PARIS: China is the last bulwark against a deep crisis in emerging economies going fully global, analysts say, although a prolonged trade war could sap Beijing’s defenses.
Emerging countries — loosely defined as having fast growing but volatile economies — have seen their currencies battered in recent weeks, plunging their finances into turmoil, and raising fears of global contagion.
But China, the world’s second-biggest economy and itself categorized as an emerging market, doesn’t share a key downside of the worst-hit countries: their rampant current account deficits.
“The possibility of a currency crisis in China is unlikely,” said Guan Qingyou, chief economist at China’s Rushi Advanced Institute of Finance.
“China’s ability to resist risk is relatively strong.”
Current account deficits must be financed with foreign currencies, and as central banks across the world enter a cycle of tighter monetary conditions, especially the powerful US Federal Reserve, cheap money will become scarce.
Higher US interest rates are “another nail in the coffin” for emerging countries needing external financing, said Lukman Otunuga, a research analyst at FXTM.
A meltdown of the Turkish lira — somewhat stemmed by a recent massive interest rate rise — and the Argentinian peso are cases in point, as both countries have “exceptionally large current account deficits,” said Oliver Jones, markets economist at Capital Economics.
South Africa, Colombia and, to a lesser extent, India and Indonesia are in similar danger of being trapped in Fed rate rise pain, he said.
But the currencies of Korea, Thailand and Malaysia have done much better because of their close trade ties with Beijing and their healthier current account positions.
China itself still boasts a strong foreign reserve position and has taken steps to cut debt, both useful shields against global turmoil.
“Our foreign exchange reserves are still relatively high,” said Guan at the Reality Institute. “In addition, China has already started the process of deleveraging after the end of 2016.”
But even if fundamentals are still holding up, only the very brave dare predict how damaging ongoing trade tensions with the United States will be to China’s position.
Recent tentative signs of improving relations between Washington and Beijing have lifted investor spirits, but the threat of the US imposing fresh tariffs on Chinese imports worth $200 billion still looms large.
Christine Lagarde, managing director of the International Monetary Fund, warned recently that higher US-China tariffs would have a “measurable impact on growth in China” and “trigger vulnerabilities” among its Asian neighbors.
While her staff did not yet see contagion spreading beyond the countries currently fighting investor flight, the escalating US-China trade spat could deliver a “shock” to emerging markets, she told the Financial Times
But in the meantime, said Joydeep Mukherji, an analyst with S&P Global, said “we are not forecasting a major crisis in emerging markets.”
Perhaps inspired by the 10th anniversary of the global financial crisis, economists have started to wonder whether there could be another worldwide meltdown, this time triggered by highly-indebted emerging countries.
For now, the answer appears to be no.
“China can still cope with its debt due to its high savings rate,” said Holger Schmieding, an analyst with Berenberg.
“Some other emerging markets are in trouble. Fortunately, they are simply not big enough to cause a big new global crisis.”
Resilient China is firewall in emerging currency crisis
Resilient China is firewall in emerging currency crisis
- Emerging countries — loosely defined as having fast growing but volatile economies — have seen their currencies battered in recent weeks
- China, the world’s second-biggest economy and itself categorized as an emerging market, doesn’t share a key downside of the worst-hit countries
PIF invests $200m in new Saudi ETF by State Street Global Advisers
RIYADH: Saudi Arabia’s Public Investment Fund has invested $200 million in the newly launched SPDR J.P. Morgan Saudi Arabia Aggregate Bond UCITS exchange-traded fund.
In a press release, State Street Global Advisers, the US-based asset manager behind the ETF, called it the first fixed-income UCITS ETF focused on the Kingdom to launch in Europe.
This move comes as global investors look to capitalize on Saudi Arabia’s growing bond market, supported by economic and infrastructure developments under Vision 2030.
The ETF launch further underscores PIF’s strategy to enhance international access to Saudi Arabia’s diversified market and attract foreign investment. PIF’s portfolio also includes investments in ETFs listed in Hong Kong, Shanghai, Shenzhen, and Tokyo.
“PIF’s investment into the first internationally listed fixed-income Saudi ETF further deepens the Saudi market, while attracting investors and strengthening cross-geography partnerships, increasing international investment in Saudi Arabia,” said Yazeed Al-Humied, deputy governor and head of Middle East and North Africe Investments at PIF.
Undertakings for Collective Investment in Transferable Securities, or UCITS, are EU regulations that establish a standardized framework for investment funds marketed and sold to investors within the economic bloc.
Listed on the London Stock Exchange and Deutsche Börse’s Xetra in Frankfurt, the new fund tracks the J.P. Morgan Saudi Arabia Aggregate Index. This index provides exposure to the Kingdom’s financial instruments, including liquid dollar- and SR-denominated government and quasi-government bonds, as well as sukuk bonds.
“We are delighted to see such significant early-stage commitment from PIF into the SPDR J.P. Morgan Saudi Arabia Aggregate Bond UCITS ETF, a first of its kind in the industry. The creation of this fund sprung from our ambition to provide investors a compelling and innovative opportunity,” said Yie-Hsin Hung, CEO of State Street Global Advisers.
The ETF is accessible to investors in several European countries, including Austria, Denmark, and Finland, as well as France, Germany, and Italy. It is also available in Luxembourg, the Netherlands, and Norway, as well as Spain, Sweden, and the UK.
State Street Global Advisers, the asset management business of State Street Corp., has served governments, institutions, and financial advisers for over four decades, managing $4.73 trillion in assets.
The SPDR ETF range spans international and domestic asset classes, providing investors with flexible options aligned to diverse strategies.
Closing Bell: Saudi main index slides to close at 12,088
RIYADH: Saudi Arabia’s Tadawul All Share Index edged lower on Wednesday, dropping by 24.55 points, or 0.20 percent, to close at 12,088.74. The benchmark index saw a trading turnover of SR7 billion ($1.86 billion), with 127 stocks advancing and 112 declining.
The Kingdom’s parallel market, Nomu, also experienced a slight decline, falling by 32.97 points, or 0.11 percent, to settle at 30,776.15. Of the stocks listed on Nomu, 41 advanced while 42 retreated.
The MSCI Tadawul Index dropped 7.53 points, or 0.50 percent, to close at 1,506.86.
Among the top performers of the day was Nice One Beauty Digital Marketing Co., which made its debut on the main market on Jan. 8. The company’s share price surged by 30 percent, reaching SR45.50.
Other notable gainers included Al-Mawarid Manpower Co., which saw its stock rise 7.82 percent to SR135.20, and Al-Baha Investment and Development Co., which saw its share price climb 6.98 percent.
On the downside, National Co. for Learning and Education recorded the largest drop, falling 4.24 percent to SR185.20. Almoosa Health Co. also saw a decline of 3.84 percent, ending the session at SR140.40, while Alinma Retail REIT Fund Yanbu saw a 3.45 percent drop to SR4.76.
On the announcements front, Nice One Beauty Digital Marketing Co. revealed it is offering 34.65 million shares at SR35 each. SNB Capital is serving as the lead manager for the offering.
United Electronics Co. announced its estimated financial results for the year ending Dec. 31, 2024. The company reported a net profit of SR534.53 million, marking a 36.8 percent increase compared to 2023. The growth was driven by higher revenues and improved gross profits, thanks to a better sales mix and expansion in the consumer finance sector, despite an increase in selling, distribution, and administrative expenses. Extra’s stock ended the day at SR95.60, up 2.13 percent.
United International Holding Co. also posted its financial results for the period ending Dec. 31, 2024. The company recorded a net profit of SR222.38 million, a 4.8 percent increase over the previous year. This growth was attributed to higher credit loss provisions and increased selling, general, and administrative expenses. The company’s shares closed at SR187.80, down 2.60 percent.
Meanwhile, the Kingdom’s Capital Market Authority announced that Rawasi Albina Investment Co. is planning to issue up to SR500 million in debt instruments. The company's stock finished the session at SR4.35, down 1.15 percent.
Saudi Arabia dominates MENA VC landscape, securing $750m in 2024
RIYADH: Saudi Arabia has retained its position as the top destination for venture capital funding in the Middle East and North Africa region, raising $750 million in 2024, according to a new report.
This marks the second consecutive year the Kingdom has topped the regional VC rankings.
Data from regional venture platform MAGNiTT showed that Saudi Arabia accounted for 40 percent of the total VC capital deployed in MENA in 2024, with a 16 percent year-on-year increase in deal flow.
The Kingdom closed 178 deals, the most of any MENA nation, reflecting strong investor confidence and a thriving startup ecosystem.
The largest deal in the region was secured by Saudi-based e-commerce enablement platform Salla, which raised $130 million.
The UAE ranked second in regional funding with $613 million raised, while leading in deal volume with 188 transactions and 12 exits.
Emerging venture markets snapshot
MENA startups collectively raised $1.9 billion in 2024, reflecting a 29 percent decline compared to 2023.
Despite the drop, MAGNiTT noted that “funding levels in 2024 were still higher than 2020 levels, prior to the 2021 and 2022 boom years, signaling continued growth in the venture space.”
The Middle East accounted for $1.5 billion of the funding, spread across 461 deals — a 10 percent annual increase. Total investor participation in the region grew by 14 percent, reaching 392 investors, while exits totaled 24.
Venture capital performance in emerging venture markets — which include the Middle East, Africa, Southeast Asia, Pakistan, and Turkiye — slowed significantly in 2024.
Total VC funding in these regions fell by 40 percent, with deal volumes dropping 20 percent compared to 2023. Both metrics also dipped below 2020 levels.
Southeast Asia led among EVMs with $5.6 billion raised across 564 deals, while Africa recorded the weakest performance, raising $1.07 billion through 294 deals.
Mega deals and early-stage activity
Global VC trends, such as reduced late-stage funding, were reflected in EVMs. Mega deals — valued at $100 million or more — declined for the third consecutive year, falling 56 percent compared to 2023.
The first quarter of 2024 saw the lowest mega deal funding since the fourth quarter of 2019, with late-stage investments hardest hit.
However, early-stage activity showed resilience. The focus on seed and pre-series A funding increased, with $1 million to $5 million ticket sizes rising by 5 percentage points year on year.
According to MAGNiTT, this emphasis on early-stage investments is critical for sustaining future deal flow growth.
Philip Bahoshy, CEO of MAGNiTT, highlighted a potential recovery in the venture market. “In 2024, we witnessed a decline in funding across EVMs driven by reduced late-stage investment activity. However, the positive development is that 2024 also saw a gradual decline in interest rates, both in mature markets like the US and Emerging Markets,” he said.
“We anticipate these rate cuts to begin boosting capital availability within the next 6-9 months, paving the way for a stronger funding environment in 2025,” Bahoshy added.
The Middle East increased its share of deal transactions across EVMs to 35 percent in 2024, an 8-percentage-point rise.
Southeast Asia captured the largest share at 43 percent, while Africa’s share dropped to its lowest level in five years, at 22 percent.
UAE’s ADNOC L&S acquires 80% stake in Navig8 for $1.04bn
- Value-accretive transaction expected to boost earnings per share by at least 20% in 2025 compared to 2024
- Transaction adds modern fleet of 32 tankers to ADNOC L&S’ fleet and expands its service portfolio
RIYADH: UAE’s ADNOC Logistics and Services has boosted its global position by acquiring an 80 percent stake in Navig8 TopCo. Holdings Inc. for $1.04 billion, strengthening its status as a prominent player in energy maritime transportation.
The transaction includes a contractual commitment to acquire the remaining 20 percent by mid-2027, positioning ADNOC L&S for expanded global operations and increased shareholder value.
Navig8, a prominent international shipping pool operator and commercial management company, brings a modern-owned fleet of 32 tankers and an established presence in 15 cities across five continents.
The firm has investments in technical management services, is a marine fuels provider operating in over 1,000 ports globally, and has additional ventures within the marine sector.
“The completion of this landmark acquisition is a significant milestone in our transformational growth strategy,” said Abdulkareem Al-Masabi, CEO of ADNOC L&S.
“By integrating Navig8’s extensive fleet and global presence, we can enhance our service offerings, generating substantial value for customers and shareholders. This strategic move unlocks new opportunities for commercial growth and expansion into new markets, reinforcing our position as a leading global energy maritime logistics company,” Al-Masabi added.
The acquisition aligns with ADNOC L&S’ growth strategy, complementing its integration with Zakher Marine International in 2022 and reinforcing its ambition to expand its global reach and service portfolio.
ZMI, an Abu Dhabi-based owner and operator of offshore support vessels, brought with it the world’s largest fleet of self-propelled jack-up barges.
ZMI’s acquisition expanded ADNOC L&S’s fleet to over 300 vessels, reinforcing its position as the region’s largest integrated logistics provider and enabling the company to offer its customers a broader range of services.
ADNOC L&S, a subsidiary of Abu Dhabi National Oil Co., will benefit from Navig8’s acquisition through expanded services, including commercial pooling, bunkering, technical management, and environmental, social, and governance-focused industrial and digital solutions.
The acquisition is structured to ensure economic ownership of Navig8 starting from Jan. 1, 2024.
The remaining 20 percent will be acquired in 2027 for deferred consideration ranging from $335 million to $450 million, depending on earnings before interest, taxes, depreciation, and amortization performance during the interim.
Nicolas Busch, CEO of Navig8, expressed enthusiasm for the deal, saying: “We are excited to join forces with ADNOC L&S and the wider ADNOC Group. This achievement highlights the exceptional efforts of the Navig8 team over the past two decades, setting the stage for this next phase.”
The acquisition is expected to deliver immediate financial benefits, with ADNOC L&S projecting a 20 percent increase in earnings per share by this year compared to the previous year.
The company’s share price saw a 5.23 percent increase as of Jan. 8, 1:00 p.m. Saudi time.
It anticipates annual synergies of at least $20 million by 2026, underscoring the value-accretive nature of the transaction.
Saudi public funds boost domestic money market holdings to $11bn
RIYADH: Saudi Arabia’s public funds ramped up their domestic money market investments to SR41.38 billion ($11.03 billion) in the third quarter of 2024, marking an 82.4 percent year-on-year increase, according to official data.
Figures from the Saudi Central Bank, also known as SAMA, showed that the total value of assets held by these organizations rose to SR160.1 billion during the three months to the end of September, marking a 36.7 percent increase compared to the previous year.
The number of operating funds grew by 9.54 percent during this period, reaching a total of 310, while the number of subscribers rose by 50.65 percent, reaching 1.57 million.
Domestic holdings saw the highest growth rate at 41.8 percent, comprising 84 percent of the total portfolio, or SR134.43 billion.
Other assets included 25.83 percent in shares, totaling SR41.24 billion, and 7.24 percent in sukuk and bonds, amounting to SR11.58 billion.
Real estate investments, valued at SR27.6 billion and accounting for 17.24 percent of the portfolio, are also considered domestic, according to SAMA.
Foreign allocations totaled SR25.66 billion, reflecting a 16 percent annual increase, and were spread across foreign shares, bonds, money market instruments, and other assets.
As Saudi Arabia’s economy continues to expand under the Vision 2030 initiative, the banking sector has seen a notable increase in loan growth, outpacing the rise in deposits.
This trend reflects the growing demand for credit, driven by the Kingdom’s ongoing infrastructure projects, real estate developments, and rising consumer spending.
In this context, Saudi investment funds are increasing their allocations to money market instruments, such as short-term government securities, which provide liquid, low-risk options for capital. This helps banks manage short-term liquidity needs while limiting exposure to significant market risks.
This investment trend not only supports the broader stability of the banking sector but also aligns with the Kingdom’s economic growth, ensuring that financial institutions can meet the rising demand for credit while safeguarding their liquidity positions.
The funds include both open-ended and closed-ended types, which are open to public investment and overseen by regulatory bodies like the Capital Market Authority.
The Saudi Public Investment Fund operates separately, focusing on long-term, strategic investments aligned with Saudi Vision 2030, and is not included in SAMA’s data.
According to SAMA, approximately 92 percent of active funds are open-ended, with assets totaling SR128.71 billion, while the remaining 8 percent are closed-ended, holding assets of SR31.38 billion.
