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Pakistan pushes to forge strategic, economic partnership as Saudi FM visits Islamabad

Pakistan Prime Minister Shehbaz Sharif (right) meets Saudi foreign minister Prince Faisal bin Farhan in Islamabad, Pakistan on April 16, 2024. (PM Office)
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Updated 16 April 2024
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Pakistan pushes to forge strategic, economic partnership as Saudi FM visits Islamabad

Updated 16 April 2024
Arab News Pakistan

ISLAMABAD: Pakistani top leaders, including the prime minister, president and foreign minister, said on Tuesday the ongoing visit of Saudi Foreign Minister Prince Faisal bin Farhan to Islamabad would help transform a longstanding friendship between the two nations into a strategic and commercial partnership.

Prince Faisal arrived in Pakistan on Monday on a two-day visit aimed at enhancing bilateral economic cooperation and pushing forward previously agreed investment deals. His trip comes a little over a week after Crown Prince Mohammed bin Salman met Prime Minister Shehbaz Sharif in Makkah and reaffirmed the Kingdom’s commitment to expedite investments worth $5 billion.

Pakistan and Saudi Arabia enjoy strong trade, defense and cultural ties. The Kingdom is home to over 2.7 million Pakistani expatriates and the top source of remittances to the cash-strapped South Asian country.

“We aim to transform our traditionally fraternal ties into a strategic and economic partnership,” Foreign Minister Ishaq Dar said as he addressed a Pakistan-Saudi Arabia Investment Conference in Islamabad, held under the umbrella of Pakistan’s Special Investment Facilitation Council, set up last year to oversee all foreign investments. 

“Your investments are not just financial commitments but are crucial in nurturing a deeply valued partnership,” Dar told the visiting dignitary. 

“It is through the SIFC platform that we intend to streamline investment processes while ensuring rapid decision making and efficient handling of investments … The SIFC has a central role in augmenting our infrastructure and streamlining our regulatory frameworks to set the stage for a flourishing investment friendly economic environment.”




Saudi and Pakistani officials pose for a group picture after the Pakistan-Saudi Arabia Investment Conference in Islamabad, Pakistan on April 16, 2024. (@KSAMOFA/X)

Dar said SIFC would ensure that investments were “swift and mutually beneficial, embodying our commitment to facilitating foreign direct investment in Pakistan.”

Pakistan was blessed with fertile agricultural lands, minerals and a large and dynamic population, complemented by a flourishing IT sector and abundant prospects for renewable energy creation, the foreign minister added. 

He said Pakistan’s fertile lands and a vast network of water resources presented numerous investment opportunities in agri-tech and food processing, with the South Asian nation having the potential to become the region’s food basket.

“Our mining sector is marked by untapped potential especially in the expansive Tethyan belt known for its abundant deposits of copper, gold and other valuable minerals,” Dar said. “The strategic advancements in these areas are highlighted by projects such as Riko Diq copper [and gold] project which exemplifies our commitment to leveraging our natural resources for mutual benefit.”




Pakistan Prime Minister Shehbaz Sharif (center) meets Saudi foreign minister Prince Faisal bin Farhan who is leading a high-level delegation in Islamabad, Pakistan on April 16, 2024. (PM Office)

On Sunday, Pakistani state media reported Saudi Arabia was likely to invest $1 billion in the mine project in Pakistan’s southwestern Balochistan province, one of the world’s largest underdeveloped copper-gold areas.

The foreign minister said Pakistan’s goal was to transform the country into a hub of economic activity, and innovation and create an attractive environment for global investors like Saudi Arabia. 

“Investing in Pakistan is not merely a placement of capital. It would actually be instrumental toward forging a partnership that promises mutual prosperity and progress,” he concluded. 

“Your engagement and investment in Pakistan will be handled with utmost respect and institutionalized commitment from our side, ensuring that together we achieve remarkable success.”

MEETINGS WITH PM AND PRESIDENT

Prince Faisal also met Pakistani PM Sharif on Tuesday who said the Saudi official’s visit would herald a new era of strategic and commercial partnerships between the two long-time allies.

“The visit is the beginning of a new era of strategic and commercial partnership between Pakistan and Saudi Arabia,” Sharif was quoted as saying in a statement from his office after he met Prince Faisal. “Pakistan wants to further promote cooperation in the fields of trade and investment between the two countries.”

The PM said Pakistan was taking steps to promote foreign investment and make partnerships “mutually beneficial” for allies, adding that Islamabad was grateful to the Saudi leadership for increasing investment.

Informing the Saudi delegation about the wide potential of investment in Pakistan, Sharif briefed them about the Special Investment Facilitation Council and measures the body was taking to promote investment. 

Sharif also invited the Saudi crown prince to Islamabad.

“The people of Pakistan are looking forward to the visit of His Highness the Crown Prince Muhammad Bin Salman to Pakistan,” the PM’s office said.

President Asif Ali Zardari and Prince Faisal also met on Tuesday and reiterated the two nations’ resolve to build a strong partnership and promote mutually beneficial economic cooperation.

Zardari said Pakistan was working to transform its long-standing and decades-old relationship with Riyadh into a “long-term strategic and economic partnership.”




Pakistan's President Asif Ali Zardari meets Saudi Arabia's Foreign Minister Prince Faisal bin Farhan in Islamabad, Pakistan on April 16, 2024. (President's Office)

The two sides also discussed regional dynamics and recent developments in the Middle East and called for an immediate and unconditional ceasefire in Gaza and an end to Israeli air and ground offensives there.

INVESTMENT PUSH

In a statement shared with media on Monday, the Pakistan information ministry said the Saudi delegation would consult with Pakistani officials “on the next stages of investment and implementation issues.”

Saudi Arabia’s planned investment in the Reko Diq gold and copper mining project would be discussed during the visit, the ministry said, adding that Riyadh was also interested in investing in agriculture, trade, energy, minerals, IT, transport and other sectors in Pakistan:

“As a result of this visit, Pakistan’s export capacity will increase, joint ventures will be launched and new opportunities will be paved.”

Cash-strapped Pakistan desperately needs to shore up its foreign reserves and signal to the International Monetary Fund (IMF) that it can continue to meet requirements for foreign financing that has been a key demand in previous bailout packages. Pakistan’s finance minister, Muhammad Aurangzeb, is currently in Washington to participate in spring meetings of the International Monetary Fund and World Bank and discuss a new bailout program. The last loan deal expires this month.

Saudi Arabia has often come to cash-strapped Pakistan’s aid in the past, regularly providing it oil on deferred payments and offering direct financial support to help stabilize its economy and shore up its forex reserves.

Last year, however, Saudi Arabia’s finance minister said the Kingdom was changing the way it provides assistance to allies, shifting from previously giving direct grants and deposits unconditionally and moving toward mutually beneficial investment deals backed by internal economic reforms.

The PM said Pakistan was taking steps to promote foreign investment and make partnerships “mutually beneficial” for allies, adding that Islamabad was grateful to the Saudi leadership for increasing investment.

Informing the Saudi delegation about the wide potential of investment in Pakistan, Sharif briefed them about the Special Investment Facilitation Council and measures the body was taking to promote investment. The body was set up last year to oversee all foreign funding.

Sharif also invited the Saudi crown prince to Islamabad.

“The people of Pakistan are looking forward to the visit of His Highness the Crown Prince Muhammad Bin Salman to Pakistan,” the PM’s office said. 

Topics: Pakistan-Saudi relations Saudi Foreign Minister Prince Faisal bin Farhan

Oil Updates – crude steadies amid possible Middle East ceasefire

Updated 26 November 2024
Reuters
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Oil Updates – crude steadies amid possible Middle East ceasefire

  • Israel, Lebanon eye ceasefire in Israel-Hezbollah conflict
  • MidEast ceasefire cuts likelihood of US sanctions on Iran oil
  • Kyiv faces sustained Russian drone attacks
Updated 26 November 2024
Reuters

SINGAPORE: Oil prices edged higher in early trade on Tuesday after falling in the previous session as investors took stock of a potential ceasefire between Israel and Hezbollah, weighing on oil’s risk premium.

Brent crude futures rose 15 cents, or 0.21 percent, to $73.16 a barrel as at 10:05 a.m. Saudi time, while US West Texas Intermediate crude futures were at $69.09 a barrel, up 15 cents, or 0.22 percent.

Both benchmarks settled down $2 a barrel on Monday following reports that Lebanon and Israel had agreed to the terms of a deal to end the Israel-Hezbollah conflict, which triggered a crude oil selloff.

Market reaction to the ceasefire news was “over the top,” said senior market analyst Priyanka Sachdeva at Phillip Nova.

While the news calmed fear of disruption to Middle Eastern supply, the Israel-Hamas conflict “never actually disrupted supplies significantly to induce war premiums” this year, Sachdeva said.

“The vulnerability of oil prices to geopolitical headlines lacks foundational backup and, coupled with the inability to maintain recent gains, reflects weakening global demand for oil and suggests a volatile market ahead.”

Iran, which supports Hezbollah, is an OPEC member with production of around 3.2 million barrels per day, or 3 percent of global output.

A ceasefire in Lebanon would reduce the likelihood that the incoming US administration will impose stringent sanctions on Iranian crude oil, said ANZ analysts.

If President-elect Donald Trump’s administration returned to a maximum-pressure campaign on Tehran, Iranian exports could shrink by 1 million bpd, analysts have said, tightening global crude flows.

In Europe, Ukraine’s capital Kyiv was under a sustained Russian drone attack on Tuesday, Mayor Vitali Klitschko said.

Hostilities between major oil producer Russia and Ukraine intensified this month after US President Joe Biden allowed Ukraine to use US-made weapons to strike deep into Russia in a significant reversal of Washington’s policy in the Ukraine-Russia conflict.

Elsewhere, OPEC+ may consider leaving its current oil output cuts in place from Jan. 1 at its next meeting on Sunday, Azerbaijan’s Energy Minister Parviz Shahbazov told Reuters, as the producer group had already postponed hikes amid demand worries.

On Monday, Trump said he would sign an executive order imposing a 25 percent tariff on all products coming into the US from Mexico and Canada. It was unclear whether this would include crude oil.

The vast majority of Canada’s 4 million bpd of crude exports go to the US Analysts have said it is unlikely Trump would impose tariffs on Canadian oil, which cannot be easily replaced since it differs from grades that the US produces.

“Contrary to today’s sell-off in risk assets, I think the tariff announcements are actually risk-positive because they are lower than consensus expectations,” said market analyst Tony Sycamore at IG.

Trump’s proposed additional 10 percent tariffs on Chinese imports are “well below” the 60 percent level he threatened pre-election, Sycamore said.

For the time being, markets are eyeing Trump’s plan to increase US oil production, which has been near record levels throughout 2022 to 2024 and absorbed supply disruption from geopolitical crises and sanctions, Phillip Nova’s Sachdeva said. 

Topics: oil updates oil prices

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Saudi Arabia’s NEOM giga-project a ‘generational investment,’ minister says

Updated 26 November 2024
Reuters
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Saudi Arabia’s NEOM giga-project a ‘generational investment,’ minister says

  • Foreign investors starting to come to NEOM, minister says
  • On recent departure of NEOM’s CEO, minister says there is a time to pass baton
  • Risk-return ‘very fair’ for outside investors, Al-Falih says
Updated 26 November 2024
Reuters

RIYADH: Saudi Arabia’s NEOM gigaproject, a futuristic region being built in the desert, is a “generational investment” with a long timeline, the country’s investment minister told Reuters on Monday, adding that foreign investment will pick up pace.

“NEOM was not meant to be a two-year investable opportunity. If anybody expected NEOM to be foreign investment in two, three or five years, then they have gotten (it) wrong — it’s a generational investment,” Minister Khalid Al-Falih said on the sidelines of the World Investment Conference in Riyadh.

“The flywheel is starting and it will gain speed as we go forward, as some of the foundational assets come to the market,” he said.

The world’s top oil exporter has poured hundreds of billions of dollars into development projects through the Kingdom’s $925 billion sovereign fund, the Public Investment Fund, as it undergoes an economic agenda dubbed Vision 2030 to cut dependence on fossil fuels.

NEOM, a Red Sea urban and industrial development nearly the size of Belgium that is meant to eventually house 9 million people, is central to Vision 2030.

NEOM announced this month its long-time chief executive, Nadhmi Al-Nasr, had stepped down, without giving further details.

Asked what effect the departure would have on investors, the minister said the executive had done “a respectable job” but that “there is a time for everybody to pass on the baton.”

Asked if PIF will continue to do much of the spending on NEOM until more foreign funds come in, Al-Falih said it was not binary.

“I think foreign investors are starting to come to NEOM, they’re starting to channel capital. Some of the projects that the PIF will be doing will be financed through global capital pools, through some alternative and private capital. That’s taking place as we speak,” he said.

“So I urge you not to look at NEOM as being 100 percent PIF and then suddenly there will be a cliff and it will go private.”

Saudi Arabia, which is racing to attract $100 billion in annual foreign direct investment by the turn of the decade — reaching about a quarter of that in 2023 — has recently seen more co-investment deals between state entities and foreign investors.

“It’s always been the intent,” Al-Falih said of foreign inflows alongside state funds.

He noted that foreign investors were at times “still looking, still examining, still sometimes questioning,” but that now there was confidence in the profitability of investment opportunities and that “the risk-return trade-offs are very, very fair and positive to them.” 

Topics: NEOM Saudi Investment Minister Khalid Al-Falih

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Saudi Arabia’s fintech demand offers growth prospects for UK firms: London Lord Mayor

Updated 26 November 2024
Nadin Hassan
REEM WALID 
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Saudi Arabia’s fintech demand offers growth prospects for UK firms: London Lord Mayor

Updated 26 November 2024
Nadin Hassan REEM WALID 

RIYADH: UK-based fintech firms have an opportunity to address rising demand for fintech services in Saudi Arabia, according to the Lord Mayor of London. 

Speaking on the sidelines of the 28th World Investment Conference in Riyadh, Alderman Alastair King highlighted the UK capital’s extensive expertise in fintech, particularly as the city works on digitizing national debt instruments. 

He noted that such initiatives could provide opportunities for collaboration between the UK and Saudi Arabia’s growing fintech sector. 

“We have incredible expertise in London in relation to fintech and financial technologies in general. I know there’s a great demand for that sector here in Saudi, so those are some of the areas we are concentrating on,” said the Lord Mayor. 

“In the United Kingdom, we’ve just started to digitize our national gilts, what they call the debt instruments. Now, there’s a road ahead to digitize them, which is a wonderful opportunity to work on those types of things,” he said. 

A gilt is a UK government bond issued in sterling, and London’s efforts to digitize these instruments could pave the way for similar initiatives in Saudi Arabia, added.

King went to say that the payments sector could also be explored, noting that the entire sector is being transformed by fintech and that there are enormous opportunities for collaboration.

Other sectors that could be devoloped include infrastructure, insurance, and legal services, as well as asset management, and banking. 

“London is the number one global center for professional services in the world. Saudi Arabia is the fastest growing economy in the G20. There’s going to be a fantastic symbiosis between us, and we can do all sorts of things together,” the Lord Mayor said during the interview. 

King also discussed the broader opportunities arising from Saudi Arabia’s energy transition and economic diversification, particularly in industries such as asset management, banking, and insurance. He emphasized the role of both large companies and small and medium-sized enterprises in fostering innovation. 

“In London, as an extraordinary financial and professional services ecosystem, there is a symbiosis between small and medium-sized companies and the large ones. Part of my job is to go around to the British companies, whether small, medium, or large, and encourage them to take advantage of the international markets that are going to be available to us,” the Lord Mayor said. 

“So, although the early adopters are the large companies, I think you often see real innovation coming out of the small and medium-sized companies,” he added. 

The Lord Mayor added that he would consider it a success if more British firms expanded into Saudi Arabia and other Gulf Cooperation Council markets, particularly in professional services. 

“I’d also view success as greater investment flows into financial and professional services in the UK,” he concluded. 

Investment trends 
 
During a panel discussion at the World Investment Conference, Nan Li Collins, senior director of investment and enterprise at the UN Conference on Trade and Development, discussed global investment trends, emphasizing the importance of effective regional policies and multilateral efforts to counteract fragmentation and protectionism. 

“I think these are the efforts we need to promote globally for more multilateral reasons, for more regional integration, to lower trade and investment barriers, and then work with countries’ investment promotion agencies to look at how to strengthen investment facilitation,” she added. 

During the discussion, Collins highlighted three key trends shaping the market.

“The first is the long-term trend of trade and investment,” she said, adding that while GDP and trade have grown steadily since the 2008 financial crisis, FDI has stagnated. 

She identified global fracturing as the second trend, noting that investment is increasing in geopolitically aligned countries but declining in more distant ones. 

The third trend is digitization, Collins said, adding that over the last decade, investment in digital services has risen from 60 percent to 80 percent, now accounting for the majority of new global FDI. 

Topics: World Investment Conference fintech Lord mayor of London business

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Saudi Tadawul Group rolls out 2nd phase of post-trade enhancements

Updated 25 November 2024
Nour El-Shaeri
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Saudi Tadawul Group rolls out 2nd phase of post-trade enhancements

Updated 25 November 2024
Nour El-Shaeri

RIYADH: Saudi Arabia’s capital markets are on track for substantial growth following the successful rollout of the second phase of the post-trade transformation enhancements by the Saudi Tadawul Group.

This latest phase, which includes upgrades across key subsidiaries — the Saudi Exchange, the Securities Clearing Center (Muqassa), and the Securities Depository Center (Edaa)—marks a significant milestone in the ongoing efforts to expand investment opportunities and bring the market in line with international standards.

Building on the first phase completed in 2022, these enhancements represent the largest transformation of the Saudi capital market to date. The upgrades are designed to broaden access to a wide range of financial instruments, improve market efficiency, and reduce systemic risks.

This initiative is part of the Tadawul Group’s contribution to the Financial Sector Development Program, a core element of Saudi Arabia’s Vision 2030, which aims to position the kingdom as a leading global investment hub.

Wael Al-Hazzani, program director of the post-trade transformation and CEO of Muqassa, described the second-phase rollout as a “pivotal moment” for the Saudi capital market. He highlighted the role of these enhancements in diversifying investment options, expanding opportunities, and creating a more efficient, transparent, and secure post-trade infrastructure.

“This initiative reinforces our commitment to strengthening the Saudi capital market’s infrastructure, ultimately positioning it as a leading global financial hub,” Al-Hazzani said.

The first phase of the post-trade infrastructure enhancements, completed in 2022, brought significant improvements to the market, including updates to business models and the transformation of post-trade technologies. These upgrades enhanced clearing, settlement, and custody services, laying the groundwork for the more advanced changes seen in phase two.

Among the key innovations in phase two are important upgrades to the Saudi Exchange, including enhancements to the derivatives market and market-making processes.

Market makers and high-frequency traders now benefit from unified trading functionalities across both cash and derivatives markets, improving liquidity and overall market efficiency. These updates also bring the Saudi Exchange in line with global best practices by improving transparency and harmonizing market microstructure elements, further solidifying its competitive position on the global stage.

Other improvements at the Saudi Exchange include an automated order flagging mechanism to cancel orders during trading engine disconnections, a new reporting service to enhance trade monitoring, and synchronized bid/ask quotes for market makers to optimize their quoting activity. Additionally, exchange members can now execute and accept bilateral trades directly through their order management systems.

Muqassa has introduced enhancements aligned with global Central Counterparty best practices. These updates include real-time trade reconciliation, improved reconciliation processes, and updates to trading limits for derivatives and covered call margining. These changes strengthen pre-trade risk management and operational efficiency. Furthermore, Muqassa’s transition to a multi-asset clearing engine places it among a select group of CCPs worldwide, capable of managing clearing activities across multiple asset classes on a single platform. These upgrades are expected to reduce costs, increase transparency, and enhance overall efficiency for market participants.

Edaa has made significant improvements to its post-trade infrastructure, particularly in messaging protocols and reporting processes. These upgrades, in line with international standards, aim to improve market efficiency, governance, and stability. The changes enhance the experience for capital market institutions, custodians, settlement agents, and investors, providing a seamless and secure post-trade environment.

Together, these enhancements are expected to bolster market stability, reduce systemic risks, and attract both domestic and international investors, positioning the Saudi capital market as a world-class financial center aligned with global best practices.

Topics: Tadawul

Closing Bell: Saudi main index closes in red despite $3.2bn in trade volume 

Updated 25 November 2024
Nour El-Shaeri 
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Closing Bell: Saudi main index closes in red despite $3.2bn in trade volume 

Updated 25 November 2024
Nour El-Shaeri 

RIYADH: Saudi Arabia’s Tadawul All Share Index dropped by 0.65 percent or 77.18 points to settle at 11,787.72 points on Monday.    

The total trading turnover of the benchmark index was SR12.2 billion ($3.2 billion), as 69 of the listed stocks advanced, while 158 retreated.    

The MSCI Tadawul Index also decreased by 13.96 points, or 0.94 percent, to close at 1,477.60.    

The Kingdom’s parallel market Nomu also dropped, losing 20.69 points, or 0.07 percent, to close at 30,864.65 points. This came as 39 of the listed stocks advanced while as many as 47 retreated.    

The index’s top performer, National Co. for Learning and Education, saw a 6.51 percent increase in its share price to close at SR229.    

Other top performers included Retal Urban Development Co., which saw a 6.45 percent rise to reach SR16.50, while Jadwa REIT Saudi Fund’s share price rose by 5.80 percent to SR10.94.   

Saudi Research and Media Group also recorded a positive trajectory, with share prices rising 5.71 percent to reach SR266.40. 

Mobile Telecommunication Co. Saudi Arabia also witnessed positive gains, with 3.82 percent reaching SR10.86. 

Saudi Chemical Co. was TASI’s worst performer, with the company’s share price dropping by 4.95 percent to SR9.60.  

Saudi Automotive Services Co. followed with a 4.77 percent drop to SR71.80. Batic Investments and Logistics Co. also saw a notable drop of 3.90 percent to settle at SR3.45.  

Walaa Cooperative Insurance Co. and Electrical Industries Co. were among the top five poorest performers, with shares declining by 3.78 percent to settle at SR21.36 and by 3.69 percent to sit at SR7.57, respectively. 

On Nomu, International Human Resources Co. was the best performer, with its share price rising by 10.22 percent to reach SR6.04.  

AME Co. for Medical Supplies and Leaf Global Environmental Services Co. also delivered strong performances. AME Co. for Medical Supplies saw its share price rise by 9.90 percent, reaching SR108.80, while Leaf Global Environmental Services Co. recorded a 5.94 percent increase, standing at SR107.  

Paper Home Co. also fared well with 5.83, and the Academy of Learning Co. increased 5.38 percent. 

Naseej for Technology Co. shed the most in Nomu, with its share price dropping by 5.71 percent to reach SR66.  

Naas Petrol Factory Co. experienced a 5.43 percent decline in share prices, closing at SR64.50, while Al Rashid Industrial Co. dropped 5.17 percent to settle at SR44. 

Alhasoob Co. and Dar Almarkabah for Renting Cars Co. were also among the top decliners, with Alhasoob Co. falling 4.92 and Dar Almarkabah for Renting Cars Co. declining 4.58 percent. 

Topics: Closing Bell Saudi Stock Exchange (Tadawul) Saudi stock market Tadawul All Share Index (TASI)

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