Global financial top brass descend on Riyadh

(From left:) Siemens CEO Joe Kaeser, IMF Managing Director Christine Lagarde and BlackRock Chairman Larry Fink are among the stellar corporate lineup attending the Future Investment Initiative in Riyadh. (Reuters)
Updated 24 October 2017
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Global financial top brass descend on Riyadh

RIYADH: A major conference hosted by the Public Investment Fund (PIF) gets underway in the Saudi capital today attended by some of the world’s top business leaders and money managers.
The Future Investment Initiative (FII) is being organized in the context of Saudi Vision 2030, the Kingdom’s ambitious blueprint for economic reform.
It is being held under the patronage of King Salman and under the leadership of Crown Prince Mohammed bin Salman, who will today welcome some 2,500 delegates to the event.
Dozens of the biggest names in global business are making the trip to Riyadh — among them IMF chief Christine Lagarde and BlackRock boss Larry Fink.
The pair will be among the speakers opening the plenary session of the conference which also includes Saudi Aramco CEO Amin Nasser.
The event will see “internationally-renowned business leaders and influencers discuss how the challenges of the future can be addressed,” said PIF Managing Director Yasir Othman Al-Rumayyan.
Attendees are set to grapple with the big themes of the global economy across a range of industries and against a backdrop of unprecedented economic reforms underway in the Kingdom.
“We see FII as a unique opportunity for the global community to bring together aspirational thinking around the future of the world economy with the realities of investment,” said Pedro Oliveira, Oliver Wyman’s regional managing partner.
“We are delighted to be partners to the PIF in driving that thinking around financial services, health care and life sciences as well as urban planning and infrastructure,” he added.
Other confirmed speakers at the event represent the leaders of major asset managers including Thomas Barrack, executive chairman of Colony NorthStar; Leon Black, chairman and CEO of Apollo Global Management; and Victor Chu, chairman and CEO of First Eastern Investment Group.
These top asset managers will be joined by speakers representing a range of sovereign wealth funds and pension funds.
Most of the important GCC sovereign wealth funds will also be represented at the event including Mahmood Hashim Al-Kooheji, CEO of Bahrain Mumtalakat Holding Company and Khaldoon Al-Mubarak, the CEO of Mubadala Investment Company.
The first day of the conference will begin with CNBC’s Andrew Ross Sorkin leading a panel of financial experts in debating the new social, economic and intellectual frameworks needed to drive global progress.
Another key session will examine breakthroughs in artificial intelligence, robotics, virtual reality, big data, social media, medical science, and smart infrastructure.
The event is also set to make headlines away from the main stage with major projects of the future on display as well as cutting -edge technology.
The first day of the investment conference will wrap up with energy executives discussing the technology expected to shape the future of the sector — with the keynote address set to be delivered by Saudi Energy Minister Khalid Al-Falih.
Other sessions will explore topics such as the future of the information economy, leadership and he age of uncertainty.
Global management consultancies from McKinsey, BCG and Oliver Wyman will also be in attendance — some of whom have been working on projects linked to the Kingdom’s economic transformation.
The gathering aims to explore the evolving role of sovereign wealth in driving the next wave of business, innovation, technology and investment.
Established in 1971 to invest in commercial project, the PIF has contributed to the establishment of numerous Saudi Arabian companies, supporting innovation, industrial diversification and non-oil sector development in the Kingdom.


Iran looms large over OPEC summit

Updated 22 September 2018
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Iran looms large over OPEC summit

  • Saudi Arabia only country in Mideast, and perhaps world, with enough capacity to keep market supplied, say experts
  • At Algiers, Opec and leading non-Opec countries are expected to discuss how to allocate supply increases to offset a shortage of Iran supplies

LONDON: The Opec summit in Algiers on Sunday meets amid widespread fears of a supply crunch when a forecast 1.4 million barrels a day of crude is lost from Iran in November when US sanctions kick in.
If, on top of that, more supply shocks hit the market in worse-than-expected disruption from Libya and Iraq, the price of crude could surge, said Andy Critchlow, head of energy news at S&P Global Platts. “At the moment, the market looks finely balanced,” he said.
There isn’t a lot of slack in the system. As Critchlow points out: “Upstream investment in infrastructure and new wells is historically low and it will take a long time to turn that around.”
At Algiers, Opec and leading non-Opec countries are expected to discuss how to allocate supply increases to offset a shortage of Iran supplies. The gathering comes after a tweet by President Trump on Sept. 20 calling on Opec to lower prices. He said on Twitter that “they would not be safe for very long without us, and yet they continue to push for a higher and higher oil price.”
Critchlow reckoned KSA still had spare capacity of about 2 million bpd. And KSA would get oil back as they go into winter as it had needed 800,000m bpd merely to generate electricity for the home market to meet heightened demand for air conditioning in the summer.
But there is uncertainty about what will come out of Algiers. For a start, the Iranians say they will not attend. That could be tricky in terms of an Opec communique at the end of the meeting as statements need unanimous support from member nations. And Iran has indicated it will veto any move that would affect Iran’s position, ie, one where other countries absorb its market share as sanctions bite.
Jason Gammel, energy analyst at London broker Jefferies, said: “The magnitude of the drop in Iranian exports is likely to be higher than any hit in demand as a result of problems linked to emerging market currencies, or trade wars. That’s why we expect oil prices to continue to strengthen. The Saudis and their partners will keep the market well supplied, and I think the issue is that the level of spare capacity in the system will be extremely low. Any threat or interruption will mean price spikes. Possibly by the end of the year demand will exceed supply; for now, the market remains in balance, but threats of supply disruption will bring volatility.”
Under the spotlight in Algiers is a production cuts accord forged by Opec and 11 other countries in 2016 which has been extended to the end of this year. The agreement helped reboot prices and obliterate inventory stockpiles that led to the crash in crude prices nearly three years ago. But how long will the agreement last? Algiers may kick that one into the long grass.
Thomson Reuters analysts Ehsan Ul-Haq and Tom Kenison told Arab News: “OPEC members would like to maintain cohesion within the group around supply ahead of Iran sanctions and declining Venezuela production, However, they are expected be in favor of maintaining stability in prices while doing so. On the other hand, they need to find a consensus around how their market share would be affected by a decision to pump more oil in the market. Any decision around production will likely be offset until the November meeting.”
Critchlow said that it is what KSA and Russia say and do that matters. “They speak for a fifth of the global oil market, producing a combined total of 22m bpd.” Together, they are the swing producers when it comes to crude production and supply.
Another factor about Algiers is that it is a meeting of the Joint Ministerial Monitoring Committee, which is not a policy-making forum. Big policy statements may have to wait for the main Opec summit in Vienna at the end of year. That said, there will be some very high-level delegations in Algiers, including the Saudi oil minister and his Russian counterpart.
A statement about the demand picture could emerge, especially as there are fears about the impact on the global economy from the US-China tariff war.
Looking to the future, Critchlow thought the Opec production cuts accord would carry on into 2019. “Oil priced between $70/bbl and $80/bbl is a sweet spot for Middle East producers. Its’s good for Saudi as it helps stop further drainage of their foreign reserves and moves the budget back toward balance. Do they want (the price) to go higher? I think that would cause a lot of political problems for them.”