within commercial banks or the private sector, with 70 to 80 percent of the market share. The number of regular issuers is not extensive, and there are insufficient issuances,” Al-Abduljabbar explained.

He emphasized the need for mandatory valuation processes in Saudi Arabia to ensure transparency and provide accurate pricing of financial products. By making valuation compulsory, the market can enhance pricing accuracy, boost investor confidence, and improve overall market liquidity.

Facilitating foreign investors

Hanan Al-Shehri, CEO of Edaa, highlighted that over the past four years, the volume of issuances in the debt market has surpassed that in the equity markets by more than six times, with the number of outstanding private issuances also doubling.

“Upcoming developments, such as the introduction of a market maker for debt instruments, are expected to have a significantly positive impact,” Al-Shehri said.

She elaborated: “The successful implementation of market makers in the stock market is being adapted for the debt instruments market. This crucial tool for increasing liquidity is anticipated to be operational before the end of the year.”

Al-Shehri also emphasized that the company is working on a project to facilitate private transactions outside of regular trading hours. “This is especially important for foreign investors and institutions who wish to trade outside official hours due to time differences,” she added.

Positive financial outlook

Waleed Al-Rashed Al-Humaid, CEO of Al-Rajhi Capital, reported that in 2024, their total value of issuances exceeded SR100 billion, whether in riyals or US dollars. “This achievement has positioned us as the leading issuer in the local market and the second globally in sukuk issuances, according to Bloomberg rankings,” Al-Humaid added.

From an international perspective, Luke Negal, head of Sovereign Bonds at CME Group, praised Saudi Arabia’s fiscal responsibility and positive financial outlook. “Saudi Arabia is well-positioned to reaffirm its role in international portfolios as a core and attractive holding. The current and upcoming five years present an ideal opportunity for the Kingdom to expand its presence in the global market,” Negal said.


Number of hotel rooms in Saudi Arabia surges 107% in Q3

Number of hotel rooms in Saudi Arabia surges 107% in Q3
Updated 03 November 2024
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Number of hotel rooms in Saudi Arabia surges 107% in Q3

Number of hotel rooms in Saudi Arabia surges 107% in Q3
  • Room licenses doubled to over 3,950, as opposed to 2,000 permits in the third quarter of last year
  • Kingdom aims to create over 1 million tourism-related jobs, driving economic growth and increasing its global travel footprint

RIYADH: Saudi Arabia’s tourism sector experienced a 107 percent increase in hotel rooms year-on-year in the third quarter of the year, according to official data. 

The Kingdom’s hospitality industry saw room numbers increase from 214,600 in the third quarter of last year to 443,200 during the same period in 2024. 

Room licenses also doubled to over 3,950, as opposed to 2,000 permits in the third quarter of last year. 

Saudi Arabia has ambitious tourism objectives, aiming to attract 150 million visitors annually by the end of the decade as part of its Vision 2030 plan. 

The initiative is key to diversifying the country’s economy beyond oil, with tourism expected to become a necessary pillar of the Kingdom’s gross domestic product. 

The nation has plans for investments exceeding $1 trillion for new attractions and infrastructure, including the Red Sea initiative and NEOM, a $500 billion mega-city. 

An accessible e-visa program has also been introduced to facilitate international travel. 

By focusing on heritage sites, luxury resorts, and cultural experiences, the Kingdom aims to create over 1 million tourism-related jobs, driving economic growth and increasing its global travel footprint. 

In February, Saudi Arabia’s Minister of Tourism Ahmed Al-Khateeb announced plans to add 250,000 hotel rooms by 2030, with 75,000 to be developed through private sector contracts. 

During a ministerial panel session at the Private Sector Forum in Riyadh, Al-Khateeb said the total number of hotel rooms in the Kingdom had reached 280,000 by the end of 2023. 

He also said that the target for 2030 is approximately 550,000 hotel rooms, emphasizing the high quality of current and upcoming projects, which will position Saudi Arabia among the top global destinations. 

The minister added that the tourism sector had reached a 10 percent contribution to GDP and a 7 percent contribution to non-oil GDP. 

Al-Khateeb said that the Kingdom has surpassed its original target of attracting 100 million tourists by 2030, reporting 100 million visitors so far, including 77 million domestic and 27 million international travelers. 


Closing Bell: Saudi indices close in green at 12,048

Closing Bell: Saudi indices close in green at 12,048
Updated 03 November 2024
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Closing Bell: Saudi indices close in green at 12,048

Closing Bell: Saudi indices close in green at 12,048
  • MSCI Tadawul Index increased by 5.51 points, or 0.37%, closing at 1,512.82
  • Parallel market Nomu gained 72.27 points, or 0.27%, to close at 27,297.45

RIYADH: Saudi Arabia’s Tadawul All Share Index started the week in green, gaining 26.15 points, or 0.22 percent, to close at 12,048.26. 

The total trading value of the benchmark index was SR4.2 billion ($1.1 billion), with 82 listed stocks advancing, while 147 retreated. 

The MSCI Tadawul Index also increased by 5.51 points, or 0.37 percent, closing at 1,512.82. 

The Kingdom’s parallel market Nomu gained 72.27 points, or 0.27 percent, to close at 27,297.45, with 38 stocks advancing and 35 retreating. 

The best-performing stock of the day was Riyadh Cables Group Co., whose share price surged by 9.98 percent to SR112.40. 

Other top performers included MBC Group Co., which saw a rise of 9.98 percent to SR45.75. 

Anaam International Holding Group and Al-Baha Investment and Development Co. also recorded gains of 8 percent and 7.69 percent, closing at SR1.35 and SR0.28, respectively. 

Rabigh Refining and Petrochemical Co. was also among the top performers with SR8.61, recording a 5.51 percent increase. 

Quara Finance Co. announced its nine-month financial results, seeing SR147.1 million in revenue, a 2.3 percent year-on-year increase. 

Despite the company’s gains in sales, net profit saw a 28.1 percent yearly decline, recording SR34.5 million in net income. 

Quara attributed the revenue increase to a growth in yield of the retail portfolio, while the decrease in profits was due to an increase in write-offs and decrease in write-off recoveries. 

Quara closed Sunday’s trading at SR16, a 0.49 percent increase. 

Elm Co. also released its financial results for the nine months of the year recording SR5.2 billion in revenue, a 25.2 percent year-on-year increase. 

The company’s net profit also saw an increase to reach SR1.3 billion, a 29.1 percent growth. 

Elm attributed the revenue growth to a 25.66 percent increase in digital business revenue and a 29.02 percent rise in business process outsourcing revenue, partially offset by a 19.13 percent decline in professional services revenue. 

Elm closed Sunday’s trading at SR1,072.20, a 4.85 percent increase. 

Tanmiah Food Co. reported a revenue increase of 23.8 percent year on year for the first nine months, reaching SR1.8 billion. 

Net profits also increase by 39.3 percent to reach SR69.1 million by the end of the period, driven mainly by fresh poultry. 

Tanmiah Food closed Sunday’s trading at SR143, a 4.99 percent increase. 

Dr. Sulaiman Al Habib Medical Services Group’s revenue also increased by 14.9 percent in the first nine months of the year compared to the same period last year, to reach SR8 billion. 

Net profits grew to reach SR1.7 billion, an 11.8 percent year-on-year increase. 

The revenue increase was primarily driven by growth in the hospital and pharmacy segments, fueled by a rise in the number of patients in the hospital sector. The rise in net profits was largely attributed to this revenue growth. 

Dr. Sulaiman Al Habib Medical Services Group closed Sunday’s trading at SR288.40, a 0.77 percent increase. 

Fragrance company Al Majed Oud Co. reported revenue of SR683.7 million for the first nine months of the year, marking a 25.5 percent increase compared to the same period last year. 

Net profits rose to SR141.9 million, a 23.3 percent year-over-year increase. The company attributed the growth in profits and sales to the strong performance of branches opened in 2023, which significantly boosted sales in the current period. 

Al Majed Oud Co. closed trading at SR150.60, a 1.05 percent decrease.


Saudi road maintenance time down 40% thanks to modern technology, transport minister says

Saudi road maintenance time down 40% thanks to modern technology, transport minister says
Updated 03 November 2024
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Saudi road maintenance time down 40% thanks to modern technology, transport minister says

Saudi road maintenance time down 40% thanks to modern technology, transport minister says
  • Saleh Al-Jasser said cutting-edge innovations have helped reduce carbon emissions
  • Several road networks were surveyed to identify shortcomings and execute safety initiatives, minister said

RIYADH: Saudi road maintenance time has been slashed by 40 percent thanks to modern technologies, according to the Kingdom’s Minister of Transport and Logistics Services. 

During a speech on the first day of the Road Safety and Sustainability Conference taking place in Riyadh from Nov. 3—4, Saleh Al-Jasser said the cutting-edge innovations have also helped reduce carbon emissions.

This falls in line with Saudi Arabia’s Roads General Authority’s vision of enhancing the safety and sustainability of the road sector through national competencies. It also aligns with the body’s keenness to improve the quality of road networks and user experience, as well as foster innovation. 

It is also in line with the authority’s objective to reduce the number of road deaths to less than five cases per 100,000 people.

“Modern technologies have helped reduce road maintenance time by up to 40 percent while reducing carbon emissions,” Al-Jasser said. 

He added: “The Kingdom has implemented many scientific innovations such as road cooling and rubber roads and has advanced in the road quality index to fourth place among the G20 countries.”

The minister highlighted how this confirms its leadership in achieving the highest safety and quality standards on roads. 

“The Kingdom’s vision has given great attention to quality of life and road safety,” Al-Jasser said.

“The Kingdom’s road network is the world’s first in terms of connectivity, and enhances sustainable development for individuals and goods according to the highest standards of security and safety,” he also said. 

The minister went on to say a large number of road networks were surveyed to identify shortcomings and execute safety initiatives. Several measures have been implemented following the reviews. 

Speaking at the same event, the Vice Minister of Transport and Logistics Services for Road Affairs and Acting CEO of RGA, Badr Abdullah Al-Dulami, shared findings from the world’s largest road survey, which confirmed that 77 percent of the Kingdom’s roads meet safety standards. He also highlighted that protection measures in traffic diversions have risen to 95 percent.

“Expanding an advanced research study that the authority is working on to use the products of building demolition in asphalt mixtures, which contributes to preserving the environment and investing in natural resources,” Al-Dulami said. 

“Launching the Saudi Road Code, which contributes to raising the level of safety, preserving the environment, and preparing the infrastructure for self-driving vehicles,” he added. 

Chairman of the International Road Federation, Abdullah bin Abdulrahman Al-Muqbil, was also present during the event. 

“To make roads safer for travel, we have harnessed modern technologies to sustain them and raise their efficiency,” Al-Muqbil said. 

The chairman said the federation has established effective partnerships with member states, including the Kingdom, which has led to enhanced safety and sustainability in the road sector and the adoption of modern technologies.


IMF to begin delayed review of Egypt loan program: PM

IMF to begin delayed review of Egypt loan program: PM
Updated 03 November 2024
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IMF to begin delayed review of Egypt loan program: PM

IMF to begin delayed review of Egypt loan program: PM
  • Review is fourth under Egypt’s latest 46-month IMF loan program approved in 2022
  • Egypt had requested financing under the RSF since 2022, with hopes it could unlock up to an additional $1 billion

CAIRO: The International Monetary Fund will this week begin its delayed fourth review of Egypt’s 46-month loan program, Prime Minister Mostafa Madbouly said on Sunday.
The review had originally been scheduled for the end of September.
It comes under an agreement Cairo signed with the IMF in April, expanding an original loan from $3 billion to $8 billion to help Egypt manage its economic challenges.
The fourth review will unlock $1.2 billion in new financing.
At a Cairo joint news conference with IMF’s managing director Kristalina Georgieva, Madbouly said the IMF team would start work on the review on Tuesday “with Egypt’s central bank and relevant ministries.”
Georgieva praised “the commitment and the strength of the actions Egypt has already taken.”
She cited moving to “a flexible exchange rate regime,” boosting “the role of the private sector as a source of growth and jobs” and consolidating “social protection by moving away from untargeted subsidies.”
The IMF chief acknowledged the challenges faced by the country’s economy amid regional conflicts.
She said “conditions have become more difficult for no fault of your own, but because of the conflict in your neighborhood.”
Earlier on Sunday, Georgieva met President Abdel Fattah El-Sisi.
A statement from the presidency quoted El-Sisi as saying Egypt “would prioritize easing the burden of inflation on citizens,” focusing on curbing rising prices, attracting investments and empowering the private sector.
The government raised fuel prices last month by up to 17 percent after inflation hit 26.4 percent in September.
Last month, El-Sisi said his government might reconsider the loan program if it creates “unsustainable public pressure.”
He cited challenges from ongoing regional instability, particularly the prolonged conflict in the Gaza Strip.
Despite the rising cost of living, Georgieva said Sunday Egyptians “will see the benefits of these reforms in a more dynamic, more prosperous Egyptian economy.”
She said she expected inflation to slide to 16-17 percent by the end of this fiscal year (to June 2025) after peaking at 37 percent.
Jihad Azour, the IMF’s Middle East and Central Asia director, last week also acknowledged challenges faced by Egypt’s economy.
In addition to the Gaza, Lebanon and Sudan conflicts, he cited a significant decline in Suez Canal revenue.
“The reduction in trade volume going through the Suez Canal has affected revenues by more than 60 to 70 percent on average, which would represent $4.5 to $5 billion in revenues,” Azour said.
In May, the IMF said traffic through the canal dropped by 66 percent the previous month as ships avoided Red Sea shipping lanes to avoid attacks by the Iran-backed Houthi militia in Yemen.


Saudi Arabia calls for robust action against land degradation

Saudi Arabia calls for robust action against land degradation
Updated 03 November 2024
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Saudi Arabia calls for robust action against land degradation

Saudi Arabia calls for robust action against land degradation
  • Kingdom’s incoming UNCCD presidency aims to increase the number of participating countries and the ambition of their goals
  • More than 71,000 square km of land expected to face deterioration before the Dec. 2nd start of the conference

RIYADH: Saudi Arabia is encouraging urgent action to combat drought, as vast areas of land — larger than the size of Ireland — are projected to face degradation globally in the near future.

With less than one month remaining until the 16th session of the Conference of Parties of the UN Convention to Combat Desertification begins in Riyadh, the Kingdom’s incoming UNCCD presidency has urged the international community to take decisive measures on drought resilience and land restoration. 

Recent data underscores the urgency of this appeal, with more than 71,000 square km of land expected to face deterioration before the Dec. 2nd start of the conference, according to the UNCCD. 

“COP16 in Riyadh is a critical moment for the international community to address land degradation if we are to meet the UNCCD target of restoring 1.5 billion hectares of land by 2030,” said Osama Faqeeha, the Kingdom’s deputy minister for environment at the Ministry of Environment, Water and Agriculture. 

Faqeeha, who is also the adviser to the COP16 presidency, added: “As the hosts, we are calling for all parties to come to Riyadh ready to increase their ambition by strengthening land restoration targets, bolstering drought resilience initiatives, and enhancing land tenure rights.” 

Since 2015, countries have been aligning with voluntary Land Degradation Neutrality targets as part of the UN Sustainable Development Goals. 

Over 130 nations have engaged in the LDN Target Setting Programme, with more than 100 already defining their objectives.

Saudi Arabia’s incoming UNCCD presidency aims to increase the number of participating countries and the ambition of their goals. 

The UNCCD has estimated that more than $44 trillion in economic output, representing over half of global gross domestic product, is moderately or highly dependent on natural capital. 

Restoration investments are highlighted as economically beneficial, with projections that each dollar invested could yield up to $30 in returns, presenting a significant opportunity for a trillion-dollar restoration economy. 

COP16 in Riyadh will mark the first time the UNCCD will introduce a Green Zone, a dedicated space for businesses, scientists, and financial institutions, as well as NGOs, the public, and impacted communities to collaborate on sustainable solutions. 

The conference will also feature seven thematic days focused on key topics such as land restoration, governance, and agri-food systems, as well as resilience, finance, and advancements in science, technology, and innovation.