Above, a construction site at the Riyadh Metro. Saudi Arabia has kepts to its pledge to maintain spending this year despite weaker oil prices. Ahmed Farwan / AFP
Above, a construction site at the Riyadh Metro. Saudi Arabia has kepts to its pledge to maintain spending this year despite weaker oil prices. Ahmed Farwan / AFP

Bond sales to bolster Saudi economy, says ratings agency



Saudi Arabian banks, reeling under the pressure of falling oil prices, may get a shot in the arm from a spate of sovereign bonds sold this year, the rating agency Standard & Poor’s said.

The country is the world’s biggest exporter of oil and its economy is likely to feel the pain of less revenue more ­intensely if the price of crude, which has lost more than half of its value, continues to slide.

The debt issued by the government, the first time it has sold bonds with maturities of more than 12 months since 2007, means that banks that purchased the debt will get safer yields that will buffer them against any downturn in the economy if there is a sharp drop off in demand for debt by corporations.

Last month, the government sold 20 billion Saudi riyals worth of bonds ranging in maturity from 5 to 10 years and yielding between 1.92 per cent to 2.65 per cent.

The Saudi riyal is pegged to the US dollar.

So far this year, Saudi Arabia has sold 35 billion riyals of local currency bonds to local banks and institutions.

The government wants to sell a total of between 90 billion riyals and 100 billion riyals of bonds by the end of the year, people familiar with the situation told the Bloomberg news agency last month.

“We know that the banks are holding excess liquidity.

“This is a good opportunity for them in a slowing down environment to use that excess utility with a decent yield,” Timucin Engin, S&P’s primary Dubai-based credit analyst, said.

“Oil has fallen down significantly and, if it stays at the current levels, there will definitely be a big effect on the corporates in terms of borrowing,” he said.

“When you lend to the government, it’s zero-risk weighted, it doesn’t put a pressure on your capital necessarily. Arguably, you are not going to incur credit losses from a strong government.”

S&P said in a report yesterday that Saudi banks have enough cash to fund $75bn to $100bn or more of sovereign issuance this year and next.

They are sitting on about $440bn in deposits, and enjoy a loan-to-deposit ratio of 81 per cent.

That is among the lowest loan-to-deposit ratios in the region, according to S&P.

The kingdom shied away from reducing oil production to prop up the price of the commodity in November, a risky move as revenues from oil sales make up about 85 per cent of the country’s budget.

Saudi Arabia’s willingness to defend its market share comes partly because its economy – the largest in the region – has become resilient enough to weather a drop in oil prices.

Despite the oil fall, economists say the region will survive because spending is not being reduced and steady oil prices over the past couple of years have boosted cash reserves.

The net current account surplus of the region stands at about $2.4 trillion, according to economist estimates.

In December, Saudi Arabia kept to its pledge to maintain spending this year.

After the plunge in oil prices, officials said that its revenue was projected to fall to 715 billion riyals this year, from 1.04 trillion riyals last year.

Riyadh projects this year’s expenditure to be about 860bn riyals.

The Egyptian investment bank EFG-Hermes said in a note to its clients yesterday that it expects the Saudi economy to grow 3.2 per cent this year from 3.6 per cent in 2014, in part because the recent bond issuances will support the government’s spending plans.

mkassem@thenational.ae

Follow The National's Business section on Twitter

Forced Deportations

While the Lebanese government has deported a number of refugees back to Syria since 2011, the latest round is the first en-mass campaign of its kind, say the Access Center for Human Rights, a non-governmental organization which monitors the conditions of Syrian refugees in Lebanon.

“In the past, the Lebanese General Security was responsible for the forced deportation operations of refugees, after forcing them to sign papers stating that they wished to return to Syria of their own free will. Now, the Lebanese army, specifically military intelligence, is responsible for the security operation,” said Mohammad Hasan, head of ACHR.
In just the first four months of 2023 the number of forced deportations is nearly double that of the entirety of 2022.

Since the beginning of 2023, ACHR has reported 407 forced deportations – 200 of which occurred in April alone.

In comparison, just 154 people were forcfully deported in 2022.

Violence

Instances of violence against Syrian refugees are not uncommon.

Just last month, security camera footage of men violently attacking and stabbing an employee at a mini-market went viral. The store’s employees had engaged in a verbal altercation with the men who had come to enforce an order to shutter shops, following the announcement of a municipal curfew for Syrian refugees.
“They thought they were Syrian,” said the mayor of the Nahr el Bared municipality, Charbel Bou Raad, of the attackers.
It later emerged the beaten employees were Lebanese. But the video was an exemplary instance of violence at a time when anti-Syrian rhetoric is particularly heated as Lebanese politicians call for the return of Syrian refugees to Syria.

HAJJAN

Director: Abu Bakr Shawky 


Starring: Omar Alatawi, Tulin Essam, Ibrahim Al-Hasawi 


Rating: 4/5

Gulf Men's League final

Dubai Hurricanes 24-12 Abu Dhabi Harlequins

SPECS

Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now

Top investing tips for UAE residents in 2021

Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.

Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.

Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.

Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.

Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.

Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.

Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”

Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI. 

'Top Gun: Maverick'

Rating: 4/5

Directed by: Joseph Kosinski

Starring: Tom Cruise, Val Kilmer, Jennifer Connelly, Jon Hamm, Miles Teller, Glen Powell, Ed Harris

HER FIRST PALESTINIAN

Author: Saeed Teebi

Pages: 256

Publisher: House of Anansi Press

COMPANY PROFILE

Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others

TWISTERS

Director: Lee Isaac Chung

Starring: Glenn Powell, Daisy Edgar-Jones, Anthony Ramos

Rating: 2.5/5

The specs

Engine: 3.8-litre twin-turbo flat-six

Power: 650hp at 6,750rpm

Torque: 800Nm from 2,500-4,000rpm

Transmission: 8-speed dual-clutch auto

Fuel consumption: 11.12L/100km

Price: From Dh796,600

On sale: now

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

UAE v West Indies

First ODI - Sunday, June 4
Second ODI - Tuesday, June 6
Third ODI - Friday, June 9

Matches at Sharjah Cricket Stadium. All games start at 4.30pm

UAE squad
Muhammad Waseem (captain), Aayan Khan, Adithya Shetty, Ali Naseer, Ansh Tandon, Aryansh Sharma, Asif Khan, Basil Hameed, Ethan D’Souza, Fahad Nawaz, Jonathan Figy, Junaid Siddique, Karthik Meiyappan, Lovepreet Singh, Matiullah, Mohammed Faraazuddin, Muhammad Jawadullah, Rameez Shahzad, Rohan Mustafa, Sanchit Sharma, Vriitya Aravind, Zahoor Khan

Three ways to get a gratitude glow

By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.

  • During your morning skincare routine, name five things you are thankful for about yourself.
  • As you finish your skincare routine, look yourself in the eye and speak an affirmation, such as: “I am grateful for every part of me, including my ability to take care of my skin.”
  • In the evening, take some deep breaths, notice how your skin feels, and listen for what your skin is grateful for.
Company profile

Date started: 2015

Founder: John Tsioris and Ioanna Angelidaki

Based: Dubai

Sector: Online grocery delivery

Staff: 200

Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends

Herc's Adventures

Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5

The biog

Simon Nadim has completed 7,000 dives. 

The hardest dive in the UAE is the German U-boat 110m down off the Fujairah coast. 

As a child, he loved the documentaries of Jacques Cousteau

He also led a team that discovered the long-lost portion of the Ines oil tanker. 

If you are interested in diving, he runs the XR Hub Dive Centre in Fujairah

 

How to wear a kandura

Dos

  • Wear the right fabric for the right season and occasion 
  • Always ask for the dress code if you don’t know
  • Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work 
  • Wear 100 per cent cotton under the kandura as most fabrics are polyester

Don’ts 

  • Wear hamdania for work, always wear a ghutra and agal 
  • Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Blue Beetle

Director: Angel Manuel Soto
Stars: Xolo Mariduena, Adriana Barraza, Damian Alcazar, Raoul Max Trujillo, Susan Sarandon, George Lopez
Rating: 4/5