Good COVID care added to KSA’s investment attraction, says Sedco chief

Good COVID care added to KSA’s investment attraction, says Sedco chief
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Updated 21 September 2021

Good COVID care added to KSA’s investment attraction, says Sedco chief

Good COVID care added to KSA’s investment attraction, says Sedco chief
  • Saudi Arabia is shifting toward cleaner energy, even though oil will continue to be an important component of our economy, says Abu Aker

DUBAI: Sedco Capital, one of Saudi Arabia’s leading investment groups, takes a global stance as it expands outside its Jeddah base.

Samer Abu Aker, Sedco chief executive officer, told Arab News: “In terms of regional exposure, we are actually global in the sense that we invest in Asia, in Europe, in the Middle East and America.”

“Our strategy is split between developed markets, emerging markets, passive strategies, active strategies in different asset classes — listed equities, private markets, direct investment into companies and in real estate as well,” he added.

Sedco, founded in 1976, has offices across the world, in Dubai, London and Luxembourg, giving it a view across global publicly listed and private asset sectors.

After two decades in financial services, Abu Aker joined the company in 2011 after Sedco was relaunched as a standalone asset management group.

The current Sedco focus is more on developed markets, with the US a favorite as American asset classes have responded well to pandemic stimulus packages that curtailed its recession.

The US government provided almost $6 trillion in coronavirus relief, while the Federal Reserve slashed its overnight benchmark overnight interest rate to near zero and is pump money into the economy through monthly bond purchases.

Last year, Sedco invested in what Abu Aker calls “jewel” real estate assets in Pennsylvania Avenue, home to the White House, in the heart of Washington DC.

The (coronavirus disease) pandemic presented opportunities, he said.

The money manager said: “Definitely it has shifted the position of our portfolios over the course of the last 18 months.

“For example, while we have maintained a strategic asset allocation based on our views on different economies and the different markets, with the pandemic coming into play we have seen the more active role of the US government both on the monetary side but also the robust fiscal spending that they have that they have put in place.”

Sedco is also actively involved in other big markets, in China and in Europe, for example, to take advantage of economic recovery as vaccines are rolled out round the world.

“As the global cycle marches on through the latter part of the year, led by developed countries, chances are that investors’ preferences might change as the worst news is priced in and valuations become more appealing,” he said.

The firm said in its August monthly bulletin that pressure on the supply of goods caused by pandemic bottlenecks “should eventually subside in the second half of 2022 as economic mobility in the US and Europe eventually decouples from the spread of the delta variant.”

But the firm adds that it does not expect core prices in these markets to quickly return to “pre-pandemic levels as a result of more fundamental forces at play,” such as wage growth.

Investors have cast a close eye on China’s crackdown on the tech sector and other industries this year, which has seen billions in fines handed out after antimonopoly investigations.

This regulatory campaign from Beijing has wiped as much as $1.5 trillion from Chinese stocks.

But Abu Aker said: “While we still retain a cautious exposure on emerging markets as a whole, we are closely watching China as it is our belief that the authorities don’t mean to cross the line of losing foreign investors’ trust. Overall, we see positive prospects in Asia.”

But Sedco remains a Saudi Arabia-based firm, and investment in the Kingdom will always be a big focus. He thinks the government measures taken during the pandemic have made it a more attractive place to invest.

The Kingdom’s second-quarter economic data showed growth of 1.1 percent quarter-on-quarter. The oil sector grew by 2.5 percent quarter-on-quarter on the back of the unwinding of the 1 million billion barrels per day voluntary output cut that lasted from February to April.

Abu Aker said: “If you would speak to any of the managers and investment companies in Saudi Arabia you will hear nothing but positive surprises from the actions and the role that the government has played.”

“We’ve never felt that there’s any lack of liquidity within the banks. They are still rich in cash, and the central bank has supported them with all the liquidity they need to support the economy, both on the government side and in the private sector.”

He added: “We have seen a good rebound as well on the residential real estate side, and this is mainly driven by structural reforms where the government has been promoting Saudi home ownership and of course mortgages.”

Other government policies will also affect investment sentiment in coming years. The move to encourage multinational companies to have their regional headquarters in Riyadh is a positive one, Abu Aker said.

“I don’t think those multinational companies should have waited for such an announcement to come out from the Saudi government for them to actually make the move. I think today if we look at the Saudi market, it is the largest market not only in the GCC but it is also one of the largest markets in the Middle East,” he said.

Sedco also believes that the $3.2 billion Shareek initiative, launched in March, to stimulate greater private sector investment in Vision 2030 projects will pay dividends.

The chief executive said: “I think it’s one more step toward engaging the government more with the private sector and increasing the ties between the government and the private sector.”

“It’s going to avail more financing, more grants to corporates and to the private sector to allow them to capture some of the opportunities they could not get funding for through the normal channels.”

The core of Sedco’s investment philosophy lies in the complementarity between Shariah principles and the current enthusiasm for ESG — environmental, social and governance — investment practice.

“We have run our own internal analysis and research, and the interesting finding that we came up with is that there’s a lot of commonalities between the Shariah guidelines and ESG — environmental, social and governance — or ethical investing.”

Shariah and ethical guidelines overlapped 90 percent of the time, he said, making “one unified investment philosophy” that helps set Sedco’s investment strategy.

“We don’t just talk the talk, we also walk the walk,” Abu Aker said.

The Sedco investment philosophy is not just governed by Shariah’s conventional stance of refusing to invest in sectors, such as tobacco, alcohol or gambling, that are frowned upon under Islam, but also by a wider commitment to prudent, ethical financial principles.

The firm signed up to the UN Principles for Responsible Investment charter six years ago, the first Saudi firm to do so.

Abu Aker sees no conflict in being a Saudi institution, based in an economy that is still mainly driven by oil revenues, and espousing ESG standards when some in the global financial industry are steering away from hydrocarbon assets on ethical grounds.

He said: “Saudi Arabia is shifting toward cleaner energy, even though oil will continue to be an important component of our economy.”

“But we understand that the future is more toward alternative and cleaner energy. Right now, it’s a transitional period, and it will take some time, but it’s heading in the right direction.”


NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO

NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO
Updated 15 sec ago

NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO

NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO
  • Seifi Ghasemi noted that the project is the biggest in the world and that it is the first time for the company to handle a project with this scale, echoing a similar comment from ACWA Power CEO to Arab News. 

NEOM’s green hydrogen plant will start operations in 2026, the chief executive officer of Air Products & Chemicals revealed in an interview with Alarabiya.

The project will export hydrogen in the form of liquid ammonia to the world market for use as a biofuel that feeds transportation systems.

Seifi Ghasemi noted that the project is the biggest in the world and that it is the first time for the company to handle a project with this scale, echoing a similar comment from ACWA Power CEO to Arab News. 

This comes amid the Kingdom’s directions towards green energy. 

 


US jobless claims fall; Turkey’s central bank slashes interest rate again: Economic wrap

US jobless claims fall; Turkey’s central bank slashes interest rate again: Economic wrap
Updated 8 min 37 sec ago

US jobless claims fall; Turkey’s central bank slashes interest rate again: Economic wrap

US jobless claims fall; Turkey’s central bank slashes interest rate again: Economic wrap

Americans applying for jobless benefits declined to 290,000 in the week ending 16 October, compared to the previous seven day's 296,00 claims, official data showed. 

This is the lowest level since March 2020 as job hirers hold on to their employees as a result of worker shortages.

Turkish interest rate falls once more

The Turkish Central Bank decided to cut its interest rate again from 18 percent to 16 percent, despite rising inflation and a depreciating currency. 

This decision came after the president renewed calls to alleviate borrowing costs to promote economic growth. Economists considered this confirmation of the bank's loss of independence as the president sacked the last three central bank governors.

South Korea's exports

Based on data released by its customs agency, South Korea's exports jumped in the first 20 days of October by 36.1 percent compared to a year earlier, while imports soared by 48 percent, causing a provisional trade deficit of $2.49 billion.

Exports rose the most for petroleum products and vessels as they leapt by 128.7 percent and 93.5 percent respectively.

The data showed that exports to China, the United States and the European Union increased during this period by 30.9, 37.1 and 42.1 percent respectively.

Sub-Saharan Africa’s recovery at risk 

The IMF said that the weak vaccination rollouts in sub-Saharan Africa could setback the region’s economic recovery in the coming period.

While higher commodity prices and favorable harvests were beneficial for some countries, the overall outlook is pessimistic as the region is likely to considerably lag behind developed countries.

The international organization expects sub-Saharan economic growth to be 3.7 percent in 2021 and 3.8 percent in 2022. 

Russia’s producer prices

Russian producer prices went up by a 26.3 percent annual rate in September, official data revealed. This is the lowest level since March and was mainly driven by a 41.4 percent surge in costs of raw materials extraction and a 25.4 percent jump in manufacturing costs.

China’s investments abroad

China's non-financial outbound direct investment (ODI) grew by 2.4 percent in the first nine months of 2021 compared to the same period last year to reach $80.78 billion, the commerce ministry said.

Ukraine’s interest rate 

The Central Bank of Ukraine kept the interest rate on hold at 8.5 percent. However, the bank said there was a possible chance to increase the rate in December if needed to manage rising inflationary pressures.


TASI closes 0.3 percent higher at 11,940 points: Market Wrap

TASI closes 0.3 percent higher at 11,940 points: Market Wrap
Updated 17 min 12 sec ago

TASI closes 0.3 percent higher at 11,940 points: Market Wrap

TASI closes 0.3 percent higher at 11,940 points: Market Wrap

RIYADH: The Tadawul All-Share Index was up 35 points on Thursday, or 0.3 percent, closing at 11,939,58 points.

Some 202.4 million of shares changed hands in 305,000 deals.

Al Rajhi Bank, SABIC and Saudi Aramco rose by 1 percent.

Baazeem was the top gainer, rising 5.6 percent, to SR124.80, with about 2.2 million shares traded.

Sulaiman Al Habib jumped 5.2 percent, to SR178.20.

Alinma Bank, Arab Sea, Sipchem and Saudi National Bank recorded their highest closings since the listing.

The parallel market index “Nomu” decreased by 719.49 points, or 2.94 percent, and closed at 23730.47 points. The liquidity amounted to about SR15.6 million.

Makkah Construction declined 1.9 percent to SR77.10. In Q3 2021, the company recorded a net profit of SR12 million.

NADEC and National Gypsum closed at SR34.95 and SR46.80, respectively.


Cryptocurrencies benefit from Bitcoin's gains: Crypto wrap

Cryptocurrencies benefit from Bitcoin's gains: Crypto wrap
Updated 23 min 26 sec ago

Cryptocurrencies benefit from Bitcoin's gains: Crypto wrap

Cryptocurrencies benefit from Bitcoin's gains: Crypto wrap

RIYADH: Leading cryptocurrencies have mirrored Bitcoin’s gains with strong performances in the past 24 hours.

Ethereum and Solana are up more than 10 percent, after Bitcoin surged above $66,000 on Wednesday.

Edan Yago, the lead contributor to the Bitcoin DeFi protocol Sovryn, said: “As big as Bitcoin is now, it’s a mere fraction of what it will be.

“An entire borderless economy will be powered by sound money. An economy far larger than our current global economy. Why? Bitcoin finally brings property rights and economic access to billions of people.”

 Ruud Feltkamp, CEO of cloud-based automated crypto trading bot Cryptohopper predicted that Bitcoin’s value will continue to grow.

“As expected, Bitcoin reached its all time high. It’s expected that the long volatile route to the top starts now, where I expect Bitcoin’s peak around Christmas. We often see that when Bitcoin makes a move, the altcoins follow in the two weeks after, which could explain the latest surge in Ethereum and Solana,” he said.

Trading
 

Bitcoin, the leading cryptocurrency in trading internationally, traded lower on Thursday, falling by 0.55 percent to $65,286 at 4:49 pm Riyadh time.

Ether, the second most traded cryptocurrency, traded at $4,251 up 6.74 percent, according to data from Coindesk.


'stc' profits hit $2.3 billion in 9 months, an increase of 3.5%

'stc' profits hit $2.3 billion in 9 months, an increase of 3.5%
Updated 20 min 41 sec ago

'stc' profits hit $2.3 billion in 9 months, an increase of 3.5%

'stc' profits hit $2.3 billion in 9 months, an increase of 3.5%
  • stc attributed the increase during the third quarter of 2021 to the rise in revenues by and a decrease in operating expenses. 

Saudi telecom giant 'stc’ reported a 3.5-percent increase in its net profit for the first 9 months of 2021, compared to the same period last year, reaching SR8.7 billion ($2.32 billion). 

The company’s net profit in the third quarter alone of 2021 increased by 5.71 percent, reaching SR2.9 billion. 

stc attributed the increase during the third quarter of 2021 to the rise in revenues by and a decrease in operating expenses.