KSA

Saudi Aramco’s India Investment – To where is the oil flowing to?

Saudi Aramco is arguably one of the world’s largest Oil and Gas Company in terms of revenues and reserves that they control. To give an idea of its size, Aramco produces close to 10.3Mn barrels per day and its closest rival, the Russian state-owned Rosneft produces a third of that. Given their relative dominance in this space, it is surprising that only recently Saudi Aramco has opened its office in India and plans to invest in India’s downstream opportunities including...

Potential Impact of Capital Market Reforms in Saudi Arabia

The Tadawul All Share Index plans to increase the listings to 250 companies from about 170 now, over the next seven years. Its current market capitalization of $396 billion is expected to add close to $ 120-130 bn post the IPO of Aramco and possible inclusion into the MSCI emerging market index by Mid-2017. The aim of the government is to increase the size of Saudi Arabia’s stock market to match that of its GDP within seven years (2014 -$798...

Managing the Big Float – Saudi Aramco

The market capitalization of the Saudi Arabian stock market is currently around USD 400bn and the IPO of Aramco could add further USD 100bn to the market capitalization (Financial Times). Inclusion of Saudi Aramco in energy sector would increase its weightage from the current value of 21.1% to 36.8% in the Tadawul index pushing the dominant financial services sector from the top spot. We believe the revised weightage where petrochemicals/energy sector dominates the index rather than the financial sector is...

These stocks in UAE and Saudi Arabia still trade above 5-year PE despite market fall

According to an analysis by Marmore MENA Intelligence (www.marmoremena.com), a research house specialized in MENA economies and business issues with the focus on providing actionable solutions, out of a total of 121 UAE-listed stocks (comprising of ADX’s 65, Nasdaq Dubai&rsquo's 5 and DFM’s 52), 12 stocks are trading at multiples that are higher than their 5-year average PE multiples, which includes stocks such as Etisalat, du, Aramex, Commercial Bank of Dubai and RAK ceramics, among others. Likewise, out of 173...

Saudi Arabia and its US dollar peg dilemma

Most GCC countries are pegged to the US dollar to avoid currency fluctuation and eliminate uncertainties in international transactions (Kuwait is pegged to a basket of currencies dominated by the US dollar). This comes at the expense of monetary policy flexibility. Stable domestic currency and a fixed exchange rate imply that traders do not have to face currency risks, and therefore will be more willing to invest and facilitate trade. Since oil is the chief commodity in the GCC, and...

KSA Economic Themes & Investment Implications – 2016

Energy Prices Reform The government of KSA over the past few decades used perks such as lower energy prices, food & water subsidies and absence of taxes for individuals and domestic corporations to distribute the oil wealth to its citizens. The subsidized energy prices translate into significant costs for the government, estimated at USD 107bn or 13.2% of the gross domestic product in 2015. However, the low oil price environment calls for prudent assessment and reforms in these subsidies to...

KSA Stock Market Outlook 2016

Majority of the sectors underperformed during 2015, with Media & Publication, Transport, Energy and Utilities and Real Estate being the exceptions. According to Marmore’s KSA stock market outlook 2016, Saudi construction and cement were the worst hit sectors as they lost 34% and 30% respectively. The decline in banking sector index by 14.9% during 2015 establishes the challenges in the form of liquidity tightening, as a consequence of low oil prices and increased government borrowings that will impact the banking...

KSA Residential Real Estate – Transactions Review (Q3 2015)

During the past decade, Saudi Arabia has witnessed rapid economic development, attributable to elevated oil production and prices, vigorous private sector activity and strong government spending on infrastructure, health, and education. The nominal GDP of KSA grew from USD 754.6bn in 2013 to USD 761.9bn in 2014, and is projected to reach USD 791.6bn in 2016. High population growth coupled with rise in per capita income has fuelled the demand for residential units in the Kingdom, especially in Riyadh and...