June 8 Saudi Chartbook Summary Real Economy: Whilst POS transactions increased 8 percent, the non-oil PMI index declined further. Meanwhile, non-oil exports in March increased by.8 percent year-on-year. Government Finance: The net monthly change to government accounts with SAMA rose by SR7 billion month-on-month in April, mainly coming from a similar rise in government deposits. Q Budget Statement: The latest Q 8 budget performance report by the Ministry of Finance (MoF) showed that the fiscal deficit increased by percent year-on-year, to SR billion. SAMA foreign Reserve Assets: SAMA FX reserves rose by $. billion month-on-month to stand at $. billion in April, marking its largest monthly increase since October. Money Supply: M was almost flat in April, showing its slowest annual rise in five months, by. percent. Among money supply aggregates, currency in circulation (M) showed the highest rise. Bank Deposits: Bank deposits declined by. percent year-on-year in April, mainly due to government deposits, which declined by. percent year-on-year, marking the largest decline in a year. For comments and queries please contact: Fahad M. Alturki Chief Economist and Head of Research falturki@jadwa.com Asad Khan Director rkhan@jadwa.com Nouf N. Alsharif Economist nalsharif@jadwa.com Head office: Phone +9 79- Fax +9 9-7988 P.O. Box 77, Riyadh Kingdom of Saudi Arabia www.jadwa.com Jadwa Investment is licensed by the Capital Market Authority to conduct Securities Businesses, license number -7. View Jadwa Investment s research archive and sign up to receive future publications: http://www.jadwa.com Released: June--8, : UTC+ Interest Rates: Excess liquidity continued to decline in the banking system for the second month in a row in April, likely leading SAIBOR to continue its rise in May, and widening the SAIBOR/LIBOR spread. Inflation: Prices rose in April by. percent year-on-year. Rentals for housing continued to decline, falling. percent year-on-year. Umrah: The number of Umrah visitors from outside the Kingdom increased in 7 to reach. million visitors. Oil-Global: Brent oil rose to above $8 pb at one point during the month, but dropped in the last week of the month following Saudi Arabia and Russia s comments on the possibility of raising oil output. Oil-Regional: Saudi oil production remained unchanged month-onmonth in April, with year-to-date output averaging mbpd. Exchange Rates: Political developments in Italy and capital outflows from emerging market economies, added to the dollar s strength during the month. Stock Market: Profit taking in anticipation of a quieter trading period during Ramadan contributed to a monthly drop in TASI in May, although the index was up strongly on the first day of trading in June. Sectorial performance: Most sectors ended the month with a significant decline, in line with TASI s performance during May. Q Listed Company Results: Q 8 listed company net-income totaled SR. billion resulting in a 7 percent decline year-on-year.
June 8 Real Economy ($ billion) POS transactions increased by 8 percent and ATM withdrawals rose by. percent in April, year-onyear. Economic data for April showed mixed performance. Whilst POS transactions increased by 8 percent and ATM withdrawals rose by. percent, year-on-year, the non-oil PMI index declined further to a new record low. In addition, non-oil exports in March increased by.8 percent year-on-year, marking its lowest yearly rise in six months, following a significant rise in February. - - Indicators of Consumer Spending (year-on-year change) Point of sale transactions Cash withdrawals from ATMs - Apr- Apr- Apr- Apr- Apr-7 Apr-8 Purchasing Managers Index The non-oil PMI index, whilst still in expansionary mode, declined further to a new record low, its lowest in nine years. Increasing rate of growth Increasing rate of contraction In March, non-oil exports increased by.8 percent year-on-year, supported by higher exports in petrochemicals, which rose by percent year-on-year, and metals, which were percent higher year-onyear. Lower growth rates in March seem to be due to a decline in transport equipment exports by 8 percent year-on-year in March. Apr- Feb- Dec- Oct- Aug- Jun-7 Apr-8 Non-oil Exports (year-on-year change) - - - - Mar- Mar- Mar- Mar-7 Mar-8 non-oil exports % change, y/y (RHS)
June 8 Government Finance The net monthly change to government accounts with SAMA rose by SR7 billion month-on-month in April, mainly coming from a similar rise in government deposits with SAMA during the month. At the same time, domestic bank holdings of government bonds increased by SR. billion in April, following a domestic sukuk issuance during the month. Net Change to Government Accounts with SAMA (month-on-month change) The net monthly change to government accounts with SAMA rose by SR7 billion month-on-month in April - - - -8 - - - Apr- Apr- Apr- Apr-7 Apr-8 Breakdown of Government Accounts with SAMA (month-on-month change) Government current deposits Government reserve...mainly coming from a similar rise in government deposits with SAMA during the month. - Domestic bank holdings of government bonds increased by SR. billion in April, following a domestic sukuk issuance during the month. The Ministry of Finance said it raised SR.9 billion from the sale of sukuks in three tranches maturing in five, seven and years. - - Apr- Apr- Apr- Apr-7 Apr-8 Domestic Banks Net Holdings of Government Bonds (month-on-month change) 9 9 - - Apr- Apr- Apr- Apr-7 Apr-8
June 8 Q Budget Statement The latest Q 8 budget performance report by the Ministry of Finance (MoF) showed that due to an increase in year-on-year expenditure, by 8 percent, at a faster rate than revenue, percent, the fiscal deficit increased by percent year-on-year, to SR billion. That said, the first quarter s deficit only accounted for 8 percent of the expected SR9 billion deficit for the whole year. 7 Revenue Q Fiscal Deficit Expenditure The fiscal deficit increased by percent year-on-year, to SR billion. 7 7 Deficit 7 Q Q Q Q Q 7 Q 7 Q 7 Q 7 Q 8 Yearly Change in Government Revenue Non-oil revenue was almost wholly behind the growth in total government revenue, rising by percent year-on -year as a switch to quarterly dividends meant that government oil revenue was up only percent yearon-year, with a part of Q contributions expected to be received in the Q. 8 9 - Tax:goods & services Compensation Social benefits Other Subsidies Other Financing Grants Capital Goods & services Oil revenue Other taxes Institutional taxes Tax: trade Yearly Change in Government Expenditure Expenditure rose as a result of higher Social Benefits related to the Citizen s Account, but also due to a rise in Compensation of Employees, following a royal decree at the start of 8 which compensated civil servants for higher living costs. 7-7
($ billion) June 8 SAMA Foreign Reserve Assets SAMA FX reserves rose by $. billion month-on-month to stand at $. billion in April, marking the largest monthly increase since October. A breakdown of FX reserves shows the recent increase came from monthly rises in foreign securities and bank deposits during the month. SAMA FX reserves rose by $. billion month-onmonth to stand at $. billion in April ($ billion) 8 7 SAMA Total Foreign Reserve Assets Foreign securities Bank deposits Gold, SDR and position in the IMF Apr-8 Apr- Apr- Apr- Apr- Apr-8 7 SAMA Foreign Reserve Assets...marking the largest monthly increase since October. ($ billion) - -7 - -9 Monthly change - Monthly change smoothed (three-month moving average) Apr- Oct- Apr- Oct- Apr-8 Breakdown of SAMA Foreign Reserve Assets (month-on-month change) The recent increase came especially from bank deposits, which saw a rise by $9. billion in April, the largest monthly increase since May. - - Gold, SDR, and position in the IMF Foreign securities Bank deposits - Apr- Apr- Apr- Apr-7 Apr-8
June 8 (SR Thousand) Money Supply Broad measure of money supply (M) was almost flat in April, showing its slowest annual rise in five months, by. percent. Out of all the money supply aggregates (M, M, M, M), currency in circulation (M) showed the highest rise in April, growing by 7 percent year-on-year, marking the highest growth since December. Latest weekly M data shows declining money supply in May. M was almost flat in April, showing the slowest annual rise in five months, by. percent. Out of all the money supply aggregates, the narrowest money supply aggregate (M), which measures currency in circulation, showed the highest rise in April, growing by 7 percent year-on-year. - - - Growth in Money Supply M (month-on-month) M (year-on-year), RHS - - Apr- Apr- Apr-7 Apr-8 - - Money Supply Aggregates and Inflation Rate (year-on-year change) Inflation, RHS M M - - Apr- Apr- Apr- Apr- Apr-7 Apr-8 Growth in Money Supply (week-on-week change) 8 - -8 - - However, latest weekly M data show declining money supply in May. - - - - - M, week-on-week change M (year-on-year), RHS..... -. -. -. -. Mar-8 Apr-8 May-8
June 8 Bank Deposits Bank deposits declined by. percent year-on-year in April, mainly due to government deposits, which declined by. percent year-onyear, marking the largest decline in a year. Meanwhile, private deposits rose by. percent year-on-year, as private time and saving deposits saw the first rise in nine months. Growth in Bank Deposits (year-on-year change) Bank deposits declined by. percent year-on-year in April. The loan to deposit ratio fell to 79 percent, below its 7 average of 8 percent. Total bank deposits Loan/deposits ratio, RHS Bank credit 9 8 8 8-7 - - 7 Apr- Apr- Apr-7 Apr-8 Growth in Commercial Bank Deposits (year-on-year change) Whilst private deposits rose by. percent year-onyear, government deposits declined by. percent year-on-year, marking the largest decline in a year. - Total private sector deposits Total government deposits Total deposits, RHS 8 - - -8 - - Apr- Apr- Apr-7 Apr-8 Breakdown of Private Sector Deposits (year-on-year change) Private saving deposits saw the first rise in nine months, increasing by percent year-on-year in April. We believe that SAMA s repo rate rise by basis points in March has encouraged more savings, especially as more repo rises are expected during the year. - Time & saving deposits Demand deposits 7 - Apr- Apr- Apr-7 Apr-8
June 8 Interest Rates Government deposits were down marginally during April, as an increase in quasi and demand deposits was equaled with a decline in time and saving deposits. Excess liquidity continued to decline in the banking system for the second month in a row in April, likely leading to SAIBOR continuing its rise in May, and widening the SAIBOR/LIBOR spread. Government deposits were down marginally during April, declining by.8 percent year-on-year. Government Deposits with Commercial Banks (month-on-month change) - - - - - - - Apr Oct Apr 7 Oct 7 Apr 8 Quasi deposits Time and savings deposits Demand deposits Excess Liquidity in the Banking System Excess liquidity continued to decline in the banking system for the second month in a row, in April (percent of bank assets) 8 Apr- Apr- Apr-7 Apr-8...likely leading to SAIBOR continuing its rise during May, and widening the SAIBOR/LIBOR spread. Latest Saibor and Libor Rates SAIBOR/LIBOR spread -month SAIBOR -month LIBOR - May-8 May- May- May- May- May-8 8
June 8 Inflation Prices rose in April by. percent year-on-year, but declined by. percent month-on-month. Food and beverages prices rose by.7 percent, and housing and utilities rose by. percent, year-on-year. However, rentals for housing continued to decline, falling by percent month-on-month, and -. percent year-on-year during April, marking the largest yearly decline since July 7. Prices rose in April by. percent year-on-year, but declined by. percent month-on-month. Food & beverages prices rose by.7 percent year-on -year, but declined by.9 percent month-on-month. Inflation (year-on-year change) - Other sub-groups contribution (ppt) - Food & beverages contribution (ppt) Transport contribution (ppt) - Housing and utilities contribution (ppt) - General Index, % y/y Apr- Oct- Apr- Oct- Apr-7 Oct-7 Apr-8 Housing & utilities and food & beverages inflation rates (year-on-year change) 9 7 - Inflation rate Housing and utilities Food & beverages - - Apr- Apr- Apr-7 Apr-8 Rentals for Housing 9 Housing & utilities rose by. percent year-on-year, but declined by. percent month-on-month, affected by the slowdown in rentals for housing which fell by percent month-on-month, and -. percent year-onyear in April. month-on-month year-on-year, RHS.. -. - - -. - Apr- Apr- Apr-7 Apr-8
(million pilgrims) June 8 Umrah The number of Umrah visitors from outside the Kingdom increased in 8-Hijri (-7) by. percent, reaching. million visitors. The NTP target for Umrah visitors from outside the Kingdom is million visitors, whilst the Vision aims for million. Most visitors, on average, stayed for two weeks. Meanwhile, the number of local Umrah visitors declined to. million visitors from.7 million visitors in 7-Hijri (-). Umrah Visitors from Outside the Kingdom (Million Visitors) The number of Umrah visitors from outside the Kingdom increased by. percent in 8-H (- 7), reaching. million visitors. +% +%.. 7 F F Duration of Stay - Umrah Visitors from Out of the Kingdom Four weeks Three weeks Most visitors, on average, stayed for two weeks. Two weeks One week Less than a week Umrah Visitors from Inside the Kingdom.7. Meanwhile, the number of local Umrah visitors declined to. million visitors in 8-H (- 7), from.7 million visitors in 7-H (- ). 8 7H (-) 8H (-7) Females Males
(million barrels per day) June 8 Oil - Global Brent oil prices rose by 8 percent and WTI prices by percent month -on-month in May following the US s decision to reapply sanctions on Iran. Although this led to Brent oil to rise to above $8 pb at one point during the month, prices dropped marginally in the last week of the month following Saudi Arabia and Russia s comments on the possibility of raising oil output to help ease prices. Oil prices were up on a monthly basis as the US reapplied sanctions on Iran ($ per barrel) 8 7 Oil Prices Brent WTI OPEC basket...triggering concerns that this could lead to a sizable drop in Iranian oil supply, similar to the pattern seen in -. (million barrels per day) Nov- May- Nov- May-7 Nov-7 May-8..8.....8. Iranian Crude Oil Production (Direct Communication). Apr- Apr- Apr- Apr-8 Global Oil Balances However, following Saudi Arabia and Russia s comments on the possibility of raising oil output, by up to mbpd, oil prices pulled back towards the end of May. That said, based on current global oil demand supply projections, oil markets would still likely remain in deficit in H 8 even if an additional mbpd of oil supply came on -line... -. - -. - Q Currernt Output Q Additional mbpd Q Q 7E Q 8F
(million barrels per day) June 8 Oil - Regional Saudi crude oil production remained unchanged month-on-month in April, with year-to-date output averaging mbpd. Meanwhile, latest available official data points to minimum change in Saudi oil exports whilst unofficial data for April and May also shows limited change to oil exports..8 Saudi Oil Production (secondary sources: April 8) Saudi crude oil production remains around mbpd...with oil exports steady at around 7 mbpd in March (million barrels per day) (million barrels per day).... 9.8 9. Apr- Oct- Apr-7 Oct-7 Apr-8 9 8 7 8 Saudi Crude Oil Exports (March 8) S.Korea Japan China US Mar- Sep- Mar-7 Sep-7 Mar-8 Provisional Saudi Crude Oil Exports (April-May 8) Other Singapore Taiwan India and expected to remain the 7 mbpd mark for April and May. Beyond then, rising seasonal summer demand for crude oil in electricity generation could result in some declines in Saudi crude oil exports. 7. 7.. week Apr. Week May
June 8 Exchange Rates Expectations of US interest rate tightening during 8 and 9 has been pushing the dollar up since mid-april. Whilst declines were seen in most currencies, capital outflows from many emerging markets led to declines in such countries currencies. The US dollar was further strengthened by political developments in Italy, which prompted some investors to move into safe haven assets. Monthly Gain/Loss Against US Dollar (May 8) Capital outflow from a number of emerging market countries and into the US resulted in dollar strength. The dollar also benefitted for investors seeking safe haven assets... (percent change against $). - - - -8 - - - - -8 - - Russia Japan Swede Indonesia S. Africa S. Korea Canada India Thailand China Malaysia Philippines UK Chile Euro Poland Hungary Mexico Brazil Turkey Argentina Euro/US Dollar..due to political developments in Italy, which also pushed the euro down.... May- Nov- May-7 Nov-7 May-8. GBP/US Dollar Meanwhile, weaker than previously expected economic growth expectations and concerns over Brexit negotiations saw the UK pound continue to decline during May.... May- Nov- May-7 Nov-7 May-8
June 8 Stock Market The Saudi Stock Market declined by percent month-on-month in May. As is normally the case in the run up to, and in the initial weeks of, Ramadan, investor profit taking in anticipation of quieter trading period contributed to the monthly drop. In fact, this trend was seen across the region, with TASI s performance in line with other Gulf markets. TASI The Saudi Stock Market declined by percent month-on-month in May... 7,,, May- Nov- May- Nov- May-7 Nov-7 May-8 Comparative Stock Market Performance (May 8) 7 as seasonally observed slower trading during the holy month of Ramadan saw losses amongst regional markets - - - -7 US UK Germany Bahrain Turkey China Qatar Abu Dhabi TASI Oman MSCI EM Dubai,, 9, 8, Daily Average Stock Market Turnover (monthly average) 8...which was also seen in traded values too. May- May- May- May-7 May-8
June 8 Sectorial Performance Most sectors ended the month with a significant decline, in line with TASI s performance during May. Whilst telecommunication, materials and banks were the best performers, insurance, real estate and media were the worst performers in May. Performance by Sector (rebased; th April 8= ) Most sectors ended the month with a significant decline, in line with TASI s performance during May. - - - - Telecoms. Materials Banks Retail Com. & Pro. Svc Con. Durables Energy Div. Fin. Pharma Utilities Food & Bev. Health & Svc Con. Svc Food & Retail Transport Capital Goods Ins. Real Est. Mgmt Media Best Performing Sectors (rebased; th April 8= ) Telecoms. Materials Banks Whilst telecommunication, materials and banks were the best performers 9 9 -Apr Worst Performing Sectors (rebased; th April 8= ) -May Ins. Real Est. Mgmt Media... insurance, real estate and media were the worst performers in May. 9 8 7 -Apr -May
June 8 Q Listed Company Results Q 8 listed company results, reported under International Financial Reporting Standards (IFRS), were down on a yearly basis but up on a quarterly basis. Although banks saw higher yearly profits, a decline in utilities' profits limited the upside in Q. Banks and Materials saw their contribution to overall listed company profitability rise during the quarter. Net-Income of Listed Companies Q 8 listed company net -income totaled SR. billion... Q Q Q Q Q Q Q 7 Q 8 Net Income by Sector (year-on-year change)...resulting in a 7 percent decline year-on-year. out of 9 sectors saw minimal change or losses in net income on a yearly basis. On the other hand, Banks and Materials saw the largest yearly rise in profitability... - - Banks Materials Energy Capital Goods Telecoms Div. Financials Media Real Est. Mgmt Comm. & Prof Svc. Food & Staples Health Care Con. Durables Pharma Transport. Consumer Svc Retail Food & Bev. Insurance Utilities Banks and Materials Contribution to Overall Net-Income (as a percentage of total net-income).which led both these sector s contribution to overall profitability rising to 8 percent in Q 8. 9 8 7 9 7 Q 8
June 8 Key Data 7E 8F 9F Nominal GDP,7,7,8,8,,9,,87, ($ billion) 7 7 77 7 8 7 8 (% change) 7. 9... -. -.. 9.8 8. Real GDP (% change) Oil.. -.... -... Non-oil private sector 8.. 7.....7..8 Non-oil government 8....7.7..7..7 Total...7.7..7 -.7.. Oil indicators (average) Brent ($/b) 99 Saudi ($/b) 9 9 8 Production (million b/d) 9. 9.8 9. 9.7..... Budgetary indicators Government revenue,8,7,, 9 9 7 8 Government expenditure* 88 9 99, 999 9 9 978, Budget balance 8-9 -8 - - - - (% GDP)...8 -. -. -7. -9. -7.9 -. Gross public debt 99 7 7 (% GDP).....8. 7. 9.9. Monetary indicators (average) Inflation (% change)..9.... -.8.. SAMA base lending rate (%, end......... External trade indicators ($ billion) Oil export revenues 8 7 8 7 7 8 99 Total export revenues 88 7 8 Imports 8 9 8 7 7 Trade balance 7 8 8 Current account balance 9 7-7 - 8 (% GDP).. 8. 9.8-8.7 -.7..8. Official reserve assets 7 7 7 9 7 8 Social and demographic Population (million) 8. 8.9 9....7...9 Saudi Unemployment (+, %)...7.7...8.8. GDP per capita ($),87,7,,9,9,8,98,8,7 Note*: Government expenditure includes SR billion in due payments for previous years Sources: Jadwa Investment forecasts for 8 to 9. Saudi Arabian Monetary Agency 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. 7
June 8 Disclaimer of Liability Unless otherwise stated, all information contained in this document (the Publication ) shall not be reproduced, in whole or in part, without the specific written permission of Jadwa Investment. The data contained in this research is sourced from Reuters, Bloomberg, The World Bank, Tadawul and national statistical sources unless otherwise stated. Jadwa Investment makes its best effort to ensure that the content in the Publication is accurate and up to date at all times. Jadwa Investment makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information that contain in the Publication. It is not the intention of the publication to be used or deemed as recommendation, option or advice for any action(s) that may take place in future. 8