Good morning, lovely people. We have a brisk issue for you this morning, with a couple of big M&A updates — including ADQ closing its acquisition of a stake in Sotheby’s — and more details on the UAE’s investments in Vietnam, which span across EV, data center and logistics infrastructure.

⛅WEATHER- Temperatures will peak at 34°C in Dubai, before cooling to an overnight low of 26°C. Over in Abu Dhabi, it’s a mostly cloudy day with a high of 31°C and an overnight low of 26°C.

WATCH THIS SPACE-

#1- Abu Dhabi proposes new banking regulations: The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) issued a consultation paper (pdf) proposing updated rules to tighten banking regulations, according to a statement from the financial center. Feedback on the proposal is open until 28 November 2024.

The new regs include:

  • Stricter corporate governance standards, requiring — among other things — a majority of non-executive directors and at least one independent director on the boards of banks and insurers;
  • Processes for identifying domestic systemically important banks (D-SIBs), which will then be subject to higher capital buffer and leverage ratio requirements;
  • Enhanced country and transfer risk management protocols, including rigorous stress testing and branch oversight;
  • New requirements mandating FSRA notification prior to significant acquisitions or the establishment of subsidiaries.

#2- Ewec receives three proposals for Khazna solar plant: The Emirates Water and Electricity Company (Ewec) has received three proposals to set up the 1.5 GW Khazna Solar Photovoltaic (PV) Independent Power Project (IPP), according to a press release. Ewec had received 27 expressions of interest, of which 19 qualified for the Request for Proposals (RFP) last April, and the final power purchase agreement is set to be inked in Q2 2025. The plant will generate enough electricity for some 160k homes across the UAE.

Who’s in so far? The proposals came from France’s Engie, a consortium of the UK’s EDF Renewables and Korea Western Power (Kowepco), and a consortium of Jinko Power and Jera. The chosen developer will construct, finance, operate, and maintain the plant. It will also keep a 40% stake, with the rest to be owned by the Abu Dhabi government.

Some of these companies are active in the Emirati market: Kowepco and EDF were tapped by Ewec in February to develop Ewec’s 1.5 GW Al Ajban solar project for an estimated investment ticket of USD 748 mn.

#3- Adnoc is gearing up to expand its oil trading business, currently holding talks with Switzerland-based commodity trading house Montfort Group to expand a tolling agreement between them that would see Adnoc send more outsourced shipments to be processed at a partially Montfort-owned refinery in Fujairah, Bloomberg reports, citing people it says are familiar with the matter. Under the current agreement, Adnoc reportedly processed at least one cargo of Sudanese Nile crude at the refining facility, where the produced fuel is then sold by Adnoc.

Adnoc’s trading operations expansion is already underway, with the state-run company signing agreements to buy Nigerian crude to be processed at the facility and is reportedly looking to secure more supply agreements.

The timing has never been better for Adnoc: The Fujairah refinery processes thick and low-sulfur oil sourced primarily from Africa. Recent supply disruptions in Sudan have limited crude supply, impacting the refinery’s operations and causing it to operate below full capacity, giving Adnoc room to expand its operations at the refinery.

#4- Dubai International Financial Center (DIFC) suspended several entities with reported ties to Iranian oil trader Hossein Shamkhani, including investment firms Milavous Group and Ocean Leonid Investments, Bloomberg reports, citing unnamed sources. These companies recently appeared in the registry of the DIFC freezone as inactive – suspended, without specifying a starting date for the status.

What’s next? Milavous hasn’t taken any actions so far, while Ocean Leonid is currently working with DIFC to provide all of the information requested by the emirate’s finance hub.

#5- Mubadala-owned Spanish oil company Cepsa was rebranded as Moeve to signify its new focus on low-carbon operations, Reuters reports, citing CEO Maarten Wetselaar. The company is currently investing EUR 8 bn to transition towards sustainable energy and mobility. These transitional steps include a partnership with Schwarz Group’s environmental arm, PreZero Spain, to build a waste recycling facility to produce 2G biofuels and circular chemical products.

PSA-

Etihad Airways canceled select flights between Abu Dhabi Zayed International Airport and Kuwait from 30 October to 2 November due to “reasons beyond its control,” the UAE’s flag carrier said in a network update on its website. The airline is working to re-accommodate impacted customers or provide full refunds.

DATA POINT-

S&P forecasts high single-digit growth in the Islamic finance sector through 2025, driven by increasing financing needs in key markets, Wam quotes Mohamed Damak, global head of Islamic Finance at S&P Global Ratings, as saying. The UAE’s robust non-oil economy is expected to support Islamic banking growth, with the sector seeing a surge in foreign currency-denominated sukuk issuances earlier this year, driven by real estate developers and financial institutions seeking FX.

Sustainable bonds are set to stabilize at around USD 1 tn globally in 2024, according to S&P Director Rawan Oueidat. While the Middle East’s share remains below 3% of the total, demand for sustainability sukuk in the region rose to USD 6.1 bn in the first nine months of the year, led by the UAE and Saudi Arabia.

The UAE’s ins. market is poised to see strong growth, with both Islamic and conventional sectors projected to expand 15-20% this year, according to Emir Mujkic, director at S&P. The sector is expected to be propelled by favorable economic conditions, rising infrastructure investments, and price adjustments in medical and motor ins. Islamic ins. currently comprises approximately 15% of the total insurance sector in the UAE.

HAPPENING TODAY-

#1- The Healthcare Future Summit is on its third and final day at the Dubai World Trade Center. The summit will discuss advances in disease management, AI integration to streamline vaccine distribution, and resource management, with a focus on vaccine policies in the GCC, according to a statement.

#2- Dubai is hosting the World Cities Cultural Summit through to Friday. The summit probes how cities can create a fostering environment for artists and entrepreneurs, while addressing global challenges, such as the climate crisis and AI.

#3- The Binance Blockchain Week is on its second and final day in Dubai. The conference gathers traders, builders, founders, institutional investors, regulators, global officials, and innovators to discuss the future of blockchain and Web3 technology.

#4- The International Geotechnical Innovation Conference is on its second and final day at Le Meridien Dubai Hotel & Conference Centre in Dubai. The event features discussions on advanced ground engineering, innovative geotechnical solutions, and an exhibition showcasing the latest technologies in geotechnical engineering.

#5- The Global Conference on Economic Diversification kicks off today and wraps up tomorrow at The Mohammed bin Rashid School Of Government. The event features panel discussions, roundtables, and workshops focused on the results of the Global Economic Diversification Index and policies related to economic diversification.

#6- AI Connect Mena kicks off today at the Etihad Museum in Dubai. The event features discussions led by global Google executives and industry leaders on prospects in AI, alongside networking sessions for key figures from the public and private sectors.

THE BIG STORY ABROAD-

For the first time in a while, business news is making it to the top of the foreign press’ front pages as Big Tech continue to report their 3Q earnings — with Meta and Microsoft both out with their figures for the quarter. Plus: The latest US economy figures are out, and Israel and Lebanon could be approaching a ceasefire.

Concerns among investors that AI investments will not translate into tangible returns anytime soon continue this quarter, with only Google owner Alphabet seeming to prove that the payoff is real so far.

#1- Microsoft’s shares fell in overnight trading after the tech giant forecast constricted growth in its Azure business due to a lack of data center capacity, bringing jitters back to investors who have been waiting for tech firms’ AI investments to pay off. The otherwise upbeat results saw a 16% y-o-y increase in revenues and net income come in higher than expected. (Bloomberg | Financial Times | Wall Street Journal | CNBC)

#2- Meta’s earnings came in slightly lower than expected, pushing shares to decline in after hours trading, on slower-than-expected growth in daily active users. CEO Mark Zuckerberg warned that more AI investments will come as the company continues to prioritize projects like the metaverse and AI-powered glasses. (Bloomberg | Reuters)

IN MACRO NEWS- The US economy grew at a 2.8% clip in 3Q 2024, slightly short of economists’ expectations of 3% growth. The results come just a few days before elections begin, and a week before the Federal Reserve meets to decide on interest rates. (FT | CNBC | New York Times)

CLOSER TO HOME- Israel is in talks for a potential ceasefire in Lebanon, with a draft proposal carried by Israeli media yesterday suggesting a potential agreement that could see a 60-day pause in fighting. Lebanese Prime Minister Najib Mikati said talks with the US envoys suggest an agreement could be reached before the end of the month and before 5 November.

US envoys for the Middle East Amos Hochstein and Brett McGurk are due to land in the Middle East today to discuss the potential agreement with Israeli Prime Minister Benjamin Netanyahu. (Bloomberg | Reuters | FT)

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