Saudi Arabia outpaces Asian giants with $18bn foreign equity inflow

Saudi investors monitor stocks at the recently opened exchange market department at the National Commercial Bank in Riyadh. (AFP)
Updated 29 August 2019

Saudi Arabia outpaces Asian giants with $18bn foreign equity inflow

  • Saudi Arabia has attracted $18 billion in foreign equity inflows so far this year
  • MSCI added Saudi stocks to its emerging markets index in June

LONDON: Saudi Arabia became the top equity investment destination among emerging markets this summer according to the Institute of International Finance (IIF)

Supported by its upgrade to emerging market status, Saudi Arabia has attracted $18 billion in foreign equity inflows so far this year, the IIF said.

“The inclusion of local stocks to broad equity benchmarks acknowledges the progress made by Saudi Arabia in reforming its capital
market system,” the institute said in its latest report.

FASTFACT

$4.5 bn

Saudi Arabia attracted more than $4.5 billion in foreign equity inflows in May and $2 billion in the first three weeks of August.

MSCI added Saudi stocks to its emerging markets index in June, while the index will complete the upgrade by the end of August.

“We expect the second phase of the upgrade to attract an additional $5 billion in equity inflows,” IIF said. While the ongoing trade war between the US and China negatively impacted investment flows to some emerging markets in recent months, Saudi Arabia bucked the overall bearish trend.

The Kingdom attracted more than $4.5 billion in foreign equity inflows in May, and $2 billion in the first three weeks of August, it said.

The inclusion of Tadawul-listed shares to both the MSCI and FTSE emerging market indexes has attracted billions of dollars from global investment funds this year.


American Airlines threatens to cancel some Boeing 737 MAX orders

Updated 11 July 2020

American Airlines threatens to cancel some Boeing 737 MAX orders

  • American’s stand comes as airlines are finding financing increasingly difficult and expensive
  • Airlines have canceled orders for more than 400 MAX planes so far this year

DALLAS: American Airlines is warning Boeing that it could cancel some overdue orders for the grounded 737 MAX unless the plane maker helps line up new financing for the jets, according to people familiar with the discussions.
American’s stand comes as airlines are finding financing increasingly difficult and expensive as the coronavirus pandemic has crippled their operations.
American had 24 MAX jets before they were grounded in March 2019. It has orders for 76 more but wants Boeing to help arrange financing for 17 planes for which previous financing has or will soon expire, according to three people who spoke Friday on condition of anonymity to discuss private talks between the companies.
If the companies can’t reach an agreement, American could use MAX financing that is about to expire to pay for jets from Boeing’s archrival Airbus, one of the people said.
Chicago-based Boeing said in a statement that it is working with customers during “an unprecedented time for our industry as airlines confront a steep drop in traffic,” but did not comment on the talks with American. The Fort Worth, Texas-based airline declined to comment.
News of American’s threat to cancel some orders was first reported by The Wall Street Journal.
The situation underscores the strain facing airlines during the coronavirus pandemic. It has grown more difficult and expensive for them to finance planes. American’s negotiating stance doesn’t reflect a loss of confidence in the plane’s safety, the sources said.
The MAX was Boeing’s best-selling plane before crashes in Indonesia and Ethiopia killed 346 people and led regulators around the world to ground all MAX jets.
The coronavirus pandemic has compounded Boeing’s problems by causing a sharp drop in air travel and a loss of interest in new planes. Nearly 40 percent of the world’s passenger jets are idled, according to aviation data supplier Cirium, as most airlines have more planes than they need until travel recovers.
That has made it more difficult to finance planes. United Airlines and Southwest Airlines found foreign lenders who agreed in April and May to buy MAX jets and lease them to the airlines, but those carriers are in stronger financial situations than American.
The 17 planes in dispute were supposed to have been delivered to American at least a year ago. That has given the airline the option of canceling the order without penalty and recovering its down payments now, according to one of the people familiar with the matter. The deliveries have been delayed while Boeing works to fix a flight-control system suspected of playing a role in the crashes.
Airlines have canceled orders for more than 400 MAX planes so far this year, and 320 are no longer certain enough to count in Boeing’s backlog. Some were dropped because the airline buyer ran into financial problems, while others were swapped for different Boeing planes. The company had taken 4,619 orders through May.
Air travel in the US fell about 95 percent from the beginning of March until mid-April. Traffic has recovered slightly since then, but remains down more than 70 percent from a year ago. With little revenue coming in, airlines are slashing spending and preparing to furlough thousands of workers this fall.
American has accepted $5.8 billion in federal aid to pay workers through Sept. 30, reached tentative agreement on a $4.75 billion federal loan, and lined up billions more in available cash from private lenders to survive the travel downturn.