Saudi Arabian General Investment Authority reveals plans for Kingdom to host FDI summit

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Updated 14 February 2020

Saudi Arabian General Investment Authority reveals plans for Kingdom to host FDI summit

  • Saudi Arabia was the most improved country in the world for doing business, the World Bank said in its report in October 2019.

RIYADH: Saudi Arabia is working closely with the UN Conference on Trade and Development (UNCTAD) to host the first ever global FDI Summit in Riyadh in October 2020.

“The summit will discuss the challenges on global FDI and feature Saudi Arabia as a case study,” said Khaled A. Tash, deputy governor of marketing and communications at the Saudi Arabian General Investment Authority (SAGIA), in an interview.

“A declining FDI trend globally is not in the interest of anyone, so we want to address these challenges, we want to discuss the solutions and want to come out with a set of recommendations that come out from Riyadh during the G20, this is our perspective on how we can help the global FDI trends to reflect from a negative to a positive one,” said Tash.

He was speaking on the sidelines of the Retail Leaders Circle (RLC) MENA Summit 2020 in Riyadh earlier this week.

“One of the commitments in Saudi Vision 2030 is a flourishing retail sector, because retail is one of the biggest job creation engines, so that’s a very important priority for the Kingdom,” he said.

Saudi Arabia was the most improved country in the world for doing business, the World Bank said in its report in October 2019.

The Kingdom leapt 30 places in the annual survey of business efficiency in 190 countries, and was the top reforming country, the highest ranking since the bank launched its “Doing Business” survey 20 years ago.

The Kingdom now ranks 62nd in the world, ahead of many larger economies such as India.

“Last but not least, we are becoming much more effective and aggressive in our marketing and promotional efforts,” he said.

“So two years ago we launched ‘Invest Saudi’ as a brand not only by the SAGIA but all the government entities working as one team to promote Saudi Arabia internationally as a platform to reach out to investors.”


Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.