Saudi Arabia's government could step in to buy collapsing stock on the local bourse and the central bank will keep banks liquid if necessary, but the global financial crisis should have a limited effect on the oil giant.
Barring surprises such as the sudden bank collapses that hit other major economies, analysts predict Saudi Arabia's status as the world's largest oil exporter offers it at least short-term protection even though falling oil prices will cut its earnings.
"They have a cushion because of the oil money in the treasury and if anyone's going to be in a safe position it's Saudi Arabia," one western diplomat said, reflecting the general view in the Riyadh diplomatic community.
But the worldwide falls in stock markets have raised questions about financial transparency in the kingdom, which holds foreign securities worth hundreds of billions of dollars and declines to give details about its investments.
Saudi Arabia's economic profile has witnessed a stunning turnaround in the last decade, while the government - dominated by the Saudi royal family - has retained a closed political culture that keeps the disenfranchised public in the dark.
Back in 1998 when King Abdullah, as crown prince, told Saudis bluntly the oil boom was over and the country would have to tighten its belt, gross domestic product (GDP) was US$144 billion (Dh528.98bn) and oil was hovering around $10 a barrel. Last year, GDP was $446bn while oil rose to nearly $100 a barrel. This year's budget assumes a modest oil price of $50 a barrel.
"Oil-producing countries have excellent financial cover so they are the least affected by the world crisis. The fear is that US and British oil firms could reduce energy investment in the Middle East," said analyst Aqeel al Inezi.
Concern over the fate of Saudi-listed firms has led the country's media coverage. Outlets such as Al Arabiya television have had days of feverish coverage aiming to reassure a small elite of wealthy investors that the market will rise again.
The stock market hit its lowest level in four years on Saturday, falling below 6,000 points. On Monday, it surged 7.5 per cent, in line with other Gulf bourses, to above 6,800.
Investors have already gone through the psychological barrier of a bourse collapse after the market fell 50 per cent to about 10,000 in 2006. And the number of daily traders has shrunk considerably since then, as most ordinary Saudis, struggling to manage with high inflation, have kept away.
Industrialist Abdul-Rahman al Zamil said the government could conceivably buy stock if the market collapses further. Many of the key stocks on the market are already majority-owned by a highly conservative government.
On Sunday, the central bank, known as SAMA, cut its key benchmark lending rate for the first time in almost two years and lowered bank reserve requirements, saying inflationary pressures had eased. Price rises in recent months hit their highest levels in 30 years.
SAMA has also sought to reassure the public that government investments abroad are safe and that liquidity in the wider economy will not dry up.
Lack of transparency means the extent of Saudi Arabia's investment overseas remains unknown. Six major banks have denied they have any exposure to toxic US mortgages.
Muhammad al Jasser, the deputy governor, said SAMA's investments abroad were "low-risk" but gave no more details. SAMA's August monthly report showed it had $285bn invested in foreign securities and $79bn in foreign bank deposits.
Other government bodies had $63bn in foreign securities and $5bn deposits with foreign banks. Their total deposits in banks fell between July and August by the same amount that their foreign securities investments rose.
Private Saudi investors often prefer anonymity, while their fortunes could have an economic impact at home.
The Swiss bank UBS last year sold a stake to a Saudi investor, and listed Saudi companies have expanded globally. Saudi industrial giant Sabic acquired General Electric's plastics division for $11.6bn last year.
Analysts say the Saudi reaction to the global financial crisis has highlighted problems of transparency in an economy that remains fundamentally strong.
Abdulhamid al Amri, of the Saudi Economic Association, said official reassurances could have prevented the bourse losses.
"Saudi stocks saw a correction that exceeds declines in markets directly hit by the crisis," he said. "The Capital Market Authority as a regulator is not committed to transparency."
A former head of the regulatory body, Ibrahim al Nasseri, told a Saudi newspaper this week that listed firms do not abide by disclosure requirements and said that insider trading continues.
* Reuters
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Founder: Ahmed Wadi
Launched: 2016
Employees: 76
Financing stage: Series A ($4 million)
Investors: Partech, Sawari Ventures, 500 Startups, Dubai Angel Investors, Phoenician Fund
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Name: Almnssa
Started: August 2020
Founder: Areej Selmi
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Sectors: Internet, e-commerce
Investments: Grants/private funding
Game Of Thrones Season Seven: A Bluffers Guide
Want to sound on message about the biggest show on television without actually watching it? Best not to get locked into the labyrinthine tales of revenge and royalty: as Isaac Hempstead Wright put it, all you really need to know from now on is that there’s going to be a huge fight between humans and the armies of undead White Walkers.
The season ended with a dragon captured by the Night King blowing apart the huge wall of ice that separates the human world from its less appealing counterpart. Not that some of the humans in Westeros have been particularly appealing, either.
Anyway, the White Walkers are now free to cause any kind of havoc they wish, and as Liam Cunningham told us: “Westeros may be zombie land after the Night King has finished.” If the various human factions don’t put aside their differences in season 8, we could be looking at The Walking Dead: The Medieval Years.
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
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Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
The specs
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Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
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Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The biog
Family: He is the youngest of five brothers, of whom two are dentists.
Celebrities he worked on: Fabio Canavaro, Lojain Omran, RedOne, Saber Al Rabai.
Where he works: Liberty Dental Clinic
Keep it fun and engaging
Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.
“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.
His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.
He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.
Meydan race card
6pm Dubai Trophy – Conditions(TB) $100,000 (Turf) 1,200m
6.35Dubai Trophy – Conditions(TB) $100,000 (Turf) 1,200m
1,800m
7.10pm Jumeirah Derby Trial – Conditions (TB) $60,000 (T)
1,800m ,400m
7.45pm Al Rashidiya – Group 2 (TB) $180,000 (T) 1,800m
8.20pm Al Fahidi Fort – Group 2 (TB) $180,000 (T) 1,400m
8.55pm Dubawi Stakes – Group 3 (TB) $150,000 (D) 1,200m
9.30pm Aliyah – Rated Conditions (TB) $80,000 (D) 2,000m
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Engine: 3.0-litre six-cylinder turbo
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
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'Brazen'
Director: Monika Mitchell
Starring: Alyssa Milano, Sam Page, Colleen Wheeler
Rating: 3/5
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Price, as tested: Dh84,000
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Transmission: Six-speed auto
Power: 142hp at 4,900rpm
Torque: 200Nm at 1,850rpm
Fuel economy, combined: 6.5L / 100km
Fight card
1. Featherweight 66kg: Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg: Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg:Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg: Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg: Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg: Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg: Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg: Mostafa Radi (PAL) v Ahmed Abdelraouf of Egypt (EGY)
9. Featherweight 66kg: Jaures Dea (CMR) v Andre Pinheiro (BRA)
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The specs
Engine: 3.8-litre twin-turbo flat-six
Power: 650hp at 6,750rpm
Torque: 800Nm from 2,500-4,000rpm
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Price: From Dh796,600
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