Key Takeaways

1. Riyadh to Host Esports World Cup, Targets SAR 50B by 2030;

2. BlackRock Strategists Skeptical on S&P 500, Bullish on Tech;

3. Saudi Aramco, KNOC Ink Deal for 5.3M Barrel Reserve in Ulsan;

4. Banque Saudi Fransi Q3 Profit Soars to SAR 1.25B;

5. Nvidia Chips to Power Future Windows PCs, Stocks Surge;

6. Intel Targets 100 Million AI Applications, Q3 Earnings Awaited;

I. Market Recap

The stock market in Saudi Arabia closed lower on Monday. The Tadawul All Shares Index(TASI.SA) was down by 1.93%. Meanwhile, the Parallel Market Capped Index (NomuC)(NOMUC.SA) decreased by 2.48%.

The session's best performer was Abdulmohsen Alhokair Group for Tourism and Development(1820.SA), which experienced a surge of 9.74%.

On the flip side, Saudi Tadawul Group Holding Co.(1111.SA) didn't fare as well, suffering a drop of 7.49%, making it the day's worst performer.

TASI Gainers	TASI Losers

The Dow Jones Industrial Average(DJI.US) and S&P 500 index(SPX.US) finished Monday’s session down about 0.6% and 0.2%, respectively. But the technology-heavy NASDAQ(IXIC.US) was able to finish up about 0.3%, as investors bought into the sector with important earnings reports ahead.

Oil prices remain near a five-day low after a drop on Monday, linked to signs that the recent Gaza conflict may stay contained. Diplomatic efforts hint at possible de-escalation, affecting oil's momentum. Traders had increased bets on higher Brent crude prices, but markets are now awaiting clues on U.S. economic health to gauge fuel demand.

As of 06:31 am BST (07:31 a.m. in Riyadh), Brent Crude Oil (BRN00) up by 0.35% to $90.14. The Proshares Trust Ii Ultra Bloomberg Crude Oil(Post Rev Splt)(UCO.US) closed at $34.52, up by 0.73% at 7:53 pm ET yesterday, while the United Sts Brent Oil Fd Lp Unit(BNO.US) traded 0.51% higher to close at $31.70.

II. Flash Headlines

Riyadh to Host Esports World Cup, Targets SAR 50B by 2030

Crown Prince Mohammed bin Salman announced the Esports World Cup, an annual event in Riyadh starting summer 2024. The initiative aims to make Saudi Arabia a global esports hub and is aligned with the National Gaming and Esports Strategy, targeting a SAR 50 billion contribution to GDP by 2030. The Cup also seeks to boost tourism, countering seasonal declines in various economic indicators. Further details are expected in early 2024.

MODON Partners with Chinese, Japanese Firms for Logistics Modules

Saudi Authority for Industrial Cities and Technology Zones (MODON) has formed logistics partnerships with Chinese firm AJEX Co. and Japanese company Kintetsu World Express. These agreements aim to establish ready-to-use logistics modules in Dammam. MODON has also partnered with TAD Logistics for projects in Riyadh and Dammam, potentially spurring national investments. The partnerships were announced during a conference from Oct. 22-23, focusing on sustainable supply chains and aligning with Saudi Vision 2030.

Saudi PIF Eyes Early 2024 IPO for Medical Procurement Firm NUPCO

Saudi Arabia's Public Investment Fund (PIF) is contemplating an IPO for National Unified Procurement Co. (NUPCO) in early 2024, according to Bloomberg. NUPCO, fully owned by PIF and established in 2009, specializes in medical procurement, storage, and distribution within Saudi Arabia. The scale and timing of the IPO are still being determined.

BlackRock Strategists Skeptical on S&P 500, Bullish on Tech

BlackRock's think tank strategists caution that investors hoping for U.S. corporate earnings growth to rejuvenate the S&P 500 index may be disappointed due to ongoing inflation instability. Despite recommending an overall underweight in stocks for the next 6-12 months, the think tank remains bullish on mega-cap tech stocks, healthcare stocks, and the Japanese stock market.

Bill Ackman Abandons Short on U.S. Treasuries Amid Global Risks

Billionaire investor Bill Ackman, known for precisely shorting long-term U.S. Treasuries, has covered his short positions on U.S. government bonds. Ackman cited excessive global risks that make it imprudent to continue shorting bonds at current long-term interest rate levels. In early August, he disclosed shorting 30-year U.S. Treasuries through options, pointing to structural changes like deglobalization and energy transition as factors exacerbating ongoing inflationary pressures.

III. Stocks To Watch

SA snapshot

Saudi Aramco, KNOC Ink Deal for 5.3M Barrel Reserve in Ulsan

Saudi Arabian Oil Co.(2222.SA) (Saudi Aramco) has entered into an agreement with Korea National Oil Corporation (KNOC) to create a joint crude oil reserve of 5.3 million barrels in Ulsan, South Korea, by 2028. The contract grants South Korea priority purchase rights during supply emergencies and includes a five-year lease. This follows discussions between Saudi Crown Prince Mohammed bin Salman and Korean President Yoon Suk Yeol on Oct. 22, resulting in multiple bilateral agreements.

Saudi National Bank Posts SAR 5B Q3 Profit

The Saudi National Bank(1180.SA) today reported its Q3 2023 financial results. Gross income rose 46.7% to SAR 13.1B, and net profit reached SAR 5B, a 6% YoY increase. Operating expenses decreased by 10% to SAR 2.7B. For the first nine months of 2023, net profit was up 8.92% to SAR 15B. Reasons for the increase include higher operating income and lower net impairment charges. The stock fell 1.59% to close at SAR 31.00 yesterday.

Banque Saudi Fransi Q3 Profit Soars to SAR 1.25B

Banque Saudi Fransi(1050.SA) today announced its financial results for Q3 2023 with net profit rising 29.55% YoY to SAR 1.25B. Gross income grew by 54.45% to SAR 3.49B. Total operating expenses saw a modest increase of 9.14% to SAR 740M. For the nine-month period, the bank reported a net profit of SAR 3.4B, up 27.06% YoY. The increase in net profit is mainly attributed to higher operating income, partially offset by an uptick in operating expenses, specifically salaries and employee-related expenses. The stock dipped 0.15% yesterday to close at SAR 33.95.
 

SASCO's Q3 Revenue Rises, Net Profit Plummets 44.84%

In Q3 2023, Saudi Automotive Services Co.(4050.SA) (SASCO) saw a 3.66% rise in Sales/Revenue to SAR 2.32B, according to today's announcement. However, Net Profit after Zakat and Tax plummeted by 44.84% to SAR 12.98M. The decline is attributed to increased costs, notably in sales and financing, outweighing any revenue gains. SASCO's stock fell by 5.04% yesterday to close at SAR 58.4.

US snapshot

Apple's $1 Billion AI Bet to Rival Google and Amazon

Apple Inc.(AAPL.US) is reportedly investing heavily in various AI aspects to catch up with rivals like Google (Alphabet Inc. Class C(GOOG.US)), Microsoft Corporation(MSFT.US), and Amazon.com, Inc.(AMZN.US), allocating an estimated $1 billion annually. The move comes as Apple has felt the impact of the rise of AI tools like ChatGPT. Analysts suggest that Apple may integrate generative AI into iPhones and iPads as early as next year, possibly combining cloud and "edge AI," starting from iOS 18 and iPadOS 18.

Nvidia Chips to Power Future Windows PCs, Stocks Surge

NVIDIA Corporation(NVDA.US) is reportedly developing a computer chip for Microsoft Corporation(MSFT.US)'s Windows OS, expected to hit the market by 2025. This move is part of Microsoft's collaboration with chip companies to build ARM-based processors for Windows PCs. Following the news, Nvidia and ARM saw an increase in intraday trading, closing up 3.8% and 4.9% respectively.

Intel Targets 100 Million AI Applications, Q3 Earnings Awaited

Intel Corporation(INTC.US) aims to accelerate AI applications in the overall PC industry through a global innovation initiative, targeting over 100 million AI applications by 2025. Intel will announce its Q3 earnings on October 26th after the U.S. market closes. Market expectations for Intel's Q3 revenue stand at $12.82 billion with an EPS of $0.20, compared to last year's same-period revenue of $15.25 billion and EPS of $0.59.

Chevron-Hess $53 Billion Deal Shakes Oil Market, Shares Drop

Chevron Corporation(CVX.US) shares fell 3.69% after announcing a $53 billion all-stock deal to acquire Hess Corporation(HES.US), the fourth-largest U.S. oil company, bringing the total enterprise value to $60 billion, including debt. Analysts say the acquisition aims to boost production, indicating U.S. oil industry's optimism for fossil fuels. Hess shares closed down 1.06%.

IV. Upcoming Events

Economic Calendar

Earnings Calendar

[This newsletter is written and edited by Bruce from Sahm News Team]