Saudi Arabia Sees Leap in Venture Capital Investment amid Pandemic

A general view of Riyadh, Saudi Arabia. (Reuters)
A general view of Riyadh, Saudi Arabia. (Reuters)
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Saudi Arabia Sees Leap in Venture Capital Investment amid Pandemic

A general view of Riyadh, Saudi Arabia. (Reuters)
A general view of Riyadh, Saudi Arabia. (Reuters)

Saudi Arabia has reported a 42 percent leap in investment with venture capital in emerging projects during Q1 2020, experts in sector revealed.

They attributed this activity to investors taking advantage of the unstable conditions caused by the coronavirus to close more deals.

Chairman of Nama Al Baraka Holding Rayan Qutub said the Kingdom’s market ranks third after the United Arab Emirates and Egypt.

She made her remarks at a virtual meeting, attended by Asharq Al-Awsat, on “The Future of Investing in Technology.”

Qutub said Saudi Arabia has closed deals worth SAR251 million ($67 million), representing 92 percent growth in 2019, while it recorded a 35 percent increase in 2018.

It reported 41 investors in 2019, who invested in various sectors, mainly e-commerce, delivery, transportation and education, according to Qutub.

He pointed out that there is a prominent contribution to business accelerators, foremost of which was Misk500, Seedstars, Vision Ventures and Startups 500. While the most prominent investors were Oqal Group, Saudi Venture Capital Company (SVC), Derayah Financial Company and Saudi Aramco.

CEO of SVC Nabeel Koshak highlighted three factors that have led to the steady growth in the Kingdom’s venture capital market over the past three years.

The first is the Kingdom's Vision 2030, which encourages startups, small and medium-sized enterprises and entrepreneurship.

“There is an acceleration in support and motivation activities and the development of government systems such as the e-commerce system, bankruptcy system and others, as well as incentive programs, such as the Venture Capital Fund and the Public Investment Fund initiative,” he noted.

According to Koshak, the pandemic has accelerated the use of technology, including e-government.

He pointed out that the Saudi Arabian Monetary Authority (SAMA) has licensed eight emerging financial technology companies during the current crisis to find loan and investment solutions and debt instruments to contribute to finding solutions for companies.

One of the advantages of the pandemic, he stressed, is helping correct the venture capital sector in regards to corporate assessment, inflation and exaggeration in financial estimates.



China State Media Warn Trump against Mutually Destructive Tariff War

A shopper walks with his purchases at Plaza Las Americas Mall near the US-Mexico border in San Ysidro, California, on November 26, 2024. (AFP)
A shopper walks with his purchases at Plaza Las Americas Mall near the US-Mexico border in San Ysidro, California, on November 26, 2024. (AFP)
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China State Media Warn Trump against Mutually Destructive Tariff War

A shopper walks with his purchases at Plaza Las Americas Mall near the US-Mexico border in San Ysidro, California, on November 26, 2024. (AFP)
A shopper walks with his purchases at Plaza Las Americas Mall near the US-Mexico border in San Ysidro, California, on November 26, 2024. (AFP)

China's state media warned US President-elect Donald Trump his pledge to slap additional tariffs on Chinese goods over fentanyl flows could drag the world's top two economies into a mutually destructive tariff war.

Trump, who takes office on Jan. 20, said on Monday he would impose "an additional 10% tariff, above any additional tariffs" on imports from China until Beijing clamped down on trafficking of the chemical precursors used to make the deadly drug.

The two superpowers are setting out their positions ahead of the former president's return to the White House. Trump's first term resulted in a trade war that uprooted global supply chains and hurt every economy as inflation and borrowing costs shot up.

Editorials in Chinese communist party mouthpieces China Daily and the Global Times late on Tuesday warned the next occupant of 1600 Pennsylvania Avenue to not make China a "scapegoat" for the US' fentanyl crisis or "take China's goodwill for granted regarding anti-drug cooperation."

"The excuse the president-elect has given to justify his threat of additional tariffs on imports from China is farfetched," China Daily said.

"There are no winners in tariff wars. If the US continues to politicize economic and trade issues by weaponizing tariffs, it will leave no party unscathed."

Economists have begun downgrading their growth targets for China's $19 trillion economy for 2025 and 2026 in anticipation of further tariffs promised by Trump during the election campaign, and are warning Americans to brace for an increase in the cost of living.

"For now, the only thing we know for sure is that the risks in this area are high," said Louis Kuijs, chief Asia economist at S&P Global Ratings, which on Sunday lowered its China growth forecast for 2025 and 2026 to 4.1% and 3.8%, respectively.

"What we assumed in our baseline is an across-the-board (tariff) increase from around 14% now to 25%. Thus, what we assumed is a bit more than the 10% on all imports from China."

Trump is threatening Beijing with far higher tariffs than the 7.5%-25% levied on Chinese goods during his first term.

"China already has a template for dealing with the previous US tariff policy," the Global Times quoted Gao Lingyun, an analyst at the Chinese Academy of Social Sciences in Beijing, as saying.

"Using counternarcotics issues to increase tariffs on Chinese goods is untenable and unpersuasive," Gao added.

Chinese President Xi Jinping told former Singaporean Prime Minister Lee Hsien Loong that China's economy would continue to grow and develop in the long-term during a meeting in Beijing on Tuesday after Trump's comments, state news agency Xinhua said.

Lee reportedly told Xi "no one should underestimate the Chinese people's determination for their nation to succeed and stand tall in the world," a remark which a separate Global Times piece said was "also meant for some people in (the) international community."

Profits at Chinese firms fell 10% year-on-year in October, data showed on Wednesday, showing how companies are struggling to remain profitable in an economy that is far more vulnerable to trade shocks this time around.

Economists in a Reuters poll last week expected additional US tariffs ranging from 15% to 60%. Most said Beijing will need to inject more stimulus to boost economic growth and offset pressure on exports.

TRADE WAR TWO

Trump previously said he would introduce tariffs in excess of 60% on Chinese goods.

The threat is rattling China's industrial complex, which sells goods worth more than $400 billion annually to the US and hundreds of billions more in components for products Americans buy from elsewhere.

His pick of trade lawyer Jamieson Greer as new US trade representative elevates a key veteran of Trump's first term trade war against China and points to a bruising four years for trade negotiators the world over.

Greer served as chief of staff to Trump's former US Trade Robert Lighthizer, the architect of Trump's original tariffs on some $370 billion worth of Chinese imports and the renegotiation of the North American free trade deal with Canada and Mexico.

The president-elect looks set to tear up that agreement on his first day in office.

Trump on Monday also pledged 25% tariffs on goods from Mexico and Canada, saying the US' neighbors were not doing enough to stop drugs and migrants crossing their borders.

But China can expect to bear the brunt of Trump's efforts to bring down the US' trade deficit and bring about the "manufacturing renaissance" he promised on the campaign trail.

"What the future will bring on this front is hard to say," S&P Global's Kuijs said. "There are many uncertainties. There is still a large increase to go to get to 60%."