Traders Expect More Volatility; Israel-Hamas Latest | Horizons: Middle East & Africa 08/12/2024
This is a rise in the Middle East and Africa. Our top stories this morning. Asian stocks start the week in the green as investors await a US inflation print that could be the key to the next Fed rate decision. Israel says a deadly strike on a school in Gaza city was aimed at Hamas command and control center. Hamas, meanwhile, is calling on mediators to come up with an implementation plan instead of more cease fire talks.
Plus, we discuss the challenges in Saudi Arabia facing and its ambitions to become a top global tourist destination. Stay tuned for this week's Mideast Money segment. Well, it's just gone eight I'm m across the Emirates. I've lived in dubai in such amount of asset. Welcome to a new week. It really was quite a wild ride last week.
Lots of volatility. So the question is, does that volatility continue this week? As I say, we've got economic data out of the US to watch out for, especially that CPI print. On Wednesday, traders braced for volatility, but we've also got key data coming out of the UK crucial for the Bank of England's decision on when to cut rates again. And on the earnings front, we get UBS results on Wednesday. So we'll have full coverage of all of that for you throughout the week. But let's just check in on how markets
are faring at the moment. You've got futures pretty flat stateside pointing higher in Europe. Treasuries closed currently because of the holiday in Japan. So we look to the futures picture unchanged at the moment. And Brent, just shy of $80 a barrel as we keep an eye on the geopolitical situation. But if we dive a little deeper into the US macro picture and thinking about whether we're actually going to get an emergency cut out of the Fed, that was a question last week off the back of that OECD data.
But if you look at the pricing for the meetings for the rest of the year, actually you can see that that is not what's expected. Traders do see a good chance of a jumbo cut, though, for September. That's 50% priced. Notably. We're going to discuss all of this more in a moment with NOMURA'S Gareth Nicholson. But first, let's dive a little deeper into what's happening in Asian markets. April, hang on. Standby for us in Singapore.
April, what's happening where you are? Yeah. Year we're seeing Asia stocks gaining ground for a second session and it looks like a semblance of calm is falling into markets after last week. As you say, it was a wild one. We saw that heavy selling at the start
of the week and then a rebound towards the end. We are seeing Japan markets close today, so that might help to cap some of the volatility we might be seeing in the space in terms of the dollar yen. But we are also keeping a close watch, not just out of data from the US this week or the UK, but Japan as well is set to release Q2 GDP numbers.
We could see a return to growth after it slipped in the first quarter and it's something that could reinforce in a way that hawkish stance that we got from the Bank of Japan not so long ago. And in terms of some of the sectors we're keeping an eye on as well are the stocks that are tied to the narrative. Taiex is the one that's outperforming. This is, of course, after TSMC sales for July showed a surge, Lizzie. All right. April Hong in Singapore, we thank you. I like this calm to start the week. But let's look ahead now to the data that we're getting on Wednesday out of the US CPI. Of course, we've been digesting, as you
say, overall this wild week of swings that brought the VIX to levels not seen since the height of the pandemic. The Fed governor, Michelle Bowman, says that while, quote, inflation is still uncomfortably above the committee's 2% goal, she remains cautious. And meanwhile, the former Treasury secretary, Larry Summers, says that any emergency Fed rate cut would be unwarranted. As stocks eased following a global sell
off. I think an emergency response would be lurching, panicked, overheated and counter-productive. On current facts, which doesn't mean that the Fed shouldn't be watching very closely. So let's discuss further with our first
guest this morning, Gareth Nicholson, Nomura International Wealth Management CEO and Managed Investments Head. Welcome to the program, Gareth. You heard Larry Summers there. He says an emergency cut would be unwarranted. Do you agree? I don't really want to disagree with Larry Summers here.
He is an expert. But, you know, the facts point to the similar sort of thing, Lizzie, you have. The last time we had emergency rate cuts, three in a row was 2001. It was the dotcom era kind of recession. That's when we had 50, 50, 53 consecutive cuts.
You know, even the GFC, we had two jumbo cuts, 5050, then 25. I mean, beginning of last week, the middle of last week, we had, you know, rate expectations. Suddenly between those two in the market doesn't feel like we're somewhere between the 2001 recession and the great financial crisis. We think a jumbo rate cut here would be
overdone. We think the market is much more aligned with three consecutive 25 rate cuts. That still shows that's the direction of the Fed is still dovish. It shows that they're looking to support the economy. They are correct scoring, but this isn't an emergency yet. So let's say that the Fed doesn't make
an emergency cut. It doesn't make a jumbo cut, but the cuts that are priced happen. Does it actually have a potential to lead to more turbulence in the market than actually saving the market, given the volatility that we've already seen? How worried are you about that sort of scenario? Well, I think it's going to be the case very much like we had before this this big panic last week was if we have an extended period of stability, then it breeds instability.
Traders get edgy. They start looking for any small little effect to that change. Be honest. What changed last week was really the BOJ and the labor markets being a bit weaker than most expected. If we now have a number of prints that people are watching closely going into September, which we do, we think the market is going to be a little bit more on edge.
But at the same time, not look to not look to do a knee-jerk reaction. So we think there's going to be volatility, but it's going be a much more measured pace where the Fed is pricing in a slowdown and the market will come to that fact as well and not expect a huge recession. And so amid all of this, where are the havens for you? For the havens? Well, I think that's where we're looking now at which is which areas are going to be able to withstand, you know, a slightly stronger yen, for instance, a weaker dollar, places where you're going to see interest rates start cutting at a gradual pace. So for us, some of the places that we
have worries about would be credit. We still think credit is going to feel some pain places that we like. We're starting to see value again in Japan. I mean, we do believe that buying the
dip in Japan, this crash was overdone. And there's a number of factors supporting getting it to Japanese equity. You've seen a lot of local investors that were investing abroad, taking that money out, now, looking at spending their tax incentive investment plans back at home. We're seeing a lot of investors that missed their initial boats in Japan looking at the headlines and saying, well, you know, the earnings earnings are pretty strong, everything, but retail sales were actually up. So there is still a case for Japan, we think, as a diversifier out of a huge overweight in us. That is a nice play alongside places like India, which again has long term tailwinds. And of course, here in the Middle East,
we're thinking about the geopolitical tensions rumbling on in the background. How much does that create a risk off mood to you? Well, I think particularly given that people 1 to 1, they're building up their portfolio. Yes. It's nice to have the equity risk and it pays off over the long term.
We still want to have that income. And that's why a lot of Middle East clients have had a lot of deposits, a lot of cash. Having that stability at five, five and a half percent.
But with rates coming down, we think a lot of those investors are going to still want that that income. They still want that stability given the uncertainty in the region and globally. And we'll start moving into fixed income, we think ten years at its near 4%, five years is even more attractive. But locking in some income for 5 to 10 years at these attractive rates is very attractive. And we've seen a lot of our Middle East clients move in that way. Okay.
Really interesting. Just finally, Gareth, I know you've been looking at the UK recently. We've had the Bank of England finally cutting rates, a bit of relative political stability. Is it time to start buying UK equities? I think you become exciting again, as you said. The the politics seems to be a lot more
clear than maybe in the US and in Europe. We think there is a big job ahead, but they have made big steps to move in that direction. And when people are looking for a traditional safe haven, the UK over the very long term has been that and we think there will be money leaving the US.
There will be money not going back into Europe and Japan and potentially the under way that many of us have had with regards to the UK will get full. So yes, we think there's definitely flow to go to the UK. Okay, really interesting. Gareth Nicholson with an optimistic view on the UK. We thank you. That's Gareth Nicholson, Nomura International Wealth Management, CIO and Managed Investment Head. Now we have had some breaking earnings across the terminal. This is from Ap-norc.
The Abu Dhabi based oil and gas company. Of course, they have announced that for the second quarter, EBITDA was up 18% year on year at 2.0, $9 billion for second quarter revenue. That came in at $6 billion.
So a real beat on the estimate of .15 billion. Second quarter net income, .19 billion, that's up 21% year on year. And they have proposed an 8.1 fils, a share dividend for the first half. So those are the latest results from Adnoc.
And we're going to be speaking to the CFO of Adnoc, Peter Von Drehle about those numbers at 8:40 a.m. just clarifying that the second quarter revenue was $6.08 billion. That's up 13% year on year. We'll break it all down with Peter later in the program. This is Bloomberg. Welcome back to Horizon's Middle East and Africa.
I'm Lizzie Bowden in Dubai. Now new polling by The New York Times suggests that US Vice President Kamala Harris has opened a narrow lead on the Republican opponent, Donald Trump, in three battleground states. For more, let's bring in Bloomberg's Derek Wallbank. Now, Derek, this polling is really interesting.
You've got Kamala Harris leading Trump in three swing states and yet Trump more trusted on the economy. How much do you read into these polling results? Well, Lizzie, I tell you what I'm looking at as I'm looking at trend lines, and this is the best poll among like the top ranked pollsters in the United States that we've seen for Kamala Harris yet since she's become the prospective Democratic nominee. Right. You've got these three key battleground state states of Wisconsin, Pennsylvania and Michigan, states I know very, very well. And realistically, the simple math is this In that election, if a Democratic nominee wins, those three states, keeps all of the rest of the states that they're expected to win otherwise.
That's it. That's the ballgame. Right. So that is a full path to the White House. And Harris is opening up a small lead, according to that survey. Now, I've seen others that suggest that the race may be closer to tied. So, you know, and we've got a long time between now and then. So all of the appropriate skepticism.
But it does suggest, Lizzie, that the US presidential race is in a very different place than it was this time three or four weeks ago. Right. Kamala Harris has breathed in a different life into the campaign. She's knocked Donald Trump a little bit off guard. He hasn't really had this same ability to kind of go at her the way that he did at Joe Biden. His numbers have slipped down. You're seeing that Harris, in some
surveys is outpacing Trump in terms of who voters trust with the economy. You're seeing an increase in fundraising. The rollout of Tim Walz as the VP pick has been far more positively received by voters than the rollout of J.D. Vance as the Republican pick.
All in all, it's been a very good three weeks for Harris. Now, will it stay that way? No. There will be trips coming up. There will be, you know, stumbles, I'm
sure, and uncertain events coming up. But so far, this rollout has gone probably about as well as Kamala Harris could have expected it. And you see this actually in market things as well, including prediction markets, but also a little bit of an ease off in the Trump trade over the last month and month or so. Yeah, indeed. And we're just showing it there on the screen how Harris is actually doing better than Biden ever did when it comes to betting odds of winning this election. But let's think about how it turned into
dollars. The fundraising picture, of course, Harris, has been on this critical campaign stretch with her newly announced running mate. How is that going? How is she doing in comparison to Donald Trump in terms of fundraising? Well, it's interesting you asked that because Donald Trump was doing quite well in fundraising compared to Joe Biden. And again, you know, let's look at these trend analysis. Joe Biden's money was drying up. Top fundraisers had said that they were
going to hold off until he made a decision to exit the race. He does that. Harris jumps in and she records some of the best fundraising totals day on day of the cycle so far.
Now she goes off on this fundraising swing and swing state rally swing. They've seen crowds that are larger than Joe Biden was getting. She just had somewhere around a 2 million event in San Francisco in her home area. And all of that is to say is that you're going to be looking at this Democratic campaign with resources that it wouldn't have had had Joe Biden been the nominee, because Harris went out and put somewhere in the order of 200 million plus dollars into this campaign in the last couple of weeks. That is a lot of money. And she's going to have the resources she needs to do kind of whatever she wants over the next 90 days of this campaign. And that's really the critical thing. Do you have the tools to do the job you
want to do? She does at this point. Okay. Really interesting because Derek Wallbank, we thank you as we look ahead to a debate. Well, an interview, in fact, on X by Elon Musk of Donald Trump later today. But good to talk to you, Derek. Now I want to go from the politics to the geopolitics right here in the Middle East.
Israel's military says a deadly strike on a school in Gaza that drew international condemnation was aimed at a Hamas command and control center. Hamas authorities in Gaza estimates that 100 people were killed in Saturday's missile attack, but the figures couldn't be independently verified. So let's get more now from our reporter in Jerusalem, Don Williams. Don, has the international response to this strike, given Israel pause? I'm not sure it has. This is just another fiercely disputed
event in a war that's now over ten months old. And Israel was quite fast to come out with what it saw as arguments rebutting the allegations that this was a civilian targets. A high casualty event among civilians. Israel says the target was, in fact, a
command center for Hamas and Islamic Jihad, ensconced within what was meant to be a civilian site, a site for displaced Palestinians. It actually named what it said were 19 dead operatives of those two groups. It also says another leader of Islamic Jihad is believed to have been there, presumably yet to be confirmed, to be among the casualties. It also says that the numbers cited by authorities in Gaza for the number of dead is inconsistent with the munitions it used.
It said it used three precision bombs on a specific part of this complex. And it doesn't seem to have been especially fazed by this criticism, criticism that actually went as high up as the US vice president's senior aide, national security adviser. He wasn't really critical, but he did repeat caution Israel to avoid civilian casualties. So certainly this event has already affected the the the nominee for the Democratic Party and potentially the next president of the United States. All right, Dan Williams in Jerusalem, we thank you for bringing us the latest on the situation there. Now for a look at some of the other
stories that we're following this morning. Ukraine's president says that Russian troops have started to fire at an occupied nuclear power plant, calling on the world and the International Atomic Energy Agency to react. Vladimir Zelensky said in a post on late on Sunday that radiation levels were within a normal range. Earlier, Zelensky called on allies to allow Kiev to strike deep within Russian territory as Moscow hit back with missile strikes following last week's cross-border incursion by Ukrainian forces.
Well, coming up on the program, we're going to focus on Ghana's growth. As Africa's top gold producer opens a new refinery to reap value from its natural resources. Bring you that conversation next. This back. Welcome back to Horizon's Middle East and Africa. I'm Lizzy Burton in Dubai. Now Africa's biggest gold producer,
Ghana, has opened a new refinery plant. The West African nation aims to refine 400 kilograms of gold a day, sourcing the raw material mainly from small scale mines. The government holds a 20% stake in the public private partnership with RUSI, Royal Minerals of India. And we get more now from Bloomberg's on Darya Ganga, who joins us from Kigali, Ontario. Good morning. What's the likely upside of this new development? Lizzie, a couple of things stand out from this deal. One of them being it'll be easier for the central bank to search for gold.
Initially, they had to buy it from outside. But this deal brings refined gold right to their doorstep, which will make it easier for them to build up their gold reserves to be able to show up there. Another added advantage is we have to remember that Ghana is among the top ten gold producers in the world. So by adding value, they'll be able to tap into that market that they had not tapped into before and bigger benefits. But at the core of this deal is formalisation of artisanal mining, which accounts for about a third of the total gold output, but is marred by irregularities such as illegal mining. So by formalizing it, they're offering them a ready market. And also the central bank has been doing
this for quite a while. Since 20 1020, they've bought gold worth $5 billion. Important to note, though, long shot, they're looking to get certified by the London Bullion Market Association.
But there are a couple of issues that they'll have to address in the value chain, including child labour. Okay. So really interesting that you mentioned the currency, because gold could also be used as an anchor for the local currency if the vice president wins the election. So just tell us more about the. I like that to put if there. This is a statement that was said during the campaign trail politicians of a promise and then deliver when their times come.
But it's also important to note that the Ghanaian currency has gone through a lot. At the peak of the tumble, it lost 60% of its value. Inflation was at 54%. And even though things have cooled down, the currency this year has lost nearly 23% of its value, affecting the cost of basic goods and services. And so if president or rather vice President Bawumia becomes president during the general elections that will be held in December, then Ghana will be joining countries like Zimbabwe that recently transitioned to the gift of a currency, lost 80% of its value. All right, Dear Ganga, we thank you for bringing us that story. Now for another look at some of the
other stories we're following this morning. Zambia has temporarily shut the borders with the Democratic Republic of Congo and a move that may delay copper exports from Africa's biggest producer. The state broadcaster, Z. NBC says that the move follows protests across the DRC over the government's decision to ban certain beverage imports from Zambia. Most of Congo's copper travels through Zambia to reach regional ports. While just checking in on these markets.
We have futures stateside, pretty flat, actually. But for Nasdaq futures ever so slightly higher, 10/10 of a percent higher. But here in the European picture. Futures pointing higher by half of a percent. Relatively quiet compared to last week as things stand. But that may not hold when we get more
of the data out this week. We've got US CPI on Wednesday. We've got a raft of new data and of course, we'll bring you full coverage of all of that throughout the week. But right here on the program next, we're going to be discussing Saudi Arabia's ambitions to become a top tourism destination. And Mandy writer joins us next in her capacity as advisor to the CEO of Saudi Tourism.
We'll bring you that conversation next. Big ambitions. Do they have the connectivity to back them up? Stay with us. This is Bloomberg. This is Horizon's Middle East and Africa. Our top stories this morning. Asian stocks start the week in the green as investors await a US inflation print that could be the key to the next Fed rate decision. Israel says a deadly strike on a school
in Gaza City was aimed at Hamas command and control center. Hamas, meanwhile, is calling on mediators to come up with an implementation plan instead of more cease fire talks. Plus, we discuss the challenges Saudi Arabia faces in its ambitions to become a top global tourist destination. Stay tuned for this week's Mideast Money segment. It's just gone. 8:30 a.m. across the Emirates. Welcome to the program as ever. And in Dubai.
Well, it was a wild week last week for markets. Does that volatility continue this week? You're looking at a pretty calm picture in markets at the moment. At the moment. But after the CPI print out of the US on Wednesday, you are looking at potentially even more volatility this week. We'll also get key data out of the U.K., which will be crucial, of course, for
the Bank of England in deciding when it's going to cut rates again. And on the earnings front, we're not done yet. We'll have results from UBS on Wednesday. So we'll have full coverage of all of that throughout the week.
But as things stand, you've got US futures flat currently. European futures pointing to a higher opening when we get there. You have treasuries and the futures picture pretty flat as well. And Brent trading just shy of $80 a barrel. As we await those reports from OPEC and the IEA and traders digest the geopolitical tensions, just looking to the chart there currently. You can see that we've had lots of questions about whether the Fed's going to do an emergency rate cut, a jumbo rate cut. We were discussing this with Gareth
Nicholson earlier. But markets aren't pricing any intermeeting cuts. You can see this here. They can you looking at the number of cuts price for the two months without Fed meetings. This is August and October. What markets do see, though, is a good chance of a jump for September. So that's 50% priced. And we will see whether this picture
changes after the eco data that we get this week. But let's check in now on how markets are faring in Asia. Avril Hong is on stand by for us in Singapore. April, what's happening where you are? Now it's another game for Asia. Stocks following on from already the rebound that we saw late last week. And this is as markets look forward to this week for U.S.
data, but perhaps more importantly for the Asia-Pacific, how we see Q2, GDP in Japan and whether we get that pick up, as is the consensus from economists. Remember, Japan's economy slipped into contraction in the first quarter. So all eyes will be on whether the data kind of vindicates the BOJ's hawkish rate hike. And we are also seeing the Taiwan markets coming under a lot of focus. The rebound that you're seeing today is
led by the benchmark heavyweights such as Hon Hai and TSMC. TSMC is doing well because of that sales surge from July. But for the likes of Hon Hai, as we expect its earnings to show in benefiting from that boom. So these are some of the stocks they
were watching in Taiwan as well. Busy. All right, April Hong and Singapore, we thank you for that update. Now let's come back to the Middle East. Saudi Arabia has announced new business regulations aimed at boosting transparency and easing the process of investing in the kingdom. The Ministry of Investment says that the updated investment law enhances investor rights by guaranteeing the rule of law, fair treatment and the freedom to transfer funds without delay.
The kingdom has taken several steps in recent years to attract foreign business as it looks to bring in more than 00 billion in foreign direct investment a year by 2030. So that's FDI. But Saudi Arabia is also betting on tourism as part of a wider strategy to transform the economy. The kingdom is looking to attract around 150 million tourists a year by 2030, with almost half to come from overseas.
It's a steep climb from the 27 million foreign arrivals in 2023, But if achieved, these lofty ambitions would catapult Saudi to the top of the rankings for the most visited nation globally. By comparison, France closed in on 100 million tourists in 2023. And while Saudi Arabia ploughs on with its plans, the question really is will the tourists come? So who better to discuss than Anita and Ben de Rato, Special Advisor to the Secretary-General at the United Nations, Tourism and Special Advisor to the CEO of Saudi Tourism? Anita, lovely to have you with me. We're really familiar with Saudi's ambitions when it comes to tourism. As I say, the question is whether those tourists are going to come and part of the challenge is connectivity. How big an issue do you think is getting around the country? It's a great challenge. And Lizzy, thank you for having me and
thank you for putting this in the spotlight. I think importantly and just rewinding slightly, when you mentioned the ambitions of Saudi to have 150 million tourists by 2030, we need to keep in mind their original ambition as part of Vision 2030 was 100 million. They reached that last year. They actually went to 106.
So seven years ahead of schedule, they've actually achieved their Vision 2030 target and they've done that through especially interconnectivity. Now the interconnectivity is by air, it's by land, it's by sea with cruise and it's by rail. It's also interconnectivity psychologically and making sure that there's an invitation to the world for everyone to actually come and visit. They're investing heavily. They're making sure that especially air connectivity is happening at a step change level, both in terms of international interconnectivity and domestic to make sure that people can travel easily within the kingdom itself. And very much focusing not just on the usual international destinations for connections, but the GCC, which is the dominant amount of the travelers that actually come to the kingdom. So it's a fast pace of change.
But of course, this is a competition. You're competing with destinations like the Maldives. I could go there and it's hot and it's easy to get around. How do you beat the competition?
By being smart, by being united, and by having leadership excellence. And that's where I can genuinely say I've had the blessing of working with Saudi since 2018, just a year before they opened up to the world. And that was in an advisory board role within Al-ula, which is one of the bigger projects of Vision 2030. And since the beginning they have been
very focused. Yes, investing in the hardware that Giga projects, accommodation, airports, airlines, but also the software and human capital development, because they want to make sure that visitors to the kingdom are enjoying international standards. But Saudi style and the CEO of Saudi Tourism, Fahad Hamida Deen, is always very clear in making sure that people understand it's Saudi tourism development for the better of the Saudis, not just for the better of the tourism experience. And that means the Saudi community being proud to be hosts, being a part of the tourism economy and feeling that they are shaping their future through tourism development aligned to Vision 2030. So it's a call to action for all Saudis to participate in this sector, and it's a call to leadership for all people in tourism.
And they're answering that call with fortitude, with focus, and absolutely with unity towards Vision 2030. So how do you see the split of foreign and local tourists weighing up in the years to come? You've made something very, very important, I think. You're a tourism practitioner underneath being a great global broadcaster. Every every destination around the world focuses on international tourists.
Absolutely. But international tourists, yes, they are important in terms of revenues and arrivals and international reputation. But domestic and regional tourist is always the backbone because that's where you need to get repeat visitation, dispersion around the destination and ultimately making sure that you have a tourism economy. That's year round, not that's only focused on holiday periods. Otherwise you're actually institutionalizing seasonality and institutions institutionalizing labour challenges. So what Saudi is doing is focusing on making sure that the Saudis feel very much welcome to explore their own country.
Likewise, people of the region. So when they reached 106 million, so again, exceeding that vision 2030 target seven years in advance, they did that not just by 106 million international, 80% were domestic and regional tourists. And they celebrate those tourists as much as they celebrate the international. And that is important for any smart destination to really build a solid tourism economy. I just want to come back to this question of connectivity, because it's really going to make or break Saudi tourism goals. When you're you have the insight that you do.
Anita And you're so close to the leadership here. I wonder what they're prioritizing. Is it hotels? Is it flight paths? Is it big projects? What's the top of the list? Yes and yes and yes.
Two or three questions around what exactly is it? Accommodation must be there. But accommodation doesn't work unless you have accessibility. And that's very much, again, through airports and airlines. We know that Riyadh Air is just been announced. It's coming into the skies in 2025 and it's aiming at 100 million passengers by 2030. So that's going to step change the way in which Saudia, for instance, and the other Saudi aircraft and airlines can be able to support the destination.
But they're also working with regional carriers. So making sure you have the regional hops. But again, very much domestic. So aviation is a fundamental part of the growth strategy of Saudi and they are absolutely making sure that's in place. Importantly, the kingdom is quite unique in that it's focusing on the, dare I say, laozi, the non sexy stuff. So looking at core infrastructure when
it comes to aviation, human capital development, they have the Giga projects and all the all factor initiatives. But when you really look at the foundations of a smart destination, which is a smart visitor economy and therefore a community of citizens that are proud to be hosts, Saudi is doing it the right way. They're creating institutions, universities, the Alula Academy, Centers of Excellence and front frontline training. Again, world class standards, Saudi style. But you mentioned the lingering
perceptions about Saudi Arabia and how that presents an issue. How much is it about changing the image of Saudi Arabia and how much is it about actually changing the culture here? It's both, and they work hand-in-hand. And I think this is where what's important and this is where the kingdom's very understanding and the leadership is very honest and saying the world is watching, the world is looking to see, are we serious? It's there's only so much one can say to convince. Watch the actions. Look at the proof of delivery. Are women involved in the industry? Are they being celebrated? Are they given freedoms? Absolutely.
Again, I joined the kingdom in terms of the advisory board back in 2018. This is when Vision 2030 was just opening up and confidence was not yet there from the world that they were serious. I now go and I'm asked why I'm wearing my abaya. I do so purely because I'm here there in my UN role. And so out of respect, especially to the local communities in Alula, I'll wear my abaya. But the Saudi women who are walking around absolutely gorgeous and all of their international brands proud of who they are and feeling celebrated, recognize this is their time.
You can't have that much consistent transformation if it's not real. This is real. And right now, the world needs inspiration. It needs proof of an environment, a
community of place in the world that is really focusing on the future and wants the world to be a part of it, which is why they're bringing in international investors, international hotel brands, international expats is a reflection of the fact that this is Saudi doing it with the world, not just for Saudi. All right, Anita, Mandy Rata, special adviser to the Secretary-General at the United Nations, tourism and special advisor to the CEO of Saudi Tourism. Lovely to have you on the program with me. Thank you. Well, for more of these stories, looking
into the intersection of wealth and power in the region, do sign up to our Mideast Money newsletter. You'll find it at bloomberg.com slash newsletters. Coming up on this program, Adnoc Gas reports its second quarter earnings. And we're going to speak to the company's CFO on the unit's expansion plans. So that conversation with Peter Von Drehle coming up next. This is Bloomberg.
Welcome back to Horizon's Middle East and Africa. I'm Lizzy Burton in Dubai. Now about gas has reported its earnings this morning. Second quarter net income, almost .2 billion. That's up 21% year on year, driven by
stronger domestic gas growth. Second quarter revenue came in at $6 billion, up 13% year on year. And I'm not Gas's CFO Peter Von Drehle joins me now. Welcome to the program, Peter. Good to have you with me. Want to just talk this morning how you
think the business has been doing in the first half of the year. Yeah, I mean, I can summarize it as a very strong, robust quarter, as you said, $6 billion of revenue. That's the third time in a row profitability. 21% up. And is it always on the back of stronger sales in the U.S., where we see a strong growth of the economy and we benefit from that.
We see an improvement in terms of volumes, but also in terms of margins. Margins were up and the Q on Q by 13%, and that demonstrates that the economy in the UAE is strong, it's growing population growth and up no gas will continue to benefit from that growth. So given that performance, are there plans to list more of the company's shares or perhaps go for a dual listing? Ultimately, I cannot have a clear view on that. I would love it, but it's not my decision. It's the shareholder who has to make this decision.
After all, they are the owner who would, in such a case list their shares. Okay, Well, is Adnoc gas going to continue to focus exclusively on the UAE? Maybe UAE? Maybe you could tell me that? Or are you going to look to participate in other projects overseas? I think for us, it's very important not just to live or secure supply to our customers in UAE, but two thirds of our revenues have come from international sales. Think about LPG, but also LNG, liquefied natural gas. We supply LNG at the moment close to six TPA to destinations around the world, in particular the Far East and Central Asia. Our portfolio is growing and of course you've heard the news that always LNG has taken RFID and we have also been able, I think has been able to announce shareholders to participate in the venture and ultimately ways LNG will be part of our portfolio. That means we will add another 9.6 MTPA
to our LNG export portfolio. So, yes, Lessee, to your question, it is domestic importance, but international sales are equally of great interest to us given that two thirds of our revenue comes from those international sales. Okay. And then how is OP not gas preparing for the end of the current gas supply contract with Qatar by the dolphin pipeline? I've no guess does not have such a contract. We supply 60% of all the gas needs in
the U.S. and I can't comment on what God is doing, to be honest. We are the sole supplier of gas, raw gas that is produced in stock. We process it or we liquefy it and export it. And you want to just talk to me about the broader market dynamics. Global growth versus domestic growth. At the moment, I believe that we are really in a good position where we see growth in the UK economic economy. But equally, if we look in particular to
LNG, we see huge demand for our LNG products. It is not only long term contracts but also short term remains strong. We are well positioned, of course, because we can have our short term cargoes either going to the west of Europe, Germany, for example, or on an opportunistic basis, we can send our cargoes to the east and that can be even the Far East and Central Asia. There are many markets that are upcoming and really start to convert to an import of LNG markets and as we are well located and we make use of that growth in the LNG markets worldwide, we have seen strength in the markets. We have been able to secure of the always LNG the majority of the contracts.
So we're quite comfortable with our energy position. All right. I'm not the CFO. Peter Von Drehle, we thank you for joining us. So just a reminder of those earnings. Out of Abu Dhabi, you had double digit
growth on EBIDTA revenue and net income for the second quarter for ADNOC gas. But a pleasure to speak to you this morning, Peter. Coming up on the program, today marks the start of Dubai's trial of a four day working week. If you're hoping that your whole weekend
might extend, this will be a conversation for you. We'll bring you the details next. This is Glenn Beck. Welcome back to Horizon's Middle East and Africa.
I'm Lizzie Bird in Dubai. Now, if you've just got back to your desk and you're wishing it's still the weekend, here's a story for you. Dubai's four day working week with shorter working hours and Fridays off for public sector employees begins today. 15 government organizations is taking part in the pilot scheme this summer as officials strive to promote better work life balance.
I'm sure we could all do with a bit of that. Let's bring in our Mideast economics reporter, Abeer Abu Omar. I mean, what do we know about who this applies to and when? I know you're here for the next two weeks, but this doesn't apply to us. Yes, it is. This just started today. It commences on August 12 until the 30th of September.
It's a pilot program under our summer. This is what Dubai sort of calls it. And it's one of those packages that really make Dubai, you know, want to be this destination for for all these people that are that are visiting. But some details about this program, it includes the public sector as of now, 15 government organizations. And I remember a couple of years ago when we covered the story about about the UAE changing its weekend. Right. That was a big deal.
This one is not as monumental as the we can change because a lot of government entities already work four and a half days. As you know, Friday is a holy day in Islam. So a lot of government entities break for the Friday prayers and then it's usually half a day. So this just changes the working hours to an official 7 hours per day on Friday while keeping, you know, things flexible for government workers. I mean, I just got here, but with this heat, I can understand why people would want a four day working week. Is it also to attract foreign workers? Exactly. So that's you know, that's one of the
things that Dubai has been trying to do over the past couple of years. This is only one incentive. Right. So we had a few years ago or a couple of years ago, we had the digital nomad visa, for example. We have the golden visas. We have a lot of schemes to attract these people, especially people that can afford to work remotely. So Dubai is trying to cultivate itself as a capital for people that can work anywhere from the world. And this is just a now, I know it starts with the public sector, but, you know, we could potentially see the private sector following suit.
You know, we don't know yet. This is a program that's just for a month and a half almost. We're going to have to see what happens with the public sector afterwards and whether private sector companies follow suit. And then, you know, you don't even have
to look far. Dubai is following. Sharjah only 30 kilometers away. That has the the four day workweek. All right. So this could just be the beginning of
Abu Omar. We thank you for bringing us that story. Well, it has been the last day of the Olympics, the closing ceremony last night in Paris. What a spectacle. The United States at the top of the medal tally. The U.S. winning 126 medals in total, 40 of them gold. But up next, we're going to be taking you to Europe. DAYBREAK Europe's coming up with Tom
Mackenzie. He'll bring you all the latest from London. That's it for Horizon's Middle East and Africa. I'm Lizzie Bird and this is Bloomberg.
2024-08-14 08:01
