March 7 Saudi Chartbook Summary Real Economy: Data for January showed a generally positive picture in economic activity. While cash withdrawals from ATMs and POS transactions fell slightly, month-on-month, the non-oil PMI continued to edge upwards, reaching a 5-month high. Government Finance: In January, the net monthly change to government accounts with SAMA came out negative, falling by SR3 billion. SAMA Foreign Reserve Assets: SAMA FX reserves fell to $5 billion in January, the lowest since August. Looking ahead, any new international sovereign bond issues should alleviate the pressure on FX reserve withdrawals. Bank Lending: Year-on-year growth in bank credit to the private sector reached.8 percent in January, the lowest since February. Annual data for showed that corporate credit growth slowed notably, while growth in consumer credit was nearly flat. Bank Deposits: Total bank deposits edged downward, month-onmonth, in January. This was due to a net decline in private sector deposits, while government deposits rose. For comments and queries please contact: Fahad M. Alturki Chief Economist and Head of Research falturki@jadwa.com Asad Khan Senior Economist rkhan@jadwa.com Rakan Alsheikh Research Associate ralsheikh@jadwa.com Head office: Phone +9 79- Fax +9 93-7988 P.O. Box 77, Riyadh 555 Kingdom of Saudi Arabia www.jadwa.com Jadwa Investment is licensed by the Capital Market Authority to conduct Securities Businesses, license number 3-37. View Jadwa Investment s research archive and sign up to receive future publications: http://www.jadwa.com Inflation: In January, inflation recorded the first negative year-onyear growth since 5, at -. percent, down from.7 percent in December. This represents the first deflationary trend since 5. Oil - Global: Brent and WTI oil prices showed marginal gains monthon-month in February. Prices are currently confined to a tight range around $55 pb. Oil - Regional: Saudi crude oil production was down 5 tbpd month -on-month in January, which totaled more than the promised cut under the OPEC agreement back in November. Exchange Rates: The dollar saw mixed results against major global currencies during February. Stock market: Having traded sideways throughout most of February, TASI saw some modest declines in the last few days of the month. These declines coincided with the launch of the parallel market (NOMU). Volumes: TASI market turnover was down percent month-onmonth in February.
(million tons) (million tons) March 7 Real Economy January cash withdrawals from ATMs and POS transactions fell slightly by SR billion, month-onmonth... Economic data for January showed a generally positive picture in economic activity. While cash withdrawals from ATMs and point-ofsale (POS) transactions fell slightly, month-on-month, the non-oil PMI continued to edge upwards, reaching a 5-month high. Meanwhile, cement sales and production rose slightly, month-onmonth, but remained significantly lower, year-on-year. 9 7 5 3 9 7 Indicators of Consumer Spending (year-on-year change) Point of sale transactions Cash withdrawals from ATMs, RHS 5 35 Jan- Jan-3 Jan- Jan-5 Jan- Jan-7 8 75 7 5 55 5 5 Purchasing Managers Index 5...meanwhile, the non-oil PMI edged upwards to 5.7, the highest since October 5. 55 5 Increasing rate of growth Increasing rate of contraction 5 Jan- Nov- Sep-3 Jul- May-5 Mar- Jan-7 Cement Production, Sales, and Clinker Inventories Cement production and sales edged upward slightly but have remained subdued, year-on-year, mainly owing to slowing demand, with clinker inventories at record highs..5. 5.5 5..5. 3.5 3..5 Sales Production Clinker inventory, RHS. 3 5 7 3 5 5 5
March 7 Government Finance In January, the net monthly change to government accounts with SAMA came out negative, falling by SR3 billion. This decline was mainly due to a net withdrawal from government current deposits. Meanwhile, banks net holdings of government bonds fell for the first time since May 5. Net Change to Government Accounts with SAMA (month-on-month change) 3 Government accounts with SAMA fell by SR3 billion in January...mainly owing to a net withdrawal from government current deposits......while domestic bank holdings of government bonds fell slightly by SR7 million, the first net monthly decline since May 5. 35-5 - -5-9 -5 - Jan-3 Jan- Jan-5 Jan- Jan-7 3 5 5 5-5 - -5 Breakdown of Government Accounts with SAMA (month-on-month change) Government current deposits Allocated deposits for government projects Government reserve - Jan-3 Jan- Jan-5 Jan- Jan-7 Domestic Bank Net Holdings of Government Bonds (month-on-month change) 9 9 - - Jan-3 Jan- Jan-5 Jan- Jan-7
(percent) ($ billion) ($ billion) March 7 SAMA Foreign Reserve Assets SAMA FX reserves fell to $5 billion in January, the lowest since August. In month-on-month terms, reserves fell by $.9 billion, representing the fastest monthly decline in thirteen months. Looking ahead, any new international sovereign bond issues should alleviate the pressure on FX reserve withdrawals. SAMA Total Foreign Reserve Assets SAMA FX reserves fell to $5 billion in January, the lowest since August. 7 8 7 5 3 Foreign securities Bank deposits Gold, SDR and position in the IMF Jan-7 Jan-9 Jan- Jan-3 Jan-5 Jan-7 SAMA Foreign Reserve Assets (month-on-month change) In monthly terms, this represents the fastest decline since December 5. 5 - -7-3 -9 Monthly change -5 Monthly change smoothed (three-month moving average) Jan- Jan-3 Jan- Jan-5 Jan- Jan-7 Breakdown of FX Reserve Assets (percent of total FX reserves) A breakdown of FX reserve assets shows a rebounding share of foreign securities, which was caused by a faster pace of withdrawals from deposits with banks abroad. 9 Bank deposits Foreign securities 8 7 5 3 Jan-7 Jan-9 Jan- Jan-3 Jan-5 Jan-7
Commerce Manufacturing Agriculture & fishing Electricity & water Construction Mining Finance Transport & Comm. Services (percent) (percent) March 7 Bank Lending Year-on-year growth in bank credit to the private sector reached.8 percent in January, the lowest since February. However, in month-on-month terms, bank credit edged upwards rising by.3 percent. Meanwhile, annual data for showed that corporate credit growth slowed notably, while growth in consumer credit was nearly flat. Bank Credit to the Private Sector January bank credit to the private sector slowed to.8 percent, year-on-year. 3 - - Month-on-month change Year-on-year change - RHS -3 Jan- Jan-5 Jan- Jan-7 Contribution to Private Sector Credit Growth by Type 8 8 Full-year data showed a notable year-on-year slowdown in corporate credit from. percent in 5 to.3 percent in. All corporate sectors, with the exception of manufacturing, received less credit compared to 5. 8 8-3 3 - Other, ppt Corporations, ppt Consumers, ppt Credit to private sector, %y/y 3 5 Corporate Credit by Activity (net change in credit since start of year) 5 5
(percent) (percent) March 7 Bank Deposits Total bank deposits edged downward, month-on-month, in January. This was due to a net decline in private sector deposits, while government deposits rose. The combination of falling deposits and rising credit has led to an increase in the loan-to-deposit ratio, from 8. percent in December to 87.3 percent in January, representing the first rise in five months. Total Bank Deposits January total bank deposits fell by SR.7 billion, month -on-month 8 - - month-on-month year-on-year (RHS) - - Jan Jan 5 Jan Jan 7 Bank Deposits by Institution (month-on-month change) -8...mainly owing to a net monthly decline in private sector deposits (-SR.7 billion). - - Other deposits Total private sector deposits - Total government deposits Jan Jan 5 Jan Jan 7 95 Loan-to-Deposit Ratio The loan-to-deposit ratio rose for the first time in five months to reach 87.3 percent in January. 9 85 8 75 Jan 9 Jan Jan 3 Jan 5 Jan 7
(percent) (percent) (percent) March 7 Inflation Inflation reached -. percent in January, representing the first deflationary trend since 5... In January, inflation recorded the first negative year-on-year growth since 5, at -. percent, down from.7 percent in December. This deflationary trend is mainly attributed to a higher base effect, as the impact of last year s energy price hike dropped out of calculations in January 7. Moreover, prices of foodstuffs continued to trend lower, year-on-year, pulling down overall inflation. 8 7 5 3 - Inflation (year-on-year change) - Jan-5 Jan-8 Jan- Jan- Jan-7 mainly owing to a higher base as last year s energy prices hikes dropped out of calculations in January 7..5 3.5.5.5.5 -.5 Contribution to Inflation by Main Components Other sub-groups contribution (ppt) Food & beverages contribution (ppt) Transport contribution (ppt) Housing and utilities contribution in (ppt) General Index, % y/y -.5 Jan- Jul- Jan-5 Jul-5 Jan- Jul- Jan-7 Domestic Food Inflation The deflationary trend in prices of foodstuffs continued for the sixth consecutive month to reach -. percent, pulling down overall inflation.. month-on-month 3. year-on-year (RHS). -. - -. - -. -3 -. - -.8-5 Jan-5 Jul-5 Jan- Jul- Jan-7 7
(million barrels) (million barrels per day) ($ per barrel) March 7 Oil - Global Brent (up.5 percent) and WTI (.7 percent) showed marginal gains month-on-month in February. Prices are currently confined to a tight range around $55 per barrel, but whilst OPEC adherence to cuts is lifting sentiment, rising US production and record commercial crude inventories are adding to downside pressures. Brent oil prices remained around the $55 pb mark 7 5 Oil Prices Brent WTI OPEC basket 3 Feb-5 Aug-5 Feb- Aug- Feb-7 3 OPEC Production (secondary sources: January 7) 33...as OPEC adherence to cuts added to upward pressure 3 3 3 9 Jan-5 Jul-5 Jan- Jul- Jan-7 55 5 US Commercial Crude Oil Stocks (million barrels)...but record US crude oil inventories simultaneously weighed on the downside to oil prices. 5 35 3 5 Feb- Feb- Feb-8 Feb- Feb- 8
3 5 7 8 9 3 5 (million barrels per day) (million barrels per day) (million barrels per day) March 7 Oil - Regional Saudi crude oil production was down 5 thousand barrels per day month-on-month in January, which totaled more than the promised cut under the OPEC agreement back in November. That said, Libyan production has rebounded sharply in recent months and poses a threat to targeted cuts from within OPEC..7 Saudi Crude Oil Production (secondary sources: January 7) Saudi production declined sharply in January, as the Kingdom set about complying to OPEC cuts..5.3. That said, OPEC s efforts to curb production could be undermined by Libya, where oil production is expected to nearly double by August, according to statements from the board of Libya s National Oil Corporation. 9.9 9.7 9.5 Jan-5 Jul-5 Jan- Jul- Jan-7.7..5..3.. Libyan Crude Oil Production (secondary sources: January 7). Jan-5 Jul-5 Jan- Jul- Jan-7 8 Saudi Crude Oil Exports (annual average) Meanwhile, latest available data shows Saudi crude oil exports averaged 7.8 mbpd in, marginally lower than the recent record in 3. 7.5 7.5 5.5 5 9
(Euro/US Dollar) Mexico S. Africa Russia Argentina S. Korea India Thailand Brazil Japan Indonesia China Chile Malaysia Philippines Canada Hungary UK Euro Poland Sweden (percent change against $) March 7 Exchange Rates The dollar saw mixed results against major global currencies during February despite the US Federal Reserve (Fed) recently stating that another interest rate rise is likely very soon. Nevertheless, investors seemed to be cautious over the dollar ahead of the US President s planned speech outlining future spending plans. Monthly Gain/Loss Against US Dollar The dollar saw mixed results against major currencies - - Euro/US Dollar....with the dollar gaining against the euro only because of increased risk of uncertainty attached to forthcoming French elections..5..5 Meanwhile, the US dollar/ Saudi riyal one year forward rate continued to trend downwards. Feb-5 Aug-5 Feb- Aug- Feb-7 US Dollar/Riyal One Year Forward Rate (USD/Saudi riyal peg = 3.75) 3.8 3.85 3.8 3.83 3.8 3.8 3.8 3.79 3.78 3.77 3.7 3.75 3.7 Feb-5 Aug-5 Feb- Aug- Feb-7
US Bahrain MSCI EM Brazil China Germany UK Turkey Qatar Abu Dhabi Oman Dubai Kuwait TASI Egypt (percent) (Index) (SR million) March 7 Stock Market Having traded sideways throughout most of February, TASI saw some modest declines in the last few days of the month. These declines coincided with the launch of the parallel market (NOMU). NOMU is expected to improve small and medium-sized companies' access to capital whilst exposing them to market disciplines, albeit with lighter listing rules and disclosure requirements than TASI. TASI The TASI was broadly flat throughout February although some modest declines were seen towards the end of the month, 9, 8,8 8, 7, 7,, 5,8 5, Feb-5 Aug-5 Feb- Aug- Feb-7 Parallel Market (NOMU) (daily index & traded volumes),, 5,98 Index Traded volumes (RHS) 3 5...which coincided with the launch of the parallel market (NOMU). 5,9 5,9 5,9 5,9 5 5,88 5,8 5 5,8 -Feb-7 7-Feb-7 8-Feb-7 Comparative Stock Market Performance (month-on-month change) As result of the declines, TASI s performance was amongst the worst in a month where most global indices only saw limited rises. - - -
Div. Fin. Real Est. Mgmt Utilities Health Care Food & Bev. Capital Goods Con. Durables Food & Staples Retail Materials Insurance Telecoms Energy Transport Com. & Prof Svc Pharma Con. Svc Banks Insurance Materials Banks Capital Goods Real Est. Mgmt REITs Food & Bev. Energy Con. Svc Con. Durables Telecoms Transport Utilities Food & Staples Retail Media Health Care Com. & Prof Svc Div. Fin. Pharma March 7 Volumes More cautious trading saw TASI market turnover was down percent month-on-month in February, a second consecutive monthly decline. Looking at the month ahead, no major scheduled economic or industry level announcements will mean exogenous factors, such oil prices, are likely to determine TASI turnover. Daily Average Stock Market Turnover Traded volumes were down percent month-on-month in February 8 Feb-3 Feb- Feb-5 Feb- Feb-7 Turnover by Sector (daily average)...with declines seen across most sectors..8... February Year-to-date Meanwhile, all but three sector s price to earnings (PE) were in-line with overall TASI levels. 8 Price to Earnings by Sector TASI PE
March 7 Key Data 3 5 E 7F 8F Nominal GDP,97,5,7,8,83,,399,39,89 ($ billion) 57 7 73 77 75 5 7 75 (% change).8 7. 9.9.5.3-3.8 -.9..8 Real GDP (% change) Oil -.. 5. -.. 5.7 3. -.3.7 Non-oil private sector 9.7 8..5.9 5.5 3.... Government 7. 8. 5.3 5. 3.7.7.5.. Total.8. 5.7.7 3.7....8 Oil indicators (average) Brent ($/b) 79.8.. 9. 99. 5. 3. 5.5.8 Saudi ($/b) 77.5 3.9.. 95.7 9.. 5.5 5.8 Production (million b/d) 8. 9.3 9.8 9. 9.7....5 Budgetary indicators Government revenue 7,8,7,5, 58 78 9 Government expenditure 5 87 873 97, 978 93 89 98 Budget balance 88 9 37 8 - -3 - - - (% GDP).. 3.. -.3 -.8 -.8 -. -. Gross public debt 7 35 99 37 33 8 (% GDP) 8.5 5. 3... 5.8 3...3 Monetary indicators (average) Inflation (% change) 3.8 3.7.9 3.5.7. 3.5..7 SAMA base lending rate (%, year end)........5 3. External trade indicators ($ billion) Oil export revenues 5 38 337 3 85 57 3 8 88 Total export revenues 5 35 388 37 3 8 3 Imports 97 53 58 59 5 7 Trade balance 5 5 7 3 8 3 7 9 Current account balance 7 59 5 35 7-57 -5 - (% GDP).7 3.7. 8. 9.8-8.7-8. -.7.8 Official reserve assets 5 5 57 7 73 53 3 3 Social and demographic indicators Population (million) 7. 8. 8.9 9. 3.3 3. 3.7 3. 33. Saudi unemployment (5+, %).5...7.7.5... GDP per capita ($) 9, 3,7 5,7 5,3,9,,5,7,737 Sources: Jadwa Investment forecasts for 7, and 8. Saudi Arabian Monetary Authority for GDP, monetary and external trade indicators. Ministry of Finance for budgetary indicators. General Authority for Statistics and Jadwa Investment estimates for oil, social and demographic indicators. 3
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