Good morning, wonderful people, and happy THURSDAY to you all. We hope you’re looking forward to the weekend as much as we are — and we have a pleasantly compact issue for you this morning to speed you on your way.
HAPPENING TODAY- It’s the third and final day of the Airports Council International annual conference — better known as WAGA 2024.The day will kick off with an invitation-only session with the CEOs of Saudi-based Cluster 2, Riyadh Airports Company, Hermes Airport, Airports Company South Africa, and Delhi International Airport. Also, UK-based global travel data, and analytics provider Official Airline Guide — aka OAG — will release its aviation 2024 outlook report on the sidelines of the event. You can check out the full program here.
Aviation + tourism are two sides of the same coin: The second panel discussion is set to delve into local and international case studies on how airports can work with non-aviation stakeholders industry to boost tourism. It is estimated that over 50% of all international tourists travel by air, and that tourism supports more than 319 mn jobs globally and contributes USD 8.8 trillion to world GDP — equivalent to 10.4% of the global economy.
Also on the agenda: The prospects for air cargo, sustainability in aviation, innovation in customer experience, and future-proofing the industry’s workforce.
Panelists to look out for:
- Steven Gillard, Boeing regional director for Middle East and Europe sustainability;
- Ayman Aboabah, Riyadh Airports Company CEO;
- Michael White, Red Sea International Airport CEO;
- Yara Wehbe, Matarat Holding general manager of customer experience;
- Ibrahim Shareef Mohamed, Maldives Airports Company CEO,
- Eleni Kaloyirou, Hermes Airports CEO;
- Kerati Kijmanawat, Airports of Thailand president; and
- Glyn Hughes, The International Air Cargo Association director general.
ALSO TODAY- Trading of shares in Riyadh-based construction and mining firm Mohammed Hadi Al Rasheed will begin on parallel market Nomu today, according to a Tadawul statement. The company is wrapping up an IPO that saw it sell a 12% stake on the parallel market in a secondary share sale.
What to expect: Shares will be allowed to trade within a ±30% band on each of the first three days before being capped at no more than 10% up or down after that before circuit breakers kick in. (All shares on Tadawul are subject to the 10% up-or-down rule.)
AND- It’s the final day of the Saudi Food Show. The gathering, sponsored by the Industry and Mineral Resources Ministry and Modon, features top global food and beverage players showcasing their products.
WEATHER- Expect clear skies in Riyadh with a daytime high of 42°C and a low of 26°C. Jeddah is looking windy with a high of 37°C and a low of 26°C, while Makkah is also getting some wind along with some heat, bringing a high of 46°C and a low of 26°C.
WATCH THIS SPACE-
#1- Crown Prince and Prime Minister Mohammed bin Salman and Japan’s Kishida Fumio agreed to establish a strategic partnership council to boost bilateral ties, according to a Japanese Foreign Ministry statement. No further details were provided on the council. The two leaders also discussed cooperation on clean energy — including green hydrogen and ammonia — and other fields.
IN CONTEXT- Businesses from Saudi and Japan signed more than 30 MoUs at the Saudi-Japan Vision 2030 business forum in Tokyo, with a focus on energy and manufacturing, among other sectors. The gathering went forward despite the absence of the Crown Prince, who postponed his trip due to King Salman’s health.
#2- Saudi and the US may only be “weeks away” from concluding a bilateral defense pact, US Secretary of State Antony Blinken told the House Appropriations Committee, according to Reuters. “Those agreements are in principle very close to being able to be concluded. Now of course we will come to Congress with them when they’re ready to be reviewed, but [we] could be really weeks away from being able to conclude them,” Blinken said. Officials have suggested in the past days that Saudi and the US were days away from an agreement.
No changes on Saudi demands of normalization: “In order for normalization to proceed, Saudi Arabia has made very clear that even with the agreements between us completed, they have to have two things: they have to have calm in Gaza and they have to have a credible pathway to a Palestinian state,” Blinken said.
PLUS- We expect the pacts to also include an agreement on AI and other advanced technologies, though talk of that component has dropped off in the US press of late. Washington has been lobbying Saudi Arabia and the UAE to work with US tech providers and not Chinese competitors.
#3- A big week ahead for Arab diplomacy? The foreign ministers of Saudi Arabia, the United Arab Emirates, Egypt, Jordan and Qatar will join their 27 European Union counterparts in Brussels on Monday for talks. Look for the war in Gaza and the post-war order there to take center stage. Foreign Minister Prince Faisal bin Farhan, meanwhile, was in Tehran yesterday for the funeral of Iranian President Ebrahim Raisi. Bin Farhan was joined by the FMs of the UAE and Kuwait as well as the emir of Qatar.
#4- The Foreign Ministry welcomed the “positive decision” by Ireland, Norway, and Spain to move toward recognition of a Palestinian state, it said in a statement on X. The decision “confirms the international consensus on the inherent right of the Palestinian people to self-determination,” the ministry said, urging more countries to follow suit to create a “reliable and irreversible path to achieve a just and lasting peace that fulfills the rights of the Palestinian people.”
A historic move: The three European countries said yesterday they would formally recognize a Palestinian state starting Tuesday, 28 May. “This is an investment in the only solution that can bring lasting peace in the Middle East,” Norway’s Prime Minister Jonas Gahr Støre said. Spanish PM Pedro Sanchez stressed that the decision was “not against Israel, is not against the Jews… It is not in favor of Hamas which is something that has been said. This recognition is not against anyone, it is in favor of peace and coexistence.” The move led Israel to recall its ambassadors from the three countries for “consultations.”
#5- The King Faisal University Endowment Fund has regulatory approval to be listed, after the Capital Market Authority gave Albilad Investment the green light for the fund’s public offering. The fund, established in 2007, focuses on investments in scientific research and social, economic, environmental, health, agricultural, and educational development, according to a report (pdf).
INVESTMENT WATCH-
Turkish steel giant Tosyali could invest as much as USD 5 bn in Saudi to set up an integrated steel mill with a production capacity of 4 mn tons, Chairman Fuat Tosyali told Reuters. The plan comes as part of a global expansion push that will see the steelmaker invest USD 1.5-2 bn a year in Africa, Saudi, Europe, and the Americas in a bid to become one of the world’s leading 30 iron and steel producers, he said.
Keeping options open for Saudi: “While we are not actively seeking partnerships, we are keeping our options open for partnerships with local private/sovereign investors [in Saudi],” he said, saying the investment is expected to be finalized in the upcoming three years.
Background: The top Turkish steelmaker, which expects USD 10 bn in turnover this year, is looking to increase its liquid steel production capacity to 20 mn metric tons — up from the current 14 mn — within the next five years.
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DATA POINTS-
#1- Saudi’s aviation sector recovery rate hit 123% of 2019 seat capacity, or 78 mn seats, outpacing the global rate of 90% , according to the General Authority for Civil Aviation (Gaca)’s full State of Aviation Report (pdf). Saudi comes second regionally after Egypt, which saw a recovery rate of 134% to 46.8 mn international seats in 2023. Total passenger traffic was up 26.2% y-o-y to 111.7 mn in 2023, with international passenger numbers seeing the most notable recovery at 60.6 mn. Monthly passenger traffic levels in Saudi first surpassed pre-pandemic levels in October 2022, according to the report.
Big contribution to GDP: The civil aviation sector has contributed USD 53 bn to the Kingdom’s GDP in 2023, according to the report. Some USD 20.8 bn came from aviation related activities, while USD 32.2 bn came from tourism. The sector saw 958k jobs across the aviation and tourism industries.
#2- Riyadh is the third-best city globally in terms of human capital, thanks to its “young, diverse population, with many immigrants having moved there to join the workforce of its growing business hub,” according to Oxford Economics’ inaugural Global Cities Index (pdf). Riyadh is ranked third behind London and Tokyo, which top the human capital category. The index evaluates 1k cities around the world based on economics, human capital, quality of life, environment, and governance.
The methodology: The human capital category takes into account educational attainment, universities, corporate HQs, population growth, age profile and foreign-born population as indicators for rankings. “Human capital encompasses the collective knowledge and skills of a city’s population, underpinning the economic potential of every city… The cities leading the Human Capital category are hubs for higher education and business innovation, helping them attract diverse and highly educated populations,” the report says.
THE BIG STORY ABROAD-
One story is on every front page this morning: AI darling-of-the-moment Nvidia.
The chipmaker’s 1Q 2024 earnings showed that sales had more than tripled to USD 20 bn, topping analyst estimates and prompting many of them to suggest that the AI boom has legs. Net income was up almost 7x — sending its stock to a record USD 1,004 in after-hours trading.
Why does it matter? “Nvidia’s results have become a way for investors to gauge the strength of the AI boom that has transfixed markets in recent months,” CNBC writes.
MEANWHILE- Saudi Arabia and the US could be “weeks away” from a wide-ranging set of accords that Washington hopes will pave the path for Riyadh to normalize relations with Israel. On the agenda are pacts on security and defense and nuclear power, Reuters reports, while EnterpriseAM Saudi also expects there to be an agreement on artificial intelligence and advanced technologies.
AND- Ireland, Norway, and Spain have said they will formally recognize the state of Palestine. The Irish Times has more.
ALSO- An early UK general election: A very wet UK Prime Minister Rishi Sunak called a general election for 4 July, ending months of speculation about when he would make the call. The elections are likely to mark a turning point in the UK government, with the Conservatives likely to lose to the opposition Labour Party — this would mark the end of a 14-year of Conservatives in power. (Reuters | The Guardian | AP)
WORTH READING THIS MORNING- Reuters is out with an investigative piece on how wealthy nations are capitalizing on climate funding to developing nations, while the Wall Street Journal looks at the highest-paid CEOs in America last year.
CIRCLE YOUR CALENDAR-
Demo day for the final round of the Sanabil 500 MENA seed accelerator will kick off next Wednesday, 29 May in Riyadh with seven finalists. Applications for the next batch are now open and will close on 6 August 2024.
Riyadh will host a Global AI Summit from 10-12 September, state news agency SPA reported yesterday. The event, which is organized by the Saudi Authority for Data and Artificial Intelligence, will focus on key AI topics and trends, delving into its local and global adoptions, ethics, and infrastructure.
Dammam will host the Saudi Maritime and Logistics Congress from Wednesday, 18 September to Thursday, 19 September. The two-day event looks to gather up to 10k attendees and 200 exhibitors, and will discuss topics including interlinked logistics, developments in supply chains, digitalisation, decarbonisation, the energy transition, and workforce development.