Asia Markets Mixed as Omicron, Fed Taper Keep Traders On Edge

As the pandemic hustles economies around the world, the US-China stand-off has been a major headache, with the two sides butting heads on several issues that have fanned worries they could renew their damaging trade war | AFP
As the pandemic hustles economies around the world, the US-China stand-off has been a major headache, with the two sides butting heads on several issues that have fanned worries they could renew their damaging trade war | AFP
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Asia Markets Mixed as Omicron, Fed Taper Keep Traders On Edge

As the pandemic hustles economies around the world, the US-China stand-off has been a major headache, with the two sides butting heads on several issues that have fanned worries they could renew their damaging trade war | AFP
As the pandemic hustles economies around the world, the US-China stand-off has been a major headache, with the two sides butting heads on several issues that have fanned worries they could renew their damaging trade war | AFP

Asian markets were mixed Friday as traders tracked developments in the Omicron virus strain as it spreads around the world, fuelling concerns about the economic recovery, just as the Federal Reserve sets the stage to withdraw its vast pandemic-era financial support.

Hong Kong was among the main losers with several dual-listed tech giants taking a hit after US officials adopted a rule allowing them to remove foreign firms from Wall Street unless they provided certain information to auditors, a move primarily targeting Chinese entities.

Global markets have whipsawed since the Omicron variant hit headlines last Friday over concerns that it may be even more transmissible than the Delta strain and that vaccines may be less effective against it.

While some of the initial panic has died down, with some suggesting it could be milder and that inoculations would be effective, experts have said it could take up to three weeks to get a full picture of the outlook and its possible economic impact.

For now, governments are playing it cautiously, imposing fresh containment measures including travel curbs and some lockdowns, which observers fear could knock the already shaky recovery off track.

Meanwhile, central banks continue to tighten their belts, having stumped up trillions of dollars to get through the initial jolt from the pandemic last year with some having already lifted interest rates twice as they face a battle against soaring inflation.

Eyes are now on the Federal Reserve, which, after months of saying the spike in prices was temporary, has now turned its focus on keeping them from running out of control and is preparing to tighten its belt.

Boss Jerome Powell suggested this week the bank would likely speed up the taper of its bond-buying program and then focus on lifting borrowing costs.

While the moves have been well telegraphed, investors are now having to adjust to the end of the age of cheap cash, which has been a key driver of the rally in world markets to record or multi-year highs in 2021.

- US crackdown -
"From an economic perspective, the variant will likely result in more protracted disruptions to supply chains as countries revamp restrictive measures, which will both hinder activity and contribute to sustained inflation," said Silvia Dall'Angelo, at Federated Hermes.

"In other words, the trade-offs central banks are facing will likely intensify in the short term. Indeed... Powell suggested that the Fed's approach to those trade-offs has started to shift, with concerns on high inflation now taking the front seat."

Wall Street's three main indexes ended sharply higher Thursday, though Asia struggled to pick up the baton.

Tokyo, Sydney, Seoul, Wellington and Jakarta all fell, though there were gains in Shanghai, Singapore, Taipei and Manila.

But Hong Kong dropped more than one percent with tech firms that are also traded on New York's exchange among the worst performers after the Securities and Exchange Commission (SEC) issued a mandate requiring companies to disclose whether they are "owned or controlled" by a government.

Beijing has refused to allow US officials to inspect audits of companies registered in China and Hong Kong, meaning they are likely to have to leave.

Chinese authorities were already cracking down on US-listed companies, citing national security concerns.

Giants including Alibaba, Tencent, JD.com and NetEase -- which are all traded in the United States -- fell sharply in Hong Kong.

Also Friday, ride-hailing firm Didi Chuxing -- which is not listed in Asia -- said it would delist from New York and begin preparations to begin trading in Hong Kong.

The development is the latest to highlight the frosty relations between China and the United States, which have been at odds on a range of issues including security and technology.

Oil prices extended Thursday's gains after OPEC and other key producers decided to continue their output increases despite the threat of Omicron to demand and the recent move to tap reserves led by the United States.

Crude initially dropped but recovered after the OPEC+ group opened the door to turn the taps down if the virus is seen to be hitting demand.



Al-Rumayyan: PIF Investments in Local Content Exceed $157 Billion

Yasir Al-Rumayyan speaks to the audience in the opening speech of the Public Investment Fund Private Sector Forum (Asharq Al-Awsat)
Yasir Al-Rumayyan speaks to the audience in the opening speech of the Public Investment Fund Private Sector Forum (Asharq Al-Awsat)
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Al-Rumayyan: PIF Investments in Local Content Exceed $157 Billion

Yasir Al-Rumayyan speaks to the audience in the opening speech of the Public Investment Fund Private Sector Forum (Asharq Al-Awsat)
Yasir Al-Rumayyan speaks to the audience in the opening speech of the Public Investment Fund Private Sector Forum (Asharq Al-Awsat)

Yasir Al-Rumayyan, governor of Saudi Arabia’s Public Investment Fund (PIF), announced that spending by the sovereign fund’s programs, initiatives, and companies on local content reached 591 billion riyals ($157 billion) between 2020 and 2024.

He added that the fund’s private sector platform has created more than 190 investment opportunities worth over 40 billion riyals ($10 billion).

Speaking at the opening of the PIF Private Sector Forum on Monday in Riyadh, Al-Rumayyan said the fund is working closely with the private sector to deepen the impact of previous achievements and build an integrated economic system that drives sustainable growth through a comprehensive investment cycle methodology.

He described the forum as the largest platform of its kind for seizing partnership and collaboration opportunities with the private sector, highlighting the fund’s success in turning discussions into tangible projects.

Since 2023, the forum has attracted 25,000 participants from both public and private sectors and has witnessed the signing of over 140 agreements worth more than 15 billion riyals, he pointed out.

Al-Rumayyan emphasized that the meeting comes at a pivotal stage of the Kingdom’s economy, where competitiveness will reach higher levels, sectors and value chains will mature, and ambitions will be raised.

PIF Private Sector Forum aims to support the fund’s strategic initiative to engage the private sector, showcase commercial opportunities across PIF and its portfolio companies, highlight potential prospects for investors and suppliers, and enhance cooperation to strengthen the local economy.


Pakistan’s Finance Minister to Asharq Al-Awsat: We Draw Inspiration from Saudi Arabia

The Pakistani Finance Minister during his meeting with Saudi Minister of Economy and Planning Faisal Alibrahim on the sidelines of the AlUla Conference (SPA)
The Pakistani Finance Minister during his meeting with Saudi Minister of Economy and Planning Faisal Alibrahim on the sidelines of the AlUla Conference (SPA)
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Pakistan’s Finance Minister to Asharq Al-Awsat: We Draw Inspiration from Saudi Arabia

The Pakistani Finance Minister during his meeting with Saudi Minister of Economy and Planning Faisal Alibrahim on the sidelines of the AlUla Conference (SPA)
The Pakistani Finance Minister during his meeting with Saudi Minister of Economy and Planning Faisal Alibrahim on the sidelines of the AlUla Conference (SPA)

Pakistani Finance Minister Muhammad Aurangzeb discussed the future of his country, which has frequently experienced a boom-and-bust cycle, saying Pakistan has relied on International Monetary Fund (IMF) programs due to the absence of structural reforms.

In an interview with Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Aurangzeb acknowledged that Pakistan has relied on IMF programs 24 times not as a coincidence, but rather as a result of the absence of structural reforms and follow-up.

He stressed the government has decided to "double its efforts" to stay on the reform path, no matter the challenges, affirming that Islamabad not only has a reform roadmap, but also draws inspiration from "Saudi Vision 2030" as a unique model of discipline and turning plans into reality.

Revolution of Numbers

Aurangzeb reviewed the dramatic transformation in macroeconomic indicators. After foreign exchange reserves covered only two weeks of imports, current policies have succeeded in raising them to two and a half months.

He also pointed out to the government's success in curbing inflation, which has fallen from a peak of 38 percent to 10.5 percent, while reducing the fiscal deficit to 5 percent after being around 8 percent.

Aurangzeb commented on the "financial stability" principle put forward by his Saudi counterpart, Mohammed Aljadaan, considering it the cornerstone that enabled Pakistan to regain its lost fiscal space.

He explained that the success in achieving primary surpluses and reducing the deficit was not merely academic figures, but rather transformed into solid "financial buffers" that saved the country.

The minister cited the vast difference in dealing with disasters. While Islamabad had to launch an urgent international appeal for assistance during the 2022 floods, the "fiscal space" and buffers it recently built enabled it to deal with wider climate disasters by relying on its own resources, without having to search "haphazardly" for urgent external aid, proving that macroeconomic stability is the first shield to protect economic sovereignty.

Privatization and Breaking the Stalemate of State-Owned Enterprises

Aurangzeb affirmed that the Pakistani Prime Minister adopts a clear vision that "the private sector is what leads the state."

He revealed the handover of 24 government institutions to the privatization committee, noting that the successful privatization of Pakistan International Airlines in December provided a "momentum" for the privatization of other firms.

Aurangzeb also revealed radical reforms in the tax system to raise it from 10 percent to 12 percent of GDP, with the adoption of a customs tariff system that reduces local protection to make Pakistani industry more competitive globally, in parallel with reducing the size of the federal government.

Partnership with Riyadh

As for the relationship with Saudi Arabia, Aurangzeb outlined the features of a historic transformation, stressing that Pakistan wants to move from "aid and loans" to "trade and investment."

He expressed his great admiration for "Vision 2030," not only as an ambition, but as a model that achieved its targets ahead of schedule.

He revealed a formal Pakistani request to benefit from Saudi "technical knowledge and administrative expertise" in implementing economic transformations, stressing that his country's need for this executive discipline and the Kingdom's ability to manage major transformations is no less important than the need for direct financing, to ensure the building of a resilient economy led by exports, not debts.


Oil Drops 1% as US, Iran Pledge to Continue Talks

The sun rises behind the Tishrin oil field in the eastern Hasakah countryside, northeastern Syria (AP)
The sun rises behind the Tishrin oil field in the eastern Hasakah countryside, northeastern Syria (AP)
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Oil Drops 1% as US, Iran Pledge to Continue Talks

The sun rises behind the Tishrin oil field in the eastern Hasakah countryside, northeastern Syria (AP)
The sun rises behind the Tishrin oil field in the eastern Hasakah countryside, northeastern Syria (AP)

Oil prices fell 1% on Monday as immediate fears of a conflict in the Middle East eased after the US and Iran pledged to continue talks about Tehran's nuclear program over the weekend, calming investors anxious about supply disruptions.

Brent crude futures fell 67 cents, or 1%, to $67.38 a barrel on Monday by 0444 GMT, while US West Texas Intermediate crude was at $62.94 a barrel, down 61 cents, or 1%.

"With more talks on the horizon the immediate ‌fear of supply disruptions ‌in the Middle East has eased ‌quite ⁠a bit," IG ‌market analyst Tony Sycamore said.

Iran and the US pledged to continue the indirect nuclear talks following what both sides described as positive discussions on Friday in Oman despite differences. That allayed fears that failure to reach a deal might nudge the Middle East closer to war, as the US has positioned more military forces in the area.

Investors are also worried about possible disruptions to supply ⁠from Iran and other regional producers as exports equal to about a fifth of the world's ‌total oil consumption pass through the Strait of ‍Hormuz between Oman and Iran.

Both ‍benchmarks fell more than 2% last week on the easing tensions, their ‍first decline in seven weeks.

However, Iran's foreign minister said on Saturday Tehran will strike US bases in the Middle East if it is attacked by US forces, showing the threat of conflict is still alive.

"Volatility remains elevated as conflicting rhetoric persists. Any negative headlines could quickly reignite risk premiums in oil prices this week," said Priyanka Sachdeva, senior market analyst at ⁠Phillip Nova.

Investors are also continuing to grapple with efforts to curb Russian income from its oil exports for its war in Ukraine. The European Commission on Friday proposed a sweeping ban on any services that support Russia's seaborne crude oil exports.

Refiners in India, once the biggest buyer of Russia's seaborne crude, are avoiding purchases for delivery in April and are expected to stay away from such trades for longer, refining and trade sources said, which could help New Delhi seal a trade pact with Washington.

"Oil markets will remain sensitive to how broadly this pivot away from Russian crude unfolds, whether ‌India’s reduced purchases persist beyond April, and how quickly alternative flows can be brought online," Sachdeva said.