DUBAI: Middle East funds have become less bullish about Saudi Arabian stocks after the market surged in recent months, while the flotation of the malls unit of Emaar Properties is reviving interest in the United Arab Emirates.
Seven percent of respondents in the latest monthly Reuters survey of 15 leading regional investment managers expect to raise allocations to Saudi Arabian equities in the next three months, while 20 percent expect to reduce them.
That is a big change from the August survey, which found 47 percent expecting to raise their Saudi equity allocations and only 7 percent to reduce them.
Bullishness toward Saudi Arabia peaked in the July survey, days after the stock market regulator announced it would open the market to direct foreign investment early next year.
Since then, sentiment toward the market has been declining, partly because sharp gains in stock prices have left many of them looking fully valued for now. The main Tadawul All-Share Index is up 10 percent since the announcement but has pulled back from its peaks in the past week.
A sharp drop in oil prices over the past several weeks is not nearly steep enough to cause financial problems for Saudi Arabia, but it may also have dampened sentiment toward the market. Brent crude oil, now at just above $95 a barrel, is down almost $20 from June's peak.
The survey was conducted over the past 10 days by Trading Middle East, a Reuters forum for market professionals.
UAE, KUWAIT
Meanwhile, 40 percent of fund managers now expect to raise their UAE equity allocations, while only 7 percent intend to reduce them. That compared with ratios of 27 percent and 7 percent in the August survey.
The $1.58 billion initial public offer of Emaar Malls Group, which concluded last week, attracted massive demand from investors, and some fund managers think the listing will help to ignite a fresh rise of the market.
“The return of activity in the IPO market in the UAE with Emaar Malls Group will help attract liquidity back to the market after the slowdown of the summer months," said Mohammed Ali Yasin, managing director at NBAD Securities.
"This will increase the trading volumes significantly in the ADX and DFM, and together with the Q3 announcements for the listed companies, will see new positive momentum come back to the UAE.”
However, the survey showed a more cautious mood towards Middle East equities and fixed income in general, apparently the result of some funds boosting allocations to cash amid expectations for US interest rate hikes next year.
The rate hikes will start to change the ultra-loose monetary conditions that have buoyed global markets in the past few years, and are expected to be imitated quickly by Gulf central banks because of their currency pegs to the US dollar.
Sentiment toward Middle East stocks is now equally split after being heavily in favor of stocks in the August survey. No fund now expects to raise its Middle East fixed income allocation and 13 percent intend to reduce them, compared with an equal split in the last survey.
Funds bullish on UAE after Emaar Malls IPO
Funds bullish on UAE after Emaar Malls IPO
Oil Updates — crude rises on tighter OPEC supply, US jobs data
SINGAPORE: Oil prices rose on Wednesday as supplies from Russia and OPEC members tightened while data showing an unexpected increase in US job openings pointed to expanding economic activity and consequent growth in oil demand.
Brent crude was up 37 cents, or 0.5 percent, at $77.42 a barrel at 10:30 a.m. Saudi time. US West Texas Intermediate crude climbed 44 cents, or 0.6 percent, to $74.69.
Oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases, a Reuters survey showed. Field maintenance in the UAE offset a Nigerian output hike and gains elsewhere in the group.
In Russia, oil output averaged 8.971 million barrels a day in December, below the country’s target, Bloomberg reported citing the energy ministry.
On the economic front, job openings rose in the US in November and the number of layoffs was low, while workers were reluctant to quit, the Job Openings and Labor Turnover Survey showed.
“Robust US economic data continues to bolster the outlook for the US economy and oil demand, further supported by a larger-than-anticipated drawdown in crude inventories,” said IG market strategist Yeap Jun Rong.
“After trading within a prolonged tight range since October last year, selling pressures may have been exhausted for now, paving the way for a modest recovery,” Yeap said.
US crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
Going forward, analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries.
“We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024,” BMI, a division of Fitch Group, said in a client note.
“The bearish view is being led by our fundamental data forecast, which points to an oversupply this year, with supply growth outstripping demand growth by 485,000 barrels per day.”
Saudi Cabinet approves new law to regulate petroleum, petchem sector
RIYADH: Saudi Arabia’s Cabinet has approved a new Petroleum and Petrochemical Law to ensure a reliable and secure supply of products within the Kingdom.
The law, which was approved on Jan. 7, is designed to optimize the use of raw materials in the sector and support the localization of the value chain, according to a report by the Saudi Press Agency.
The new legislation will replace the existing Petroleum Products Trade Law and is expected to achieve several key objectives, including regulating petroleum and petrochemical operations. It aims to accelerate the sector’s growth, foster economic development, and encourage increased investment in the industry.
Upon the law’s approval, Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman expressed gratitude to the Cabinet, emphasizing that the law would help establish a robust legislative framework for the Kingdom’s energy sector. He added that the new directive would facilitate the optimal use of petroleum and petrochemical resources.
The law will regulate the use, sale, purchase, and transportation of petrochemical products, as well as oversee the operation of distribution stations and petrochemical facilities, the Saudi Press Agency report noted.
In addition to the Petroleum and Petrochemical Law, the Cabinet approved several other agreements on Jan. 7. These include a memorandum of understanding for cooperation between Saudi Arabia’s Ministry of Justice and Singapore’s Ministry of Law, an MoU on health cooperation with Morocco’s Ministry of Health and Social Protection, and an MoU to strengthen digital government collaboration between Saudi Arabia’s Digital Government Authority and Qatar’s Ministry of Communications and Information Technology.
The Cabinet also endorsed an air services agreement between Saudi Arabia and Eswatini, a Southern African nation.
Furthermore, the Cabinet reviewed ongoing development programs and projects aimed at diversifying the Kingdom’s economy, exploring new revenue streams, and maximizing the use of available resources.
EV maker Lucid becomes first global automotive manufacturing company to join ‘Made in Saudi’ program
EV maker Lucid becomes first global automotive manufacturing company to join ‘Made in Saudi’ program
- Aims to increase industrial sector’s contribution to GDP to at least 20% by 2025
- Move seeks to attract additional investments, enhance non-oil exports, and create sustainable job opportunities
RIYADH: Electric vehicle manufacturer Lucid Motors has become the first global automotive company to join the Kingdom’s “Made in Saudi” program as the country continues strengthening its industrial capabilities.
The milestone grants Lucid the right to use the “Saudi Made” label on its products, symbolizing the nation’s focus on quality and innovation.
The strategy aims to increase the industrial sector’s contribution to the gross domestic product to at least 20 percent by 2025, tripling the current industrial base.
It also seeks to attract additional investments, enhance non-oil exports, and create sustainable job opportunities, aligning with Vision 2030’s economic diversification goal.
“This is a step that represents a strong push to enhance the image of the national industry and attract investments and global companies, which consolidates the Kingdom’s position as a global center for innovative manufacturing,” Minister of Industry and Mineral Resources Bandar Alkhorayef said in a post on his X account.
In a separate statement, the minister said that Lucid Motors’ inclusion in the program underscores Saudi Arabia’s strategic transformation toward creating a fully integrated electric vehicle manufacturing ecosystem.
The minister added that this initiative aligns with the objectives of the National Industrial Strategy, which focuses on empowering promising sectors and attracting high-value investments in advanced industries.
Lucid’s participation in the program follows the launch of its first international manufacturing plant in Saudi Arabia in Sept. 2023.
Located in King Abdullah Economic City, the facility is the Kingdom’s first-ever car manufacturing plant and represents a key milestone in its efforts to build a domestic automotive industry.
The facility can currently assemble 5,000 Lucid vehicles annually during its first phase. Once fully operational, the complete manufacturing plant, including the assembly line, is expected to produce up to 155,000 electric cars per year.
Saudi Arabia is aggressively promoting the adoption of electric vehicles as part of its Vision 2030 strategy, which aims to achieve net-zero carbon emissions by 2060.
A critical target of the initiative is for 30 percent of all vehicles in Riyadh to be electric by 2030, contributing to a broader goal of reducing emissions in the capital by 50 percent.
To support the transition, the Public Investment Fund — a major backer of Lucid Motors — has been instrumental in establishing a domestic EV manufacturing sector.
In addition to its stake in Lucid Motors, PIF has launched Ceer, the Kingdom’s first locally branded electric vehicle manufacturer, as part of its efforts to bolster the industry.
Infrastructure development is also a core focus, with the Kingdom planning to deploy 5,000 fast chargers across Saudi Arabia by 2030 to facilitate the adoption of EVs.
Consumer interest in EVs is steadily growing, with over 40 percent of Saudi consumers considering purchasing an electric vehicle within the next three years, according to a 2024 report by London-based professional services network PwC.
Faisal Sultan, vice president and managing director for the Middle East at Lucid Motors, expressed the company’s pride in joining the program, saying: “We are delighted to join the ‘Made in Saudi’ program and have the honor of using the ‘Saudi Made’ label, which represents quality and excellence.”
He added: “We are committed to embodying the values of this national identity, such as sustainability, innovation, and excellence. With the increasing focus on electric vehicles in the Kingdom, we aim to deliver an advanced and unique experience to our customers.”
The minister said that Saudi Arabia has emerged as a central hub for electric vehicle production, supported by modern infrastructure, incentivizing policies, and a highly skilled workforce.
He also said that major players like Lucid Motors strengthen the Kingdom’s position as a global center for future-focused industries while contributing to increased local content, non-oil exports, industrial localization, and knowledge transfer.
Launched in March 2021, Saudi Arabia’s Made in Saudi program promotes domestic products and services, encouraging local consumption and boosting non-oil exports.
The move aligns with Saudi Arabia’s broader industrial strategy, which aims to increase the sector’s gross domestic product contribution to 20 percent by 2025 and drive investments in advanced industries.
It also supports Vision 2030’s goal of reducing the nation’s reliance on oil by fostering high-value sectors like electric vehicle manufacturing.
Closing Bell: Tadawul maintains upward momentum, closes at 12,113
- Parallel market Nomu dropped 54.97 points, ending the session at 30,809.12
- MSCI Tadawul Index rose by 3.48 points to reach 1,514.39
RIYADH: Saudi Arabia’s Tadawul All Share Index extended its upward trajectory for the second consecutive day on Tuesday, rising by 8.60 points, or 0.07 percent, to close at 12,113.29.
The benchmark index recorded a total trading turnover of SR7.71 billion ($2.05 billion), with 124 stocks advancing, while 110 saw declines.
In contrast, the Kingdom’s parallel market, Nomu, dropped 54.97 points, ending the session at 30,809.12. The MSCI Tadawul Index also gained ground, rising by 3.48 points to reach 1,514.39.
The standout performer of the day was Almoosa Health Co., which made its debut on the main market. The stock surged by an impressive 14.96 percent, closing at SR146. Other notable gainers included Al Mawarid Manpower Co. and Saudi Reinsurance Co., whose share prices climbed by 10 percent and 9.23 percent, closing at SR125.40 and SR63.90, respectively.
On the flip side, Al-Baha Investment and Development Co. saw its share price fall by 4.44 percent, ending the day at SR0.43.
On the announcements front, Filling and Packing Materials Manufacturing Co. announced it had signed a Shariah-compliant credit facility agreement worth SR50 million with Al Rajhi Bank to finance its working capital.
According to a statement on Tadawul, the 12-month credit facility is backed by a promissory note covering its entire value. FIPCO clarified that there are no related parties involved in the agreement. The company’s stock inched up by 0.44 percent, closing at SR45.70.
Meanwhile, LIVA Insurance Co. revealed it had received a Baa2 insurance financial strength rating with a stable outlook from Moody’s. The rating reflects the company’s strong capital adequacy, solid asset quality, and conservative investment strategy, alongside moderate reserve risk.
LIVA emphasized that the rating underscores Moody’s confidence in the company’s enhanced underwriting discipline and its ability to maintain profitability and growth within the Saudi market. A Baa2 rating is considered medium-grade, indicating a company’s acceptable ability to meet short-term debt obligations. LIVA’s stock gained 0.57 percent, closing at SR17.60.
Saudi Arabia eases domestic worker quotas for HR firms
- Only firms with 3,000 workers or fewer now have to meet the threshold
- Firms with more than 15,000 workers are fully exempt from any domestic worker quota
RIYADH: Human resources firms in Saudi Arabia have welcomed the reform of a rule that required 30 percent of all employees to be domestic workers.
The change to the law, announced by the Ministry of Human Resources and Social Development, means that only firms with 3,000 workers or fewer now have to meet that threshold.
Those with a workforce ranging from 3,001 to 10,000 workers will instead be obligated to maintain a reduced quota of 20 percent, with that level dropping to 10 percent for companies with staffing levels between 10,001 to 15,000.
Firms with more than 15,000 workers are fully exempt from any domestic worker quota.
This policy shift is expected to balance supply and demand in the support workers sector, improving its legislative environment.
It comes at a time when Saudi Arabia’s human resources management market is experiencing rapid growth, and prior to this decision market research firm Horizon Grand View Research projected the sector would expand by a compound annual growth rate of 11.1 percent from 2024 to 2030.
Companies affected by the changes issued statements on Tadawul welcoming the new rules, with Mawarid Manpower Co. stating that “this decision will have an impact on the company’s business, as it will alleviate the company’s obligation to recruit a specific percentage of the total workforce.”
Similarly, Saudi Manpower Solutions Co., also known a SMASCO, highlighted that “this decision aims to achieve a balance between supply and demand, thereby improving the legislative environment for the support (domestic) workers sector.”
Maharah Human Resources Co., which employs over 15,000 domestic workers, said that “it is not required currently to comply with any percentage for the household workers out of the total workforce.”
The company highlighted the cost-saving benefits of the new system, noting that “it is expected that this decision will have an impact on the company’s long-term business, as it will alleviate the company’s obligation to recruit a specific percentage of the total workforce and reduce recruitment costs for household resources to ensure compliance with previous percentages.”
Additionally, the firm stated that the amendment “gives the company the ability to increase the workforce in the corporate sector to meet the growing demand without any constraints limiting that.”
The reform reflects Saudi Arabia’s broader efforts to modernize labor laws and streamline operations across key sectors.
