Goldman was top broker in Saudi market in May as foreign interest surged

The headquarters of Goldman Sachs is pictured on April 17, 2019 in New York City. (AFP)
Updated 11 June 2019

Goldman was top broker in Saudi market in May as foreign interest surged

  • Foreign interest in investing in Saudi Arabia has picked up
  • Goldman Sachs handled 18.6% of trades by value and 12.3% by volume in May

DUBAI: Goldman Sachs was the top broker in the Saudi market in May, both in terms of value and volume of trades, stock exchange data showed, as foreign banks benefitted from a surge of international money into the Kingdom.
Foreign interest in investing in Saudi Arabia picked up ahead of the inclusion of the country’s stock market in global index provider MSCI’s emerging market indexes last month.
Goldman, which was not even among the top ten brokers in Saudi Arabia in April, handled 18.6% of trades by value and 12.3% by volume in May, according to data from Tadawul, the Saudi bourse.
It was followed by HSBC Saudi Arabia, which handled 9.4% of trades by value last month.
In 2017, Goldman received approval to trade equities in Saudi Arabia, joining the growing band of western investment banks and fund managers expanding in the Kingdom.
“They managed to make inroads to both local and foreign businesses,” said a financial industry executive.
Of the 10 top brokers in May, five were foreign, the data showed.
Goldman was the lead manager for the initial public offering (IPO) of Arabian Centers, which listed last month. It was the first IPO in the Kingdom under Rule 144a, which allows the sale of securities primarily to qualified institutional buyers in the United States.
Saudi securities firms such as NCB Capital and Al Rajhi Capital have traditionally been top brokers in the domestic market. The Saudi market opened to foreigners in 2015.
Late last month, the Saudi equity market joined the first phase of passive fund inclusion in the MSCI Emerging Market Index, which is expected to trigger billions of dollars of foreign fund inflows.
In May, foreigners bought a record 17.62 billion riyals ($4.70 billion) of Saudi stocks, according to Saudi stock exchange data.
Foreign ownership of Saudi stocks stood at 6.64% as of May 30, the bourse data showed.
The Saudi index has gained over 12% so far this year, making it among the best performers in the Gulf region this year.

Crude prices surge as OPEC+ agrees to extend cuts

Updated 06 June 2020

Crude prices surge as OPEC+ agrees to extend cuts

  • The eagerly awaited gathering comes as oil exporters globally are hurt by low prices

DUBAI: Crude oil prices on Friday surged on international markets after the OPEC+ alliance, led by Saudi Arabia and Russia, reached a deal to continue supply limits at their present historic level.

After a week of negotiation, a virtual meeting of the Organization of the Petroleum Exporting Countries (OPEC) was expected to take place on Saturday to formally seal the agreement to keep combined cuts at 9.7 million barrels per day (bpd) for at least another month.

Last-minute worries about Iraq, which had held out over committing to its share of the cuts, were overcome with a pledge by Baghdad to stick to the agreed limits and to make up any shortfall in the coming months, according to an official from one of the OPEC delegate countries.

In a speech in Washington, D.C., US President Donald Trump praised the work of OPEC+ in rebalancing the oil market. “We saved that industry (US oil) in a short period of time, and you know who helped us? Saudi Arabia and Russia and others. We got them to cut back substantially,” he said.

The deal struck in April to cut an unprecedented 9.7 million bpd, reinforced by an extra 1 million bpd voluntary cut by Saudi Arabia and smaller amounts by the UAE and Kuwait, has been credited with pulling global oil markets back from the brink of collapse.

Brent crude, the global benchmark, jumped nearly 6 percent in European trading, to stand above $42 per barrel. Oil prices have more than doubled since “Black Monday” on April 20, when West Texas Intermediate (WTI), the American benchmark, fell briefly into negative territory largely because of trading technicalities.

WTI was trading at more than $39 on Friday, raising the possibility that some of the US production lost due to well shut-ins and corporate failures might come back onto the market.

Saudi Energy Minister Prince Abdul Aziz bin Salman was due to address the OPEC+ meeting in his capacity as co-chairman of the joint ministerial monitoring committee (JMMC).

“The conditions right now warrant hopefully successful meetings. Coordination is under way to hold OPEC and OPEC+ meetings tomorrow afternoon,” Prince Abdulaziz bin Salman was quoted as saying by Reuters.

According to an official, the prince was expected to stress the need for vigilant monitoring by OPEC+ of supply limits.

UAE Energy Minister Suhail Al-Mazrouei, urged producers to improve their compliance with agreed cuts.

“As a representative of the UAE, I find it disappointing and unacceptable that some of the largest producers with capacity like (Saudi Arabia) and Russia comply 100 percent or more while other major producers do less than 50 percent,” he wrote in the letter seen by Reuters.

Iraq and Nigeria have been regarded as the biggest laggards on compliance in the OPEC+ partnership, both arguing that their financial needs required them to sell as much oil as possible. Last week Nigeria indicated its willingness to adhere to the limits.

Wrangling with Iraq continued into Friday until a breakthrough was finally reached, and Baghdad promised to abide by the terms of the original deal and stick to compliance agreements.

Monthly meetings of OPEC’s JMMC will take place until the end of the year to monitor compliance levels among OPEC+ countries, and to assess the overall state of the market.

There has been no decision as yet on whether Saudi Arabia and other Gulf countries will continue the extra 1 million bpd cuts, which could expire at the end of this month.

Oil-market sentiment was also lifted by a surprise fall in American unemployment, taken as a sign that the US economy could recover more strongly than expected.

Global oil exporters have come under intense pressure this year as the pandemic stifles the beginning of a recovery in energy investment that had started to materialize.

At the start of the year, global energy investment was expected to rise 2 percent in 2020, its biggest growth in six years, the International Energy Agency (IEA) had predicted. Instead, the Paris-based organization now expects global investment in energy to plunge by 20 percent this year — the equivalent of $400 billion.


(With Reuters)