What we’re tracking on 30 October 2019
Habemus Aramco IPO date: Mark your calendars, as Aramco (known modestly as “potentially the largest IPO in History”) is set to begin trading on the Saudi stock exchange on 11 December. The Saudi government is expected to officially announce the decision next Sunday, with subscription to the offering looking set to commence on 4 December.
A lot is riding on this IPO, not only for Saudi, but for the rest of the region, who see it as a litmus test for investors. Egyptian officials have said that resumption of Egypt’s privatization program will definitely follow the Aramco IPO. You can catch all the details below in Speed Round.
The date was announced by Al Arabiya during the opening day of the Future Investment Initiative Conference 2019, otherwise known as the “Davos in the Desert,” yesterday in Riyadh. This year’s conference turned out to be a much more fashionable affair than last year’s, including Indian Prime Minister Narendra Modi, White House adviser Jared Kushner, BlackRock CEO Larry Fink, and Goldman Sachs COO John Waldron. Both EFG Hermes CEO Karim Awad and Qalaa Holdings Chief Ahmed Heikal were present as guest speakers. Bloomberg took it upon themselves to explain the who’s who of the conference.
From the conference — Will Brexit kickstart the emergence of new global financial hubs? Awad spoke yesterday in a panel that included the likes of JP Morgan’s global head of investment and corporate banking Carlos Hernandez, the heads of both the Tadawul and the SIngapore stock exchanges, and UK Minister for Investment Graham Stuart. The panel looked at the rise of new global financial centers in the Brexit era and what that means for MENA. Awad stated that there’s room for more markets to take the lead and grow as financial hubs, singling out Saudi Arabia as a rising destination. New regulations & new listings will bring about massive change for Saudi, he added. “Once you start companies from Egypt, UAE or other markets listing in the Saudi Stock Exchange, this will be a very positive step for the market to become a hub,” Awad said. Hernandez agreed with Awad’s assessment that Saudi is on the right track.
Today’s agenda will look at the initiatives that will guide capital market development through the next decade of growth. A host of other interesting panels will look energy innovation, infrastructure investments, and developments on the Red Sea Project For the full program click here.
The ghost of Khashoggi haunts the gathering, says the foreign press: As expected the foreign press ripped into the conference, whose last iteration took place immediately following the backlash of the murder of Saudi journalist Jamal Khashoggi. The Financial Times’s assessment of the matter is that Saudi needs this conference to work. Getting investors into Saudi is a matter of life or death with the economy close to its second recession in three years, but keeping them there is a whole other ballgame. Investors are highly skeptical of the government’s repeated promises to limit involvement in businesses and allow the private sector to grow.
Investment Minister Sahar Nasr was the Sisi administration’s representative. Nasr spoke of women empowerment in emerging countries, and reforms her ministry is working on in Egypt to improve their capacity to participate in the economy, the ministry said in a statement.
The quarter-finals of CIB’s squash championships by the pyramids kicked off yesterday — and so far the semis are 75% Egyptian: Egyptian world no.1 Raneem El Welily went through to the next round after just three minutes when compatriot Nour El Tayeb retired from the game. In the semis El Welily will face Nouran Gohar, who beat the UK’s Sarah-Jane Perry 3:1. In the men’s round, Ali Farag triumphed over Daryl Selby and will face New Zealand’s Paul Coll, who beat Fares Dessouky. The second batch of quarter-final games takes place today, with Karim Abdel Gawad, Marwan El Shorbagy, Nour El Sherbini and Hania El Hamammy all in action.
Another US rate cut almost a dead cert as Fed wraps up November meeting: The Fed’s Open Market Committee will announce later today whether they will push ahead with a third consecutive rate cut. The market is 93.5% certain that we’ll see another 25 bps “insurance cut” by the end of the day, according to CME Group. This would take the Fed Funds rate down to the 1.5%-1.75% range.
There’s unlikely to be consensus though: Blue chip CEOs have been downplaying the possibility of a recession on unexpectedly strong 3Q earnings, which led the S&P 500 to record highs yesterday. The recent optimism may persuade more members to vote against a cut, widening the divisions seen last month when three officials came out against further easing.
What happens next? Market watchers will be paying close attention to Chairman Jay Powell’s post-meeting presser for clues as to whether we may be in for more cuts in the months ahead. For now, the market seems to think the Fed will hit the pause button, with investors giving a one-in-five chance of another cut at the December meeting. The Financial Times and MarketWatch have more.
Lebanese PM Saad Hariri resigns amid protests: Lebanese Prime Minister Saad Hariri stepped down from his position yesterday, acceding to the hundreds of thousands of protesters who have filled the streets demanding his resignation, the Associated Press reports. Hariri, whose departure is likely to fuel further uncertainty, said he had “hit a dead end” in his attempts to find a way out of the crisis. The country’s central bank governor said on Monday that the economy risks imminent catastrophe if a political solution is not found, with banks and many businesses having shut their doors for the past two weeks.
In other global miscellany:
- Congress to hold vote on Trump impeachment: The US House of Representatives will on Thursday hold a vote to decide the timetable for public impeachment hearings against President Donald Trump. Plans would see hearings begin before Thanksgiving, and a vote on whether to impeach the president taking place before Christmas, Democratic Party sources said. (CNN)
- The UK is heading for its third election in four years: Prime Minister Boris Johnson’s proposal for a 12 December election was voted through by MPs yesterday, paving the way for a five-week campaign that many hope will decide the fate of Brexit. (BBC)