Saudi business chiefs back 2020 budget

The Saudi Budget 2020 Forum in Riyadh. (AFP)
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Updated 11 December 2019

Saudi business chiefs back 2020 budget

  • 2020 spending plan hailed as a positive driver in boosting country’s economy

RIYADH: Saudi businesses have welcomed spending plans of SR1.02 trillion ($272 billion) next year, announced by King Salman.

The Council of Saudi Chambers praised the efforts of the monarch, Crown Prince Mohammed bin Salman and others in reaching an agreement on the 2020 budget.

The government has predicted revenues of SR833 billion and a deficit of SR187 billion for next year, considered an indicator of the success of the Kingdom’s economic policies amid a bleak global economic backdrop.

Chairman of the Council of Saudi Chambers Dr. Sami Abdullah Al-Abaidi said that the Saudi business sector was optimistic about the new spending plans.

“These figures reflect the effective impact of the economic reform measures, the economy’s restructuring and diversification of sources of income,” he added.

Al-Abaidi praised the king and the crown prince for supporting the Saudi economy through numerous projects and initiatives aimed at boosting the business sector.

He said the most notable were business performance improvement initiatives, privatization, private-sector stimulation and local promotion programs.

“This has paved the way for the Kingdom to get the best international classifications, including its first world ranking in business environment reforms, which made it a hub for investments,” Al-Abaidi added.

The business chief reiterated King Salman’s determination to continue implementing reforms, diversifying sources of income, making optimal use of resources, empowering the private sector, and improving transparency and efficiency in government spending to boost growth rates.

“These trends are one of the most important requirements for achieving the Kingdom’s Vision 2030,” he said.

The council’s vice chairman, Muneer bin Saad, said the budget for the new year focused on investing in the human element and sectors that directly affected the lives of citizens, including the development of services.

Saad added the monarch had directed to extend the disbursement of the cost of living allowance until the end of 2020.

Council member Abdullah Al-Odaim said the budget met the expectations of Saudi citizens, and strengthened the confidence of international investors, as figures showed the determination of the state to move forward in its policies to raise the efficiency of government spending.

They also showed increases in non-oil revenues, projected to grow more in light of the improvement of economic activity.

The delegated secretary-general of the Council of Saudi Chambers, Hussain Al-Abdulqader, said the Saudi business sector welcomed the budget which through
its projects and programs would help improve investment opportunities as well as the Saudi economy, ultimately strengthening the Kingdom’s global economic standing.


Virus fears push stocks to 2-week low

Updated 28 January 2020

Virus fears push stocks to 2-week low

  • China has confirmed more than 2,700 cases of the new virus, with 81 deaths. Most have been in the central city of Wuhan

LONDON: World shares slipped to their lowest in two weeks on Monday as worries grew about the economic impact of China’s spreading coronavirus, with demand spiking for safe haven assets such as Japanese yen and Treasury notes.

The death toll from the coronavirus outbreak in China rose to 106 and the virus spread to more than 10 countries, including France, Japan and the US. Some health experts questioned whether China can contain the epidemic.

By midday in London, MSCI’s All-Country World Index, which tracks shares across 47 countries, was down 0.6 percent to its lowest since Jan. 9.

In Europe, stock markets slumped at the start of trading, tracking their counterparts in Asia. The pan-European STOXX 600 index fell 2 percent to its lowest level since Jan. 6, and the Euro Stoxx 50 volatility index jumped to its highest level since December.

“The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets,” Marc Chandler, chief market strategist at Bannockburn Securities, told clients.

In Asia, Japan’s Nikkei average slid 2 percent, the biggest one-day fall in five months. A Tokyo-listed China proxy, ChinaAMC CSI 300 index ETF, fell 2.2 percent. Many markets in Asia were closed for the Lunar New Year holiday.

US S&P 500 mini futures were last down 1.36 percent, suggesting an open in the red on Wall Street later. The VIX volatility index, also known as Wall Street’s “fear gauge,” hit its highest levels since October.

The ability of the coronavirus to spread is getting stronger and infections could continue to rise, China’s National Health Commission said on Sunday. More than 2,800 people globally have been infected.

China announced it will extend the week-long new year holiday by three days to Feb. 2 and schools will return from their break later than usual. Chinese-ruled Hong Kong said it would ban entry to people who have visited Hubei province in the past 14 days.

“While the continued spread of the virus is concerning, we were expecting that the outbreak could worsen before being brought under control,” UBS strategists wrote in a research note, adding that they expected impact on the region’s economy and risk assets to be short-lived.

“Sentiment may remain depressed in the near term, especially for those sectors most impacted, however we retain a positive outlook for emerging market stocks, including a preference for China equities within our Asia portfolios.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.45 percent, although markets in China, Hong Kong, Taiwan, South Korea, Singapore and Australia were closed on Monday.

All three major Wall Street indexes closed sharply lower on Friday, with the S&P 500 seeing its biggest one-day percentage drop in over three months.

The S&P 500 lost 0.9 percent, the Dow Jones Industrial Average 0.6 percent and the Nasdaq Composite 0.9 percent. The US Centers for Disease Control and Prevention has confirmed five case of the virus on US soil.

US Treasury prices advanced, pushing down yields. The benchmark 10-year note’s yield fell to a three-and-half-month trough of 1.6030 percent. It last traded at 1.6321 percent.

Elsewhere in bonds, the Italian 10-year yield fell to a three-month low Monday after right-wing leader Matteo Salvini failed in his bid to overturn decades of leftist rule in the northern region of Emilia-Romagna on Sunday, bringing some relief to the government.

In the currency market, the Japanese yen strengthened as much as 0.5 percent to 108.73 yen per dollar, a two-and-a-half-week high.

The euro last traded unchanged to the dollar.

China’s yuan tumbled to a 2020 low, and commodity-linked currencies such as the Australian dollar fell, as growing fears about the spread of a coronavirus from China pushed investors into safe assets.

The coronavirus outbreak also pressured oil and other commodity prices.

US West Texas Intermediate crude futures plummeted 2.69 percent to a three-and-a-half-month low of $52.13. Brent shed more than 3 percent to a three-month low of $58.50 per barrel.

Spot gold rose as much as 1.0% to $1,585.80 per ounce, the highest level since Jan. 8, as the coronavirus outbreak pushed up demand for the safe-haven metal.