Saudi Arabia launches strategy to boost market transparency, foreign investment

Saudi Arabia launches strategy to boost market transparency, foreign investment
Chairman of the Saudi Capital Market Authority, Mohammed El-Kuwaiz (R), speaks during the Debt Markets and Derivatives Forum held in Riyadh on Sept. 8. SPA
Short Url
Updated 15 September 2024
Follow

Saudi Arabia launches strategy to boost market transparency, foreign investment

Saudi Arabia launches strategy to boost market transparency, foreign investment
  • Plan’s objectives include creating strong debt market and boosting global competitiveness of asset management industry
  • Blueprint comprises three pillars and over 40 initiatives designed to propel the market’s growth and efficiency

RIYADH: Saudi Arabia’s Capital Market Authority has unveiled a plan for 2024-2026 to develop a robust debt market and enhance the international competitiveness of its asset management industry.

The strategy emphasizes safeguarding investors’ rights by increasing transparency and ensuring market integrity. It revolves around three main pillars and includes over 40 initiatives aimed at boosting market growth and efficiency. A key aspect of this approach is enhancing the stock market’s role in capital raising.

To achieve this, the authority plans to introduce special purpose acquisition companies on the parallel market and facilitate the issuance of Saudi depositary receipts. These measures are designed to offer more diverse investment opportunities and make the market more attractive to both domestic and international investors.

Highlighting the plan’s bold objectives, CMA Chairman Mohammed El-Kuwaiz said: “Our new strategy emphasizes the creation of a robust debt market, the enhancement of the asset management industry, and the attraction of increased investments to the national economy.”

The top official made these remarks during the Debt Markets and Derivatives Forum held in Riyadh last week. 

The undertaking will build on past successes while aligning with Saudi Vision 2030, which supports the national economy by facilitating an advanced financial ecosystem and attracting international investments.

The plan focuses on increasing transparency, spurring innovation in financial technology, and expanding financing options. It represents a significant step toward realizing the goals of Saudi Vision 2030, which seeks to enhance the national economy by creating a sophisticated financial ecosystem and attracting global investments.

These initiatives are designed to build on past achievements and position Saudi Arabia as a leading financial hub in the region.

Additionally, the CMA is focusing on developing the sukuk and debt instruments market by creating regulatory frameworks for green, social, and sustainable debt instruments. This aligns with the global push toward environmental, social, and governance criteria.

To stimulate market activity and support Saudi Arabia’s broader financial sector development goals, the CMA is simplifying the regulatory processes for offering, listing, and registering debt instruments. The objectives include increasing the stock market’s value to 80.8 percent of gross domestic product by 2025, up from 66.5 percent in 2019, and expanding the debt instruments market to 24.1 percent of GDP by the same year.

Central to this strategy is a strong emphasis on investor protection, which involves enhancing market transparency and supervisory mechanisms.

In response to recent increases in penalties and compensation for market violations, El-Kuwaiz highlighted the importance of protecting investor interests. “Trust is vital for a successful market,” he said, underscoring the CMA’s commitment to developing class action compensation procedures and improving the resolution process for complaints between financial institutions and their clients. These efforts are aimed at creating a transparent, accountable market environment that strengthens investor confidence.

The CMA’s plan also emphasizes empowering the financial market ecosystem, particularly through support for financial technology, or fintech.

Recognizing the crucial role of technology in fostering competition and efficiency within the financial sector, the CMA intends to promote the growth of fintech companies and facilitate open finance applications within the market framework. This strategy aims to integrate advanced technologies into the financial sector, streamlining operations and enhancing user experiences.

Building on the successes of the CMA’s 2021-2023 agenda, which saw a significant 52 percent increase in the number of listed companies—from 204 in 2019 to over 310 by the end of 2023—the new strategic plan seeks to further advance the market. These achievements have laid a solid foundation for the current strategy, highlighting the global recognition of the Saudi financial market’s expanding prominence.

The new plan aims to enhance the market’s appeal to foreign investors, with the goal of establishing the Saudi financial market as a regional and international leader by the end of 2026. This includes doubling the number of companies licensed to engage in fintech activities and increasing the volume of managed assets.

A notable aspect of the plan is its comprehensive approach to regulatory reforms and market development. This includes reforms to regulatory frameworks for offerings and listings, the development of investment fund regulations, and improvements to class action compensation procedures. The CMA’s focus on enabling more flexible fund structures and advancing the asset management industry reflects a forward-thinking approach to market growth and sophistication.

The CMA’s initiatives reflect the Kingdom’s ambition to position itself as a leading regional and global financial hub. By concentrating on ESG-aligned financial instruments, enhancing market transparency, and prioritizing investor protection, the CMA is laying the groundwork for a sustainable and resilient market environment.


Oil Updates – prices edge up on geopolitical tensions; higher-than-expected US inventories cap gains

Oil Updates – prices edge up on geopolitical tensions; higher-than-expected US inventories cap gains
Updated 17 min 13 sec ago
Follow

Oil Updates – prices edge up on geopolitical tensions; higher-than-expected US inventories cap gains

Oil Updates – prices edge up on geopolitical tensions; higher-than-expected US inventories cap gains

SINGAPORE: Oil prices rose marginally on Thursday as geopolitical concerns over escalating tensions between Russia and Ukraine countered the impact from a bigger-than-expected increase in US crude inventories.

Brent crude futures rose 16 cents, or 0.2 percent, to $72.97 as of 7:08 Saudi time. US West Texas Intermediate crude futures rose 16 cents, or 0.23 percent, to $68.91.

Ukraine fired a volley of British Storm Shadow cruise missiles into Russia on Wednesday, the latest new Western weapon it has been permitted to use on Russian targets a day after it fired US ATACMS missiles.

Moscow has said the use of Western weapons to strike Russian territory far from the border would be a major escalation in the conflict. Kyiv says it needs the capability to defend itself by hitting Russian rear bases used to support Moscow’s invasion, which entered its 1,000th day this week.

“For oil, the risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks,” said ING analysts in a note.

JPMorgan analysts said oil consumption recovered in the past week thanks to better travel demand in the US and India, and as the latter also showed a significant rise in industrial demand.

Global oil demand is estimated to reach 103.6 million barrels per day (bpd) during the first 19 days of November, up 1.7 million bpd on-year, the analysts said in a note.

But countering the gains was a rise in US crude inventories by 545,000 barrels to 430.3 million barrels in the week ended Nov. 15, exceeding analysts’ expectations in a Reuters poll for a 138,000-barrel rise.

Gasoline inventories last week rose more than forecast, while distillate stockpiles posted a larger-than-expected draw, according to the Energy Information Administration data.

Adding to supply, Norway’s Equinor said it had restored full output capacity at the Johan Sverdrup oilfield in the North Sea following a power outage.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies led by Russia, the group known as OPEC+, may push back output increases again when it meets on Dec. 1 due to weak global oil demand, according to three OPEC+ sources familiar with the discussions.

OPEC+, which pumps around half the world’s oil, had initially planned to gradually reverse production cuts with minor increases spread over several months in 2024 and 2025.

However, the International Energy Agency said in its report last week even if OPEC+ cuts remain in place, oil supply will exceed demand in 2025 as rising production from the US and other outside producers outpaces sluggish demand. 


Saudi Arabia’s construction contracts jump 47% to $49.3bn in H1 2024  

Saudi Arabia’s construction contracts jump 47% to $49.3bn in H1 2024  
Updated 29 min 15 sec ago
Follow

Saudi Arabia’s construction contracts jump 47% to $49.3bn in H1 2024  

Saudi Arabia’s construction contracts jump 47% to $49.3bn in H1 2024  

RIYADH: Saudi Arabia’s construction sector continues to thrive, with contract awards totaling SR185 billion ($49.3 billion) in the first half of the year, revealed a senior executive. 

Speaking during a webinar hosted by the US-Saudi Business Council, Albara’a Al-Wazir, the council’s director of economic research, said the figure represents a 47 percent increase compared to the previous year. 

He added that 2024 was well above where 2023 stood at the same point last year. “On a quarterly basis, in Q2, the value of contract awards reached about $17.6 billion — that’s about SR66 billion — and grew year over year by about 11 percent,” said Al-Wazir.  

He further highlighted that the year-to-date performance was even more impressive. 

Al-Wazir emphasized that the construction sector benefits from strong collaboration between the government and the private sector in helping meet Vision 2030 targets. 

“The private sector’s contribution was 4.9 percent, demonstrating exponential growth in construction contracts,” the executive added. 

The overall construction index, which tracks construction activity expected to move into the execution phase within six to 18 months, surged significantly to reach 271 points. 

“Sustained growth is evident, with the index showing year-over-year increases of 33 percent,” Al-Wazir said. 

Regarding sector-specific growth, he said: “Oil and gas, real estate, and water sectors are keeping the momentum from the first quarter into the second quarter, and the growing influential role of the private sector is expanding not just the economy in general but specifically the construction sector.”  

Oil and gas represented 41 percent of total contract awards, with the second quarter seeing a 505 percent year-over-year growth, largely due to Saudi Aramco’s projects.  

“The oil and gas sector reached unprecedented levels, with $7.3 billion in Q2 alone,” Al-Wazir said. 

The real estate sector also showed strong growth, with an 8 percent year-over-year increase in contract values. Residential real estate remains a key focus, especially as the Kingdom moves closer to its 2030 goal of 70 percent homeownership. 

Water infrastructure saw a 26 percent year-over-year growth, with projects such as sewage plants in the Eastern Province contributing to the overall momentum. 

“There is no sign of a slowdown in these sectors,” he said, adding that the pace of contract awards is expected to remain strong. 

Regional overview 

Regional breakdowns showed that the Eastern Province remains the dominant hub for construction, accounting for 59 percent of total contract awards, driven primarily by oil and gas projects based there. 

Riyadh has also experienced growth, especially in the real estate sector, which accounted for 56 percent of contracts in the capital. Key projects include educational and healthcare infrastructure, such as the SR2.3 billion King Salman University project and the Diriyah Gate. 

Saudi Arabia’s investment surge in infrastructure is part of a broader strategy to build a sustainable and diversified economy. 

“The Kingdom is positioning itself as a diversified economic powerhouse with a thriving private sector that can sustain its economy and drive innovation,” Al-Wazir added. 

Urban transformation  

Saudi Arabia’s urban landscape is undergoing a significant transformation, shifting from a centralized model dominated by Riyadh and Jeddah to a polycentric approach, according to Elias Abou Samra, CEO of RAFAL Real Estate Development Co. 

“Economic activity is no longer clustered solely around traditional hubs. We’re seeing new nodes emerging in the south, such as the Red Sea as a tourist destination, NEOM in the northwest, and economic centers like Dammam and even the north,” Abou Samra said. 

These new urban nodes are being connected through advanced infrastructure, including high-speed railways and newly opened airports. 

This shift, Abou Samra noted, is creating new opportunities for investment and employment while boosting the competitiveness of industries like mining and electric vehicle production. 

“King Abdullah Economic City, for example, is leading in EV car production, and this is just one of many examples,” he added. 

Abou Samra also highlighted the Kingdom’s progress in human capital development. “Saudi Arabia created 1 million jobs in 2023, and we’re on track to break this record in 2024,” he noted, stressing that much of this growth is being driven by the private and quasi-governmental sectors. 

He further pointed out that Saudi Arabia has become an increasingly attractive destination for expatriates, particularly with initiatives like the premium residency program. 

“This program allows expats to invest in real estate and economic sectors through equity stakes, opening opportunities that were previously inaccessible,” he explained. 

While acknowledging the progress, Abou Samra pointed out areas where further improvements are needed, particularly in economic efficiency. 

“I’m not here just to paint a rosy picture, and we need to keep a close eye on economic growth and the efficiency of the economy. The short-run multiplier stands at 0.2 as we speak, and medium to long term, it peaks at 0.6. If we compare this to the G20 countries, we are lagging behind,” he said. 

Abou Samra added, “But the good news is that the government is very keen on improving the multiplier effect, and the efficiency of the public sector is increasing by the quarter, not to say, by the day. This is driven by new involvement by the youth in the public sector.”  

This comes as Saudi Arabia continues to prioritize both social and physical infrastructure development in alignment with Vision 2030. 

“These are really focal points that the Kingdom is addressing currently,” Al-Wazir said. 

Meanwhile, physical infrastructure projects serve as the backbone for developments across the country, requiring significant investment and resources.  

One example is Riyadh’s redevelopment under the Royal Commission for Riyadh City, which is heavily dependent on physical infrastructure support. 

Gross fixed capital formation, a measure of investment in infrastructure and assets, rose by 3.2 percent overall, with private sector contributions growing 5.3 percent. 

“We’re starting to see an inflection point where the private sector is growing its role, while government contributions have declined by 8 percent year-over-year,” Al-Wazir said. 

The Kingdom’s emphasis on fostering public-private partnerships and attracting foreign direct investment is expected to reshape its business landscape. 

“Bolstered public-private partnerships and FDI are likely to foster a more dynamic private sector, driving innovation in technology, urban planning, and renewable energy,” Al-Wazir added. 

The executive reaffirmed the trajectory of Saudi Arabia’s construction sector, noting that the Kingdom is on track to meet many of its Vision 2030 targets, driven by record-breaking investments and an expanding private sector role. 


Saudi local content projects valued at $213bn by Q3 2024, says Alkhorayef

Saudi local content projects valued at $213bn by Q3 2024, says Alkhorayef
Updated 20 November 2024
Follow

Saudi local content projects valued at $213bn by Q3 2024, says Alkhorayef

Saudi local content projects valued at $213bn by Q3 2024, says Alkhorayef

JEDDAH: The value of projects under Saudi Arabia’s local content initiatives has reached approximately SR800 billion ($213 billion) by the third quarter of 2024, according to the Kingdom’s Minister of Industry and Mineral Resources, Bandar Alkhorayef.

Speaking at the ongoing second edition of the Local Content Forum in Riyadh, themed “Partnerships for Sustainable Growth,” Alkhorayef revealed that Saudi Arabia’s share of local content in government procurement has increased from 33 percent in 2020 to 47 percent by the third quarter of 2024.

The minister, who also serves as chairman of the Local Content and Government Procurement Authority, added that the authority has focused on encouraging target sectors to adopt and prioritize local content, improving governance in government procurement processes, and enhancing efficiency in this area.

Established in 2018, the LCGPA is responsible for developing and overseeing policies and regulations, fostering local opportunities, promoting transparency, and utilizing national purchasing power. In collaboration with both public and private sectors, its mission is to strengthen local content in the national economy and improve government procurement processes.

The second edition of the forum builds on the success of the first, offering new opportunities for knowledge exchange, experience sharing, and raising awareness about the enablers, mechanisms, and policies of local content.

During his speech, Alkhorayef emphasized the critical role of the LCGPA in advancing local content, which he described as a cornerstone of Saudi Vision 2030.

He highlighted local content as both a brilliant concept and a key innovation introduced by Vision 2030. Alkhorayef noted that local content has received consistent attention since its inception, with Crown Prince Mohammed bin Salman underscoring its national importance in his meetings.

The initiative has now become integral to national strategies and government actions, receiving recognition at local, regional, and international levels.

The minister further stated that the authority’s success is a result of a shared belief in the importance of local content. To maximize its impact, the authority has established and activated over 380 local content teams across various entities to ensure proper implementation and compliance with policies.

Alkhorayef also mentioned that the authority has supported national factories by adding 1,100 new products to the mandatory list, directing nearly SR87 billion in national spending toward local products from early 2022 through Q3 2024.

Additionally, the number of factories producing items on the mandatory list has increased by 1,437, reaching a total of approximately 6,100, an 8 percent growth rate—surpassing the 5 percent growth rate of all factories in the Kingdom. This growth has generated over 42,000 new job opportunities in the past three years, supporting the Kingdom’s efforts to empower national talent and create sustainable employment.

Alkhorayef also highlighted the authority’s success in signing 50 agreements to localize industries and transfer knowledge in key sectors such as transportation, logistics, medical supplies, pharmaceuticals, and water. These agreements are expected to contribute over SR47 billion to the country’s gross domestic product.

The minister emphasized that the benefits of local content extend beyond economic outcomes, contributing to stronger local capabilities, enhanced national security against global challenges, improved supply chain resilience, and increased foreign investment and technology transfer to the Saudi market.

He reiterated that achieving the shared national goal of advancing local content requires the collective effort of all sectors, affirming that the LCGPA is working at an accelerated pace with national entities to realize this goal and fulfill the Kingdom’s aspirations.

In his address during the forum, Faisal Al-Ibrahim, minister of planning and economy, emphasized the importance of knowledge transfer for local content.

He remarked: “Today we may produce a simple product, but tomorrow there will be multiple simple products, and over time, more complex products will be built on them. This accumulated knowledge sustains long-term economic diversification.”

Al-Ibrahim noted that Saudi Vision 2030’s core objective is to diversify economic growth by fostering an environment conducive to developing competitive products and services for global markets. He emphasized that local content is essential for the economy’s resilience and its ability to address future challenges.

In a panel discussion titled “Future Directions of Local Content in the Context of Saudi Vision 2030,” Al-Ibrahim explained that increasing exports will help diversify sources of growth, aiming for expansion beyond oil and public finances. This strategy will drive private sector growth, support small and medium-sized businesses, and create sustainable jobs.

Investment Minister Khalid Al-Falih also participated in the forum, asserting that the Saudi economy “should be, and is, part of an integrated global economy.”

He noted that globalization is here to stay, despite evolving supply chain dynamics and country-to-country connections. Al-Falih stressed that Saudi Arabia is targeting foreign investment to reach 5.7 percent of the total economy, aiming for a market worth over SR6 trillion by 2030, equating to nearly SR388 billion in investment.

Highlighting the local economy’s importance, Al-Falih pointed out that Saudi Aramco has become a global hub for knowledge and technology transfer. He also noted SABIC’s success in building a vast petrochemical industry in Saudi Arabia through partnerships with foreign investors and mentioned Ma’aden’s expanding global presence.

Ahmed Al-Zahrani, assistant minister of energy for development and excellence, discussed the role of the country’s energy sector localization committee, chaired by Energy Minister Prince Abdulaziz bin Salman and deputized by Alkhorayef.

Al-Zahrani emphasized the committee’s mission to promote localization and ensure stable supply chains within the energy sector. He highlighted a research and development program in collaboration with over 14 government and private entities, including Aramco, ACWA Power, SABIC, and several universities.

The goal, he said, is to ensure the sustainability of localization from research and development through innovation to the final product.


Closing Bell: Saudi main index closes in red at 11,867 

Closing Bell: Saudi main index closes in red at 11,867 
Updated 20 November 2024
Follow

Closing Bell: Saudi main index closes in red at 11,867 

Closing Bell: Saudi main index closes in red at 11,867 

RIYADH: Saudi Arabia’s Tadawul All Share Index declined on Wednesday, shedding 7.99 points, or 0.07 percent, to close at 11,867.92.

The total trading turnover of the benchmark index was SR4.78 billion ($1.27 billion) with 88 of the listed stocks advancing, while 141 declined.  

Saudi Arabia’s parallel market Nomu, however, gained by 0.98 percent to 29,859.11.  

The MSCI Tadawul Index marginally slipped 0.49 points to close at 1,491.34. 

The best-performing stock of the day was Al-Baha Investment and Development Co., with its share price increasing by 7.14 percent to SR0.30.  

Fawaz Abdulaziz Alhokair Co.’s share price rose by 8.29 percent to SR14.10, while Development Works Food Co.’s stock surged by 6.85 percent to SR131. 

Conversely, Saudi Chemical Co. recorded the biggest drop, falling 2.90 percent to SR9.71. 

On the parallel market, the top performer was Dar Almarkabah for Renting Cars Co., with its share price surging 15.45 percent to SR50.80. 

Saudi Investment Bank announced the launch of its US-denominated additional tier 1 capital sustainable sukuk under its sukuk program. 

In a statement to Tadawul, the bank revealed the appointment of Alistithmar for Financial Securities and Brokerage Co., Citigroup Global Markets Limited, HSBC Bank, and JP Morgan Securities as joint lead managers.  

It also appointed Goldman Sachs International, MUFG Securities EMEA plc, Arqaam Capital Limited, and Standard Chartered Bank as bookrunners. 

The offering, available to eligible investors in Saudi Arabia and internationally, commenced on Nov. 20 and is scheduled to close on Nov. 21. 

With a minimum subscription of $200,000, the sukuk will be perpetual and callable after five years. 

Saudi Investment Bank’s share price rose 2.65 percent to SR13.58. 

Knowledge Tower Trading Co. has announced a board resolution to transfer from the parallel market to the main market, subject to market approval and fulfillment of all regulatory requirements.  

Following the announcement, the company’s share price saw a significant increase of 7.20 percent, closing at SR10.90 


Tourism seen as key to advancing global climate action, UN official says

Tourism seen as key to advancing global climate action, UN official says
Updated 21 November 2024
Follow

Tourism seen as key to advancing global climate action, UN official says

Tourism seen as key to advancing global climate action, UN official says

RIYADH: Tourism presents a significant opportunity to advance global climate action, said a senior UN official, urging nations to integrate tourism into climate policies. 

Speaking in Baku, Nigar Arpadarai, COP29 UN Climate Change high-level champion, emphasized the need for countries to integrate tourism into national climate policies, highlighting Azerbaijan’s progress in implementing this approach. 

This comes on the back of a 2019 UN report showing a 60 percent rise in transport-related emissions from tourism between 2005 and 2016, which accounted for 5 percent of global CO2, with projections for a 25 percent increase by 2030.  

“Climate change threatens parts of the tourism industry. Tourism is, therefore, an opportunity for both development and enhanced climate action,” Arpadarai said. 

“Azerbaijan has advanced sustainability within its own tourism strategy. Building on its experience, the COP29 Presidency is focused on promoting sustainability and resilience in tourism, and we are urging countries to integrate tourism into national climate policy,” she added.  

Arpadarai called on parties to join in this effort by signing the COP29 Declaration on enhanced action and tourism. 

She further noted that Tourism Day aims to lay the foundations for a holistic approach to sustainable tourism. 

“We encourage all stakeholders to join in this effort as we consider solutions to this key pillar of growth and development,” Arpadarai added. 

Also speaking during the same conference, Kanan Gasimov, head of the administration at Azerbaijan’s State Tourism Agency, highlighted how the COP29 host is leading efforts to integrate climate considerations into its tourism policies. 

“We are committed to driving meaningful change. Tourism is not only a key pillar of our economy but also deeply tied to our rich culture and natural heritage,” Gasimov said. 

“We now understand that the future of our destinations depends on the sustainability of our actions today,” he added. 

Gasimov also noted that through initiatives like the Baku Declaration, Azerbaijan is determined to position tourism as a force for positive climate impact, both within the country and globally. 

“With the momentum we’ve built at COP29, I’m confident that we can achieve transformative change,” he said. 

Zorista Urosevic, executive director of UN Tourism, who also attended the conference, emphasized that tourism, recognizing its vulnerability to climate change and its impact on ecosystems, is committed to adopting low-carbon, climate-resilient models aligned with sustainable development goals. 

“The launch of the Baku Declaration on enhanced climate action in tourism, promoted by the COP29 presidency, underscores this commitment,” she said. 

“Over 50 governments endorsed the Baku Declaration in the last 20 days as well as some non-state stakeholders, and it is planned to continue collecting endorsements until and before COP30,” Urosevic added. 

COP29 represents a pivotal moment in global climate negotiations, particularly for the Global South. 

Developing nations are poised to continue their fight for substantial climate finance, robust adaptation strategies, and equitable policy outcomes within the framework of common but differentiated responsibilities, based on the respective capabilities of nations.   

Expectations are high as delegates discuss topics including carbon emissions reduction, sustainable development, and the integration of climate resilience into national policies.