Business

RIYADH — Saudi Aramco is expected to announce a drop in profits as it unveils on Monday its first annual results since its listing, as the energy giant grapples with sinking oil prices.

The 2019 financial results follow an initial public offering (IPO) on the domestic stock exchange in December, which raised a record $29.4 billion from a sale of 1.75 per cent of the company.

In April 2019, the company opened up its accounts to ratings agencies for the first time, revealing a net profit of $111.1 billion for the previous year.

The announcement confirmed its status as the world's most profitable company.

On Monday, Aramco will reveal its full-year results directly to investors and the public for the first time — and it is expected to announce a drop in profits owing to lower crude prices.

The company's net profit for the first nine months of last year dived 18 per cent to $68.2 billion, as its revenue fell due to lower prices.

The energy giant remains vulnerable to oil price fluctuations.

"This is Aramco's first set of earnings as a public company," Ellen Wald, author of the book "Saudi Inc.", told AFP.

"The real questions and insight won't arrive until the next earnings call when we learn how Aramco dealt with the current oil market drama and Saudi politics."

Market turmoil 

As the coronavirus wreaks havoc in the global economy and oil prices, Aramco prepares to lift its crude supplies by 25 per cent to 12.3 million barrels per day from April as part of an intense price war against Russia.

It also announced plans to raise output capacity by one million bpd to 13 million bpd, a significant move that would require investments worth billions of dollars. 

The developments have sent oil prices sliding to $34 a barrel from around $65 at the time of IPO.

Forecasts for future crude prices and demand are also bleak.

In its latest monthly report, the Organisation of Petroleum Exporting Countries lowered its forecast for global average daily demand by 0.92 million barrels to 99.73 million barrels.

"Energy analysts will be watching for Aramco's 2019 fourth quarter earnings but their minds will be on the first quarter of this year," Wald said.

Aramco shares rallied immediately after the listing on December 11, rising by 19 per cent to 38 riyals ($10.1) and temporarily lifting the company's valuation above the $2 trillion mark, which was sought by Saudi Arabia’s Crown Prince Mohammed Bin Salman.

But as oil prices tumble, Aramco shares have lost 29 per cent from its highest point, slipping below the listing price.

On Thursday, Aramco's market value dropped to around $1.55 trillion, but it still remains the world's largest publicly listed company.

Ahead of last year's IPO, Aramco pledged to distribute dividends of at least $75 billion every year until 2024 in a bid to lure investors. 

But shareholders, many of whom tapped lenders and sold personal assets to raise cash to invest in Aramco stocks, lamented the recent share drop. 

One Twitter user posted a photo of a stunned man sitting atop an empty safe deposit box.

By Anuj Chopra with Omar Hasan in Dubai

SAN FRANCISCO — Microsoft on Friday announced that co-founder Bill Gates has left its board of directors to devote more time to philanthropy.

The 64-year-old stopped being involved in day-to-day operations at the firm more than a decade ago, turning his attention to the foundation he launched with his wife, Melinda.

Gates served as chairman of Microsoft’s board of directors until early in 2014 and has now stepped away entirely, according to the Redmond-based technology giant.

“It’s been a tremendous honour and privilege to have worked with and learned from Bill over the years,” Microsoft Chief Executive and company veteran Satya Nadella said in a release.

“Bill founded our company with a belief in the democratising force of software and a passion to solve society’s most pressing challenges; and Microsoft and the world are better for it.”

Nadella said Microsoft would continue to benefit from Gates’ “technical passion and advice” in his continuing role as a technical adviser.

“I am grateful for Bill’s friendship and look forward to continuing to work alongside him,” Nadella said.

Computing and compassion 

Gates left his CEO position in 2000, handing the company reins to Steve Ballmer to devote more time to his charitable foundation.

He gave up the role of chairman at the same time Nadella became Microsoft’s third CEO in 2014.

Regularly listed among the world’s richest people, William H. Gates was a geeky-looking young man when he and Paul Allen co-founded Microsoft in 1975.

Gates grew up in Seattle with two sisters. His father William was an attorney and his late mother Mary was a schoolteacher and chairwoman of United Way International.

He began programming computers as a 13-year-old student, and fell in love with the machines.

Among the tales told about Gates is that while working on school computers, he tinkered with programming to put himself in classes made up mostly of girls.

With his parents’ blessing, Gates dropped out of Harvard to start “Micro-soft” with his late childhood friend Allen.

A key move was to focus on licensing software to computer makers in numerous “partnerships” that resulted in affordable machines being available to the masses.

As the personal computer market grew, Microsoft became the world’s top software company. Its virtual monopoly led to a much-publicised antitrust trial, in which the company managed to avert a break-up but had to endure years of government monitoring.

Gates went on to turn his attention from software to fighting disease and other humanitarian challenges with his wife, under the auspices of the Bill and Melinda Gates Foundation.

“This move is not surprising to the Street as Gates has continued to focus more on his myriad of philanthropies across the globe over the past decade,” Wedbush analyst Daniel Ives said in a note to investors.

“Gates is a historic figure in the technology world and his legacy at Microsoft will be felt in Redmond for decades to come.”

HONG KONG — Global equities and oil prices fell through the floor again on Thursday after Donald Trump banned all travel from mainland Europe to the US for a month to fight the coronavirus, ramping up fears the global economy will careen into recession.

The news came after the World Health Organisation (WHO) officially labelled the outbreak a pandemic and hit out at "alarming levels of inaction" for its spread.

Asian equity markets, already deep in the red in reaction to the WHO announcement, cratered after Trump's address.

Tokyo ended down 4.4 per cent, putting it in a bear market after falling more than 20 per cent from a recent high, while Sydney lost 7.4 per cent in the ASX 200's worst day since the 2008 financial crisis.

Hong Kong fell 3.7 per cent, though Shanghai was off 1.5 per cent as China continues to see infection rates slow.

Seoul, Singapore and Jakarta lost more than three per cent, Mumbai tanked more than 6 per cent and Wellington slid five per cent while Taipei retreated 4.3 per cent.

Manila crashed 10 per cent — sparking a brief trading halt — after it emerged Philippines President Rodrigo Duterte would undergo a precautionary test for the virus, while his finance minister and head of the central bank were among several officials who were to go into quarantine. It ended down 9.7 per cent.

Bangkok also triggered an automatic halt by falling 10 per cent.

In early trade London and Paris each plunged 4.5 per cent, while Frankfurt dived five per cent. Gulf markets also tumbled, with Riyadh down more than 4 per cent.

The Japanese yen, a key haven in times of crisis, jumped more than 1 per cent against the dollar.

"Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell... after a massively negative signal from trading in US markets it just fell in your lap," said AxiCorp's Stephen Innes.

The losses followed another brutal session on Wall Street, where the Dow fell into a bear market and futures pointed on Thursday to another rout.

The coronavirus outbreak has left virtually no sector untouched, though travel and tourism have been particularly hard-hit as countries institute travel bans and quarantine requirements, with Italy in a country-wide lockdown.

The number of cases across the globe has risen to more than 126,000 with 4,600 deaths, according to Johns Hopkins University.

In announcing the Europe ban — which excludes Britain — Trump said the continent had seen a surge in new cases because governments failed to stop travel from China, where the COVID-19 epidemic began.

He said the prohibitions would also "apply to the tremendous amount of trade and cargo", and "various other things as we get approval". 

However, the White House afterwards clarified that "the people transporting goods will not be admitted into the country, but the goods will be".

'Crying out 

for a response' 

Oil prices were also hammered, with both main contracts falling around 6 per cent at one point before edging back slightly. The oil market was already under pressure after Saudi Arabia and Gulf partner UAE stepped up a price war with plans to flood global markets.

"We are now staring at the whole world going into a lockdown," Vandana Hari, of Vanda Insights, said. "Oil demand can be expected to crash through the floor and all previous projections on oil consumption are now out the door."

The Saudi move was the latest escalation of a fight among oil producers after Russia balked at an OPEC-backed plan to cut production in response to lost demand because of the coronavirus.

"Markets are crying out for a co-ordinated response to COVID-19 headwinds and a lack of concrete US policy action is rattling markets," said Tapas Strickland, senior analyst at National Australia Bank.

Trump's address included several measures intended to ease the financial burden particularly for small business, including payroll tax relief and deferred tax payments.

But he did not unveil any large-scale tax cuts, which OANDA's Jefrey Halley said "has probably disappointed markets more than anything".

The bloodbath across global trading floors has come despite a raft of measures by governments worth at least $150 billion to offset the impact of the outbreak, while central banks will be called upon to cut already low interest rates and introduce other fiscal measures.

German Chancellor Angela Merkel has said she will do "whatever is necessary" to help the economy, while the European Central Bank was due to hold a policy meeting later in the day at which it is under pressure to open up the taps.

LONDON — Oil prices slid Wednesday after Saudi Arabia and Gulf partner UAE stepped up a price war with plans to flood the global markets while an early rally in equities evaporated as investors nervously awaited a US relief plan. 

Crude dived after the UAE joined Saudi Arabia in plans to hike supplies and raise their oil production capacity by millions of barrels a day in response to Russia’s refusal to agree output cuts to support prices.

A day after the kingdom said it would boost supplies by at least 2.5 million barrels per day to 12.3 million bpd in April, Riyadh said it will further boost capacity to 13 million bpd. 

UAE national oil company ADNOC said it was ready to raise output by one million bpd to 4 million bpd and increase capacity to 5 million bpd.

Markets had been showing signs of much-needed stability in early trade following two days of wild gyrations.

Crude had provided support, rising for a second day after Monday’s massive meltdown.

But jittery investors slowly sold out as Wednesday wore on and then slumped deep into the red.

Both main crude contracts fell more than 3 per cent, having been up as much as five per cent earlier in the day.

The price war follows Russia’s rejection last week of a Saudi-led proposal to deepen production cuts to support oil prices as demand falls due to the economic disruption caused by the coronavirus outbreak.

Production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) cartel led by Saudi Arabia and an alliance of producer nations including Russia has helped prop up oil prices the past couple years in the face of rising production by the United States.

Wednesday’s U-turn on oil markets spurred a similar move in equities markets. 

Asian stock markets had been well in positive territory in morning trading but finished lower.

London stocks ended 1.4 per cent despite the Bank of England slashing its key interest rate to a record low 0.25 per cent and the government pledging fiscal stimulus worth £30 billion ($39 billion, 34.4 billion euros).

Paris and Frankfurt also slipped, while Milan added 0.3 per cent as the Italian government promising even more stimulus.

The main European markets are now firmly in bear market territory, having lost more than 20 per cent of their value in a quick period under the onslaught of concern over the coronavirus. 

US markets also moved sharply lower on Wednesday as the World Health Organisation called the coronavirus outbreak a pandemic.

“This negative bias has been facilitated by reports that there is indecision in Washington still about the fiscal stimulus that should be enacted to deal with the fallout from the coronavirus,” said market analyst Patrick J. O’Hare at Briefing.com

“The president would like the payroll tax to be suspended but reportedly there is bipartisan disagreement over that idea. Instead, lawmakers are said to be interested in more targeted economic measures,” he added.

Treasury Secretary Steven Mnuchin said that US President Donald Trump is “very much focused” on the package that could include a payroll tax cut, among other options, as data showed that nearly three-quarters of US firms are suffering supply disruptions due to the coronavirus epidemic.

“Government intervention is seen as a sign of weakness by traders as they feel if the administration needs to take such action, the situation must be dire,” said analyst David Madden at CMC Markets UK.

LONDON — A rebound in global stocks following their biggest one-day drop in more than a decade ended faster than expected on Tuesday as markets continued to feel the pinch of uncertainty. 

Meanwhile, oil prices jumped more than 7 per cent, having plunged by a third the previous day, in the biggest price swing since the 1991 Gulf War, as Russia reached out to Saudi Arabia, possibly in a bid to mitigate an oil price war.

Global stock markets collapsed on what has become known as “Black Monday”, with the Dow on Wall Street plunging more than 2,000 points, as a potent cocktail of concerns about the coronavirus and oil prices sparked panic selling.

Equities began on Tuesday on the right foot after sentiment was boosted by US President Donald Trump saying late Monday his administration would be meeting lawmakers to discuss economic relief measures to mitigate the impact of the disease as it spreads through the United States.

The mood was also helped by news that Chinese President Xi Jinping had visited Wuhan, the centre of the virus outbreak, lifting hopes that the country is well on track to recovery as new infections fall.

The news came after weeks of quarantines that have rocked the local and global economy. 

Asian and Middle East stock exchanges shot higher, recovering a good chunk of their Monday losses.

European indices as well as those on Wall Street also jumped, but the gains faded with European markets closing in the red.

“Last night, President Trump said he will push for a payrolls tax cut as well as assistance for hourly employees who have been impacted by the health crisis,” said market analyst David Madden at CMC Markets UK.

“The proposal hasn’t come to fruition yet, and that is why stocks turned sharply lower,” he added.

‘Lot of question marks’ 

Mikael Jakoby, head of continental European trading at Oddo Securities in Paris, said on Tuesday’s attempt at a technical rebound “in no way offsets the loss of optimism in the short term”.

“A few small, uncertain announcements about stimulus measures by Trump or the European Central Bank are not going to be enough to restore confidence in the future quickly,” he told AFP. 

“There are still a lot of question marks, and we are still in the growth phase of coronavirus cases,” he added.

Shares in Milan ended 3.3 per cent lower, despite Italy’s airing new economic plans to help families and businesses hurt by a sharp drop in tourism over the past month.

Milan stocks had tumbled 11 per cent on Monday.

Dead cat bounce? 

Investors often express scepticism about a rebound that follows a heavy fall in a stock or market by referencing the idea that even a dead cat will bounce if it falls from a great enough height.

Mentions of felis catus stalked broker notes on Tuesday.

“With the whiff of a springy rotting feline seeping into trading rooms, the European markets completely erased their gains on Tuesday,” said Connor Campbell at Spreadex.

Oil prices doggedly remained higher, however, as some traders were forced to cover their short positions while others went bargain hunting.

Even an announcement by Saudi Aramco that it would boost production only provided a brief reversal, as Russia signalled it could resume its cooperation with the Organisation of the Petroleum Exporting Countries which had kept a floor under prices for the past several years.

“Traders took that as a sign that Moscow might be open to the idea of playing ball with the Saudis,” said CMC Markets UK’s Madden.

DUBAI — Stock markets in the energy-rich Gulf states were battered on Monday as a price war sent oil prices tumbling after crude producers failed to agree on output cuts.

All seven Gulf Arab bourses were in the red for the second day running, shedding hundreds of billions of dollars of market value.

The Saudi market, the largest in the region, dived 7.8 per cent over the day, with energy giant Saudi Aramco plunging by 10 per cent before recovering around half of that by close.

The biggest listed firm in the world has lost some $250 billion of its value over the past two days.

Its capitalisation stands at $1.51 trillion, way below the $2 trillion sought by the kingdom in last year’s initial public offering.

Dubai Financial Market dropped 8.3 per cent at close, its worst level in seven years, but authorities suspended trading in most leading stocks after they slumped the maximum daily limit of 10 per cent.

The Abu Dhabi Securities Exchange shed 8.1 per cent to a four-year low, while the Qatar Stock Exchange was down 9.7 per cent.

Kuwait’s Premier index tumbled 10.3 per cent, forcing a suspension of trading for the second day in a row. The country’s All-Shares Index lost 8.6 per cent.

The tiny bourses of Oman and Bahrain dipped 5.6 per cent and 5.8 per cent, respectively.

The seven bourses had taken an initial beating on Sunday, the first trading day of the week, shedding tens of billions of dollars as the Saudi market tumbled by 8.3 per cent.

Oil prices heavily impact markets in the six-nation Gulf Cooperation Council region as exports generate between 70 per cent and 90 per cent of public revenues.

The crash in crude prices comes as all six member states — Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates — resort to austerity measures to rein in persistent budget deficits.

Oil prices crashed as markets opened on Monday, with the benchmark Brent crude diving to $36 a barrel.

That added to panic as investors hunkered down for a potentially long price war.

The message from Saudi Arabia is: “As long as it takes”, said Anas Al-Hajji, a Texas-based oil expert.

“Given the sharp price decline... it is hoped they will start cooperating again in May,” but the rout could last until the producers’ cartel OPEC meets in July, he said.

Currently, dealers are fleeing riskier assets and diving into safe havens such as gold and the yen. 

Saudi Arabia launched its assault on prices on Sunday with the biggest slash in two decades, Bloomberg News reported, after OPEC and other top producers failed to clinch a deal to reduce output.

The Saudis “are responding to Russia’s exit from output cuts by launching a price war,” Bill Farren-Price, director of Britain-based RS Energy, told AFP. 

Russia’s decision had already battered prices, and analysts have suggested they could head towards $20 if producers cannot cut a deal.