Saudi Stocks Falls after Govt. Triples VAT Rate
Gulf stock markets lost ground in early trade on Monday, with Saudi Arabia’s index falling the most after the kingdom said it will triple its value-added tax rate and suspend a cost of living allowance for state employees to shore up its finances.
The austerity measures are being introduced as the world’s largest oil exporter suffers from slumping oil prices, while at the same time fighting the new coronavirus outbreak.
Oil revenues in the first three months of the year fell 24% from a year earlier to $34 billion, pulling total revenues down 22%.
Saudi Arabia’s benchmark index declined 2.8%, dragged down by a 3.2% drop in Al Rajhi Bank and a 1.9% fall in oil giant Saudi Aramco.
Aramco is looking to restructure its deal for a controlling stake in petrochemicals maker Saudi Basic Industries (SABIC) after the target’s value dropped more than 40%, Reuters reported citing two sources.
SABIC shares were down 1.5% on Monday.
In Dubai, the index slid 2.3%, with Dubai Islamic Bank, the country’s largest sharia-compliant lender, losing 4.1% and Emirates NBD Bank down 2.3%.
The Abu Dhabi index eased 0.4%, hurt by a 1.7% fall in Abu Dhabi Commercial Bank.
The United Arab Emirates’ third-biggest lender reported an 84% fall in first-quarter net profit last week as it took $292 million in impairments on debt exposure to troubled hospital operator NMC Health and payments group Finablr.
Qatar’s index traded flat with most industrial and financial stocks also little changed. Petrochemical firm Industries Qatar gained 3.7%, however, while Commercial Bank was down 1.8%.