Tadawul to set off derivatives trading from next month

The Saudi Stock Exchange (Tadawul) said on Tuesday trading in the kingdom’s first exchange-traded derivatives product would start on Aug.30, part of moves to make the Saudi equity market more attractive to foreign investors.

Tadawul said the Saudi Futures 30 (SF30) Index Futures Contract was based on the MSCI Tadawul 30 (MT30) Index, and would give investors hedging tools and more opportunities to gain exposure to the Saudi capital market.

Tadawul CEO Khaled al Hussan said the new product would make the Saudi stock market more attractive, especially to foreign investors.

Saudi authorities have introduced a raft of reforms to attract overseas share buyers and issuers as part of efforts to lure foreign capital and diversify the oil-dependent economy.

In 2019, the Saudi market joined the FTSE Emerging All Cap Index and the MSCI Emerging Markets Index, triggering more foreign fund inflows.

The Saudi bourse plans to launch other derivatives-related products, like options, and complete the whole system by the end of 2021 and start of 2022, said Wael al-Hazzani, Chief Executive Office of the Securities Clearing Center Co.

Tadawul’s al Hussan told a virtual news conference the outbreak of the novel coronavirus had not significantly affected trading on the Saudi stock market, with volumes higher than last year. The benchmark stock index is down 12 per cent this year as the Saudi economy has been hurt by lockdowns imposed after the virus outbreak and a slump in oil prices.

Saudi Stock Exchange or Tadawul is the stock exchange in Saudi Arabia. It is supervised by the Capital Market Authority. It lists 171 publicly traded companies.

Meanwhile the state energy giant Saudi Aramco said on Tuesday that it will be reorganising its downstream business to support its global growth strategy, aiming to complete it by the end of this year.

The downstream model will be divided into four units: fuels including refining, trading, retail and lubes; chemicals; power; and pipelines, distribution and terminals, Aramco said in a statement.

“This reorganisation is designed to enhance the effectiveness and efficiency of Aramco’s existing downstream assets, but does not represent a fundamental change in the overall business structure,” Aramco said.

Saudi Aramco, the world’s biggest oil producing company, is expanding its downstream, or refining and marketing, business globally. It pumps around 8.5 million barrels per day (bpd) of crude, of which it exports about 6 million bpd.

Saudi Aramco plans to raise its refining capacity - inside Saudi Arabia and abroad - to 8-10 million bpd, from around 5 million bpd now. Aramco is expanding its refining business at home as well as in new markets, particularly in Asia.

In June, Aramco completed its purchase of a 70 per cent stake in SABIC, the world’s fourth-largest petrochemicals company, from for $69.1 billion.

Saudi Aramco plans webcast for its Q2, 2020 results on Aug.10, the firm said in a statement.

Saudi Arabia’s state-owned oil company Saudi Aramco will reduce its August-loading shipments of medium and heavy crude grades to at least six Asian buyers, several sources familiar with the matter said on Monday.

Buyers in China, Japan, South Korea, Taiwan and India were notified by Aramco over the weekend about the supply cuts, the sources said. This is the fourth month in a row the company is cutting shipments for heavier grades. Saudi Arabia, the largest producer and biggest exporter in the Organization of the Petroleum Exporting Countries (OPEC), has been cutting its production and exports to comply with an agreement between OPEC and allies, including Russia, to cut output by a record of 9.7 million barrels per day over May to July.

Aramco will cut Arab Heavy crude supplies for August by about 10 per cent of their contracted volumes while Arab Medium supplies were also reduced, five of the sources said. These grades are considered so-called heavier crudes because of their higher densities compared to other types of oils.

However, buyers were given the option to switch these supplies to lighter crude grades, two of the sources said.

Saudi Aramco’s previous supply cuts in Asia have been focused on these crude grades.

“They have cut supplies of medium and given us more of extra light and light (crude). Both grades suit us so there is no problem,” said an official at India’s Bharat Petroleum Corp Ltd (BPCL), adding that overall it received full nominated volumes.

Reuters