Foreign energy companies continue operations as usual, senior Iraqi official says
Foreign energy companies are continuing their operations as usual, a senior Iraqi official overseeing operations in southern oilfields told Reuters on Thursday, as the US prepares a partial evacuation of its embassy in Baghdad.
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Arab News
2 hours ago
- Arab News
Pakistan set to hold rates as Israel-Iran conflict overshadows growth push
KARACHI: Pakistan's central bank is expected to hold its policy rate on Monday, a Reuters poll showed, as many analysts shifted their previous view of a cut in the wake of Israel's military strike on Iran, citing inflation risks from rising global commodity prices. Israel said on Friday it targeted nuclear facilities, ballistic missile factories and military commanders in a 'preemptive strike' to prevent Tehran from building an atomic weapon. Several brokerages had initially expected a cut but revised their forecasts after the Israeli strikes sparked fears of a broader conflict. The escalating hostilities triggered a sharp spike in oil prices — a worry for Pakistan given the broader impact on imported inflation from a potentially prolonged conflict and tightening of crude supplies. Eleven of 14 respondents in a snap poll expected the State Bank of Pakistan (SBP) to leave the benchmark rate unchanged at 12 percent. Two forecast a 100 basis-point cut and one predicted a 50 bps cut. 'There remains an upside risk of a rise in global commodity prices in light of geopolitical tensions which could mark a return to inflationary pressures,' said Ahmad Mobeen, senior economist at S&P Global Market Intelligence. 'The resultant higher import bill could also threaten external sector performance and bring pressure to the exchange rate.' Inflation in the South Asian country has been declining for several months after it soared to around 40 percent in May 2023. Last month, however, inflation picked up to 3.5 percent, above the finance ministry's projection of up to 2 percent, partly due to the fading of the year-go base effects. The SBP expects average inflation between 5.5 percent and 7.5 percent for the fiscal year ending June. The central bank paused its easing cycle in March after cumulative cuts of 1,000 basis points from a record high of 22 percent, and resumed it with a 100-basis-point reduction in May. The policy meeting follows the release a tight annual budget, which saw Pakistan raise defense spending by 20 percent but overall expenditure was reduced by 7 percent, with GDP growth forecast at 4.2 percent. Pakistan says its $350 billion economy has stabilized under a $7 billion IMF bailout that had helped it staved a default threat. Some analysts are skeptical of the government's ability to reach the growth target amid fiscal and external challenges. Abdul Azeem, head of research at Al Habib Capital Markets, which forecast a 50-bp cut, said a lower rate could 'support the GDP target of 4.2 percent and reduce the debt financing burden.'
Argaam
2 hours ago
- Argaam
Market Performance: What to expect on ME tensions?
Tadawul All Share Index (TASI) ended the week 1.5%, or 164 points, lower at 10,841, as geopolitical tensions in the Middle East intensified. Israel launched airstrikes early today on sites inside Iran, in a major escalation of the crisis surrounding Tehran's nuclear program. The strikes reportedly targeted nuclear facilities. In response, global oil prices surged, with Brent crude jumping 8% to surpass the $75 per barrel mark.
Arab News
2 hours ago
- Arab News
State-led startup momentum poised for sustainable growth under Vision 2030
RIYADH: Amid a record-breaking surge in venture funding and a wave of regulatory reforms, Saudi Arabia is drawing global attention for its ambitious push to build a vibrant startup economy. The Kingdom's entrepreneurial landscape is being reshaped thanks to the work of Saudi Venture Capital, a subsidiary of the National Development Fund, and incubation support from the Small and Medium Enterprises General Authority, known as Monsha'at. With government capital underwriting much of the early momentum, the challenge now lies in translating that support into private-sector-driven sustainability, with some market observers cautioning against confusing rapid growth with long-term sustainability. 'The long-term sustainability of this support will depend on continued private-sector participation and market-driven investment flows,' Philip Bahoshy, CEO of MAGNiTT, told Arab News in an interview. He accepted that sovereign-led investment vehicles have played a foundational part in catalyzing early-stage innovation, saying: 'Saudi initiatives like SVC and Monsha'at have played a critical role in expanding access to capital, fostering entrepreneurship, and developing the broader startup ecosystem.' Bahoshy cited SVC's strategy of acting as a fund-of-funds as a key mechanism for increasing market liquidity, alongside new instruments such as venture debt and private equity. These tools are designed not only to finance startups but to build institutional depth across the capital stack. Beyond financial capital, the initiatives have emphasized ecosystem development through mentorship and education. 'Another key pillar is their focus on education — whether they be in-person events or the content they share through sponsorships like MAGNiTT — to educate the market,' Bahoshy added. Monsha'at, he added, has expanded its support through physical incubators and SME-focused regulatory facilitation, helping reduce barriers for company formation and early operations. Capital drives diversification For Said Murad, senior partner at Global Ventures, these efforts are not just supportive — they are catalytic. 'SVC has invested in 54 private capital funds that invested in over 800 startups and SMEs via $3 billion in AUM (assets under management). This has resulted in entrepreneurship growth and economic diversification,' the venture capitalist told Arab News in an interview. Murad added that this flow of capital has had knock-on effects beyond startups, helping to 'drive jobs and economic growth' across sectors and enabling venture firms like his to back 'emerging technologies across platforms built by exceptional founders.' In assessing sustainability, the venture community is looking for more than just headline investment totals. Bahoshy pointed to a broadening of sector focus as a positive indicator. 'Indicators of sustainable growth include diversified sector investment, rising follow-on funding rounds, and an increasing number of successful exits,' he said. MAGNiTT's recent report with the National Technology Development Program, he noted, shows Saudi Arabia outperforming the wider Middle East and North Africa region on follow-on investment metrics — evidence of startups moving successfully through the funding pipeline. Murad emphasized deal activity and capital market maturation. 'Achieving a record number of deals in 2024 (178), which was 31 percent of MENA's total deal number, reflects positively on activity,' he said. He also cited the growing pipeline of exits and public listings, saying: 'More than 50 IPO applications are currently under review by the regulator and the exchange, showing further momentum in the Saudi market.' The increase in mergers and acquisitions transactions — up 17.4 percent year on year — suggests the market is entering a phase of consolidation and liquidity, which is critical for long-term investor confidence, he stated. Still, the pace and scale of state-backed capital injections have prompted some caution. 'Concerns about government-driven funding inflating valuations remain,' Bahoshy warned. He stressed the need to monitor startup profitability, organic market demand, and the inflow of non-government capital to guard against artificial inflation. In his view, sustainable ecosystems are those where 'startups demonstrate strong unit economics' and attract both domestic and international private capital. Murad agreed that macroeconomic indicators must be matched with real operational progress. 'From an investor's perspective, distinguishing between real market development and an overheated ecosystem requires a mix of macroeconomic signals and sector-specific insight,' he said. Those metrics include gross domestic product growth, employment contribution, and non-oil revenue gains. At a sectoral level, fintech remains a bellwether. 'In fintech, for example, sustained growth in digital payment adoption, rising financial inclusion, and tangible collaboration between fintech and incumbent banks signal structural integration rather than hype,' Murad explained. On the structural side, Saudi startups face a different set of challenges as they scale regionally and globally. While local capital and infrastructure offer a strong base, market fragmentation across the MENA region presents real operational hurdles. 'Key challenges include regulatory differences, talent mobility constraints, and fragmented market demand,' Bahoshy said. In particular, sectors such as fintech and health tech often require jurisdiction-specific compliance, which can stretch the resources of scaling companies. Murad underscored the importance of localization and talent strategy in overcoming those barriers. 'Startups operating in sectors such as fintech or health tech may find it particularly difficult to navigate differing compliance standards and approval timelines,' he said, adding that hiring local talent is often critical. 'Our portfolio company Rabbit, a hyperlocal e-commerce platform, has made the recruitment of local employees a key part of its Saudi market entry strategy,' said Murad. Despite these headwinds, both Bahoshy and Murad see a strategic shift toward long-term market integration. 'Saudi startups are increasingly positioning themselves as regional leaders within MENA,' Bahoshy said, with many expanding into the UAE, Egypt, and other Gulf Cooperation Council markets. Murad added that founders are building their businesses 'with scalability in mind,' and are 'leveraging the Kingdom's strong capital base, infrastructure, and Vision 2030 momentum to compete across borders.' Next growth phase Ultimately, the next phase for Saudi Arabia's startup ecosystem will depend on how effectively it balances public ambition with private execution. While Vision 2030 provides a powerful narrative and institutional backing, sustained impact will be measured by market maturity, depth of innovation, and the ability of startups to solve real problems across borders and sectors. As Saudi Arabia's startup ecosystem transitions from state-backed momentum to market maturity, investors and policymakers are shifting their focus from funding volume to long-term value creation. This next phase will test whether startups can scale beyond subsidized growth and become embedded drivers of innovation across sectors and borders. 'What often matters most is on-the-ground visibility: how embedded startups are in daily life, how their products are solving real problems, and how much institutional trust they've earned,' said Murad. That visibility — whether in finance, healthcare, or logistics — is increasingly seen as a litmus test for lasting impact. Startups that succeed in the Kingdom are now expected to meet regulatory standards, address market needs, and contribute to non-oil GDP. Murad pointed to the fintech sector, where startups are not only attracting investment but also becoming integral to the financial system through collaboration with banks and the adoption of digital infrastructure. He noted that alignment with national priorities, like those in the Financial Sector Development Programme, helps reinforce sector-wide progress. Regional expansion remains an important strategic goal, but the road to cross-border growth is uneven. Bahoshy pointed out that as Saudi startups expand into nearby markets, they encounter challenges such as varying regulations, limited movement of skilled talent, and inconsistent consumer demand across the region. To mitigate these challenges, firms are increasingly investing in local knowledge and partnerships rather than applying one-size-fits-all models.
