Mideast funds positive on Saudi Arabia after corruption crackdown

Saudi King Salman ordered the formation of a super committee to combat corruption in November. (SPA)
Updated 01 December 2017
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Mideast funds positive on Saudi Arabia after corruption crackdown

DUBAI: Middle East fund managers have become more positive toward Saudi Arabian equities after authorities launched a sweeping crackdown on corruption, a monthly Reuters poll showed on Thursday.
Forty-six percent of funds now expect to raise their allocations to the Saudi stock market in the next three months and none to reduce them, according to the poll of 13 leading managers, conducted over the past week.
That is the most bullish bias toward Saudi stocks since July, and compares with ratios of 31 percent and 8 percent in last month’s poll.
The crackdown alarmed the stock market because of its potential to damage the economy and undermine companies linked to suspects.
As a result, foreign investors were net sellers of stocks in the first three weeks of this month, exchange data shows. They were also concerned by rising tensions between Saudi Arabia and Iran, fueled by instability in Lebanon.
But many fund managers said they were looking past the short-term instability caused by the corruption crackdown to possibilities created by Saudi Arabia’s economic reform program, including privatizations, big new development projects and the plan to lift a ban on women driving next year.
“The crackdown on corruption that we witnessed earlier this month, along with escalated tensions between Iran and Saudi, pushes us to be cautious about our overall Saudi exposure,” said Dubai’s Arqaam Capital.
However, it added: “Short-term uncertainties are concerning, but our long-term view is net positive when putting together reform initiatives and liberalization efforts.”
The non-oil part of the Saudi economy is barely growing this year and is not expected to fare much better next year because of the planned introduction of a 5 percent value-added tax.
But the government is expected to increase spending on development projects moderately in 2018 — perhaps relying in part on funds recovered in the corruption crackdown — so some funds are starting to look toward an economic recovery in 2019.
Sachin Mohindra, portfolio manager at Abu Dhabi’s Invest AD, said that while economic, regulatory and social reforms in the region as a whole would sustain growth in the long term, for now “we expect regional investors to continue to exercise a lot of caution and volumes to remain subpar relative to history.”
 


Scottish government wins fracking case against energy giant Ineos

Updated 19 June 2018
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Scottish government wins fracking case against energy giant Ineos

  • The devolved government said a moratorium on fracking was in place
  • neos had argued that the ban was imposed unlawfully

EDINBURGH: Scotland’s highest court has ruled in favor of a government ban on fracking which had been challenged by energy giant Ineos, the Scottish government said on Tuesday.
“This decision vindicates the extensive process of research and consultation which the Scottish government has undertaken since 2015,” Scottish business minister Paul Wheelhouse said in a statement. “Our preferred position is not to support unconventional oil and gas extraction in Scotland (fracking), and that position remains unchanged.”
The devolved government said a moratorium on fracking — gas extraction via hydraulic fracturing of the ground — was in place. That meant no local authority could grant planning permission until an impact assessment process had been carried out.
Ineos had argued that the ban was imposed unlawfully, and that it contradicted evidence that shale gas could be produced safely by unconventional methods.
Scotland decided to outlaw fracking in October after a public consultation found overwhelming opposition to it.