Key Takeaways

1. Saudi April Inflation Stable at 1.6%, Housing Prices Key Driver;
2. Natural Gas Distribution Board Decides to Transfer to Main Market;
3. Al Mawarid Manpower Qtrly Profit Rises;

I. Market Recap

Saudi Arabia's Tadawul All Shares Index(TASI.SA) decreased by 0.15% and the Parallel Market Capped Index (NomuC)(NOMUC.SA) increased by 0.03% on Wednesday. Saudi Industrial Development Co.(2130.SA) emerged as the top performer, while Basic Chemical Industries Co.(1210.SA) witnessed the most significant drop.

As of Wednesday’s close, the S&P 500 index(SPX.US) increased by 1.17%, the NASDAQ(IXIC.US) rose by 1.40%, and the Dow Jones Industrial Average(DJI.US) increased by 0.88%.

II. Flash Headlines

Saudi April Inflation Stable at 1.6%, Housing Prices Key Driver

Saudi Arabia’s inflation rate held steady at 1.6% in April, consistent with the previous month, influenced mainly by a 0.4% increase in housing-related expenses. A slight overall 0.3% rise in the Consumer Price Index was recorded in April over March. Increases were also observed in the costs of personal goods and services (1.2%), food and beverages (0.2%), clothing and footwear (0.6%), and recreation and culture (0.7%). In contrast, furnishing and home equipment prices dropped by 0.5%, notably in furniture, carpets, and flooring.

GCC Banks to Keep Strong Profits in 2024 Amid Postponed US Fed Rate Cut

S&P predicts strong GCC bank profits in 2024 due to delayed US rate cuts. US Fed’s steady rates support asset quality while GCC central banks maintain currency pegs through similar policies. Minor profit dip expected in 2025 if rate cuts commence.

US April CPI Eases, Rate Cut Unlikely Before September

US April CPI slows slightly, marking the smallest annual core CPI rise since April 2021, in line with expectations. “New Federal Reserve Communications” notes many Americans still face high-cost pressures, with more CPI reports needed to boost Fed confidence. The Fed is unlikely to cut rates before September. April CPI data suggests a chance of rate cuts later this year, easing concerns of further rate hikes.

III. Stocks To Watch

SA snapshot

Electrical Industries Greenlights Saudi Transformer Factory Expansion

Electrical Industries Co.(1303.SA) has announced an expansion project for the Saudi Power Transformers Co. factory, which will enable the manufacturing of extra-high-voltage transformers and reactors. The estimated cost for the project is SAR 192 million. Construction is expected to begin in the second half of 2024, with pilot production anticipated to start in the first quarter of 2027. The expansion will be funded through available cash, debt, and other financing programs, with the goal of starting commercial production in the third quarter of 2027.

Natural Gas Distribution Board Decides to Transfer to Main Market

The board of Natural Gas Distribution Co.(9516.SA) has resolved to proceed with the transfer of the company to the main market.

Al Mawarid Manpower Qtrly Profit Rises

Al Mawarid Manpower Co.(1833.SA) reported a quarterly net profit of 26.41 million riyals, up from 22.16 million riyals in the same period last year. Quarterly sales also rose to 374.6 million riyals, an increase from 293.87 million riyals year-over-year.

USA snapshot

US Meme Stocks Plunge

US Meme Stocks Plunge, Trade Halted; GameStop Corp. Class A(GME.US) Drops 18.9%, AMC Entertainment Holdings, Inc. Class A(AMC.US) Down 20% as AMC Announces 23.3 Million Share Offering to Swap for $164 Million in 2026 Notes.

Berkshire Hathaway Unveils Investment in Chubb

After three-quarters of secrecy, Berkshire Hathaway reveals its mystery stock investment in the insurer Chubb Limited(CB.US) Limited in a regulatory filing. Moreover, Berkshire trimmed its Apple stake in Q1, though Apple remains the firm’s top holdings.

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This newsletter is written and edited by Selena from Sahm News Team