00:00 We will now go to Mr. Mohammad Al-Omra, President of the Gulf Central Bank for financial consultations.
00:06 Mr. Mohammad, welcome to our show and thank you for being here.
00:10 As the second show of the week, we are back to 12,300 points.
00:14 Although we are welcoming a new investor today to achieve profits,
00:19 but the market seems to be taking the direction of oil stocks
00:24 and is going back to them after Aramco's decision to lower prices for its customers.
00:28 Is this a temporary trend in your opinion?
00:30 And therefore, we will return to the 12,300 points during the remaining sessions of this week.
00:38 In the name of God, the most merciful.
00:40 I mean, of course, what you said is true,
00:43 because of the effect of oil prices on government wills and on liquidity and so on.
00:49 But also, the global markets are in a period of correction,
00:53 which is about a week.
00:55 And therefore, the market was ignoring the movements of the global markets
01:01 and in fact, it has had a negative effect for a short period of time for several days.
01:06 We saw the Saudi market continue the path of rising prices
01:11 and reached the target of about above the level of 12,300.
01:16 But of course, we now have more than two months.
01:20 Even the correction process that took place at the end of last week
01:24 is not considered a correction in the known sense,
01:27 because the market has been ignoring it for less than 24 hours and has reversed its course again.
01:32 And therefore, we have reached a strong resistance point in the market,
01:36 which is the area between 12,300 and 12,400.
01:40 And it was natural for us to enter the correction process.
01:42 And I think today is the first head of the correction process that the market is starting.
01:47 Of course, today's market was under pressure from most of the leading sectors,
01:51 banks in the first place, and also communications and some of the main materials.
01:56 At the same time, the energy sector has reversed its course.
02:00 But what is interesting, as you mentioned, Maysa, at the beginning of the report,
02:04 is that the value of the exchanges is high.
02:06 We have now had about a week of unusual levels in terms of the value of daily exchanges.
02:14 At the end of last week, we saw over 11 billion in one session.
02:19 Today, we are close to about 9 billion.
02:23 And therefore, the liquidity is very high at the peak.
02:26 And this is not a healthy indicator.
02:30 We wish that the value of the exchanges would be at the bottom, not at the top.
02:34 But in general, optimism is still dominant in the market.
02:37 And even at this moment, despite the state of the correction,
02:40 the market is still maintaining its upward trend.
02:43 But the expected entry into the correction may continue for several days
02:48 or even for a week or 10 days.
02:50 MBC today, a 30% rise, Mr. Mohamed.
02:54 And this is the first time we are seeing this in 2024.
03:00 How much will it be able to absorb some of the liquidity we are seeing in the market?
03:05 At least in the first month of the new year.
03:09 We have been talking about this since the morning.
03:12 Because today, the percentage of the correction is 30%.
03:15 At the time, the trading was, as far as I remember, only 100 million.
03:19 And in order to be able to judge the effect of liquidity on the MBC group,
03:26 I think we must open the ratio and see the point of equilibrium.
03:30 And I think maybe tomorrow we will see this equilibrium and stability.
03:35 And therefore, we will see higher liquidity rates than the levels we had today.
03:41 And this, of course, shows that in general, the levels,
03:48 and specifically in the media sector, I think are very useful.
03:53 And it attracted a large number of investors,
03:57 indicating that the book is covered by very large numbers.
04:00 And also today, the correction ratio is 30%,
04:06 even though there are no offers.
04:11 And it was natural to see this huge amount of liquidity,
04:15 despite the optimism and great interest in the primary public investments.
04:20 Extra also opened the season with the announcement of the results of the payment sector.
04:25 It is clear that the company, we started to see unrepeated losses, Mr. Mohamed.
04:31 And it was announced earlier that the company will stop operations in Egypt
04:36 due to fluctuations, whether at the level of the economy or even the currency.
04:40 Is it able, in your opinion, to compensate some of these losses
04:44 by other investments, at least at the domestic level?
04:49 It is natural that the company must focus on its main activity in the Kingdom,
04:56 since this is the main market and this is the important source of will.
05:01 It is known that the company has suffered losses,
05:06 and stopped operations, and other things.
05:09 In my opinion, I see excellent results, in fact.
05:12 If we look at it on an annual or separate basis,
05:15 we see growth in sales, we see growth in profit,
05:20 despite the fact that the sales are single digit, not very high,
05:25 higher than two channels, it remains one channel.
05:28 But despite these results, I see it very good for the company's performance,
05:34 especially that this growth came from the operating sectors
05:37 and is distributed to most of the company's sectors,
05:40 whether it is in sales, or in consumer financing and other things.
05:46 This makes it clear that the company, in fact, I see its performance is good.
05:49 It is true that Egypt's losses amount to 32 million,
05:53 which is still a small amount for the overall profit,
05:57 even if we look at the net assets or sales,
06:02 it is still a very modest number,
06:04 and it is easy for the company to cover or overcome this crisis.
06:07 But the lesson learned is that we should not go to distant markets
06:13 that may harm the main activity, which is the Kingdom and the Arabian Gulf markets,
06:18 because this is the main source and the company has succeeded in it.
06:21 I think we should invest and focus more on the main activity
06:26 instead of going to the outskirts and in areas that may be relatively far away
06:31 and therefore the risk is much higher than the main activity.
06:36 Many industrial companies are now starting to receive some signals from Aramco
06:44 that the fuel prices are rising, and we are still in a relatively incomprehensible situation
06:50 with the cost of financing from the central banks and the central banks around the world.
06:54 Mr. Mohamed, how is the cost of financing and the fuel prices today
06:58 affecting the industrial companies in the Saudi market
07:02 and their future at least for the first quarter of this year?
07:07 A good question, because first of all, we must divide the industrial companies.
07:12 There are companies that have announced their impact on the rise in fuel prices or energy,
07:19 but we can say that most of them are petrochemical companies or energy-related companies.
07:25 Their impact was limited.
07:27 The highest impact was on what was mentioned earlier, the food companies and SIPCM,
07:34 which was about 3.5% of the total sales.
07:38 It remained a small percentage, but it is now understood by the cement companies,
07:47 because cement companies have not yet determined the impact ratio and need some time,
07:53 and its impact may be greater.
07:55 But we see that this is a necessary correction in prices, and I think even in the future,
08:01 prices may also rise to higher levels than they were in the Saudi Vision 2030 policy
08:11 by reaching the reference prices, which means that global prices must reach sooner or later
08:18 for industrial companies.
08:20 This will certainly enhance the efficiency of energy exploitation for industrial companies,
08:26 but we are also in a moment of anticipation to study the impact of energy rise,
08:32 even if it is modest, but there may be surprises for cement companies,
08:39 even if the cost is relatively high.
08:43 We will wait for these data from the companies.
08:47 Mr. Mohamed El Omran, President of the Gulf Center for Financial Consultations,
08:51 thank you for being with us today.
08:53 Thank you, welcome.
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