Gulf stocks little changed after steep declines in previous session

Dubai’s bellwether Dubai Financial Market General Index was up 0.3 percent on Monday. (AFP)
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Updated 06 January 2020

Gulf stocks little changed after steep declines in previous session

Major Gulf bourses were little changed on Monday, a day after shares in the region fell steeply due to alarm over increasing hostility between the United States and Iran, while Kuwait extended losses.

Tehran promised vengeance after a US air strike in Baghdad on Friday killed Qassem Soleimani, an Iranian top military commander and architect of its growing influence in the Middle East.

Trump also said that the US will retaliate against Iran if Tehran were to strike back after the killing.

“Escalation encourages money to leave the region and reduces investment inflows, as an actual war would be devastating for regional economies,” said Firas Modad, Middle East and North Africa director at IHS Markit. “It also raises the price of oil, but not enough to plug the hole in the Saudi budget.”

In Saudi, the index edged down 0.1 percent, with National Commercial Bank losing 0.6 percent and Saudi Aramco falling 0.1 percent to 34.5 riyals ($9.20), hitting its lowest intraday level since last month’s market debut.

Oil prices shot more than 2 percent with Brent rising above $70 a barrel, while spot gold surged close to a seven-year peak on Monday, after Trump issued a threat to impose sanctions on Iraq amid escalating tensions with Iran in the Middle East.

In Kuwait, the index declined 0.2 percent, following its biggest fall in over two years in the previous session. Mabanee Company slid 2.6 percent and Burgan Bank was down 2 percent.

Dubai’s index rose 0.3 percent as Dubai Islamic Bank was up 0.7 percent and Emaar Properties added 0.5 percent.

The Abu Dhabi index traded flat with Aldar Properties dropping 0.9 percent, whereas Dana Gas rose 1.7 percent.

The Qatari index slipped 0.1 percent, hurt by a 1.5 percent fall in lender Masraf Al Rayan and a 1.7 percent decrease in Mesaieed Petrochemical.

Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 01 October 2020

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.