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Mon 11 May 2020 12:09 PM

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Saudi shares slump in early trading after hike in VAT, cut to state allowances

The Tadawul All Share Index dropped as much as 3.5% in Riyadh

Saudi shares slump in early trading after hike in VAT, cut to state allowances

The Tadawul All Share Index dropped as much as 3.5% in Riyadh.

Saudi shares slumped in early trading Monday after the government tripled the value-added tax and cut allowances for state workers in austerity measures to cope with the economic impact of coronavirus and the drop in oil prices.

The Tadawul All Share Index dropped as much as 3.5% in Riyadh. Al Rajhi Bank, Saudi Aramco and Riyad Bank pressured the benchmark the most, sliding by between 2.1% and 5.7%.

While “painful,” the measures are “necessary and beneficial to protect fiscal and economic stability in the short and long term,” Finance minister Mohammed Al-Jadaan said in a statement carried by the Saudi Press Agency. The steps taken are valued at about 100 billion riyals ($26.6 billion).

The main Saudi index dropped 7.4% earlier this month after Al-Jadaan said measures were needed to respond to the crisis. The gauge is down 23% this year, following a slump in equity markets in developed and emerging markets.

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