INTERVIEW: ‘There is going to be pain and maybe some austerity’ — Saudi Citi chief

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Updated 10 May 2020
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INTERVIEW: ‘There is going to be pain and maybe some austerity’ — Saudi Citi chief

  • CEO Carmen Haddad believes the Kingdom’s economy is robust and well resourced 

The coronavirus crisis has changed everything in the economic world as governments struggle to adapt to the new reality of collapsing growth and the likelihood of a Great Depression-type period ahead.

But some economies are better placed to handle a major downturn than others, according to Carmen Haddad, head of the US banking giant Citi in Saudi Arabia.

“Let’s put things into perspective, Saudi Arabia remains a G20 economy, and a very robust economy, the largest in the Middle East,” she told Arab News.

Her optimism is tempered by a realistic assessment that the Kingdom, along with every other economy in the world, will have to adapt as countries emerge from the crisis.

“I think there’s going to be pain, and maybe some austerity measures will be needed if this period extends. The government has taken several measures, including a 5 percent cut on its 2020 expenditure. This will probably come from entertainment and tourism sectors as the policymakers need to reallocate spending to ensure the right sectors receive funding,” she said.

“Maybe this will give some reflection on some of the projects. They have the opportunity to revisit the projects they have, especially the mega-projects that require huge capital expenditure.”

Citi has been busy in the Kingdom for many years, since it first opened up there in the 1950s, and recently has been part of the banking team that had helped Riyadh raise money on international capital markets, as well as advising on project financing, trade and other forms of corporate activity. Haddad is well placed to analyze the current economic and financial situation in which the Kingdom finds itself.

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As well as the global economic downturn as a result of pandemic-related lockdowns, Saudi policymakers also have to reckon with the effects of the collapse in oil prices — still the government’s biggest source of revenue.

Haddad is aware of the challenges. “Saudi is largely an oil-based economy and possesses about 12.5 percent of the world’s proven reserves. Even with the implementation of the economic and social reforms under Vision 2030 and the plan to diversify away from being an oil-based economy, the non-oil revenue accounts for one-third of total revenues.

“This one-third now was only 13 percent of gross domestic product (GDP) five years ago, so the vision has been in execution mode for a few years. But considering the developments in crude oil supply demand dynamics and COVID-19, this has naturally had an impact on revenues as we saw the first-quarter  budget figures from the Ministry of Finance. We saw decline of 22 percent year on year. Expenditures were higher by 4 percent and there was a 9 per deficit,” she added.

The Kingdom has a number of policy options available to deal with the challenges, she believes.

“Regarding the deficits, the ratio of debt to GDP figure was 24 percent at the end of 2019, so even if you get to 30 percent by year end you still have a relatively robust and strong economy. I think the self-imposed debt ceiling increase from 30 percent to 50 percent will help during these times, until oil prices stabilize.

“They’ve been doing things very proactively. The Ministry of Finance recently announced the total impact of the current environment will be $29 billion on the 2020 budget deficit, so that means the forecast deficit has been revised to $79 billion, and it will be funded by debt and reserves.

“If you look at the debt issuance in the market by Saudi Arabia this year, it has been very well measured. They issued in January and then again in April — Saudi already raised $20 billion in debt between Eurobond and domestic sukuk.

“In the April issuance, Saudi raised a $7 billion multi tranche bond and it was 7.5 times oversubscribed. It was the largest order book from and emerging market sovereign this year, and a remarkable transaction from demand and pricing perspective,” she said. Citi was part of the finance team that advised on that bond issue.

The Kingdom has big reserves it can tap into, Haddad said. “The finance minister said it’s going to be painful and difficult, but I think Saudi has the capacity to manage. I think you have enough headroom to raise more debt and fund the deficit from local and international markets, and also tap into reserves from the government current account.

“Let’s not forget the reserves. The Saudi Arabia Monetary Authority (SAMA) announced a drop in the reserves to $475 billion, that’s down by $25 billion, but you know it’s expected there is going to be some pressure on reserves.

“If you look at the package of support for the banking system of $13 billion, aimed at easing the private sector, SMEs, and lending conditions. Those are very important steps that have been taken as well, and already reflected in the drop in the reserves.


BIO

BORN: Hamburg, Germany

EDUCATION:

  • Schooling in Baghdad and London
  • University of Richmond, UK
  • American International University, London

CAREER:

  • JP Morgan Chase, asset manager
  • Lehman Brothers, sales
  • Merrill Lynch, trading and brokerage
  • Citi private bank, KSA
  • Chief country officer, Citi Qatar
  • CEO, Citi KSA

“Overall, there are other reserves in the system that we don’t often look at. The Ministry of Finance has $130 billion of reserves and other government agencies like the Public Pension Agency, the General Organization for Social Insurance and the Public Investment Fund, we estimate they have a combined figure of around $500 billion in assets under management, of which $100 billion are in foreign liquid assets. So total reserves available are above $600 billion,” she said.

And there is the likelihood that oil prices will revive toward the end of the year as global demand recovers. Citi is looking at an average of $36 per barrel this year and $56 for 2021.

“Assuming that, we should be OK. Again, the debt appetite is there, reserves are high and the deficit is being managed, so hopefully this is going to be OK.  We need to look beyond 2020.  The IMF expects a bounce back in GDP in to 2.9 percent for next year,” she said.

Saudi Arabia, like other governments trying to tackle the pandemic shock, will have to take some hard decisions, Haddad said. “They may delay some projects that are not critical, given COVID and future challenges on certain sectors, like tourism.

“There will be huge changes in the way that we operate, so there may be some thought around what is a priority and what is not. Some of the mega-projects around entertainment and travel, for example — maybe those might be deferred or scaled back,” she said.

The pandemic crisis does not necessarily involve a complete halt to corporate and financial activity. “A lot of focus has been on privatization, but now it becomes even more important to accelerate the privatization agenda. Project financing or project-led funding for the public sector is important, as well as tapping into the export agency is also something that could be considered, the Export Credit Agency program. And then some optimization around certain portfolios. Tapping liquidity is increasing, so I’m sure there are other ways they can consider funding. So the focus there will be going forward and diversifying the funding base,” she said.

There could even be a buying opportunity for the Kingdom as foreign assets are going at bargain prices. The Public Investment Fund has already been active, snapping up opportunities in global leisure and energy sectors.

“The PIF has a lot of assets under their belt. They could go to the market and start looking for cheaper discounted prices to expand and enter the market today, especially the international market given their focus on the main pillars of investment.

“They have some liquidity to be able to buy at a cheaper price. They’ve done that and they can continue to do that. There’s some valuation dislocation happening in equity markets and from that there are opportunities for people who hold cash and have the ability to do that,” she said.

From her base in Dubai’s international financial center, Haddad is planning what she calls “phase two” of the reaction to the crisis, when Citi is thinking about getting back to some kind of post-pandemic reality.

“Although governments have announced some easing of restrictions, we are taken our own pace to ensure the safety of our people and coordinating with all stakeholders from government, the health ministry and regulators, to ensure we return to the workplace in a phased and measured approach, and need to make sure we get this right.

“We have not set out an exact timeline or dates because much depends on external factors. We are focused on the data, not the date, in our planning to return to office, and it will be done in multiple phases,” she said.

But she believes there will be permanent shifts in business practice as a result of the crisis.

“We have to understand that there is going to be a new normal. I don’t think I’ll be traveling as much, for sure,” she said.


Uzbekistan keen to collaborate with Saudi Arabia on environmental protections: top official

Updated 6 sec ago
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Uzbekistan keen to collaborate with Saudi Arabia on environmental protections: top official

RIYADH: Uzbekistan’s cooperation with Saudi Arabia on ecology and environmental protection is steadily progressing, with the Central Asian nation aiming to deepen this partnership through the exchange of knowledge and innovation, a top official said.

Speaking to Arab News on the sidelines of the Tashkent International Investment Forum, Uzbekistan’s Minister of Ecology, Environmental Protection and Climate Change Aziz Abdukhakimov said that the country wishes to collaborate with the Kingdom to develop effective solutions to issues including dust and sand storms. 

Saudi Arabia is spearheading climate action efforts across the Middle East, with ambitions to plant 10 billion trees, rehabilitate 40 million hectares of degraded land, and reduce carbon emissions by more than 278 million tonnes per year.

“Our cooperation with the Kingdom of Saudi Arabia in the fields of ecology and environmental protection is dynamic and multifaceted. Through the Intergovernmental Commission between our two countries, we regularly exchange views on the current state and future prospects of collaboration between our environmental agencies,” said Abdukhakimov. 

He added: “We plan to foster collaboration between our national parks and protected natural areas. Saudi Arabia has more than 70 such areas, covering about 18 percent of its territory.” 

The minister further said that such collaborations will allow the exchange of expertise in preserving unique ecosystems and rare species of flora and fauna. 

Abdukhakimov added that Uzbekistan’s Central Asian University of Environmental and Climate Change Studies is seeking to establish academic partnerships with institutions in the Kingdom, including King Saud University and King Abdulaziz University, for the exchange of scientific knowledge and innovations in the environmental field. 

“Our cooperation is built on trust, mutual interest, and a shared responsibility for sustainable development and environmental protection in our regions,” said the minister. 

He also invited Saudi partners to participate in the international Eco Expo Central Asia exhibition to be held in Tashkent from June 19 to 21, as well as the 20th CITES COP20 Conference, which will take place in Samarkand from Nov. 24 to Dec. 5.

Uzbekistan’s environmental agenda

During the interview, Abdukhakimov told Arab News that Uzbekistan is currently facing several severe environmental challenges, both globally and regionally, including climate change, desertification, and land degradation. 

“These phenomena directly impact the country’s sustainable development and require proactive government action. At the regional and national levels, the most pressing issues include water scarcity and pollution, air quality degradation, and the need to conserve and restore biodiversity,” he said. 

To address these challenges, the Uzbek government, under the leadership of President Shavkat Mirziyoyev, is taking various measures, including a push for a green economy, a transition to environmentally friendly transportation, and the development of alternative and renewable energy sources. 

Saudi Arabia is also collaborating with Uzbekistan to advance its energy transition journey, which aims to generate 40 percent of its electricity from clean sources by the end of this decade.

Saudi utility giant ACWA Power is the largest foreign player in Uzbekistan’s energy sector, with the company already implementing 19 projects in the country worth a combined value of $5 billion. 

Out of these 19 initiatives, eight are focused on renewable energy, which is expected to support the Central Asian nation’s goal to achieve 20 gigawatts of clean energy capacity by 2030. 

During the Tashkent Investment Forum, Abid Malik, president of ACWA Power for Central Asia, announced that Uzbekistan will commence producing green hydrogen this month, with an annual production capacity of 3,000 tonnes.

In 2023, Mirziyoyev launched a pilot green hydrogen facility in the Tashkent Region in cooperation with ACWA Power. The $88 million project is being implemented in two phases, with production from the first phase expected to begin this month.

During the forum, Soumendra Rout, ACWA Power’s country head for Uzbekistan, said that the company is planning to invest $5 billion in the Central Asian nation as a part of its broader strategy aimed at increasing its total commitments in the country to $15 billion. 

Abdukhakimov added that Uzbekistan, through the nationwide project Yashil Makon “Green Space,” aims to plant 200 million trees annually. 

Under the project, Uzbekistan has planted over 850 million tree and shrub seedlings over the past four years. 

“Under the ‘Uzbekistan – 2030’ Strategy, one of the key priorities is to ensure a favorable environment for the population. The year 2025 has been declared the ‘Year of Environmental Protection and Green Economy,’ underscoring the state’s strong commitment to environmental priorities,” said the minister. 

Abdukhakimov further added that Uzbekistan is also strengthening institutions for environmental monitoring and control, with the country installing automated air pollution monitoring stations and expanding its meteorological network. 

“These measures demonstrate Uzbekistan’s systematic approach to solving environmental problems and its active engagement in the global environmental movement,” he added. 

Cooperation with regional partners

According to Abdukhakimov, Uzbekistan, like other Central Asian nations, is located in one of the world’s most climate-vulnerable regions. 

He added that the average temperature in the region has risen by 1.5 degrees Celsius — twice the global average, while the area of glaciers has decreased by 30 percent in the last 50 to 60 years, resulting in water shortages, land degradation, and reduced crop yields. 

“Central Asian countries share a common history, transboundary water resources and similar environmental threats — from desertification to increased vulnerability in agriculture. For this reason, Uzbekistan views cooperation as a key instrument in crafting a unified regional response to climate risks,” said the minister. 

To ensure regional cooperation, Uzbekistan also hosted the Samarkand Climate Forum in April, where the Regional Green Development Concept was presented. 

The minister said that this document serves as a foundation for shaping coordinated climate policy and strengthening regional solidarity in the face of global challenges. 

Uzbekistan is also actively engaged in numerous regional initiatives, including the International Fund for Saving the Aral Sea, the Regional Environmental Center for Central Asia, and the CAREC Program, as well as projects with the World Bank, OSCE, and UNESCO.

Abdukhakimov further said that these initiatives will facilitate knowledge exchange, joint management of natural resources, and the mobilization of international funding. 

“In short, Uzbekistan builds regional cooperation on climate issues on the principles of solidarity, mutual benefit, and synergy— firmly believing that only collective efforts can ensure a sustainable future for the entire region,” the minister said. 


World Bank to end ban on nuclear energy projects, still debating upstream gas

Updated 12 June 2025
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World Bank to end ban on nuclear energy projects, still debating upstream gas

  • World Bank to work closely with IAEA to build capacity
  • Electricity demand is expected to more than double by 2035

WASHINGTON: The World Bank’s board has agreed to end a longstanding ban on funding nuclear energy projects in developing countries as part of a broader push to meet rising electricity needs, the bank’s president Ajay Banga said on Wednesday.
Banga outlined the bank’s revised energy strategy in an email to staff after what he called a constructive discussion with the board on Tuesday. He said the board was not yet in agreement on whether the bank should engage in funding the production of natural gas, and if so, under what circumstances.
The global development bank, which lends at low rates to help countries build everything from flood barriers to railroads, decided in 2013 to stop funding nuclear power projects. It announced in 2017 it would stop funding upstream oil and gas projects beginning in 2019, although it would still consider gas projects in the poorest countries.
The nuclear issue was agreed fairly easily by board members, but several countries, including Germany, France and Britain, did not fully support changing the bank’s approach to embrace upstream natural gas projects, sources familiar with the discussion said.
“While the issues are complex, we’ve made real progress toward a clear path forward on delivering electricity as a driver of development,” Banga said, adding that further discussion was required on the issue of upstream gas projects.
Banga has championed a shift in the bank’s energy policy since taking office in June 2023, arguing the bank should pursue an “all of the above” approach to help countries meet rising electricity needs and advance development goals.
In his memo, he noted that electricity demand was expected to more than double in developing countries by 2035, which would require more than doubling today’s annual investment of $280 billion in generation, grids and storage.
The Trump administration has been pushing hard for ending the ban on nuclear energy projects since taking office.
The US is the bank’s single largest shareholder — at 15.83 percent, followed by Japan with 7 percent and China with close to 6 percent — and the bank’s decision to broaden its approach to energy projects will likely please President Donald Trump, who withdrew the US from the Paris Climate Agreement and its emission-reduction targets as one of his first acts in January.
Twenty-eight countries already use commercial nuclear power, with 10 more ready to start and another 10 potentially ready by 2030, according to the Energy for Growth Hub and Third Way.
Banga said the World Bank Group would work closely with the International Atomic Energy Agency to strengthen its ability to advise on nuclear non-proliferation safeguards, safety, security and regulatory frameworks.
The bank would support efforts to extend the life of existing nuclear reactors, along with grid upgrades. It would also work to accelerate the potential of small modular reactors.
ENERGY MIX
Trump administration officials and some development experts say developing countries should not be blocked from using inexpensive power to expand their economies while advanced economies like Germany continue to burn fossil fuels.
But climate activists worry that funding more nuclear and natural gas projects will divert funds away from urgently needed efforts by developing countries to adapt to climate change and benefit from abundant alternative energy sources such as solar.
“Net zero does not mean fossil fuel free. It means, still, that there will be 20 percent energy coming from fossil fuels,” said Mia Mottley, prime minister of Barbados. “We know natural gas is that clean fuel.”
Banga said the bank’s revised strategy would allow countries to determine the best energy mix, with some choosing solar, wind, geothermal or hydroelectric power, while others might opt for natural gas or, over time, nuclear.
He said the bank would continue to advise on and finance midstream and downstream natural gas projects when they represented the least-cost option, aligned with development plans, minimized risk and did not constrain renewables.
The bank would further study evolving technologies like carbon capture and ocean energy, Banga said, adding it aimed to simplify reviews and approvals.
Banga said the bank would continue advising on and financing the retirement of coal plants, supporting carbon capture for industry and power generation, but not for enhanced oil recovery, which can typically secure commercial financing. 


Oil Updates — prices ease as market assesses Middle East tension

Updated 12 June 2025
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Oil Updates — prices ease as market assesses Middle East tension

SINGAPORE: Oil prices eased on Thursday, reversing gains made earlier in the Asian trading session, as market participants assessed a US decision to move personnel from the Middle East ahead of talks with Iran over the latter’s nuclear-related activity.

Brent crude futures were down 49 cents, or 0.7 percent, to $69.28 a barrel at 9:30 a.m. Saudi time, while US West Texas Intermediate crude was 41 cents, or 0.6 percent, lower at $67.74 a barrel.

A day earlier, both Brent and WTI surged more than 4 percent to their highest since early April.

US President Donald Trump said the US was moving personnel because the Middle East “could be a dangerous place.” He also said the US would not allow Iran to have a nuclear weapon. Iran has said its nuclear activity is peaceful.

Increased tension with Iran has raised the prospect of disruption to oil supplies. The sides are set to meet on Sunday.

“Some of the surge in oil prices that took Brent above $70 per barrel was overdone. There was no specific threat identified by the US on an Iranian attack,” said Vivek Dhar, director of mining and energy commodities research at Commonwealth Bank Australia.

Response from Iran is only contingent on US escalation, Dhar said.

“A pull back (in price) makes sense, but a geopolitical premium that keeps Brent above $65 per barrel will likely persist until further clarity on US-Iran nuclear talks is revealed,” he added.

The US is preparing a partial evacuation of its Iraqi embassy and will allow military dependents to leave locations in the Middle East due to heightened security risk in the region, Reuters reported on Wednesday citing US and Iraqi sources.

Iraq is the second-biggest crude producer after Saudi Arabia in the Organization of the Petroleum Exporting Countries.

Military dependents can also leave Bahrain, a US official said.

Prices weakened having hit key technical resistance levels during Wednesday’s rally, plus some market participants are betting on Sunday’s US-Iran meeting resulting in reduced tension, said OANDA senior market analyst Kelvin Wong.

Trump has repeatedly said the US would bomb Iran if the two countries cannot reach a deal regarding Iran’s nuclear-related activity including uranium enrichment.

Iran’s Minister of Defense Aziz Nasirzadeh on Wednesday said Iran will strike US bases in the region if talks fail and if the US initiates conflict.

US Special Envoy Steve Witkoff plans to meet Iranian Foreign Minister Abbas Araghchi in Oman on Sunday to discuss Iran’s response to a US proposal for a deal.

Separately, US crude inventories fell 3.6 million barrels to 432.4 million barrels last week, the Energy Information Administration said. Analysts polled by Reuters had expected a draw of 2 million barrels. 


Saudi Arabia adds MEDEX service to Jeddah Port, linking 12 global hubs

Updated 11 June 2025
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Saudi Arabia adds MEDEX service to Jeddah Port, linking 12 global hubs

  • New service connects Jeddah to Abu Dhabi and Jebel Ali in the UAE
  • It also connects to Karachi in Pakistan, and Colombo in Sri Lanka

RIYADH: Saudi Arabia has expanded its maritime connectivity with the addition of the MEDEX shipping service at Jeddah Islamic Port, linking the Kingdom to 12 regional and international ports. 

Operated by global logistics firm CMA CGM, the new service connects Jeddah to Abu Dhabi and Jebel Ali in the UAE, Karachi in Pakistan, and Colombo in Sri Lanka, according to a release by the Saudi Ports Authority, or Mawani. 

The move is part of Mawani’s broader efforts to improve operational efficiency at Jeddah Islamic Port and raise Saudi Arabia’s standing in global port performance rankings. 

It also supports the Kingdom’s National Logistics Strategy, which aims to increase the sector’s contribution to gross domestic product from 6 percent to 10 percent by 2030, positioning Saudi Arabia as a strategic logistics hub connecting three continents.

“This service enhances the port’s competitive advantage, facilitates global trade, opens new business horizons, and supports national exports,” Mawani said.

Jeddah Islamic Port currently features 62 multi-purpose berths, a bonded and re-export logistics area, several specialized terminals, and advanced cargo-handling equipment. Shutterstock 

The MEDEX service is the 19th shipping line added to Jeddah Islamic Port since the beginning of 2025, reinforcing Saudi Arabia’s commitment to improving regional and international connectivity. 

With a capacity of up to 10,000 twenty-foot equivalent units, the new service also links Jeddah to Mundra and Nhava Sheva in India, Piraeus in Greece, Malta, Genoa in Italy, Fos in France, and Barcelona and Valencia in Spain.

Headquartered in Marseille, CMA CGM Group operates in 177 countries and is the world’s third-largest shipping company. It serves more than 420 ports across five continents with a fleet of over 650 vessels. 

The new service aims to boost domestic import and export activity, supporting Saudi Arabia’s broader objective of establishing itself as a global trade hub. 

Jeddah Islamic Port currently features 62 multi-purpose berths, a bonded and re-export logistics area, several specialized terminals, and advanced cargo-handling equipment. It also houses two general cargo terminals, two ship repair docks, and a dedicated marine services zone. The port’s total handling capacity reaches 130 million tonnes annually. 

Saudi Arabia climbed to 15th place globally in container throughput rankings in 2024, underlining its growing role as a maritime logistics powerhouse, according to Lloyd’s List, a UK-based shipping industry journal. 

The report said Jeddah Islamic Port advanced to 32nd place globally, up from 41st in 2023, after handling 5.58 million containers last year — a 12.6 percent increase from the previous year.


Closing Bell: Saudi main index holds steady at 11,005

Updated 11 June 2025
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Closing Bell: Saudi main index holds steady at 11,005

  • Parallel market Nomu shed 84.03 points to close at 27,223.71
  • MSCI Tadawul Index declined by 0.07 percent to end at 1,405.46

RIYADH: Saudi Arabia’s Tadawul All Share Index gained 0.49 points on Wednesday, closing at 11,005.02.

The total trading turnover of the benchmark index was SR5.60 billion ($1.49 billion), with 149 of the listed stocks advancing and 89 declining.

The Kingdom’s parallel market Nomu, however, shed 84.03 points to close at 27,223.71.

The MSCI Tadawul Index also declined by 0.07 percent to 1,405.46. 

Fawaz Abdulaziz Alhokair Co., also known as Cenomi Retail, was the best-performing stock on the main market, as the company’s share price advanced by 9.93 percent to SR19.70. 

Miahona Co. also saw its share price increase by 6.09 percent to SR24.38.

The stock price of Americana Restaurants International PLC advanced 5.74 percent to SR2.21. 

Conversely, the share price of Elm Co. declined by 6.66 percent to SR959.20. 

The top gainer on Nomu was Meyar Co., whose share price grew 20.74 percent to SR65.20.

In the parallel market, Knowledge Net Co. also saw its stock price rise by 10 percent to SR34.10. 

The share price of Anmat Technology for Trading Co., which debuted on the Kingdom’s parallel market, climbed by 4.74 percent to SR9.95. 

On Tuesday, Saudi Arabia’s main market also witnessed three negotiated deals worth SR23.3 million. 

The negotiated deals include ACWA Power’s SR12.59 million, followed by Ades Holding Co.’s SR5.74 million, and Saudi Kayan Petrochemical Co.’s SR5 million. 

A negotiated deal indicates the purchase of a stock based on an agreement between buyers and sellers, apart from the market price.

These agreements are executed under the control of Tadawul and in accordance with capital market laws and regulations. 

The share price of ACWA Power declined by 5.34 percent to SR255.40. 

Ades Holding Co. saw its share price drop by 0.74 percent to SR13.48. 

The stock price of Saudi Kayan Petrochemical Co. edged up by 0.40 percent to SR4.96.