March 2020: Saudi Arabia on the global frontlines to fight COVID-19

 

Saudi Arabia was among the first countries to announce a list of precautionary measures to safeguard its citizens and residents against the coronavirus (COVID-19), and it is continuously mitigating the ongoing risk by revising and introducing additional measures to control the spread of the virus.

 

Perhaps, at this stage the human aspect is of high significance, which urged King Salman to issue an order to provide free treatment to Saudis, residents, as well as everyone else infected by the virus, including visa violators or illegal residents.

 

This decision was greatly recognized by the Director General of the World Health Organization Tedros Adhanom Ghebreyesus who hoped other countries will follow the Saudi leadership.

 

On the economic level, the Kingdom announced a list of stimulus packages worth billions of Saudi Riyals to support the private sector, businesses and small and mediums enterprises (SMEs) during the coronavirus fallout.

 

Globally, Saudi Arabia chaired an extraordinary virtual summit of G20 leaders who decided to inject USD 5 trillion in the global economy to counter the impact of the pandemic.

 

Argaam takes a look at the most pressing events that marked the third month of 2020.

 

Saudi Arabia against coronavirus

 

Free treatment

 

King Salman issued an order to provide free treatment to residents, nationals, and visa violators infected with coronavirus.

 

WHO praises Saudi Arabia

 

“This is what Health For All means! Thank you so much King Salman for your leadership and commitment to ensure everyone has access to the health services needed to fight COVID19. I hope other countries will follow your lead! Solidarity,” Tedros Adhanom Ghebreyesus, Director General of the World Health Organization (WHO) said on his Twitter account.

 

SAR 120 bln initiatives

 

Saudi Arabia launched SAR 120 billion initiatives to implement urgent measures to mitigate the impact of coronavirus on the Kingdom’s economic activities.

 

KSRelief-WHO deal

 

King Salman Humanitarian Aid and Relief Center (KSRelief) signed an agreement with WHO to combat the coronavirus pandemic.

 

SAMA’s initiatives

 

Saudi Arabian Monetary Authority (SAMA), the Kingdom’s central bank, announced a number of initiatives to mitigate the impact of coronavirus, as mentioned below.

 

SAMA deferred loan installments for all individuals who lost their jobs, directly or indirectly, due to the coronavirus outbreak, including borrowers and free professions.

 

SAR 50 billion package

 

SAMA launched an SAR 50 billion financing package to support the private sector, especially small and medium enterprises (SMEs).

 

Reduction in repo rate

 

SAMA lowered its repo rate from 225 basis points (bps) to 175 bps, and its reverse repo rate from 175 bps to 125 bps, after the US Federal Reserve cut interest rates in an emergency move.

 

E-wallet ceiling

 

SAMA raised the top-up of the monthly ceiling limit for e-wallets to SAR 20,000 to boost digital payment transactions.

 

Bundle of precautionary measures

 

SAMA took a new bundle of precautionary measures including supporting banks to provide highest-quality banking services and fulfill clients' financing needs. It instructed local lenders to help private sector entities stand lower cash flows.

 

Banks response

 

Saudi banks announced the immediate implementation of the SAMA’s program to support the private sector, especially SMEs.

 

Kafalah fees

 

SAMA announced depositing SAR 6 billion in favor of financing entities to exempt the micro, small and medium enterprises (MSMEs) from the costs of the Financing Guarantee (Kafalah) program.

 

Lockdown

 

King Salman imposed lockdowns in Riyadh, Makkah and Madinah and banned residents from leaving and circulating between the Kingdom's 13 regions.

 

Prices scheme

 

The Ministry of Commerce and Investment confirmed that Saudi Arabia has a great abundance of goods and a high level of inventory.

 

“Price increase or manipulation is a red line,” it stressed.

 

Flights suspension

 

Saudi Arabia suspended all international flights to curb the spread of the Coronavirus.

Temporary closure

A number of Tadawul-listed companies temporarily closed their branches across the Kingdom, in line with the health authorities’ efforts to control the spread of coronavirus.

 

G20 against coronavirus

 

G20 to inject $5 trln

 

The G20 nations pledged a "united front" in the fight against the coronavirus pandemic, and said they will inject USD 5 trillion into the global economy to counter the impact of the crisis.

 

Collective global response

 

King Salman called on G20 countries to announce stimulus packages and business policies, in addition to working on restoring confidence in the global economy and aiding other developing countries to rebuild their economies and upgrade their infrastructures to overcome the crisis.

 

Finance and Markets

 

13 firms, 7 REITs disclose earnings on March 31

 

The Saudi Stock Exchange (Tadawul) said that 13 Saudi-listed firms and 7 REIT funds disclosed their financial statements for the fiscal year 2019 on the last day of disclosure March 31, 2020.

 

Reduced trading hours

 

Tadawul announced a temporary reduction of trading hours for all listed securities from 10am to 1pm, effective from March 26.

 

Positive earnings

 

A number of listed companies on Tadawul continued to announce their financial results for the fiscal year 2019.

 

The companies that posted higher profits include Saudi Research and Marketing Group (SRMG), Alandalus Property Co. (Alandalus), Yanbu Cement, Mediterranean and Gulf Insurance and Reinsurance (MedGulf), Mouwasat Medical Services (Mouwasat), Saudi Vitrified Clay Pipes (SVCP), Southern Province Cement (Southern Cement), Leejam Sports Co. (Fitness Time), Malath Cooperative Insurance (Malath), Al Hammadi Company for Development and Investment (Al Hammadi), Northern Region Cement, Al Ahli Takaful, Astra Industrial Group (Astra), Saudi Arabia Refineries (SARCO), Baazeem Trading Co. (Baazeem), City Cement, Wataniya Insurance, Maharah Human Resources, AlAhli REIT Fund, Eastern Province Cement (EPCCO), Aljazira Takaful Taawuni (Jazira Takaful), Bawan, and Al Jouf Cement, (Jouf Cement), Musharaka REIT, Al Maather REIT Fund., National Gas and Industrialization Co. (GASCO), Saudi Automotive Services Co. (SASCO), Mulkia Gulf Real Estate REIT Fund, Swicorp Wabel REIT Fund, Falcom Saudi Equity ETF, Aldrees Petroleum and Transport Services Co. (Aldrees), Saudi Marketing Co. (Farm Superstores), and Bonyan REIT Fund.

 

Lower profits

 

However, several firms reported a drop in net earnings or losses such as BATIC Investments and Logistics Co. (BATIC), Methanol Chemicals Co. (Chemanol), Etihad Atheeb Telecommunication Co. (GO), Saudi Advanced Industries (SAIC), Al Ahsa Development, Halwani Bros., Al-Etihad Cooperative Insurance Co., Arriyadh Development (ARDCO), Makkah Construction and Development, Middle East Healthcare (Saudi German Hospital), Buruj Cooperative Insurance (Buruj), Alinma Tokio Marine, Wafrah for Industry & Development (Wafrah), Al Rajhi Company for Cooperative Insurance (Al Rajhi Takaful), Solidarity Saudi Takaful (Solidarity), Al Alamiya for Cooperative Insurance (Al Alamiya), National Gypsum, Walaa Cooperative Insurance (Walaa), Saudi Arabian Cooperative Insurance (SAICO), SABB Takaful, Middle East Paper (MEPCO), Lazurde Company for Jewelry (Lazurde), Al-Omran Industrial Trading, AlAbdullatif Industrial Investment (AlAbdullatif), Sahara International Petrochemical (Sipchem), Ash-Sharqiyah Development Co., Al Hassan Ghazi Ibrahim Shaker Co. (Shaker), Amana Cooperative Insurance Co. (Amana Insurance), Al-Samaani Factory for Metal Industries Co. (Al-Samaani), National Metal Manufacturing and Casting Co. (Maadaniyah), Tabuk Agricultural Development Co. (TADCO), Saudi Aramco Total Refining and Petrochemical Co. (SATORP), Salama Cooperative Insurance Co. (Salama), Abdulmohsen Alhokair Group for Tourism and Development (Al Hokair Group), Aseer Trading, Tourism & Manufacturing Co. (Aseer), Saudi Chemical Holding Co. (Saudi Chemical),  Saudi Arabian Amiantit Co. (Amiantit), Saudi Cable Co., National Industrialization Co. (Tasnee), Kingdom Holding Co., Saudi Pharmaceutical Industries and Medical Appliances Corp. (SPIMACO), Tourism Enterprise Co. (Shams), Saudi Real Estate Co. (Al Akaria), AlJazira Mawten REIT, FALCOM Petrochemical ETF, Saudi Fisheries Co. (Alasmak), Al Sorayai Trading And Industrial Group Co. (AlSorayai Group), Saudi Industrial Export Co. (SIECO), Jabal Omar Development Co., Saudi Indian Company for Cooperative Insurance (Wafa Insurance), Filling & Packing Materials Manufacturing Co. (FIPCO), and Saudi Aramco.

 

Cash dividends

 

Several listed-companies announced dividends for 2019, including Yanbu National Petrochemical Co. (Yansab), Arabian Cement, Al-Babtain Power and Telecommunication (Al-Babtain), Mulkia Gulf Real Estate REIT Fund, Qassim Cement, Southern Province Cement (Southern Cement), National Petrochemical (Petrochem), United Electronics (eXtra), Almarai Co (Almarai), National Commercial Bank (NCB), AXA Cooperative Insurance Co. (AXA-Cooperative), Basic Chemical Industries (BCI), Jadwa REIT AlHaramain Fund,  Umm Al-Qura Cement (UACC), Saudi Arabia Refineries (SARCO), Herfy Food Services (Herfy Foods), Arriyadh Development (ARDCO), Makkah Construction and Development, Jarir Marketing Co. (Jarir), Baazeem Trading Co. (Baazeem), Saudi Aramco, Al Ahli REIT Fund (1), National Medical Care Co. (Care), Yanbu National Petrochemical Co. (Yansab), Mouwasat Medical Services, Thob Al Aseel, Al Maather REIT Fund (Al Maather REIT), Abdullah Al Othaim Markets (A.Othaim Market), Maharah Human Resources (Maharah), Saudi Arabia Refineries (SARCO), Zahrat Al Waha For Trading Co., Chubb Arabia Cooperative Insurance Co., National Gypsum, Chubb Arabia Cooperative Insurance Co. (Chubb Arabia), Al Khaleej Training and Education Co., Riyad Bank (RIBL), Samba Financial Group (SAMBA), Taiba Investments Co. (Taiba), Saudi Arabia Fertilizers Co. (SAFCO), Al Rajhi Bank, MEFIC REIT Fund, Saudi Pharmaceutical Industries and Medical Appliances Corp.’s (SPIMACO), MEFIC REIT Fund, Kingdom Holding Co., Aldrees Petroleum and Transport Services Co. (Aldrees), Arab National Bank (ANB), Saudi Arabia Fertilizers Co. (SAFCO), and National Commercial Bank (NCB) . 

 

Withholding dividends

 

On the other hand, some companies’ board of directors recommended withholding dividend distribution such as Al Gassim Investment Holding Co. (GACO), Fitaihi Holding Group, Basic Chemical Industries Co. (BCI), Saudi Airlines Catering Company (Saudi Catering), Saudi Company for Hardware (SACO), Saudi Public Transport Co. (SAPTCO), Buruj Cooperative Insurance Company (Buruj), Al Yamamah Steel Industries Co. (Al Yamamah Steel), Northern Region Cement Co. (Northern Cement), Saudi Marketing Co. (Farm Superstores), and Walaa Cooperative Insurance Co.               

 

Dr. Sulaiman Al Habib Group

 

Dr. Sulaiman Al Habib Medical Services Group (HMG) started trading on Tadawul, on March 17, under the symbol 4013 in the healthcare sector, with a 10% daily price fluctuation limit per share.

 

The initial public offering (IPO) of HMG was subscribed around 83 times, as investors injected nearly SAR 217 billion.

 

The retail offering ended, on March 3, as 5.25 million shares (or 10% of the total offered shares amounting to 52.5 million) were allocated to the retail investors.

 

Appointments & resignations

 

Some companies elected new boards and announced appointments and resignations to their boards and executive management teams, including Etihad Atheeb Telecommunication Co. (GO), Company for Cooperative Insurance’s (Tawuniya), Jabal Omar Development Co., Saudi Arabian Mining Co. (Maaden), Saudi Paper Manufacturing Co., Almarai Co., Al Sagr Cooperative Insurance Co., Red Sea International Co. (Red Sea), Dr. Sulaiman Al Habib Medical Group (HMG), and Al Kathiri Holding Co.

 

Economy & Investment

 

Listing government assets

 

The cabinet approved listing government assets planned for privatization in Tadawul after IPO.

 

Financials’ deadline

 

CMA extended deadline for the Tadawul-listed companies which have not disclosed their board reports and financial statements.

 

Expat remittances

 

Remittances from expatriates in Saudi Arabia rose by 12% year-on-year (YoY) to SAR 10.84 billion in February 2020 when compared to the same period last year.

 

New economy minister

 

King Salman issued a royal decree appointing Mohammed Al-Jadaan as the new Minister of Economy and Planning. Al-Jadaan will continue to serve as Finance Minister.

 

2019 GDP growth

 

Saudi Arabia’s gross domestic product (GDP) saw a marginal rise by 0.3% year-on-year (YoY) to SAR 2.639 trillion in 2019.

 

Strong fiscal position: Moody’s

 

The decline in global oil prices due to the coronavirus outbreak and breakdown of the OPEC+ agreement is likely to impact the fiscal revenue and exports of many oil producing countries, including Saudi Arabia, Moody’s said. However, it added that the Kingdom’s robust sovereign balance sheet will cushion the impact.

 

S&P rating

 

S&P Global maintained Saudi Arabia’s sovereign credit ratings at ‘A-/A-2’ with a stable outlook. The estimate of the Kingdom’s strong net asset-stock position on its fiscal and external balances continues to be a key ratings support.

 

Debt ceiling

 

King Salman approved raising the debt ceiling to 50% of gross domestic product from 30%.

 

Saudi investment funds

 

The total value of assets held by investment funds in Saudi Arabia grew by 43% year-on-year (YoY) to SAR 159.96 billion by the end of 2019, compared to SAR 111.86 billion in 2018.

 

Budget expenditure

 

The government approved to partially cut the 2020 budget expenditure by nearly SAR 50 billion, or less than 5% in areas that have the least social and economic impact.

 

Sukuk closes

 

The Ministry of Finance closed the March 2020 issuance under the Saudi Arabian Government SAR-denominated Sukuk Program.

 

Construction

 

SAR 197.1 bln worth contracts

 

The total value of awarded contracts for 2019 in Saudi Arabia hit SAR 197.1 billion ($52.6 billion), the highest since 2015, according to the latest Contract Awards Index for the Fourth Quarter 2019 by the US-Saudi Business Council.

 

Banking

 

2019 loan

 

Mortgage loan provided to retail and corporate clients by commercial banks in Saudi Arabia saw an increase of 25% YoY to SAR 297.4 billion in 2019, according to data issued by SAMA.

 

Higher credit provisions

 

Saudi banks’ credit provisions increased by 91% YoY to SAR 4.1 billion in the fourth quarter (Q4) of 2019 as compared to SAR 2.14 billion in the same period in 2018.

 

Freezing accounts suspended

 

SAMA issued a decision to suspend the freezing of clients’ bank accounts for a period of 30 days with regards to specific cases.

 

Merger & Acquisition

 

Mulkia Gulf REIT

 

Mulkia Gulf Real Estate REIT Fund completed the acquisition of Elite Mall building in Riyadh for SAR 201.5 million.

 

Energy

 

Saudi Aramco capacity

 

Saudi Aramco announced that it received a directive from the Ministry of Energy to increase its maximum sustainable capacity (MSC) to 13 million barrels per day (mbpd) from 12 mbpd.

 

Cut in prices

 

Saudi Aramco cut its April 2020 contract prices for propane by $200 a ton, compared to March prices, to $230 per ton, the lowest since 2008.

 

ACWA Power

 

ACWA Power signed 3 new strategic agreements, potentially worth up to $2.5 billion, with The Ministry of Energy of Uzbekistan to amplify power generation and develop technical expertise.

 

Petrochemicals

 

SABIC’s agreements

 

Saudi Basic Industries Corporation (SABIC) signed a 7-year strategic agreement with global automation firm Emerson to help the petrochemical manufacturer successfully adopt digital transformation programs and optimize operations.

 

Earlier, SABIC increased its stake in Clariant AG, a Switzerland-based producer of specialty chemicals, to 31.5%.

 

EU approves Aramco-SABIC deal

 

Saudi Aramco confirmed securing an unconditional EU antitrust approval for its $69 billion bid for a 70% stake in SABIC.

 

Sipchem begins maintenance

 

Sahara International Petrochemical Company (Sipchem) announced to carry out the regular maintenance turnaround at the PDH unit owned by its affiliate, Al-Waha Petrochemical Co. (Al Waha).

 

Giga projects

 

Amaala appoints advisors

 

The ultra-luxury development Amaala appointed Foster + Partners, the British architectural design and engineering firm, as the architectural advisors.

 

In a related development, Amaala appointed Malaysia-based architectural firm Denniston as the master planners for one of its communities, The Island.

 

New consultant for Red Sea

 

The Red Sea Development Company, the developer behind the Red Sea mega project, appointed UK-based Cundall, an international multi-disciplinary consultancy, to develop a lighting strategy in order to become the largest certified Dark Sky Reserve in the world.

 

Transportation

 

Trade license to Virgin Hyperloop One

 

Saudi Arabia awarded a trade license to Virgin Hyperloop One following a recent announcement by the Ministry of Transport and the Public Transport Authority to conduct the world’s first Hyperloop study on a national level.

 

Telecom

 

Mobile data increases

 

Mobile data increased by 30-40% in Saudi Arabia, while demand for education and health platforms jumped by 1000% and 200% respectively.

 

Higher spectrum frequency

 

The digital infrastructure in Saudi Arabia is well-developed with the internet penetration touching 94%. The frequency spectrum was increased by 30% to support the capacity of mobile towers to cope with the increased pressure on networks over the past several days in the range of 30-40%.

 

Write to Sunil Kumar Singh at sunil.kumar@argaam.com and

Christine El Cheikh at christine.elcheikh@argaam.com