The Daily Circuit: Saudi economy’s rebound + GCC-Indonesia trade talks
👋 Hello from the Middle East!
Today in the Daily Circuit, we’re looking at Saudi Arabia’s projected return to economic growth, Mubadala-owned Sanad’s new Airbus contract, Indonesia’s quest for a free trade agreement with the GCC and the gourmet menu being offered to SpaceVIP’s amateur astronauts with their $495,000 ticket. But first, Islamic finance is fueling a surge in the Gulf debt market.
Two of Kuwait’s biggest banks are exploring a merger that would create an Islamic lender with more than $50 billion in assets. The proposed tie-up comes amid a wave of banking consolidation across the Middle East, partly driven by competition for financing large-scale projects as Gulf countries rapidly diversify away from oil.
Boubyan Bank, with assets worth $29 billion and Gulf Bank, with assets worth $24 billion, will conduct due diligence and valuation studies into the potential deal, the two lenders said in a statement. The move comes as Kuwait Finance House weighs taking a large stake in Saudi Investment Bank, while National Bank of Bahrain considers a potential merger with Bank of Bahrain and Kuwait.
Consolidation of financial institutions in the GCC is being driven by the need to create lenders with greater scale as countries seek financing for mega-projects and other diversification activities aimed at boosting the non-oil economy. These capital intensive activities, and the development and diversification of funding channels are expected to drive the GCC’s debt capital market to reach $1 trillion outstanding by next year, according to a new report from Fitch.
Saudi Arabia, which is contending with lower oil profits and mounting expenses associated with its Vision 2030 transformation plans, held a 43% share of the $940 billion outstanding government debt in the GCC at the end of Q1 2024, while the UAE held 30%. Around 40% of outstanding government debt was sukuk – bonds compliant with Islamic sharia law – while the rest was in conventional bonds, Fitch said.
Environmental, social, and governance (ESG) sukuk, meanwhile, reached $18 billion outstanding in GCC countries, driven by increasing sustainability commitments, according to Fitch.
Saudi Arabia’s yearlong economic contractionhas slowed with a transition to growth coming soon as the effect of oil production cuts begins to fade. Forecasts compiled by Bloomberg show the $1.1 trillion economy is set to return to growth in the third quarter with a gain of almost 4%, in what would be the biggest acceleration since the end of 2022. “We expect this to be the last quarter of deeply negative hydrocarbon sector growth,” Carla Slim, an economist with Standard Chartered, told the news agency. OPEC+ has been withholding supplies for almost two years in a bid to prop up oil prices. While that has kept the benchmark Brent crude at an average price of $83.50 a barrel so far this year, that’s lower than the price Saudi Arabia needs to balance its budget, which the IMF estimates at $96 a barrel.
SPACE GOURMET
Forget the early days of Tang and squeeze-tube turkey or freeze-dried spaghetti and meatballs on the International Space Station. Travelers aboard SpaceVIP’s Neptune capsule who pay $495,000 for the journey to Earth’s stratosphere will be treated to a menu prepared by innovative Danish chef Rasmus Munk, Arabian Business reports. With the maiden six-hour flight scheduled for the second half of 2025, SpaceVIP founder Roman Chiporukha says interest from the UAE has been particularly strong. Though the menu hasn’t been finalized yet, Munk’s Michelin-starred Alchemist restaurant in Copenhagen is known for such dishes as lamb’s brain in walnut oil and cherry sauce, rhubarb gazpacho and “Bikini Toast” filled with Gruyére cheese and Joselito ham. “I want to highlight food as a common thread in our human existence, and it will be truly meaningful to serve it while gazing down at the Earth’s curvature,” Munk said.
💲 Sovereign Circuit
Mubadala: Sanad, an aerospace engineering company owned by the Abu Dhabi sovereign wealth fund, signed an agreement with Airbus to provide maintenance, repair and overhaul services for the European planemaker’s aircraft.
Public Investment Fund: Hassan Allam Holding, an Egyptian engineering and construction company, said its Saudi unit – in partnership with El Seif Engineering Contracting and China Harbour Engineering Arabia – has secured a contract to design and build the PIF-backed Port of Neom’s Container Terminal 1 and Marine Services Area.
Abu Dhabi Investment Authority: A consortium led by Blackstone that includes ADIA and Singapore’s sovereign wealth fund GIC and is targeting a majority stake in Indian snack brand Haldiram, has reportedly sweetened its bid. The group will attempt to acquire a 51% stake in the company in a $4.8 billion deal, according to Moneycontrol.
↪↩ Closing Circuit
⛽ Gas Costs: European natural gas prices rose for a fourth session on Wednesday as growing Middle East violence is deepening concern in Europe about retaining sufficient fuel supplies.
🇹🇷 Turkish Turnaround: Turkey, which is negotiating a free-trade agreement with the GCC, has become the darling of emerging market investors after instituting financial reforms and drawing in $30 billion since last year from foreign purchases of stocks and bonds, Bloomberg reports.
🤝 Venture Matchmaker: Steel Atlas, a New York investment firm that hopes to match U.S. and European startups with funders and deployment opportunities in Saudi Arabia, has raised its first venture fund of $10 million, the Wall Street Journal reports.
🛏️ Hotel Finder: Holisto, an Israeli startup whose technology helps find the most suitable hotel prices, raised $10 million from travel site Trivago.
🗣 Circuit Chatter
⚽ Planning Ahead: Saudi Arabia, the only bidder for the 2034 World Cup, announced it will host the 48-team soccer tournament in 15 stadiums across five cities, including eight in Riyadh.
💱 Free Trade: The GCC and Indonesia started formal negotiations in Riyadh on Wednesday to write a free trade agreement that would slash commercial tariffs between the wealthy Arab bloc and the most populous Muslim-majority nation.
⚓ Yacht Haven: Qatar’s Old Doha Port has been turned into a luxury yachting haven and will host the first Qatar Boat Show this year to showcase “marine innovation and leisure lifestyle.”
🏜️ Desert Limits: Saudi Arabia has set up a joint operation room in Riyadh to streamline its efforts to host the 11-day U.N. Convention to Combat Desertification in December, known as COP16.
🌍 Power Circuit
Queen Rania of Jordanofficially opened a new radiation oncology building at the King Hussein Cancer Center in Amman on Wednesday. The facility includes the country’s first public umbilical cord blood bank, a cellular therapy and applied genomics department, and a bone marrow-transplant program.
Iranian President Masoud Pezeshkian received Sheikh Abdullah bin Zayed, UAE Deputy Prime Minister and Minister of Foreign Affairs, on the sidelines of the presidential inauguration ceremony in Tehran on Tuesday.
➿ On the Circuit
Kelly Ortberg, a longtime aerospace industry veteran, was appointed on Wednesday as president and CEO of Boeing, the world’s second-largest planemaker. The company faces a safety and quality crisis which has caused long delays in the delivery of new planes to UAE flag carrier Emirates and Saudi Arabia’s soon-to-be launched Riyadh Air.
Chakib Benmoussa, Morocco’s Minister of National Education called on private schools during a meeting in Rabat to strengthen their teaching standards and refrain from raising tuition.
Lieut. Col. Sheikh Saeed bin Hamdan, Commander of the UAE Naval Forces, met in Abu Dhabi on Wednesday with Chinese Ambassador Zhang Yi Ming to discuss cooperation between the navies of both nations.
🎶 Culture Circuit
🕌 Super Shrine: Oman’s Bab Al Salam Mosque was named to Time magazine’s annual list of the world’s 100 best places to visit in 2024. The mosque which was designed by architect Marwan Al Balushi and sits west of the capital city of Muscat, “is not just a place of spiritual reflection; it symbolizes Oman’s forward-thinking approach to design and culture, bridging the past and the future in a breathtaking edifice,” Time wrote.
📷 Photo of the Day
Chilean President Gabriel Boric visited Dubai’s Museum of the Future yesterday, along with a delegation of government ministers and senior officials, as part of his official visit to the UAE. (Photo: WAM)
🗓️ Ahead on The Circuit
July 2-Aug. 25, Riyadh, Saudi Arabia: Esports World Cup. An international competition for professional gamers with a $60 million prize pot. Boulevard City.
July 27-Aug. 4, Washington D.C. Mubadala Citi DC Open. Tennis tournament featuring nine of the world’s top 20 players. Rock Creek Park.
Aug. 12-15, Riyadh, Saudi Arabia: Saudi Food Expo. One of the kingdom’s largest trade shows for the food & beverage industry. Riyadh Front Exhibitions.
Sept. 10-11, Dubai, UAE: Global Vertical Farming Show 2024. Annual event brings together investors, growers, and executives in the vertical farming industry from around the world. Le Méridien Dubai Hotel & Conference Centre.
Sept. 24-25, Dubai, UAE: ACT Middle East Treasurers Summit. Corporate treasurers and financial professionals from across the region gather for policy discussions on issues ranging from cash management to sustainability. Grand Hyatt Dubai
Sep. 30-Oct. 2, Dubai, UAE: Future Hospitality Summit. The global conference for leaders in the hospitality industry expands this year at a new location with dedicated space for ESG planning, country pavilions and a larger exhibition area. Madinat Jumeirah.
Abu Dhabi’s Yahsat orders two new satellites from Airbus
The UAE space program is taking a $1.1 billion leap forward by contracting with Airbus to build two new satellites.
Abu Dhabi-based Yahsat signed a contract with European aerospace company Airbus Defence and Space to design and build the AY4 and AY5 satellites based on the widely used Eurostar Neo platform.
Yahsat won a $5.1 billion contract last year to provide satellite service for the UAE government, primarily through the AY4 and AY5 models that are scheduled for launch in 2027 and 2028.
Yahsat merged with Emirati space company Bayanat last December to form a new company focused on satellite communications and artificial intelligence with an implied market value at the time of $4 billion.
Among the key backers of the combined entity are the Mubadala sovereign wealth fund, AI developer G42 and International Holding Co., the Abu Dhabi investment company led by Sheikh Tahnoon bin Zayed.
The Weekly Circuit: Paris Air Show + UAE-Israel medical deal
👋 Good Monday morning in the Middle East!
The Paris Air Show opens today, bringing airline executives, cabinet ministers and defense contractors to the world’s biggest aviation event. Saudi Arabia will use the seven-day exhibition to introduce its new carrier, Riyadh Air, which is negotiating with Boeing and Airbus over a fleet of narrow-body jets. The company plans to start flying its purple and blue aircraft in 2025 and announced a provisional order in March for up to 72 Boeing 787 Dreamliners.
Israel’s Rafael Advanced Defense Systems will for the first time show off its new SkySonic system, designed to intercept missiles that fly at several times the speed of sound. Interest is building at the French exhibition amid assertions by Russia that it has used hypersonic missiles against Ukraine. Iran claimed this month that it created a hypersonic missile called “Fattah” – Conqueror in Farsi – that can travel at 15 times the speed of sound. Rafael is testing SkySonic but hasn’t said when it will be ready for operation.
The German Bundestag’s vote last week to approve the $4.3 billion purchase of Israel Aerospace Industries’ Arrow-3 missile-defense system is also generating buzz in Paris. “Basically, we have a solution for air defense on all layers, from very short-range like 10, 20 or 25 kilometers, to ballistic missiles,” Golan Haver, the state-owned company’s senior vice president for Europe, told The Circuit.
Among those expected at the show in Paris’ Le Bourget Airport will be Israeli Defense Minister Yoav Gallant and IAI Chairman Amir Peretz, representatives said. The Israeli Defense Ministry announced a record $12.6 billion in defense exports last year, saying that almost 25% of that amount came from partners to the Abraham Accords. It did not detail what portion of the exports came from which of the countries that include the United Arab Emirates, Bahrain, Morocco and Sudan.
Two Senate Democrats announced plans last week to investigate the proposed partnership between the PGA Tour and the Saudi-backed LIV Golf circuit. Washington Post columnist Fareed Zakaria wrote that the golf deal illustrates the growing economic and political clout of the Gulf states in world affairs amid high oil prices. “This surge of wealth has reshaped the Middle East,” Zakaria wrote. “The Gulf is where the action is.”
The Biden administration is making a renewed pitch to bring Saudi Arabia and Israel together for a normalization agreement, the New York Times reported. Saudi Arabia’s minister of investment, Khalid Al-Falih, told CNBC that the world has become multipolar and his country’s ties with China will “only come closer as their common interests grow.”
Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].
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MEDICAL MILESTONE
UAE’s PureHealth, Israel’s Sheba Medical Center sign cooperation agreement
Sheba Director Yitshak Kreiss, UAE Ambassador to Israel Mohamed Al Khaja and PureHealth Group Chief Corporate Officer Rashid Al Qubaisi at signing ceremony (SHEBA MEDICAL CENTER)
PureHealth, the largest health care company in the United Arab Emirates, and Israel’s Sheba Medical Center signed an agreement last week to conduct joint research, collaborate on staff training and combine efforts to promote medical tourism. The two institutions approved a memorandum of understanding outlining their intention to work together across a range of medical fields, The Circuit’s Jonathan Ferziger reports.
Gaining momentum: Israel’s ambassador to the UAE, Amir Hayek, told The Circuit that the preliminary agreement demonstrates a growing momentum for the Abraham Accords, which normalized relations between the two countries in 2020. “We are talking to each other about everything,” Hayek said in an interview from Abu Dhabi. “We are open about everything and we are past the point of no return.”
Emirati visit: The agreement follows a visit to Sheba, near Tel Aviv, and other Israeli health facilities last week by top executives and doctors from the Emirati organization, Hayek said. PureHealth is a $5 billion subsidiary of Abu Dhabi’s ADQ sovereign wealth fund that was formed last year to consolidate the UAE’s major health institutions, including Abu Dhabi Health Services Co., The National Health Insurance Co., Tamouh Healthcare and the Abu Dhabi Stem Cell Center. PureHealth operates 25 hospitals and 100 clinics across the Gulf state.
Robust partnership: “This collaboration marks a major milestone in our efforts to drive healthcare innovation and improve patient outcomes,” Rashid Al Qubaisi, PureHealth’s group chief corporate officer, said in a statement. “By combining our expertise and resources, we aim to foster breakthrough research, advance medical education, and establish a robust framework for clinical services coordination.”
Expanding trade: Since the signing of the U.S.-backed Accords at the White House in September 2020, trade between the UAE and Israel has exceeded $3.8 billion and the two countries expect commercial activity to reach $10 billion by the end of 2026. ADQ reached an agreement in December to buy control of Phoenix Holdings, Israel’s biggest insurer, for about $675 million. The deal is under regulatory review in Israel.
UAE’s G42 teams up with Viola Ventures to address worldwide tech employee shortage
Global Valley will seek to deal with the global lack of trained technology workers (GETTYIMAGES)
A government-owned technology company in the United Arab Emirates and Israel’s largest private investor in tech firms launched a joint venture aimed at providing computer engineers and other skilled employees to businesses around the world. The new company, Global Valley, will be based in Abu Dhabi, the UAE’s capital, and address an international shortage of programming talent, The Circuit reports.
Artificial Intelligence: Global Valley brings together Abu Dhabi’s G42, which has interests ranging from biotechnology to artificial intelligence, the Abu Dhabi Investment Office and Israel’s Viola Ventures, which has $5 billion in assets under management, the companies said in a statement on Thursday. G42 is controlled by Sheikh Tahnoon bin Zayed, the UAE’s national security adviser and younger brother of UAE President Mohamed bin Zayed, ruler of Abu Dhabi.
Dynamic hub: The new company will strengthen Abu Dhabi as a “dynamic hub for technological advancement and business prowess,” G42 Group Chief Executive Peng Xiao said. Avi Zeevi, a co-founder and general partner of Viola, said Global Valley “will provide tech companies, in Israel and globally, with the best-of-class tech talent to fuel their future growth and support their activities in the region.”
Global shortage: While the ongoing global economic slowdown has led to layoffs that increased the supply of tech workers, the industry expects the employee shortage to grow. A study by the consulting firm Korn Ferry predicts a global talent gap by 2030 of some 85 million employees in the telecommunications, media and technology sector.
New Frontiers: The $450 billion Qatar Investment Authority is considering investments in the U.S. and Asia, showing interest in technology and health care, Bloomberg reported. The sovereign wealth fund is also in talks with Egypt about investing in seven historic hotels located in Cairo, Aswan, Luxor and Alexandria, according to Reuters.
Gaming Hub: Saudi Arabia and the UAE are investing billions of dollars into gaming and esports companies, turning the Middle East into an industry hub, a BCG report says. Google, meanwhile, announced the first Google MENA Gaming Summit, which will be held in Riyadh by year’s end.
Silicon Valley Rivals: Israel, the UAE and Saudi Arabia are gaining on Silicon Valley in spawning new technology companies, a report by Startup Genome consultants said.
Oil Challenge: Iran is shipping the most crude oil in almost five years as it reengages with Saudi Arabia while competing in the global energy market, Bloomberg reported.
Easy Visa: Morocco and Israel agreed to ease visa requirements for travelers from both countries and enable more Moroccans to work in Israel.
Gaza Gas: Israel said it will work with Egypt on long-stalled plans to help develop a natural gas field owned by the Palestinians off the coast of the Gaza Strip.
IPO Pick: Dubai-based Amanat Holdings selected EFG Hermes and First Abu Dhabi Bank to manage the planned IPO of its health care unit, Bloomberg reported.
Closing Circuit
Chip Maker: Intel Corp. reached an agreement in principle with the Israeli government to invest $25 billion in expanding its semiconductor chip production plant in the southern town of Kiryat Gat. Israel will provide a $3.1 billion grant for the project.
Startup City: Dubai’s startup technology companies raised more than $2 billion last year, double that in 2021, capturing some 30% of funding rounds in the MENA region.
Bicycle Fund: Abu Dhabi’s Mubadala sovereign wealth fund will invest $200 million in Bicycle Capital, a private equity firm run by Marcelo Claure, former COO of SoftBank.
IPO Channel: Saudi Arabia’s Jada Fund of Funds, a subsidiary of its sovereign wealth fund, plans to invest in Investcorp’s $500 million Saudi pre-IPO growth fund.
Luxury Homes: Emaar Properties unveiled plans for a $20 billion waterfront project in Dubai called “The Oasis,” with 7,000 residential units that include mansions and villas.
Japanese Property: Abu Dhabi-based Mubadala will invest in Japanese real estate through a $572 million joint venture with Proprium Capital Partners and Manulife.
New Incentives: Saudi Arabia’s giant Neom city-building project signed agreements with several government ministries to provide more incentives for attracting investment.
Egyptian Assets: Egyptian Chemical Industries, the state-owned fertilizer producer known as Kima, may sell a stake to a unit of Abu Dhabi’s ADQ sovereign wealth fund.
Big Events: The Abu Dhabi Investment Authority holds a large stake in a group managed by Blackstone that acquired Virginia-based Cvent for $4.6 billion.
On the Circuit
Elon Musk, owner of Twitter and CEO of Tesla, chatted on tech regulatory matters with the UAE’s minister of state for artificial intelligence, digital economy and remote work application, Omar Al Olama, who termed the discussion “refreshing.”
Yosef Zinger was appointed chairperson of the Israel Securities Authority by Finance Minister Bezalel Smotrich, replacing Ana Guetta.
Oren Zeev, founding partner of Israel’s Zeev Ventures, talks on the “Venture Unlocked” podcast about why he believes VCs are still a good long-term investment.
Ahead on the Circuit
June 19, Tel Aviv, Israel: FinTech-Aviv Summer Summit 2023. Brings together startups, investors and corporate executives. Mindspace, 5th floor.
June 20-21, Tel Aviv, Israel: Fintech Junction. Conference draws investors, bankers, regulators and fintech executives. Hilton Tel Aviv.
June 20-22, Riyadh, Saudi Arabia: The Saudi Food Show. Chefs, restaurateurs, food company executives and government officials gather for trade show. Riyadh .International Convention and Exhibition Center.
June 21-25, Dubai, UAE: Dubai Esports and Games Festival. Gamers, designers, investors come together for four-day event that includes competitions and conferences. Dubai Exhibition Centre.
June 23, Dubai, UAE. Dubai One Health Conference. Doctors, researchers and government officials discuss public health, as well as the health of animals, plants and the environment. Movenpick Grand Al Bustan Hotel.
July 25, Los Angeles. CNBC x Boardroom: Game Plan. Athletes, owners, investors and innovators discuss what drives the modern-day sports fan to emerging opportunities in teams and leagues. Register to receive location.
Culture Circuit
Hot Wheels: Gearing up for Formula 1 season, the Qatar Grand Prix is offering a $7,350 “Ultimate Fan Experience” ticket for 33 times the price of standard admission to the Oct. 6-8 event at the Lusail International Circuit. The premium ticket includes access to a prime viewing area above the pit lane that looks over the finish line, parking, a guided F1 track tour, a lunch with F1 drivers and former stars, admission to the exclusive Paddock Club and a pit lane walkabout. A standard three-day ticket costs $220.
Open Book: The National Library of Israel is kicking off a series of “Epilogue” events this week, celebrating 63 years in which the nation’s literary archive has been housed on the Jerusalem campus of the Hebrew University. The first is a 13-hour festival featuring performances by Israeli writers, musicians, actors and stand-up comedians that takes place on Wednesday. The National Library’s $200 million new home, featuring an iconic sloped roof and located next to the Knesset, Israel’s parliament, opens later this year.
Baalbeck Beat: Lebanon’s 60-year-old Baalbeck festival opens July 1 and will bring some of the best Middle East music acts to the Roman Acropolis site. Performances will include theater, opera, jazz, Arab pop and dance. Among the most popular acts appearing this year are the Al-Kindi Ensemble with Sheikh Hamed Daoud and the Damascus Whirling Dervishes. Lebanese pop star Melhem Zein will be a hometown favorite at Baalbeck.
