Franklin Templeton gets QFI status in Saudi Arabia

Around $3 billion in foreign flows has come into Saudi stocks already in 2018, taking total foreign investment in local equities to around $9 billion. (Reuters)
Updated 18 June 2018
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Franklin Templeton gets QFI status in Saudi Arabia

  • Fund manager attracted by fiscal and social reforms
  • KSA market attracts $3 billion in foreign flows this year

LONDON: US fund manager Franklin Templeton is to allow foreign investors to invest directly in Saudi Arabian stocks for the first time, after announcing that its funds have been granted Qualified Foreign Investor status by market regulators.

The firm’s increased commitment to Saudi Arabian stocks follows the steady easing of restrictions on foreign investors by regulators in the Kingdom, as part of capital markets and economic reforms within the country.

The Saudi Capital Market Authority (CMA) announced measures to ease restrictions on foreign investment in the local stock market from this January and allowed eligible foreign enterprises to acquire a larger stake of up to 10 percent of any issuer’s shares, up from 5 percent.

“Bold fiscal reforms, including steps to reduce its reliance on oil, will put the Kingdom’s economy on more sustainable footing over the long-term,” said Bassel Khatoun, managing director, frontier and MENA, Franklin Templeton Emerging Markets Equity.

“At the same time, impressive capital-market reform is culminating in classification upgrades by key index providers. Finally, social reform continues unabated, leading to new investment opportunities across the economy. As a firm, we are excited to be part of these positive developments.”

Saud stocks are expected to be upgraded to emerging market status by index provider MSCI on Wednesday, following a similar upgrade by fellow index provider FTSE Russell at the end of March.

Around $3 billion in foreign flows has come into the market already in 2018, taking total foreign investment in local equities to around $9 billion.

Franklin Templeton forecasts such upgrades will attract additional foreign investment flows of around $35 billion. The upcoming IPO of Saudi Aramco, expected in the next year or so, will bring in $50 billion in foreign investment depending on valuation, the firm predicted.


OPEC chief: Group must stay together as US sanctions Iran

Updated 18 min 46 sec ago
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OPEC chief: Group must stay together as US sanctions Iran

  • Production cut agreement now a "permanent feature"
  • Brent already near $80 per barrel

FUJAIRAH: OPEC must stick together for the good of the global economy as founding member Iran faces renewed US sanctions, the head of the group said Tuesday — though he did not address how an already-tight market will make up for the loss of Iranian supply.
Mohammed Sanusi Barkindo also said an agreement between OPEC and non-members that cut production and helped bring prices back up from lows of $30 a barrel in January 2016 was now “a permanent feature.”
Cementing that arrangement would be one of the topics of discussion as OPEC meets this Sunday in Algeria, he added.
Still, OPEC will face rising anger from Iran, which feels increasingly under pressure after President Donald Trump pulled out of the landmark nuclear deal between Iran and world powers in May.
Crushing US oil sanctions on Iran will resume in early November and already, American allies in Asia are cutting back on their purchases of Iranian crude.
The US moves have gotten furious reactions from Iran, especially amid talk of American officials asking Russia and Saudi Arabia to make up the difference.
“Mr. Trump’s attempt to prevent Iran from appearing on the global crude oil markets has allowed Russia and Saudi Arabia, which would not favor low prices, to pursue hostage-taking policies in the market,” Iranian OPEC governor Hossein Kazempour Ardebili said on Saturday.
Barkindo said: “Iran is not only a founding member of OPEC, it’s a very important member of this organization. We have no choice but continue to work with all parties.”
Benchmark Brent crude already is nearing $80 a barrel and analysts believe it may go even higher as production remains low. A loss of Iranian supply likely will further drive up prices.
Trump, facing midterm elections in the US, already has called for more oil production from Saudi Arabia and OPEC to bring down prices with limited effect. A gallon of regular gasoline costs on average $2.85 in the US, up from $2.62 a year ago, according to AAA.
Barkindo praised the agreement between OPEC and non-members that cut production and said the cartel would work to make it permanent.
“The declaration of cooperation has come to stay,” he said.