MUMBAI: India’s three main stock exchanges said on Friday they would stop licensing their indexes and securities or providing data to foreign exchanges, saying such agreements had led trading to migrate outside of the country.
Foreign markets now offer dollar-based derivative contracts based on Indian indexes, shares and other securities under licensing agreements with Indian exchanges, allowing overseas investors to gain exposure to Asia’s third-largest economy without having to trade onshore.
Those licensing agreements will now be terminated with immediate effect, subject to notice periods, the National Stock Exchange, BSE and Metropolitan Stock Exchange said in a joint statement late on Friday.
The most popular of these contracts has long been the SGX Nifty 50 index futures offered by the Singapore Exchange under a licensing agreement with the National Stock Exchange, India’s biggest exchange. It tracks the NSE’s main index of its top 50 shares, the Nifty 50 index.
The actions would prevent SGX from offering the contract to overseas investors, who would be forced to unwind contracts and buy into domestic derivatives to gain exposure to India, a country that has become an emerging market darling, but has had disputes with foreign funds over taxes and regulations.
“The volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets,” the Indian exchanges said in the statement.
The latest move will not apply to exchange-traded funds or similar products, the three stock exchanges said.
Although foreign investors have pumped more than $77 billion into India since 2012, exchanges have long felt they are missing out, because derivatives have been popular in Singapore, which is seen as offering lower tax and a more certain regulatory regime.
The action comes as SGX this week introduced trading in single-stock futures contracts for Nifty 50 components, which had raised fears it would significantly take away liquidity from India. SGX had previously focused on index derivative contracts.
In a statement late on Friday, SGX said it would “take all measures to maintain orderly trading and clearing of SGX India equity derivatives.”
The exchange added it would also work to develop “viable solutions for international investors into India,” including exploring opportunities in a financial center India is keen to develop in the Western state of Gujarat.
India regulators have been cracking down on trading of offshore derivatives, as they seeks to attract foreign investors to the Gujarat International Finance Tech city, replicating some of the global exchanges and offering dollar-based derivative contracts, lower taxes and easier regulations.
India already taxes equity investments held for less than a year at 15 percent and has a securities transaction tax, which makes it more expensive than most other major Asian countries.
Indian bourses to stop licensing index, stock prices to foreign exchanges
Indian bourses to stop licensing index, stock prices to foreign exchanges
Saudi Arabia’s private debt market targets over $1.77bn by Q3 2024: report
RIYADH: Saudi Arabia’s private debt market is experiencing significant growth, with eight active funds targeting to raise over $1.77 billion in capital by the third quarter of 2024, according to a new report.
This growth is driven by a sharp rise in investor confidence, with 97 percent of Middle East-based institutional investors now viewing the Kingdom as the most promising market for private debt in the coming year, up from 82 percent in 2023, based on Preqin survey data.
The report, titled “Territory Guide: The Rise of Private Debt Funds in Saudi Arabia 2024,” was published in collaboration with Saudi Venture Capital Co. It highlights the increasing interest from both regional and global investors, fueled by the positive outcomes of the Kingdom's Vision 2030 reforms.
The findings align with the fact that Saudi Arabia accounts for up to 27.5 percent of private debt fund transactions in the Middle East and North Africa region between 2016 and the third quarter of 2024.
In 2022, private debt funds focused on Saudi Arabia raised a record $335 million in total capital, a sharp rise from the $32 million raised by a single fund in 2003.
“This first-of-its-kind report highlights the emergence of private debt funds as a key asset class in Saudi Arabia, driven by the Kingdom’s Vision 2030 and its ambition to diversify the economy,” said Nabeel Koshak, CEO and board member at SVC.
“At SVC, we continue our commitment to support the development of such reports that provide policymakers, investors, and founders with insights and data to inform strategic decisions and policies to nurture the private capital ecosystem further,” Koshak added.
David Dawkins, lead author of the report at Preqin, commented: “Global investment firms are not alone in closely watching the growth and evolution of Saudi Arabia’s nascent private debt industry.”
Dawkins also noted: “For other developing economies in the Middle East and beyond, Saudi Arabia’s success in this area will strengthen the impetus for improving transparency to secure the capital needed for sustainable growth in a net-zero world.”
The study further revealed that among all private debt funds with investments tied to Saudi Arabia that concluded between 2016 and the third quarter of 2024, mezzanine funds accounted for 50 percent of total exposure, with direct lending and venture debt funds closely following at 30 percent and 20 percent, respectively.
Support for startups and small to medium-sized enterprises in the Kingdom is also reflected in the high proportion of venture debt, which represents 75 percent of all funds in the market with Saudi Arabia exposure.
The report also highlighted that private debt marked its second consecutive year as the asset class with the highest proportion of Middle Eastern investors intending to increase their investments in the coming year. Nearly 58 percent of investors expressed this sentiment, up from 50 percent in 2023.
The percentage of investors considering private debt the most promising asset class in the region rose by 12 percentage points, from 31 percent in 2023.
Private debt is expected to further bolster Saudi Arabia’s growing entrepreneurial community as the nation advances toward its Vision 2030 goals. Since 2018, new regulatory frameworks have been implemented, ushering in an era of increased transparency and equity within the private debt sector, closely aligned with the Kingdom’s broader investment vision.
Closing Bell: Saudi main index rises to close at 11,864
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 24.38 points, or 0.21 percent, to close at 11,864.90.
The benchmark index recorded a trading turnover of SR4.22 billion ($1.12 billion), with 124 stocks advancing and 99 declining.
The Kingdom’s parallel market Nomu also posted gains, climbing 345.06 points, or 1.13 percent, to close at 30,885.34, as 49 stocks advanced and 32 declined.
The MSCI Tadawul Index increased by 4.74 points, or 0.32 percent, to close at 1,491.56.
The best-performing stock of the day was Arabian Contracting Services Co., whose share price surged 9.97 percent to SR167.60.
Other notable gainers included Saudi Reinsurance Co., rising 4.97 percent to SR45.45, and Saudi Public Transport Co., which climbed 3.98 percent to SR23.00.
Al-Baha Investment and Development Co. led the decliners, falling 6.06 percent to SR0.31. Aldrees Petroleum and Transport Services Co. dropped 4.33 percent to SR123.60, and Batic Investments and Logistics Co. declined 3.23 percent to SR3.59.
Leejam Sports Co. announced the opening of four new fitness centers. These include a men’s center and the first ladies’ center in Al-Rass city, Qassim Province, as well as the first men’s and ladies’ centers in Al-Qunfidah city, Makkah Province.
Branded under “Fitness Time” and “Fitness Time - Ladies,” the centers will feature state-of-the-art facilities, high-spec sports equipment, and modern designs.
The financial impact of these openings is expected to reflect in the fourth quarter of 2024. Despite the announcement, Leejam Sports Co. closed the session at SR180, down 0.34 percent.
Obeikan Glass Co. reported a net profit of SR29.89 million for the nine months ending Sept. 30, a 58.3 percent drop from the same period in 2023. The decline was attributed to lower average selling prices due to global market conditions and increased administrative expenses related to a new investment in a subsidiary, Saudi Aluminum Casting Foundry.
The stock ended at SR49.60, down 1.59 percent.
United Mining Industries Co. announced the issuance of two exploration licenses for gypsum and anhydrite ore from the Ministry of Industry and Mineral Resources. The company plans to conduct studies to determine the availability of raw materials, with financial impacts to be announced upon completion.
Its stock closed at SR39.60, up 0.26 percent.
Morgan Stanley receives approval to establish regional HQ in Saudi Arabia
RIYADH: US-based investment bank Morgan Stanley has been granted approval to establish its regional headquarters in Saudi Arabia, as the Kingdom continues to attract international investment.
This move aligns with Saudi Arabia’s regional headquarters program, which offers businesses various incentives, including a 30-year exemption from corporate income tax and withholding tax on headquarters activities, as well as access to discounts and support services.
Saudi Investment Minister Khalid Al-Falih confirmed the progress of this initiative in October, stating that the Kingdom has successfully attracted 540 international companies to set up regional headquarters in Riyadh—exceeding its 2030 target of 500.
“Establishing a regional HQ in Riyadh reflects the growth and development of Saudi Arabia and is a natural progression of our long history in the region,” said Abdulaziz Alajaji, Morgan Stanley’s CEO for Saudi Arabia and co-head of the bank’s Middle East and North Africa operations, according to Bloomberg.
Morgan Stanley first entered the Saudi market in 2007, launching an equity trading business in Riyadh, followed by the establishment of a Saudi equity fund in 2009.
This approval follows a similar move by Citigroup earlier this month, with the bank also receiving approval to establish its regional headquarters in Saudi Arabia.
Fahad Aldeweesh, CEO of Citi Saudi Arabia, emphasized that this development would support the firm’s future growth in the Kingdom.
Goldman Sachs, another major Wall Street bank, also received approval in May to set up its regional headquarters in Saudi Arabia.
Prominent international firms that have already established regional headquarters in Saudi Arabia include BlackRock, Northern Trust, Bechtel, PepsiCo, IHG Hotels and Resorts, PwC, and Deloitte.
In addition, a recent report from Knight Frank noted that Saudi Arabia's regional headquarters program has led to increased demand for office space in Riyadh, with the city’s office stock expected to grow by 1 million sq. meters by 2026.
In August, Kuwait’s Markaz Financial Center echoed this sentiment, predicting a significant uptick in the Kingdom’s real estate market during the second half of the year, driven by the regional headquarters program.
QatarEnergy strengthens global footprint with offshore expansion in Namibia
RIYADH: QatarEnergy has expanded its portfolio through a new agreement with TotalEnergies to increase its ownership stakes in two offshore blocks in Namibia’s Orange Basin.
According to a press release, the state-owned energy firm will acquire an additional 5.25 percent interest in block 2913B and an additional 4.7 percent interest in block 2912 under the new deal, subject to customary approvals.
Once finalized, QatarEnergy’s share in these licenses will rise to 35.25 percent in block 2913B and 33.025 percent in block 2912.
Saad Sherida Al-Kaabi, Qatar’s minister of state for energy affairs and CEO of QatarEnergy, said: “We are pleased to expand QatarEnergy’s footprint in Namibia’s upstream sector. This agreement marks another important step in working collaboratively with our partners toward the development of the Venus discovery located on block 2913B.”
TotalEnergies, the operator of both blocks, will retain 45.25 percent in block 2913B and 42.475 percent in block 2912. Other partners include Impact Oil & Gas, which holds 9.5 percent in both blocks and the National Petroleum Corp. of Namibia, which owns 10 percent in block 2913B and 15 percent in block 2912.
Located about 300 km off the coast of the African country, in water depths ranging from 2,600 to 3,800 meters, these blocks host the promising Venus discovery. The Venus field has attracted considerable attention as a significant find that could impact Namibia’s energy future.
This offshore acquisition complements QatarEnergy’s recent ventures into renewable energy. In October, the company announced a 50 percent stake in TotalEnergies’ 1.25-gigawatt solar project in Iraq.
The initiative, part of Iraq’s $27 billion Gas Growth Integrated Project, aims to enhance Iraq’s energy self-sufficiency by addressing its reliance on electricity imports and reducing environmental impacts.
The solar project, set to deploy 2 million bifacial solar panels, will generate up to 1.25 GW of renewable energy at peak capacity, supplying electricity to approximately 350,000 homes in Iraq’s Basra region.
QatarEnergy will share equal ownership of the project with TotalEnergies, which retains the remaining 50 percent.
The firm’s dual focus on traditional and renewable energy highlights its strategic approach to meeting global demands while addressing sustainability concerns.
Its involvement in Namibia’s offshore blocks and Iraq’s shift toward renewable energy highlights a well-rounded portfolio that includes fossil fuels and clean energy investments.
GCC lending growth hits 3.1% in Q3, Saudi Arabia leads: report
RIYADH: Listed banks in the Gulf Cooperation Council achieved their highest lending growth in 13 quarters, with loans rising 3.1 percent to $2.12 trillion in the third quarter.
According to a report by Kamco Invest, Saudi Arabia led the surge with a 3.7 percent quarter-on-quarter increase in gross loans, marking its fastest growth in nine quarters.
Qatar followed with a 1.9 percent rise, while Bahrain recorded a 1.2 percent increase.
This growth aligns with the International Monetary Fund’s projection of 3.5 percent nominal gross domestic product growth for GCC nations in 2024, driven by the strong performance of non-oil sectors in the UAE, Qatar, Bahrain, and Saudi Arabia.
The region’s commitment to diversification and long-term infrastructure development continues to drive its financial sector.
Despite record lending levels, aggregate net income for GCC-listed banks increased marginally by 0.4 percent to $14.9 billion.
While total revenues grew 4.1 percent, supported by a 2.8 percent rise in net interest income and a 6.9 percent increase in non-interest income, higher expenses and impairments weighed on profitability.
Loan impairments rose to a three-quarter high of $2.5 billion, with increases in the UAE, Saudi Arabia, Oman, and Bahrain partially offset by declines in Qatar and Kuwait.
Customer deposits across GCC-listed banks reached a nine-quarter high, rising 3.2 percent to $2.5 trillion.
Saudi Arabia led with a 4.6 percent increase, while the UAE maintained its position as the largest deposit market at $828 billion.
Deposits in Oman and Qatar also saw solid growth, contributing to the region’s overall resilience.
The aggregate loan-to-deposit ratio remained stable at 81.4 percent, with Saudi Arabia reporting the highest ratio of 92.8 percent and the UAE the lowest at 69.3 percent, reflecting its strong liquidity position.
The GCC banking sector’s resilience is further demonstrated by its consistent focus on operational efficiency. The cost-to-income ratio declined slightly to 39.9 percent, highlighting the sector’s ability to manage expenses effectively despite rising costs.
As the region continues to diversify its economy, the banking sector remains a critical enabler of growth, funding large-scale projects and fostering financial innovation.
While rising funding costs and potential interest rate cuts may pose challenges, the sector’s robust fundamentals and strategic focus on non-oil growth position it for sustainable expansion.
The commitment to balancing economic diversification with financial innovation is expected to drive the sector’s continued success, reinforcing its pivotal role in the GCC’s broader economic landscape.
