COVID-19 pandemic has ‘permanently affected’ Saudi shopping habits, says expert

COVID-19 pandemic has ‘permanently affected’ Saudi shopping habits, says expert
About 4 of 10 consumers in Saudi Arabia said that their shopping habits have permanently changed due to the coronavirus pandemic. (AFP file photo)
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Updated 26 February 2021

COVID-19 pandemic has ‘permanently affected’ Saudi shopping habits, says expert

COVID-19 pandemic has ‘permanently affected’ Saudi shopping habits, says expert

RIYADH: Shopping habits have changed permanently for 42 percent of Saudi consumers during the pandemic, according to a new report by global consultancy firm Simon-Kucher & Partners. 

Only 6 percent of respondents of the survey in Saudi Arabia said that their shopping habits had not changed at all while 52 percent said that their habits had changed temporarily. 

In an interview with Arab News, Lovrenc Kessler, managing partner of Simon-Kucher’s Dubai office and co-author of the report, spoke in detail about the findings and his predictions for the future.

“I found it very interesting that the pandemic had a very different impact on local shopping behavior,” he said. “Consumer behavior really shifted globally. So, for example, there was an increase in demand for toilet paper in Germany, or pasta in Italy. In the Middle East, there was a large increase in the demand for fitness equipment. Yoga mats, weights, kettle bells, and so on.” 

FASTFACTS

Healthier food options are generally more expensive than processed or fast-food options, one of the main factors that contributes to the Kingdom’s staggering obesity rate of more than 40 percent.

Increased demand for healthier food has sparked companies in the region to provide more organic and healthy options.

According to the report, 65 percent of Saudi consumers said that they would be willing to pay more for foods and drinks that do not contain undesirable ingredients; 58 percent wished for more “all-natural” food products on store shelves.

However, the fact remains that healthier food options are generally more expensive than processed or fast-food options, one of the main factors that contributes to the Kingdom’s staggering obesity rate of more than 40 percent.

The increased demand has nonetheless sparked companies in the region to provide more organic and healthy options. Carrefour, for example, is expanding their organic section of local produce and has signed an agreement with Emirates Bio Farm to source up to 450 tons of organic produce to support this drive.

Additionally, the Simon-Kucher and Partners report showed that, due to the pandemic, 44 percent of Saudis were looking to reduce spending, 44 percent were prioritizing value for money when making purchases, and 48 percent were constantly on the lookout for bargains and deals.

In terms of hygiene consciousness, Kessler also noted that retailers themselves were approaching the issue from different perspectives and trying to emphasize its importance. 

“Clearly, their efforts have eased the minds of shoppers to a very large extent. I have seen it myself in retail chains that operate in the UAE and the KSA, where they would be disinfecting carts, handing out gloves, making sure that people always have a mask on. That has been a part of the entire service proposition, and has even served as a sort of competitive aspect for them to differentiate themselves from the competition and attract customers,” he said.

From a consumer aspect, the study found that 84 percent said that they were being hygiene cautious, 84 percent reported avoiding rush hours, and only 20 percent said they were shopping as usual.

As for e-commerce, Kessler believes that while the prevalence of shopping online has increased as a result of the pandemic, it is unlikely to ever replace the brick-and-mortar stores completely.

“E-commerce definitely will not replace the physical shopping experience, especially not in the GCC region or in the Middle East. Shopping malls will always be a place to visit with family and friends, especially during the hot summer months,” he said.

However, he does believe that the e-commerce percentage will continue to increase, due to the convenience it offers, while the drawbacks of online shopping, such as being unable to choose your own produce or replace unavailable items with choices of your own, will ensure that physical shopping remains a strong option. 

“It has opened up new options for shopping, such as grocery shopping online, something that was not very typical pre-COVID, but a lot of shoppers have now adapted to it. But the question of how much farther it will continue to rise, or whether it will experience a dip in future, really depends on companies and what type of offers they have,” he said.


Saudi Arabia, Greece agree to establish business council

Saudi Arabia, Greece agree to establish business council
Updated 8 sec ago

Saudi Arabia, Greece agree to establish business council

Saudi Arabia, Greece agree to establish business council
RIYADH: The Council of Saudi Chambers has signed a memorandum of understanding (MoU) to establish a Saudi-Greek Business Council to enhance bilateral trade and investment between the two countries, SPA reported.

The body will aim to open new areas for economic cooperation, facilitate continuous interaction between the Saudi and Greek business sectors, and remove obstacles to doing business.

The new council will also exchange information on available markets and investment opportunities, enable commercial and investment partnerships, and provide recommendations to the relevant authorities in the two countries to improve economic relations.

The agreement stipulates that the joint business council will consist of representatives of Saudi and Greek business owners interested in investment and trade, and the council will hold periodic meetings in Riyadh and Athens to discuss opportunities for trade and investment cooperation between the two countries.

Greek exports to Saudi Arabia slumped to $339 million in 2020 from more than $800 million in 2019, according to the United Nations Comtrade database. Of that, $202.5 million was fuel and distillates and $18.6 million was vegetable, fruit and nut preparations.

Saudi Arabia exported $184.2 million of goods to Greece in 2019, $111.9 million of which was plastics, followed by $47.5 million of copper.

China’s central bank rules all crypto transactions are illegal

China’s central bank rules all crypto transactions are illegal
Updated 24 September 2021

China’s central bank rules all crypto transactions are illegal

China’s central bank rules all crypto transactions are illegal
  • The global values of cryptocurrencies including Bitcoin have massively fluctuated over the past year partly due to Chinese regulations
  • Bitcoin, the world’s largest digital currency, and other cryptos cannot be traced by a country’s central bank, making them difficult to regulate

BEIJING: China’s central bank on Friday said all financial transactions involving cryptocurrencies are illegal, sounding the death knell for the digital trade in China after a crackdown on the volatile currencies.
The global values of cryptocurrencies including Bitcoin have massively fluctuated over the past year partly due to Chinese regulations, which have sought to prevent speculation and money laundering.
“Virtual currency-related business activities are illegal financial activities,” the People’s Bank of China (PBOC) said in an online statement Friday, adding that offenders would be “investigated for criminal liability in accordance with the law.”
The notice bans all related financial activities involving cryptocurrencies, such as trading crypto, selling tokens, transactions involving virtual currency derivatives and “illegal fundraising.”
Bitcoin, which had already been falling before the announcement, sank by as much as 8.9 percent to $41,019 in European afternoon trading before recovering slightly later in the day.
The central bank said that in recent years trading of Bitcoin and other virtual currencies had become “widespread, disrupting economic and financial order, giving rise to money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities.”
This was “seriously endangering the safety of people’s assets,” the PBOC said.
While crypto creation and trading have been illegal in China since 2019, further crackdowns this year by Beijing warned banks to halt related transactions and closed much of the country’s vast network of bitcoin miners.
Friday’s statement by the central bank sent the strongest yet signal that China is closed to crypto.
Bitcoin, the world’s largest digital currency, and other cryptos cannot be traced by a country’s central bank, making them difficult to regulate.
Analysts say China fears the proliferation of illicit investments and fundraising from cryptocurrency in the world’s second-biggest economy, which also has strict rules around the outflow of capital.
The crypto crackdown also opens the gates for China to introduce its own digital currency, already in the pipeline, allowing the central government to monitor transactions.
In June, Chinese officials said more than 1,000 people had been arrested for using the profits from crime to buy cryptocurrencies.
Several key Chinese provinces have banned the operation of cryptocurrency mines since the start of this year, with one region accounting for eight percent of the computing power needed to run the global blockchain — a set of online ledgers to record bitcoin transactions.
Bitcoin values tumbled in May on the back of a warning by Beijing to investors against speculative trading in cryptocurrencies.
“China’s ban on all cryptocurrency trading activity will have some short-term impact on currency valuation, but long-term implications are likely to be muted,” said Ganesh Viswanath Natraj, Assistant Professor of Finance at Warwick Business School.
“This ban will result in the migration of crypto investment opportunities to other hubs in Asia, such as Singapore’s launch of the DBS digital currency exchange earlier this month,” he added.


Saudi Arabia insurance reforms will enhance sector — CAIS CEO

Saudi Arabia insurance reforms will enhance sector — CAIS CEO
Updated 24 September 2021

Saudi Arabia insurance reforms will enhance sector — CAIS CEO

Saudi Arabia insurance reforms will enhance sector — CAIS CEO
  • Adoption of IFRS 17 standards will increase investment in the sector

RIYADH: Saudi Arabia may be the first country in the world to witness a merger between three insurance companies following regulatory reforms, according to Sulaiman Binmayouf, CEO at United Co. for Actuarial Services CAIS.

Many of Saudi Arabia’s 29 insurance companies need capital infusions or mergers to meet the requirements of regulators, after they ordered to triple capital to SR300 million from SR100 million, Binmayouf said.

The Kingdom’s insurance companies are only profitable with high premiums, some of which they have to freeze as reserves, meaning they can’t invest the money, he said.

However, he expects the adoption of IFRS 17 standards by the insurance sector in the Kingdom will help solve the problem.

IFRS 17 is an International Financial Reporting Standard that was issued by the International Accounting Standards Board in May 2017.

The financial statements of insurance companies on the Capital Market Authority (CMA) website are not sufficient for taking an investment decision, said Binmayouf.

The standard will provide a more accurate supervision and disclosure process in the development of financial statements, giving investors a clearer idea of whether they want to invest in the company or not, he said.

“Investors should look at the status of insurance companies in terms of the board of directors and committees, and review the strategic plan and financial statements to make the investment decision,” he said.

That will lead to more capital flowing into the insurance sector, while supporting its stability, he said. IFRS 17 will be implemented in stages, as decided by the central bank.


Fed policy tightening not all bad for Gulf economies — Jefferies

Fed policy tightening not all bad for Gulf economies — Jefferies
Updated 24 September 2021

Fed policy tightening not all bad for Gulf economies — Jefferies

Fed policy tightening not all bad for Gulf economies — Jefferies
  • A likely strengthening of the dollar, to which Gulf currencies are pegged, may push down inflation, because it makes imports less expensive

RIYADH: The impending end of super-loose monetary policy from the Federal Reserve will have both positive and negative effects on the economies of the Arabian Gulf, according to Alia Moubayed, a managing director at investment bank Jefferies International.

A likely strengthening of the dollar, to which Gulf currencies are pegged, may push down inflation, because it makes imports less expensive, Moubayed said in an interview with Asharq.

Higher interest rates on dollar-denominated assets tend to lead to outflows from emerging markets, but Moubayed said that the Gulf markets have recently witnessed an influx of foreign capital, especially into stocks, and so should not be affected as badly as many of their EM peers.

Higher interest rates will increase the financing burden on governments with large budget and trade deficits, such as Bahrain, Moubayed said.

However, countries such as Qatar, Saudi Arabia and the UAE will “benefit from shrinking deficits due to the rise in oil prices and the increase in revenues in national currencies,” she said.

The Federal Reserve announced yesterday that it will likely start reducing its asset purchase program soon, and said policy makers are increasingly minded to start raising interest rates in 2022 instead of 2023 as previously envisioned.

If progress toward employment and inflation targets continues, the slowdown in asset purchases may start in November and end in mid-2022, the Fed said.


APICORP sukuk program given expected AA rating by Fitch

APICORP sukuk program given expected AA rating by Fitch
Updated 24 September 2021

APICORP sukuk program given expected AA rating by Fitch

APICORP sukuk program given expected AA rating by Fitch
  • A default in APICORP's sukuk program would be considered a default in the parent, Fitch said

RIYADH: APICORP, the multilateral development bank set up by Arab oil producers, has received a rating of AA(EXP) by Fitch for its sukuk program.

APICORP Sukuk Ltd. (ASL) is incorporated in the Cayman Islands with the sole purpose of issuing Islamic debt. The final rating is contingent on Fitch receiving documents that support information already provided.

ASL is expected to receive the same AA rating as APICORP as a default in the sukuk program would be considered a default in the parent, Fitch said. APICORP’s rating is based on Fitch’s solvency and liquidity assessment and a “medium risk” business environment.

APICORP was established in 1975 by the 10 members of the Organization of Arab Petroleum Exporting Countries (OAPEC) with the aim of developing the Arab world’s energy sector through equity investment, debt financing, financial advisory and energy research services.