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

Good COVID care added to KSA’s investment attraction, says Sedco chief
Short Url
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.”


Phasing out gas-powered cars depends on customer demand: Nissan exec

Phasing out gas-powered cars depends on customer demand: Nissan exec
Updated 13 sec ago

Phasing out gas-powered cars depends on customer demand: Nissan exec

Phasing out gas-powered cars depends on customer demand: Nissan exec

DUBAI: Nissan is eco-friendly but also consumer-led, a top official from the Japanese automaker said in the wake of the company not signing a COP26 global pledge to phase out gas-guzzling cars. 

As many as 30 national governments joined the deal struck in Glasgow last month, as the transportation industry races to fix decades of environmental damage due to carbon emissions.

They were joined by six automotive giants, including Ford and Mercedes-Benz, but Nissan, with its French partner Renault, skipped the pact. 

“If customers say remove it (gas-fueled vehicle production), we will remove it,” Ashwani Gupta, Nissan’s chief operating officer told Arab News on Tuesday. 

“If (a customer) doesn’t find any more excitement in internal combustion engines cars; if he doesn’t find any price competitiveness in ICE cars; if he has to pay a CO2 penalty, why will he keep it?”

Gupta, who was in Dubai for a media tour, emphasized the importance of making the transition smooth for Nissan’s customers.

“I think it’s up to us how to make it competitive, so customers will naturally do it,” he explained, adding: “In Europe, it will happen very soon.”

The Japanese automaker is ramping up efforts to introduce new electric car models in the next 10 years, aiming for a 50 percent electrification mix by 2030, as it also doubles down on being carbon neutral across the life cycle of its products by 2050. 

Last week, it announced a $17.6 billion investment to develop solid-state batteries for its planned electric model line-up, as well as to establish a pilot plant by 2024, with production starting by 2028. 

Europe is the company’s biggest market for electrification, and it plans to increase sales of electric vehicles in the region by more than 75 percent — followed by Japan, China, and the US. 

As for the Middle East, Gupta said the region has the vision for sustainability and global excellence. 

“Timing could be different because other markets started before, but the Middle East is starting now,” he said.

In an earlier statement, Gupta said his company’s vision is focused on creating “customer pull through an attractive proposition.”

The company is planning to localize manufacturing and sourcing to make electric vehicles more competitive — starting with its core markets of Japan, China, and the US, drawing from its EV Hub concept in the UK. 

“Nissan is working for the future,” Gupta said, downplaying remarks of former Chairman Carlos Ghosn, who said the carmaker is “visionless.” 

 


Egypt's sovereign fund aims to increase its investment portfolio to $1.5bn

Egypt's sovereign fund aims to increase its investment portfolio to $1.5bn
Image: Shutterstock
Updated 6 min 9 sec ago

Egypt's sovereign fund aims to increase its investment portfolio to $1.5bn

Egypt's sovereign fund aims to increase its investment portfolio to $1.5bn
  • Egypt's sovereign fund signed an agreement with a winning US consortium to develop and rehabilitate the Tahrir Complex

Egypt's sovereign fund aims to increase its investment portfolio in 2022 to 23 billion Egyptian pounds ($1.5 billion) between managed, owned or liquid assets, its executive director has said. 

Ayman Soliman pledged to increase cooperation with various sovereign funds during the coming period, including those from the Gulf.

He stated that the green economy, infrastructure, logistics and tourism sectors are the most prominent sectors targeted by the fund for investment during the next year, with three-four new agreements planned to be signed to produce green hydrogen in Egypt. 

Egypt's sovereign fund signed an agreement with a winning US consortium to develop and rehabilitate the Tahrir Complex, with a total investment of more than 3.5 billion Egyptian pounds. 

“We aim to attract billions of dollars in projects in the next two years. We hope that the Tahrir Complex development project will be the beginning of many pioneering projects and future investments,” Soliman added.

Last month, the Egyptian president El-Sisi urged the fund to continue studying the state's under-utilised properties and assets, with maximising the return from them to ensure the sustainability of its investments. 


Economic rebound in GCC induces stable outlook for banks: Moody’s

Economic rebound in GCC induces stable outlook for banks: Moody’s
Updated 19 min 48 sec ago

Economic rebound in GCC induces stable outlook for banks: Moody’s

Economic rebound in GCC induces stable outlook for banks: Moody’s

An economic recovery and stronger oil prices prompted Moody’s to set a stable outlook for banks in the Gulf Cooperation Council region for the upcoming 12 to 18 months, the ratings agency said in a report.

“Economic growth in 2022 will reflect a gradual increase in hydrocarbon production and a strong recovery in other segments of the economy,” said Ashraf Madani, a vice president and senior analyst at Moody’s.

He added that quality of assets is set to stay healthy despite a marginal rise in non-performing loans.

As for next year, the firm indicated that regulatory measures and large projects, including stadiums for the World Cup and Saudi Arabia’s giga projects, will boost credit growth in the region and raise credit demand.

The US-based company added that liquid assets account for about 25-30 percent of total GCC banking assets and are predicted to stay this way to safeguard against any unforeseen crises.

Loan performance will likely deteriorate when payment holidays end, Moody’s pointed out. The UAE and Bahrain are two countries that will be most affected.

GCC governments still maintain a strong disposition to protect the banking sector due to their large sovereign wealth funds, the report added.

 

 


China’s exports and imports reach all-time highs

China’s exports and imports reach all-time highs
Image: Shutterstock
Updated 25 min 58 sec ago

China’s exports and imports reach all-time highs

China’s exports and imports reach all-time highs
  • The country’s trade surplus hit $71.7 billion in November

Exports and imports in China grew annually by 22 and 32 percent in November when compared to a year earlier, reaching all-time records.

Exports went up to $326 billion while imports rose to $254 billion, Bloomberg reported, citing China's customs administration.

However, exports growth experienced a slowdown during the month, falling from October’s 27.1 percent to 22 percent. This was attributed to a thinning demand and a rise in costs.

In contrast, imports growth picked up pace significantly, rising to 32 percent as the East Asian country replenished its inventories of some commodities such as coal. This is compared to the lower 20 percent growth experienced in the previous month.

Coal imports in the country climbed to the highest level since the start of the year to supply its power system.

The country’s trade surplus hit $71.7 billion in November, down from October’s level of $84.5 billion.

While the country continues to notably recover from the pandemic, it still suffers from a number of problems, including power shortfalls and debt issues in the property sector.


Inflation in eurozone economies is transitory: IMF

Inflation in eurozone economies is transitory: IMF
Image: Shutterstock
Updated 07 December 2021

Inflation in eurozone economies is transitory: IMF

Inflation in eurozone economies is transitory: IMF
  • The reason the IMF gave this assessment is that the hikes in consumer prices didn’t turn into wage increases

Despite inflation hitting a record high last month in the euro area, the International Monetary Fund said that the rise in prices is transitory and not worrisome.

Annual inflation rate in the zone reached 4.9 percent in November, Reuters reported.

The reason the IMF gave this assessment is that the hikes in consumer prices didn’t turn into wage increases, also known as the second-round effect.

It pointed out that, meanwhile, monetary policy should remain loose.

The international lender also stated that governments in the euro area should continue backing their economies to overcome the adverse effects initiated by the pandemic. The organization added that fiscal consolidation is not urgent, but its plans should be readily available now.

“Policies should remain accommodative but become increasingly targeted, with a focus on mitigating potential rises in inequality and poverty,”the IMF said.

I took a quote from the source since it's reuters.