Legendary investor Mark Mobius could open business in Saudi Arabia

Mark Mobius. (Reuters)
Updated 18 October 2017

Legendary investor Mark Mobius could open business in Saudi Arabia

DUBAI: Mark Mobius, the legendary investor, is considering setting up an office in Saudi Arabia for his firm, the $750 billion Franklin Templeton Investments (FTI) group.

In an exclusive interview with Arab News, Mobius, who is executive chairman of FTI’s emerging markets business, said that he expected a big increase in investment opportunities in the Kingdom as part of the economic transformation strategy being pursued under the Vision 2030 reform plan, and was exploring the possibility of a permanent presence in Saudi Arabia.

“In Saudi Arabia we still have to invest via proxies, but it’s quite possible we’d like to invest directly in Saudi Arabia, and we could do that via an office there. Saudi could become very big indeed,” he said.

“We would definitely consider opening an office in Saudi Arabia and getting a full investment licence. What would make it even more attractive would be if the GCC (Gulf Cooperation Council) nations got together and unified their economies in terms of currencies and investment flows. It would be in the interest of Saudi Arabia to encourage that, and eventually include Egypt too in a big trading group,” he added.

Mobius currently invests in listed securities in Saudi Arabia in the food, banking and logistics sector, but is looking to expand his exposure to the country.

“At the moment, out of $500 million we have invested in the Middle East, some $270 million is in Saudi Arabia. But there is $29 billion of assets in the emerging markets group. We could easily double the investment in Saudi equities. If the reforms in the Kingdom move ahead, we could easily absorb another $200 million to $300 million in Saudi Arabia,” he said.

But he added that it was important for Saudi Arabia to be upgraded to emerging market status by MSCI and FTSE Russell, the index compilers. “Inclusion in the indices is vital,” he said.

Mobius, who has been investing in global emerging markets since 1987, said he was interested in any public offering of shares in Saudi Aramco, but with certain caveats.

“There are corporate governance issues that would leave a big question mark. The Saudi government is obviously running the show and will have to make it clear that the quoted element of Aramco is independent of the government. The way to do that is to have truly independent directors and ensure that they and the shareholders will get a chance to vote on key issues,” he said.

There were other issues regarding Aramco, he said. “It would also be good to spin off those things like schools, hospitals and social projects that are not strictly part of the oil business,” he said, although he conceded that dividend policy would be important in determining how global investors viewed these issues.

Global oil demand under threat from cleaner fuel

Updated 30 min 35 sec ago

Global oil demand under threat from cleaner fuel

  • Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook
  • The IEA’s central scenario is for demand to grow by about 1 million bpd on average every year to 2025

LONDON: Electric vehicles and more efficient fuel technology will cut transportation demand for oil by 2040 more than previously expected, but the world may still face a supply crunch without enough investment in new production, the International Energy Agency (IEA) said on Tuesday.
Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook. The IEA’s central scenario is for demand to grow by about 1 million barrels per day (bpd) on average every year to 2025, before settling at a steadier rate of 250,000 bpd to 2040 when it will peak at 106.3 million bpd.
“In the New Policies Scenario, demand in 2040 has been revised up by more than 1 million bpd compared with last year’s outlook, largely because of faster near-term growth and changes to fuel efficiency policies in the United States,” the agency said.
The IEA believes there will be about 300 million electric vehicles on the road by 2040, no change on its estimate a year ago. But it now expects those vehicles will cut
demand by 3.3 million bpd, up from a previous estimated loss of 2.5 million bpd in its last World Energy Outlook.
“Efficiency measures are even more important to stem oil demand growth: Improvements in the efficiency of the non-electric car fleet avoid over 9 million bpd of oil demand in 2040,” the IEA said.
Oil demand for road transport is expected to reach 44.9 million bpd by 2040, up from 41.2 million bpd in 2017, while industrial and petrochemical demand is forecast to reach 23.3 million bpd by 2040, from 17.8 million bpd in 2017.
All global oil demand growth will stem from developing economies, led by China and India, while demand in advanced economies is expected to drop by more than 400,000 bpd on average each year to 2040, the IEA said.
The IEA, which advises Western governments on energy policy, maintained its forecast for the global car fleet to nearly double by 2040 from today, growing by 80 percent to 2 billion.
On the supply side, the US, already the world’s biggest producer, will dominate output growth to 2025, with an increase of 5.2 million bpd, from current levels of about 11.6 million bpd. From that point onwards, the IEA expects US oil production to decline and the market share of the Organization of the Petroleum Exporting Countries (OPEC) to climb to 45 percent by 2040, from closer to 30 percent today.
New sources of supply will be needed whether or not demand peaks, the agency said.
“The analysis shows oil consumption growing in coming decades, due to rising petrochemicals, trucking and aviation demand. But meeting this growth in the near term means that approvals of conventional oil projects need to double from their
current low levels,” IEA director Fatih Birol said.
“Without such a pick-up in investment, US shale production, which has already been expanding at record pace, would have to add more than 10 million bpd from today to 2025, the equivalent of adding another Russia to global supply in seven years, which would be a historically unprecedented feat.”