Saudi Aramco IPO will guarantee growth and jobs: Al-Falih
Saudi Aramco IPO will guarantee growth and jobs: Al-Falih
In his message unveiling Aramco’s 2016 annual review on Thursday, Al-Falih, who is also chairman of the oil giant, said the planned initial public offering (IPO) on Saudi and international stock markets was “the most notable feature of the Kingdom’s transformation” as set out in the Vision 2030 plan to reduce its dependence on oil revenue.
“The Vision, which aims to diversify the national economy beyond oil and build a thriving private sector, will enable Saudi Aramco to expand its global presence. Concurrently with the Vision, the company will enlarge its supply chain and improve business reliability through a local network of suppliers and manufacturers while increasing the competitiveness of Saudi Arabia’s energy sector,” he said.
He added that the IPO — which is set to value Aramco at $2 trillion and which is scheduled for late next year — would “elevate the international visibility of the company’s decision making and governance, and building confidence in its long-term strategy.”
In 2016, which Al-Falih said was a “challenging year,” Aramco reached an all-time record for production of crude oil, pumping an average of 10.5 million barrels a day (mbd) — the biggest daily figure of any oil company in history.
Late in the year, Saudi Arabia led the Organization of the Petroleum Exporting Countries (OPEC) initiative to cap oil production in the face of falling prices, which Al-Falih said has “set the stage for an improved business environment in 2017.”
He said that 2016 was a “turning point” for Aramco, Saudi Arabia and the global oil industry.
Saudi Arabia ratified the Paris Agreement on climate change in 2016, just before the US signaled it was to leave the global pact to protect the environment. Al-Falih said that “the role of oil and gas in the global energy mix will remain significant for decades to come.”
Wealthy Gulf individuals feel more confident about regional prospects
- “Factors like the region’s stability, attractive investment opportunities and low-tax environment are seen as the main drivers behind the growing confidence in the region’s economy.”
- Among the most optimistic were respondents in the UAE, with 57 percent of those surveyed saying they thought the overall outlook was improving.
DUBAI: Survey finds growing optimism on region’s economies, but Saudi investors remain wary.
Wealthy individuals in the Gulf are more optimistic over the future of the region and the global economy compared with last year, and are increasing likely to invest in their own countries and other emerging markets in Asia than in western economies. These are among the main findings of an annual survey by Dubai-based Emirates Investment Bank (EIB), released on Tuesday, of the sentiment among high net worth individuals (HNWIs) in the region.
After two years of falling confidence, some 60 percent of regional HNWIs now believe things will improve or stay the same. Fewer are pessimistic about both regional and global economic prospects than last year, while nearly 80 percent of respondents said they would prefer to invest in Gulf assets, rather than looking abroad.
The recovering oil price was a big reason for the increasing feel-good factor in the Gulf, according to Khalid Sifri, EIB’s chief executive officer, who added: “Factors like the region’s stability, attractive investment opportunities and low-tax environment are seen as the main drivers behind the growing confidence in the region’s economy.”
After falling below $30 per barrel in early 2016, oil has subsequently recovered to a three-and-a-half-year high, breaching the $75 a barrel mark yesterday for the first time since November 2014.
However, the overall optimism of the survey masks some concerns among regional HNWIs; in Saudi Arabia, 48 percent of respondents said that they saw the regional economic situation improving or staying the same, against 52 percent who felt it was likely to worsen in 2018.The survey was conducted last November and December, when investor sentiment in the Kingdom was affected by the high-profile anti-corruption campaign undertaken against some prominent business people accused of financial wrong-doing. “It may have been affected by that. We shall see what the situation is at the end of this year,” Sifri said.
Respondents from Kuwait were even more pessimistic. None of the respondents from the country felt that things were going to improve on the investment front this year, while 54 percent said they would worsen. Among the most optimistic were respondents in the UAE, with 57 percent of those surveyed saying they thought the overall outlook was improving. On the long-term global outlook, a total of 78 percent of those surveyed across the region were optimistic about prospects over the next five years, with most citing positive economic and political stability as the reason, along with a smaller number who said oil price stabilization would benefit the world economy. The oil price recovery was the biggest reason for regional optimism.
The geopolitics of the region was claimed as a big factor in deciding investment decisions, but Saudis were less concerned than others. Only 29 percent in the Kingdom said they were influenced by geo-political events, compared with 83 percent in Qatar and 85 percent in the UAE.
Oil prices, economic reforms and the introduction of VAT were also factors influencing investment, as was the election of Donald Trump as president of the USA. There has been a big shift in global investor orientation outside the GCC. Nearly half of regional wealthy investors (47 percent) are now looking to Asia, 38 percent to the wider Middle East and North Africa, some 34 percent to Europe and only 17 percent to North America. The survey was conducted among 100 HNWIs with $2 million or more in investable assets.