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.



IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.


Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.


Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.