AI-driven inclusivity in focus as FII summit gets off the ground
Updated 24 October 2023
Nirmal Narayanan
RIYADH: Artificial intelligence can create a more inclusive society and steer the world toward a more sustainable development model, according to Public Investment Fund Gov. Yasir Al-Rumayyan.
Speaking at the Future Investment Initiative in Riyadh, Al-Rumayyan, who is also the chairman of the FII Institute, said that AI has all the potential to accelerate global trade and investments.
“If harnessed for good, AI has the power to create a more inclusive society. To make this happen, global collaboration is needed along with internationally aligned regulations and governance,” he said.
The FII Institute chairman was confident of accelerating growth and productivity despite the inflationary climate.
He added: “As AI advances, it will accelerate global trade in numerous ways. It is predicted that 70 percent of companies will adopt at least one type of AI by 2030.”
According to Al-Rumayyan, the widespread adoption of AI and machine learning demands vast energy consumption, and it is very critical to balance the carbon emissions as the world embarks on this journey.
“The daily energy consumption to support running Chat GPT is estimated at 564 megawatt-hours, which is equivalent to the energy consumed by more than 26,000 American homes in a year,” he said.
Al-Rumayyan, who is also the chairman of Saudi Arabian Oil Co., noted that a data-driven approach is essential to reduce the carbon footprint associated with the widespread use of AI.
Saudi Aramco has implemented several programs to combat emissions, including the Archie Initiative — a program to enhance greenhouse gas emissions estimates within the energy supply chain.
Al-Rumayyan added that Saudi Arabia is leading the way in developing various solutions to combat the biggest climate challenges the world is facing.
He further noted that the world is facing turbulent economic conditions, as central banks all around the globe have tightened their monetary policies to slow down inflation, and this rise in interest rate has been the fastest since the early 1980s.
“Governments and private sectors cannot sustain the same level of spending, lending and investment as they did in the past. Priorities should be made, and the interests in innovation and technology should be at the forefront to accelerate the change,” he said.
Talking about the initiatives of the PIF, Al-Rumayyan said that the fund has focused on 13 sectors to develop and diversify the Kingdom’s economy and added that the wealth fund has created 90 companies and has created 560,000 jobs until now.
“Our world requires global solutions that outpace our collective challenges. So, in every corner of the world, humanity needs to find common ground,” Al-Rumayyan said.
On his part, FII Institute CEO Richard Attias said that the world should embrace diversity in all its forms to ensure a better future.
“As we move forward, we must try to create societies that embrace diversity in all its forms. Inclusion is not merely a matter of fairness. It is a recognition of the richness that different perspectives and backgrounds bring to our community,” said Attias.
The CEO further pointed out the need for an ethical framework and regulations as advanced technologies have become part of our daily lives.
“As we grapple with ethical dilemmas posed by emerging technologies like artificial intelligence and genetic engineering, it becomes imperative to establish a robust ethical framework that saves human rights, privacy and dignity,” he said.
Attias added: “The values of transparency and accountability will be crucial in answering that these technologies are being harnessed for the benefit of all.”
Speaking ahead of the event, Attias revealed that the total value of investments made through agreements, contracts and deals during the FII since its launch in 2017 amounted to SR120 billion.
During the event, World Bank Group President Ajay Banga said that geopolitical tensions threaten the global economy.
“There is so much going on in the world and geopolitics in the wars that you’re seeing and what just happened recently in Israel and Gaza. At the end of the day, when you put all this together, I think the impact on economic development is even more serious,” said Banga.
He also urged private sector firms to step into developing countries to solve the issues associated with investments in the renewable energy sector, saying that $1 trillion is needed in this regard,
“There is not enough money in government coffers, or even in the multilateral development banks. We need to involve the private sector with their capital,” added Banga.
Saudi banks shift focus to debt markets during sukuk surge
Updated 21 March 2025
Reem Walid
RIYADH: As Saudi Arabia’s financial system turns increasingly to debt markets for funding, it will face new opportunities and increased risk in relation to its stability and resilience, experts told Arab News.
The growth of sukuk issuance and other debt market activities are essential to the Kingdom’s economic diversification targets and objectives set out in the Vision 2030 initiative.
Saudi Arabia raised SR2.64 billion ($704 million) through sukuk issuances in March, following the SR3.07 billion secured in February and SR3.72 billion in January.
A report by Fitch Ratings in February showed that the Kingdom holds the largest share of the Gulf Cooperation Council’s debt capital market — which itself surpassed the $1 trillion milestone at the end of January.
This represented a 10 percent year-on-year growth across all currencies.
Another report by Fitch earlier this year showed that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets — outside China — and the world’s largest sukuk issuer in 2024.
The Kingdom’s debt capital market grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt.
Funding uses
Saudi Arabia uses sukuk issuance as a mechanism to finance giga-projects such as NEOM, the Red Sea, and Qiddiya, which collectively require hundreds of billions of dollars in funding.
Ian Khan, a technology futurist and author, said this highlights the Kingdom’s commitment to Islamic finance as a driver of sustainable development.
“Sukuk aligns with Vision 2030 by attracting both domestic and international ethical investors, particularly from markets in Southeast Asia, the Middle East, and North Africa. Additionally, sukuk’s structure, which ties returns to tangible assets, ensures that funds are channeled into real economic activities such as renewable energy, infrastructure, and technology, all of which are cornerstones of Saudi Arabia’s diversification agenda,” Khan said.
Ian Khan, a technology futurist and author. Supplied
“Furthermore, by developing its domestic sukuk market, the Kingdom reduces its dependence on oil revenues, which currently account for over 50 percent of GDP,” he said.
Khan emphasized that sukuk also supports green finance initiatives, with Saudi entities already issuing green sukuk to fund renewable projects such as the 300 MW Sakaka Solar Project.
Risks and rewards
According to Mohammad Nikkar, principal at Arthur D. Little Middle East, reports published by the Kingdom’s central bank highlight the capitalization strength of the Saudi banking system.
“However, an overreliance on external funding such as debt markets could potentially weaken the credit quality of the banking system, highlighting the need for more prudent risk management,” he said.
There is no doubt that as the focus shifts toward debt markets, new dynamics and opportunities emerge.
“As the sector progresses toward 2030 and beyond, the increasing reliance on debt markets necessitates continued regulatory vigilance and the implementation of robust risk management practices to maintain overall stability and resilience,” Nikkar said.
Mohammad Nikkar, principal at Arthur D. Little Middle East. Supplied
Khan said that the Kingdom’s sovereign bond issuances have been met with strong global demand, with oversubscriptions often exceeding several billion dollars, reflecting investor confidence in the country’s economic reforms.
“However, the increasing exposure to external debt introduces risks, particularly if global interest rates rise or oil revenues fluctuate significantly,” he said.
The author went on to emphasize that to address these challenges, the Saudi Central Bank is likely to strengthen regulatory frameworks and risk buffers, ensuring that banks maintain adequate capital and manage foreign currency risks effectively.
According to Edmond Christou and Basel Al-Waqayan, analysts at Bloomberg Intelligence, the increasing reliance on debt markets will improve the resilience of Saudi Arabia’s banking sector by diversifying funding sources and providing more stable capital to support long-term project financing.
“With banks managing significant duration and liquidity risks, stable funding is critical for driving growth in key sectors aligned with Vision 2030. Senior unsecured paper, for instance, are issued at an average spread of 90 basis points above benchmark treasuries, while subordinated AT1 bonds range between 150–200 basis points,” the analysts told Arab News in a joint statement.
“In 2024, Saudi banks raised approximately $11.5 billion in debt markets, and they are on track to exceed that figure as they continue to finance major projects,” they added.
Martin Blechta, partner at Boston Consulting Group, explained that some of the largest and most recent issuances were done by AlRajhi Bank, Riyad Bank, and Banque Saudi Fransi, as well as Arab National Bank, Saudi Investment Bank, and Gulf International Bank, among others. For some, this was a first-time issuance.
“The increasing reliance on the debt market is an expected progression of the banking sector overall and very much on the strategic agenda of the Saudi Capital Market Authority aiming to expand the debt instrument market,” Blechta said.
“Additional Tier 1 capital plays an important role in the capital structure of leading international banks and the recent developments in the Saudi banking sector are very much in line with that.”
Vision 2030 alignment
From ADL’s point of view, Nikkar explained that by fostering a robust debt capital market, the Kingdom enables growth of alternative sources of funding — a pillar of its National Investment Strategy and aligned with Pillar 1 of the Financial Services Development Program.
The ADL partner added: “This expansion not only opens the country to more investments from international investors but also provides new opportunities for domestic investors to participate in the investment drive fueled by the country’s unprecedented infrastructure and flagship projects within Vision 2030.”
Christou and Al-Waqayan from Bloomberg Intelligence argued that growing focus on sukuk issuance and debt market activities is pivotal to support Saudi Vision 2030’s objectives of economic diversification and sustainable growth.
“A deeper and more developed local capital market attracts foreign investment flows, which are critical to supporting the Kingdom’s expanding economy. Initiatives such as last year’s Saudi ETF listing in Hong Kong and China, as well as the Lenovo deal are key to attract international capital,” the analysts said.
Blechta from BCG noted that banks are diversifying funding sources to match the changing nature of government and large corporate financing needs.
“The majority of large-scale projects are in need of very long-term debt that is typically USD-denominated, to increase international investor demand. Banks are accordingly matching this demand on their funding side. Interestingly, most recent Saudi bank debt issuances were heavily oversubscribed, which shows strong investor confidence in the Saudi banking sector overall,” the partner said.
“However, most demand for the SAR denomination was still domestic, while the USD titles have seen more international investor uptake,” he added.
Martin Blechta, partner at Boston Consulting Group. Supplied
Transformative effects on the Kingdom’s financial landscape
The accelerating trend of Saudi banks looking toward debt markets is set to transform the Kingdom’s financial landscape,
From ADL’s perspective, Nikkar believes that this shift is likely to deepen the capital markets, enhance liquidity, and introduce a wider array of financial instruments to market participants, thereby attracting a more diverse group of investors.
“The Saudi debt capital market is poised to exceed SR2 trillion outstanding over the next few years, driven by government projects under Vision 2030, deficit funding, diversification efforts, and ongoing reforms,” he said.
“This substantial growth indicates a maturing financial market capable of supporting large-scale economic initiatives. Collectively these developments will foster a more dynamic and diversified financial services ecosystem in Saudi Arabia,” the ADL representative added.
Additionally, the accelerated shift of Saudi banks toward debt markets will fundamentally transform the Kingdom’s financial landscape by enabling greater sophistication, resilience, and competitiveness.
From Khan’s point of view, Saudi banks hold an average capital adequacy ratio that provides a strong foundation for leveraging debt markets without compromising financial stability.
The shift coincides with the Kingdom’s efforts to develop the domestic capital markets, as evidenced by initiatives such as the Saudi Stock Exchange reforms and the Financial Sector Development Program.
Khan believes this trend is likely to have a transformative effect on the expansion of debt market instruments.
“Saudi banks are increasingly involved in issuing corporate bonds, sukuk, and hybrid instruments to diversify their funding sources. This diversification reduces reliance on short-term deposits, thereby enhancing long-term stability,” Khan said.
The trend will also lead to greater integration with global markets, technology and innovation in finance, and enhanced environmental, social and governance alignment.
On integration with global markets, Khan said: “Participation in international debt markets has already attracted significant foreign investments. For instance, Saudi Arabia’s $10 billion green bond issued in 2023 was oversubscribed threefold, reflecting investor confidence. This global integration will help Saudi banks build stronger partnerships and access lower-cost capital.”
With regards to technology and innovation in finance, he believes the way debt instruments are issued and traded will be transformed, saying: “The Kingdom is embracing fintech to streamline debt market activities. For example, digital sukuk issuance platforms and blockchain-based systems are being explored to enhance transparency and efficiency.”
Khan added: “The rise of ESG-focused investments, particularly green bonds and sukuk, will push Saudi banks to prioritize sustainable finance. This aligns with Vision 2030 goals of achieving net-zero emissions by 2060 and attracting investors who prioritize sustainability.”
Bhavya Kumar, managing director and partner at BCG, believes that an increasing reliance on debt markets presents opportunities and risks for the Kingdom’s banking sector.
“While it supports Saudi’s broader economic goals under Vision 2030 by diversifying funding sources — reducing dependency on deposits, improving risk management practices required to meet international investor expectations, and fostering financial market development — it also introduces vulnerabilities related to market volatility, leverage, and systemic risks,” Kumar said.
Gold set for 3rd weekly gain as investors seek safe haven
Gold hit record high of $3,057.21 per ounce on Thursday
Silver, platinum, palladium poised for weekly declines
Updated 45 min 55 sec ago
Reuters
BENGALURU: Gold prices fell on Friday, but were poised for a third straight weekly gain, bolstered by safe-haven demand amidst geopolitical and economic uncertainties as well as anticipation of US Federal Reserve rate cut later this year.
Spot gold was down 0.3 percent at $3,034.02 an ounce as of 3:59 p.m. Saudi time. US gold futures eased 0.1 percent to $3,040.90. Bullion has gained 1.7 percent so far this week.
“It’s just a little bit of profit taking ahead of the weekend. Ongoing safe-haven demand, both based on trade concerns and geopolitical risks continues to be the primary driving force,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Gold has hit 16 record highs so far this year, amid geopolitical tensions and economic uncertainty, with four surpassing the crucial $3,000 mark and hitting an all-time peak of $3,057.21 per ounce on Thursday.
US President Donald Trump still intends for new reciprocal tariff rates to take effect on April 2.
The Fed held its benchmark interest rate steady on Wednesday as widely expected, but indicated two quarter-percentage-point cuts before the end of the year.
Traders are pricing in 71 basis points of easing this year from the Fed with at least two rate reductions of 25 bps each, with a cut in July fully priced in, LSEG data showed.
Israel announced an escalation in air, land, and sea strikes against Hamas in Gaza to pressure the release of remaining hostages, effectively abandoning a two-month ceasefire and launching an all-out air and ground campaign against the dominant Palestinian militant group.
Gold, traditionally viewed as a safe-haven investment during times of inflation or economic volatility, tends to do well in a low interest rate environment.
Spot silver slid 1.4 percent to $33.08 an ounce, platinum lost 1 percent to $974.90 and palladium shed 0.6 percent to $946. All three metals were poised for weekly losses.
Oil Updates — crude heads toward 2nd consecutive weekly gain on supply concerns
Updated 50 min 22 sec ago
Reuters
LONDON: Oil prices rose on Friday and were heading for a second consecutive weekly gain as fresh US sanctions on Iran and the latest output plan from the OPEC+ producer group raised expectations of tighter supply.
Brent crude futures were down 23 cents, or 0.3 percent, at $71.77 a barrel by 4:00 p.m. Saudi time. US West Texas Intermediate crude futures fell 13 cents, or 0.2 percent, to $67.94.
On a weekly basis, Brent was on track to rise more than 1.5 percent and WTI 1 percent, marking their biggest gains since the first week of the year.
The US Treasury on Thursday announced new Iran-related sanctions, which for the first time targeted an independent Chinese refiner among other entities and vessels involved in supplying Iranian crude oil to China.
New US sanctions against Iran’s oil exports triggered Thursday’s rally in oil prices along with the OPEC+ pledge to compensate for overproduction, said PVM analyst Tamas Varga.
Thursday’s announcement marked Washington’s fourth round of sanctions against Iran since US President Donald Trump in February promised “maximum pressure” on Tehran and pledged to drive the country’s oil exports to zero.
Analysts at ANZ Bank said they expect a 1 million barrels per day (bpd) reduction in Iranian crude oil exports because of tighter sanctions. Vessel tracking service Kpler estimated Iranian crude oil exports above 1.8 million bpd in February.
Oil prices were also supported by the new OPEC+ plan for seven members to cut output further to compensate for producing more than agreed levels. The plan would represent monthly cuts of between 189,000 bpd and 435,000 bpd until June 2026.
OPEC+ this month confirmed that eight of its members would proceed with a monthly increase of 138,000 bpd from April, reversing some of the 5.85 million bpd of output cuts agreed in a series of steps since 2022 to support the market.
“While the group shares a plan for compensation cuts, it certainly doesn’t mean members will follow it. A handful of members have consistently produced above their target production levels,” ING analysts said in a note on Friday.
Closing Bell: Saudi main index closes in green at 11,760
Updated 20 March 2025
Miguel Hadchity
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 50.89 points, or 0.43 percent, to close at 11,760.32.
The total trading turnover of the benchmark index was SR5.89 billion ($1.57 billion), as 123 of the listed stocks advanced, while 109 retreated.
The MSCI Tadawul Index increased by 6.13 points, or 0.41 percent, to close at 1,490.20.
The Kingdom’s parallel market Nomu dipped, losing 162.11 points, or 0.53 percent, to close at 30,521.53. This comes as 43 of the listed stocks advanced while 31 retreated.
The best-performing stock was Rabigh Refining and Petrochemical Co., with its share price surging by 9.87 percent to SR7.68.
Other top performers included Retal Urban Development Co., which saw its share price rise by 4.96 percent to SR16.50, and Ades Holding Co., which saw a 4.38 percent increase to SR16.70.
The worst performer of the day was Sinad Holding Co., whose share price fell by 6.91 percent to SR12.40.
Gulf General Cooperative Insurance Co. and SICO Saudi REIT Fund also saw declines, with their shares dropping by 6.19 percent and 5.18 percent to SR9.55 and SR3.66, respectively.
On the announcements front, Amwaj International Co. announced its financial results for 2024, with net profits reaching SR6.3 million, down by 60.1 percent compared to the previous year.
In a statement on Tadawul, the company attributed the decrease to restructuring inventory and marketing mix to accommodate new technology, which has a higher demand level and profit margin than before.
“The addition of new products will positively impact sales and results for 2025 and will boost cash flow,” the statement said.
In another announcement, Gulf General Cooperative Insurance Co. revealed its annual financial results for 2024.
The company’s insurance revenues in 2024 reached SR414.3 million, up from SR315.6 million in the previous year, marking a 31.2 percent surge.
This was principally driven by business growth and an increase in the motor line of business, according to a statement by the firm.
In today’s trading session, the group’s shares traded 6.19 percent lower on the main market to close at SR9.55.
Saudi Printing and Packaging Co. also announced its annual financial results for last year.
The company’s net loss surged to SR219.4 million from SR132.3 million in the previous year due to establishing a provision for credit losses in trade receivables and recording impairment in fixed assets, inventory, and goodwill.
In Thursday’s session, the firm’s shares traded 2.43 percent lower on the main market to close at SR10.42.
On another note, Saudi Industrial Investment Group has announced that its board of directors has recommended a share buyback of up to 11 million ordinary shares, subject to approval by the Extraordinary General Assembly.
In a statement on Tadawul, the group said that the buyback aims to hold 10 million shares as treasury while allocating 1 million shares to the company’s long-term employee incentives program.
The repurchase will be financed through internal resources, and the acquired shares will not carry voting rights in General Assembly meetings.
SIIG will comply with regulatory solvency requirements, with a solvency report from external auditors to be included in the EGA approval process.
In today’s trading session, SIIG’s shares traded 1.72 percent higher on the main market to close at SR15.36.
Saudi Aramco unveils direct air capture tech to reduce emissions
Updated 20 March 2025
MOHAMMED AL-KINANI
JEDDAH: Saudi Aramco has unveiled the Kingdom’s first direct air capture test unit, marking a significant milestone in its mission to reduce emissions and advance carbon capture technology for a sustainable future.
The unit is capable of removing 12 tonnes of carbon dioxide from the atmosphere each year, according to an official statement from Aramco.
As the world’s leading integrated energy and chemicals company, Aramco emphasized that the pilot plant, developed in partnership with Siemens Energy, represents a crucial step in enhancing DAC capabilities.
Ali A. Al-Meshari, Aramco’s senior vice president of technology oversight and coordination, highlighted that direct carbon dioxide capture technologies will play a pivotal role in mitigating greenhouse gas emissions, particularly in industries that are difficult to decarbonize.
“The test facility launched by Aramco is a key step in our efforts to scale up viable DAC systems, for deployment in the Kingdom of Saudi Arabia and beyond. In addition to helping address emissions, the CO2 extracted through this process can in turn be used to produce more sustainable chemicals and fuels.” Al-Meshari said.
The development is in line with Saudi Arabia’s commitment to achieving net-zero emissions by 2060, following a circular carbon economy approach that emphasizes reducing, reusing, recycling, and removing carbon.
This initiative also supports the Saudi Green Initiative, which aims to reduce carbon emissions by 278 million tonnes annually by 2030 and transition 50 percent of the country’s energy sources to renewables.
The project reflects Aramco’s strong commitment to carbon capture, a critical component of its goal to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly-owned and operated assets by 2050.
Aramco plans to use the new facility as a testing ground for next-generation CO2 capture materials specifically designed for Saudi Arabia’s unique climate. Additionally, the company aims to drive down costs, promoting the quicker adoption of DAC technologies in the region.
As part of its circular carbon economy strategy, Aramco is exploring methods for capturing CO2 both at emission sources and directly from the atmosphere, incorporating cutting-edge technological solutions, as stated in the company’s announcement.
In partnership with Siemens Energy, Aramco intends to scale up the technology and lay the groundwork for large-scale DAC facilities in the future.
Furthermore, the DAC test facility launch comes shortly after Aramco, along with its partners Linde and SLB, signed a shareholders’ agreement to develop a carbon capture and storage hub in Jubail. Phase one of the hub will have the capacity to capture 9 million tonnes of CO2 from three Aramco gas plants and other industrial sources.
In October 2023, Saudi Aramco announced its collaboration with major international companies to develop emissions reduction solutions, including lower-carbon hydrogen, direct air capture of CO2, and an innovative approach to CO2 storage.
