JEDDAH: The NCB Private Banking and NCB Capital were the first of the Kingdom’s banks to hold a series of forums for its investment customers where it presented a balanced view of how to move forward in the current economic climate.
The forums featured presentations to a select audience of NCB Private Banking and NCB Capital clients, investors, traders, brokerage customers and institutional clients at events held in Riyadh, Dammam and Jeddah. The number of attendees at the three events exceeded expectations and there was keen audience interaction in the question and answer sessions that followed the presentations.
The agenda included speeches and presentations by a number of experts. Among them was Jarmo Kotilaine, chief economist of NCB Capital, whose presentation was titled “Whither the Global Economy.” Said Al-Shaikh, chief economist of NCB, gave a presentation on “The Global Financial Crisis and It’s Implications on the Saudi Economy.” Bryan D’Aguiar, head of Equity Research at NCBC, whose presentation was titled “Saudi Equity Markets — Sow the Seeds for a Rich Harvest.”
Kotilaine in his presentation discussed the future of global economy and the causes behind the continuing economic turbulence. He suggested that no quick turnaround was in sight as the credit crunch turns into a broader and increasingly global downturn. “We can write off the rest of 2008, and a great deal more needs to be done before situation is stabilized,” he said. He added that this is complicated by the fragile sentiment caused by the exceptional magnitude of the economic challenges. “Ultimately, the crisis was likely to significantly transform the financial system — with increased regulation and risks-aversion — as well as the global balance of economic power,” he added.
Al-Shaikh in his presentation went into detail concerning the cause of the global financial crisis, itemizing the stages that took the economy from bubble to burst — beginning with cheap and easy money, increased appetite for risk, new forms of financial engineering, increased capacity for leverage and rising house prices, to distrust of new forms of finance, reduced appetite for risk, reduced capacity for leverage, falling house prices and slowing economy.
Moving on to the effect on oil prices, Al-Shaikh said that as the economic recession spreads beyond the US to the Euro Zone, Japan, and even to the emerging economies, demand for oil is expected to weaken in 2009 with a resulting decline in prices.
Bringing an upbeat note to the forum, Bryan D’Aguiar in his presentation drew attention to the fact that the last time Saudi equities were so inexpensive was almost a decade ago in Q1-1999 when oil was trading at less than $10 per barrel. D’Aguiar expressed that valuations in local equity markets were compelling and that the medium term outlook was positive.
