Partial lifting of coronavirus curfew to revive Saudi business activity: experts

An aerial view shows deserted streets in the Saudi coastal city of Jeddah, during the novel coronavirus crisis. Construction companies in the Kingdom are allowed to resume their activities. (AFP)
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Updated 27 April 2020

Partial lifting of coronavirus curfew to revive Saudi business activity: experts

  • Kingdom’s stock exchange reacted positively to the decree to climb 3.54 percent

RIYADH: Experts have welcomed a royal decree to partially lift the coronavirus curfew across Saudi Arabia, saying it will revive business activity and increase consumption. 

The decree means the curfew is off from 9 a.m to 5 p.m. from April 26 to May 13.

Saudi Arabia’s main stock exchange reacted positively to the decree to climb 3.54 percent, the most since March 10. Seven companies reached the daily limit of 10 percent, 194 companies closed up and only one company closed down.

Bandar Alkhorayef, minister of industry and mineral resources, thanked in a tweet the country’s leadership for taking the decision.

“We ask all entities in the industry sector to comply with the preventive measures mentioned in the royal decree,” he added.

Construction companies and factories are allowed to resume their activities without restrictions on time, according to the nature of their business, the state news agency, SPA reported. 

Wholesale and retail trade stores, as well as commercial centers and malls, are also reopening. Places that will stay shut are those that do not achieve physical distance, including beauty salons, sports and health clubs, cinemas, restaurants and cafes. 

Mazen Alsudairi, the head of research at Al Rajhi Capital, said the decision would increase the scale of economic consumption and that this uptick would benefit sectors that had been hit hard by the curfew. 

“Consumption will improve, grocery retailers will continue maintaining the lead (with revenue). Other companies will also be relieved from (having) low or zero revenues such as mall retailers and retailers that were forced to switch to e-commerce,” he told Arab News.

Alsudairi said that other sectors such as construction would already be under pressure with Ramadan, which usually witnesses a slowdown of construction activities, such industries were unlikely to benefit from the decision, he added. 

He said he expected only a slight improvement in revenues for the manufacturing sector, especially those producing construction-related goods.

“In general, this is a period for the government to assess the impact of the decision to partially lift the curfew and the capability to move further, to release or loosen the restrictions further or maintain them.”

Jamal Banoon, economist and journalist writer, said the measures would speed up the country’s recovery.

“These measures will speed up the recovery of the Saudi economy and compensate the Kingdom for the losses incurred during the last two months, especially the SMEs and MSMEs that were really hit by the pandemic,” he told Arab News. “Most of the shops are going to give offers and discounts to shoppers to encourage them to come back to the malls and to whet the customers’ appetite for buying.”

He said the weeks leading up to May 13 would be a test to see if the market dealt with the partial curfew lift well by forcing people to take the appropriate preventive measure and apply the rules of social distancing. “This will facilitate our return to normal life in the period after,” he added.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 53 min 19 sec ago

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

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Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.