Saudi financial sector shows off wares to global audience

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Saudi financial sector shows off wares to global audience

The huge global appetite for the Saudi Aramco bond has given the whole of the investment banking advisory business a new spring in its step. (AP Photo)

At lunchtime on Tuesday, the headcount of attendees for Saudi Arabia’s latest international financial extravaganza stood at 3,400, and rising. By the time you read this in print or online, it will probably have topped the 4,000 mark and still heading upward.

Organizers at the Financial Sector Conference, which opens in the world-renowned Ritz-Carlton conference hall in Riyadh on Wednesday morning, said informally that some 3,400 attendees had signed up for the two-day showcase of the Kingdom’s financial industry, and that more were registering at an impressive rate.

This is the first time Saudi Arabia has specifically highlighted the progress its financial sector has made within the Vision 2030 strategy to diversify its economy away from oil dependency. Of course, finance was a big feature of the Future Investment Initiative (FII) held in successive years at the same venue, which earned the epithet “Davos in the desert,” but the Kingdom’s policymakers obviously felt that finance was so important to the overall Vision that it needed its own event.

After all, industry and logistics had its own day in the Ritz sun in January, when the National Industrial Development and Logistics Program was unveiled at the same venue. Now it is the turn of the bankers, corporate financiers, securities traders, mortgage providers and insurers to put their wares on display for the world.

The conference is the official “coming out” of the Financial Sector Development Program (FSDP), the part of the Vision that deals specifically with cold, hard cash —  in all its manifestations. The program was set up to promote and enable financial planning, encourage financial support for the private sector, and accelerate the creation of an advanced capital market.

The move toward inclusion of Saudi stocks in the MSCI Emerging Market Index has lifted stocks toward levels last seen in 2015.

Frank Kane

Finance has actually had rather a good time of it in the Kingdom lately. The move toward inclusion of Saudi stocks in the MSCI Emerging Market Index has lifted stocks toward levels last seen in 2015. The huge global appetite for the Saudi Aramco bond has given the whole of the investment banking advisory business a new spring in its step. 

The event is taking place against the backdrop of a still challenging, but improving economic environment. Since the International Monetary Fund predicted a slowing in the rate of growth in the Kingdom’s economy in January, several things have gone the right way, and there is a cautious note of optimism that the worst is over after the slump brought on by the crash in oil prices in 2014.

Crude prices have risen this year, on Tuesday hitting a five-month high of nearly $75 a barrel. Part of that rise is down to the careful management of supply by OPEC members, led by Saudi Arabia, and a group of non-OPEC producers led by Russia. Some of the recent spike is also due to a large chunk of Iranian oil coming off the market as US sanctions head toward their zero-export goal.

One senior businessman I spoke to in Riyadh on the fringes of the conference site on Tuesday spoke rosily of the prospects for his consumer-oriented business, as Saudi shoppers got used to the VAT measure introduced last year and the higher energy bills many have to pay.

Other anecdotal evidence suggests that there has been a leap in mortgage applications in the first few months of this year, another sign that consumers are shifting their priorities in the new environment. The panels involving the Saudi Real Estate Refinance Company, which is seen as a key to providing more affordable housing in the Kingdom and boosting home-ownership among citizens, promise to be particularly illuminating.

The guest list of the conference — which is being held under the royal patronage of King Salman — reads like a who’s who of the Saudi Arabian policymaking elite, with ministers from the finance, economy and strategic ministries, as well as top policymakers from capital markets, investment and insurance industries.

These are complemented by an array of movers and shakers from the international financial community, with big names from the US, European and Asian banking sector in attendance. Expect some big headlines, with some big numbers and dollar symbols in them.

  • Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai
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