Saudi Tadawul leads Gulf rally as oil prices recover

The Saudi bourse jumped 5.6 percent in opening trade on Tuesday as oil prices bounced after heavy losses. (AFP)
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Updated 10 March 2020

Saudi Tadawul leads Gulf rally as oil prices recover

  • Energy giant Aramco gains 5.5 percent
  • All the Gulf stock markets sustained heavy losses in the past two days

DUBAI: Stock markets in the energy-rich Gulf states made a strong rebound in opening trade Tuesday, led by the Saudi bourse which jumped 5.6 percent, as oil prices bounced after heavy losses.
Energy giant Aramco, which dominates the Saudi Tadawul market, gained 5.5 percent after a series of sessions in the red where it tumbled below the price where it listed last December.
Dubai Financial Market surged 5.5 percent while its sister Abu Dhabi market rose 4.2 percent, partly reversing steep declines.
Boursa Kuwait, where trading on its premier index was suspended for two days due to huge losses, rallied 6.6 percent and the Qatar stock market rose 3.0 percent.
The small bourses of Bahrain and Oman rose 1.2 percent and 0.2 percent respectively.
All the Gulf stock markets sustained heavy losses in the past two days, dropping to multi-year lows after oil producers failed to reach an agreement on output cuts in an impasse that sent oil prices crashing.
After Russia rejected calls from oil-exporting group OPEC, which includes Saudi Arabia, for deeper output cuts to combat a coronavirus-fueled slump in demand, Riyadh drove through massive price cuts in a bid to win market share.
As the confrontation flared, oil prices — the mainstay of public revenues in the Gulf states — posted the single biggest one-day loss in three decades on Monday with Brent crude sliding to $33 a barrel.
But as Brent gained more than 7.0 percent to around $37 a barrel on Tuesday, energy and global stocks also rebounded in Asian trade, a day after global equities suffered their biggest losses in more than a decade.


Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 36 min 51 sec ago

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.