Saudi stocks dive after finance minister vows 'painful' measures

DUBAI: Saudi shares tumbled today, a day after the finance minister announced "painful" measures to tackle the economic impacts of the coronavirus pandemic.

The Tadawul stock market closed the day a huge 7.4% lower, as all but one of the 195 listed stocks on the Arab world's largest bourse were in the red. Energy giant Saudi Aramco skidded 5.2% at the close of the first trading day of the week.

Finance Minister Mohammed al-Jadaan said late Saturday that the kingdom would take "drastic measures" to face the double shock of the novel coronavirus and low oil prices.

"Some of these measures could be painful," he said in an interview with Saudi-owned news channel Al-Arabiya.

The minister expected that Riyadh could lose half of its oil income, which contributes about 70 percent of public revenues, as oil prices have shed two-thirds of their value since the start of the year.

Jadaan said the government had allocated US$48 billion as stimulus to assist the economy in the face of the coronavirus impacts. He said the world's leading crude exporter would borrow close to US$60 billion this year to plug a huge budget deficit.

The company Saudi Jadwa Investment forecast on Thursday that the kingdom would post a record US$112 billion budget deficit this year.

The International Monetary Fund in April projected that the Saudi economy would contract by 2.3% this year. And London-based Capital Economics said last week the contraction would be at least 5.0%, one of the biggest drops in several decades.

Moody's Investors Service on Friday changed Saudi economic outlook to negative from stable but affirmed its A1 ratings.

"The negative outlook reflects increased downside risks to Saudi Arabia's fiscal strength stemming from the severe shock to global oil demand and prices triggered by the coronavirus pandemic," the rating agency said.

In other bourses in the oil-rich Gulf, the Dubai Financial Market slumped 4.0% at close while its sister Abu Dhabi Stock Exchange ended down 2.8%. Qatar's bourse finished 0.9% lower while Kuwait's premier index and all-shares index closed down 2.0% and 1.8% respectively. The small bourses of Oman and Bahrain were flat.

Oil revenues make up at least 70% of public revenues in each of the six Gulf Arab states. – AFP

source https://www.thesundaily.my/business/saudi-stocks-dive-after-finance-minister-vows-painful-measures-IB2366802