HONG KONG: Asia’s equity markets have enjoyed their busiest start to a year in deal terms even as Hong Kong, the region’s most active IPO hub, awaits a series of blockbuster Chinese tech listings.
Companies and investors have taken advantage of buoyant markets to sell blocks of new and existing shares — as seen last week when Naspers, the 33 percent owner of Tencent, cashed in part of its holding in the Chinese tech darling for the first time, raising $9.8 billion from the sale of 2 percent.
Asia-Pacific markets have in total hosted $69.1 billion of equity-related deals in the year to March 28 — a 43 percent jump from the same period last year, according to Thomson Reuters data. The rise was led by a 46 percent increase in so-called follow-on deals, including, as well as the Tencent block trade, rights issues of $2.5 billion and $1.9 billion by Woodside Petroleum and Tata Steel respectively to fund expansion plans.
Capital raised via initial public offerings fell by 12 percent to $11.9 billion as Hong Kong, typically the regional leader, remained quiet, raised just $2.8 billion — a figure eclipsed by the $4.2 billion raised on India’s two main exchanges and one dwarfed by the $12.8 billion raised by the New York Stock Exchange and Nasdaq.
But bankers are confident that Hong Kong will soon reassert itself.
“The second half of the year is looking very robust. Notwithstanding the recent market volatility, the second quarter of this year is going to be much busier than usual, too,” said Bruce Wu, co-head of Citigroup’s Greater China equity capital markets group.
Hong Kong has a lot riding on expectations of a pick-up in IPOs. Rule changes due in the second quarter will overturn the city’s long-held one-share-one-vote principle, ushering in the ability to weight voting rights in favor of company founders.
In theory, the changes should allow the city to better fight back against New York, its closest rival in the battle for the biggest Chinese tech listings. Many companies have to date opted for New York, including Alibaba, precisely because the US has long allowed weighted voting rights.
“This year will definitely be a huge year for Hong Kong IPOs,” said Li Hang, head of Greater China equity capital markets at CLSA.
“There are a lot of companies that are rushing to go, or hoping to get listed as early as possible. Before, their only choice is the US market, but now they are really thinking about Hong Kong.”
Among those expected to list in Hong Kong are Xiaomi, the Chinese smartphone and appliances maker which is seeking a valuation of up to $100 billion, and Lufax, the online wealth management platform backed by Ping An valued at $18.5 billion in 2016.
For bankers, the prize is not simply wresting the crown of leading capital-raising center from New York again. They are also hoping investor enthusiasm for Hong Kong will increase after the territory was dominated for years by the floats of state-owned Chinese groups that few foreign fund managers were interested in.
“When you look at the current listed universe in Hong Kong, it still has an old-economy, financial bias to it. If we get a lot of volume coming through with tech-related, growth-type stocks, it should transform the market into a more interesting space with greater institutional involvement,” said David Binnion, Goldman Sachs’ head of equity capital market distribution and risk for Asia excluding Japan.
Blockbuster Chinese tech IPOs set to ignite red-hot Asian equities market
Blockbuster Chinese tech IPOs set to ignite red-hot Asian equities market
Saudi commercial records surge 68% in 20 months
RIYADH: Saudi Arabia has seen a remarkable 68 percent growth in commercial records over the 20 months since the implementation of its New Companies Law, according to a recent government report.
The law, which took effect on Jan. 19, 2023, introduced significant reforms aimed at simplifying business processes and fostering a more dynamic corporate environment. By the end of the third quarter of 2024, the number of commercial records had risen to 389,413, up from 230,762 before the law’s introduction, the Ministry of Commerce reported.
Among the law’s key innovations are streamlined processes for setting up joint-stock companies, the ability for shareholders to participate remotely, and improved financing options, including allowing limited liability companies to issue debt instruments. These changes have reshaped the corporate landscape by simplifying company formation and offering flexible financing avenues.
The law also encourages broader ownership by easing the purchase of shares and equity stakes. Notably, it introduces a simplified joint-stock company model and includes provisions for non-profit organizations. Other reforms include allowing sole proprietorships to transition into any company type, modernizing rules for corporate mergers and transformations, and permitting company splits.
Small and micro enterprises are exempt from the requirement of an external auditor, reducing their compliance burdens. Additionally, the law enhances digital services, enabling remote shareholder meetings and decision-making, and removes restrictions across all stages of company formation, operation, and exit.
The reforms also introduce a family charter to govern family-owned businesses and simplify the process for foreign companies to operate in the Kingdom, creating a more flexible and investor-friendly environment.
In its September report, the International Monetary Fund praised the reforms for improving access to financing, reducing fees, and strengthening governance, which has helped attract record levels of foreign investment. The IMF also noted that the reforms have contributed to the growth of non-oil sectors and increased employment.
The IMF further highlighted that the rise in non-oil revenues underscores the effectiveness of these reforms, which have also led to better compliance and alignment of customs procedures with international best practices.
In addition, in September, Saudi Arabia approved new laws related to commercial registration and trade names, further streamlining business operations and improving the overall business environment.
These changes were approved at a Cabinet session in Riyadh on Sept. 17, chaired by Crown Prince Mohammed bin Salman.
Saudi Arabia’s refined crude exports hit 23-month high at 1.54m bpd
RIYADH: Saudi Arabia’s refinery crude exports surged 23 percent in September compared to the previous month, to reach 1.54 million barrels per day – the highest level for almost two years.
According to figures from the Joint Organizations Data Initiative, the increase to a 23-month high was fueled by strong demand for refined products, including diesel, motor gasoline, aviation gasoline, and fuel oil.
Diesel led the export mix, accounting for 47 percent of shipments, with volumes rising 35 percent month on month to 727,000 bpd. Motor and aviation gasoline made up 23 percent of exports, while fuel oil contributed 7 percent.
Refinery output in Saudi Arabia remained steady at 2.76 million bpd, with diesel representing 44 percent of refined products, followed by motor and aviation gasoline at 25 percent, and fuel oil at 17 percent.
Crude oil exports rose modestly by 1.41 percent to 5.75 million bpd, while production edged down by 0.19 percent to 8.97 million bpd.
Despite the rise in exports, domestic petroleum demand dropped sharply by 267,000 bpd to 2.62 million bpd, possibly due to seasonal factors and improved efficiency.
OPEC announced in November that eight key OPEC+ nations, including Saudi Arabia, Russia, and Iraq, have agreed to extend voluntary production cuts of 2.2 million bpd through December.
Initially introduced in 2023 to stabilize the oil market, the cuts reflect the group’s commitment to the Declaration of Cooperation, with plans to offset overproduction by September 2025. Iraq, along with Russia and Kazakhstan, reaffirmed adherence to the agreement and compensation schedules earlier this month.
Direct crude usage
Saudi Arabia’s direct crude oil burn dropped significantly in September, falling by 296,000 bpd compared to August to 518,000 bpd — a 36.4 percent decline and the lowest level in five months.
This decline is largely attributed to seasonal temperature changes, as the weather begins to cool from the peak summer heat, reducing the demand for air conditioning and, consequently, the need for crude oil in power generation.
Compared to September last year, the lower burn levels also reflect the Kingdom’s ongoing efforts to enhance energy efficiency and diversify its power sources.
By expanding its natural gas network and scaling up renewable energy projects, the Kingdom is reducing its reliance on crude oil for electricity generation, aligning with its Vision 2030 strategy for a sustainable and diversified energy mix.
More than 70 Saudi firms travel to Poland, Slovakia to boost trade ties
JEDDAH: Representatives from 72 Saudi firms are part of a group visiting Poland and Slovakia in a bid to increase trade with the European countries.
Delegates from Federation of Saudi Chambers are also part of the trip, which will see high-level economic meetings involving senior government officials and private sector representatives. Their objective is to explore investment opportunities and sign several agreements and commercial partnerships.
The delegation, led by Chairman of the Federation of Saudi Chambers Hassan bin Mujib Al-Huwaizi, includes over 72 business representatives from various economic sectors, along with governmental entities and authorities, according to the Saudi Press Agency.
In August, the Kingdom and Poland established a joint business council for the 2024-2028 term to boost trade and investment between the two countries. The move is part of the nation’s broader strategy to deepen economic ties with Europe, with a particular focus on Poland, one of the continent’s largest economies.
Poland has seen impressive growth in its agri-food sector, with exports reaching a record €47.9 billion ($51.1 billion) in 2023 — a €10 billion increase from the previous year.
In 2023, Saudi Arabia’s trade exchange with Poland reached SR33.7 billion. The Kingdom’s primary exports to Poland include mineral products and plastics, while Poland’s main exports to the Arab country consist of tobacco, machinery, and mechanical appliances.
The relationship between Saudi Arabia and Slovakia has also witnessed growth following the official opening of the Slovak Embassy in Riyadh in recent years. Additionally, bilateral trade has increased significantly, highlighting untapped investment opportunities.
The delegation will begin its visit to Poland by holding the Saudi-Polish Business Council meeting, a joint forum, and bilateral meetings between representatives.
In Slovakia, the delegation will host the Saudi-Slovak Business Forum, conduct meetings between companies from both sides and sign an agreement to establish a joint business council.
Through its recent series of international visits to ten countries, the federation is leading efforts to open new markets and opportunities for the Kingdom’s backers and to boost trade and investment exchanges with countries worldwide, in alignment with the aspirations of Saudi Vision 2030.
Blatco, Golden Star Rubber to build Middle East’s largest tire plant in Saudi Arabia
JEDDAH: Saudi Arabia’s Black Arrow Tire Co., or Blatco, has partnered with Thailand’s Golden Star Rubber Co. to build the Middle East’s largest tire manufacturing facility in Yanbu, with a $470 million investment.
The plant will initially produce 4 million tires annually for passenger vehicles, with plans to expand production to 6 million tires per year, including truck and bus tires.
The Yanbu facility is set to boost Saudi Arabia’s industrial capabilities and will create more than 2,000 local jobs. The partnership will supply the facility with the natural rubber required for tire production in the Kingdom.
The Saudi tire market, which produced 22.6 million units in 2023, is projected to grow at a compound annual growth rate of 1.26 percent, reaching 25.5 million units by 2032, according to market research firm IMARC Group.
Largely import-driven, the sector is dominated by Chinese tire brands due to their affordability and availability. However, flagship brands have gained traction in recent years, thanks to their higher quality and longer product lifecycles, the report added.
The ceremony to mark the deal, signed by Blatco Chairman Abdullah Al-Wahibi and Golden Star Rubber Chairman Amir Zafar, was also attended by Hassan Al-Huwaizi, president of the Federation of Saudi Chambers of Commerce, Al-Ekhbariya reported.
The agreement aligns with Vision 2030’s goals to localize industries, transfer knowledge, and support domestic content. The partnership is also supported by the Saudi-Thai Business Council, aimed at strengthening commercial and investment ties between Saudi Arabia and Thailand.
The plant will be situated in the Kingdom’s industrial city on the Red Sea, under the Royal Commission for Jubail and Yanbu. Blatco officials anticipate that 50 percent of production will be consumed locally, with the remainder to be exported to regional markets.
Earlier this year, Blatco signed a 20-year technology export agreement with South Korea’s Kumho Tire. As part of the deal, Kumho Tire agreed to supply Blatco with the technology to produce passenger car tires for the Middle East, including Saudi Arabia.
Founded in Riyadh in 2019, Blatco aims to become a key player in automotive manufacturing and distribution in the region. The company focuses on contributing to Saudi Arabia’s economy, creating jobs, and supporting technology transfer initiatives, according to its website.
In October 2023, the Kingdom’s Public Investment Fund announced a separate $550 million tire factory in a joint venture with Italy’s Pirelli.
PIF holds a 75 percent stake in the venture, with Pirelli providing technology and commercial support. The facility, set to begin operations in 2026, will produce tires for passenger vehicles under the Pirelli brand and a new local brand for domestic and regional markets.
Saudi Aramco, Sinopec begin construction of petchem complex in Fujian
RIYADH: Saudi energy giant Aramco, in collaboration with China Petrochemical & Chemical Corp. and Fujian Petrochemical Co., has launched the construction of a refinery and petrochemical complex in Fujian province, China.
The project, which is slated to be fully operational by the end of 2030, will feature an oil refinery with a capacity of 320,000 barrels per day, according to a company statement. In addition to the refinery, the complex will include a 1.5 million-tonne-per-year ethylene unit, a 2 million-tonne paraxylene unit with downstream derivatives capacity, and a 300,000-tonne crude oil terminal.
Aramco’s long-standing relationship with China spans more than three decades. This new venture is part of Aramco’s broader strategy to solidify its position as a key player in the global energy sector, while also supporting Saudi Arabia’s economic growth.
“Building on our strong relationships with both Sinopec and Fujian Petrochemical, today’s groundbreaking further expands Aramco’s growing downstream investment portfolio in China,” said Mohammed Al-Qahtani, Aramco’s downstream president.
He continued: “We will supply in excess of 1 million barrels per day of our crude oil to these high chemical conversion assets in China, reinforcing Aramco’s role as a reliable and long-term partner in China’s development. This also advances our liquids-to-chemicals strategy, through which we intend to direct more of our crude toward helping meet rising global petrochemicals demand.”
The new facility will also supply around 5 million tonnes of feedstock annually to the Gulei Petrochemical Base, the statement added.
The Fujian Petrochemical Complex will be a joint venture, with FPCL, a collaboration between Sinopec and Fujian Petrochemical Industrial Group Co., holding a 50 percent stake. Aramco and Sinopec will each own a 25 percent share.
Ma Yongsheng, chairman of Sinopec, highlighted that the Fujian project represents a significant milestone in the partnership between Saudi Arabia and China.
“Both Sinopec and Aramco are committed to promoting the high-quality development of the petroleum and petrochemical industry. Aramco’s participation supplies long-term reliable and competitive feedstock for the project and further boosts the healthy development of Gulei Petrochemical Base,” said Yongsheng.
This new deal further deepens Aramco’s collaboration with Sinopec in the energy sector. Earlier this year, in January, Aramco awarded contracts worth over $3.3 billion to Sinopec and Spain’s Tecnicas Reunidas for the construction of a gas facility in Saudi Arabia. The project involves the development of a new natural gas liquids facility at the Jafurah unconventional gas production site in Saudi Arabia.
In October, Aramco also strengthened its ties with Chinese partners, signing a five-year partnership with China National Building Material Group to explore advanced materials, including the potential manufacturing of wind turbine blades in the Kingdom.
