Mark Mobius doesn’t think anyone should be investing in Saudi Arabia

      Published on Friday, 18 January , 2019      208 Views     
Mark Mobius doesn’t think anyone should be investing in Saudi Arabia

  • Business

Now is not a good time to put your money in Saudi Arabia, heavyweight emerging markets investor Mark Mobius believes.

The founder of Mobius Capital Partners criticized the kingdom on Monday, telling CNBC’s Hadley Gamble he sees rough times ahead for the country and its neighbors.

“The Khashoggi murder is a very bad situation, and as far as I’m concerned I don’t think we should be investing in Saudi Arabia for that reason unless there is some real big change,” Mobius said, referring to the brutal murder of Saudi journalist Jamal Khashoggi, for which the government in Riyadh has been blamed.

The kingdom has charged several Saudis for murder, but denies international accusations that its crown prince Mohammed bin Salman had any involvement. A number of investors suspended their investment projects with the kingdom including Virgin CEO Richard Branson, though many others like Blackrock’s Larry Fink have pledged to continue business there.

Oil price is ‘disastrous’ for Saudi Arabia

Beyond its reputational issues, however, another pitfall for investors lies in the oil price, Mobius explained.

“If you look at price of oil, it’s disastrous for Saudi Arabia, and these other countries that depend on oil prices. I mean we were predicting $100 (a barrel) by the end of last year and now we’re at $57 — this range is incredible, it’s a disaster,” he said.

Saudi Arabia has announced it will cut crude exports to 7.1 million barrels per day (bpd) by end of this month, compared to range of 7.3 to 7.9 million bpd in previous months, in a bid to lift oil prices. OPEC members hope to bring prices $80 per barrel, a far cry from the current $57.44 Brent crude was trading at around 8 a.m. London time. By the end of 2018, oil prices had fallen some 30 percent from their early October highs on fears of global oversupply and slowing economic growth worldwide.

Indeed, Riyadh saw its foreign investment figures drop dramatically in 2017, the same year that the powerful crown prince ordered a so-called anti-corruption shakedown, detaining hundreds of Saudi royals and businessmen in the Ritz Carlton hotel and confiscating large portions of their finances. Subsequent political disruptions have rattled investor confidence — something that does not bode well for the crown prince’s bold Vision 2030 program, a drive to diversify the kingdom’s revenue away from hydrocarbons and create private sector jobs for the country’s booming youth population.

Falling foreign investment

That program will rely heavily on the foreign investment that’s been leaving the country: in one week in October alone, following the news of Khashoggi’s murder, foreign investors withdrew $650 million from the Saudi equity market, which is the largest in the Middle East. Between September and November of last year, foreign holdings of shares in the Tadawul, Saudi Arabia’s stock exchange, fell by 7 percent.

The numbers show a downward trend going as far back as 2008 — that year saw a high of $39.5 billion in foreign direct investment (FDI), dropping nearly every year and chalking a mere $1.4 billion in 2017, according to the UN Conference on Trade and Development’s World Investment Report. That represents a more than 80 percent drop from the previous year’s $7.5 billion in FDI, far worse than the worldwide decrease in FDI of 23 percent.

Recent drops were due in part to large divestments and foreign multinationals like Royal Dutch Shell selling their stakes in local ventures to their Saudi partners, the UN report said.

Category Business | 2019/01/18 latest update at 12:00 AM
Source : CNBC | Photocredit : Google
Comments Add comment

Related Articles

The editorial staff of Saudi Arabia Today would like to give all of its readers from Gulf and Saudi Arabia and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Saudi Arabia Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Saudi Arabia, the Gulf and the world.

Sponsored Publications

Saudi Alhokair’s mall unit files for IPO, offering in second quarter: sources
Saudi Arabia Saudi Arabia news

Saudi Alhokair’s mall unit files for IPO, offering in second quarter: sources

Saudi Arabia’s Fawaz Alhokair Group plans to offer shares in its shopping malls business in Riyadh in the…

Saudi Arabia new rules

Property prices continue to fall in key UAE markets

UAE banks invest Dh87 billion in Saudi Arabia, Egypt

King Salman receives dignitaries in Riyadh King

King Salman receives dignitaries in Riyadh

The Kingdom’s Grand Mufti Sheikh Abdul Aziz Al-Asheikh, senior scholars, ministers and a group of citizens called on…

Saudi King Salman reshapes country’s political and security affairs council King

Saudi King Salman reshapes country’s political and security affairs council

Saudi King Salman on Thursday announced a new list of appointees to key positions in the country’s political…

Saudi Arabia’s Prince Talal bin Abdulaziz has died King

Saudi Arabia’s Prince Talal bin Abdulaziz has died

Saudi Arabia’s Prince Talal bin Abdulaziz passed away on Saturday, family members and Saudi media said on Twitter.…

Bahraini crown prince meets Saudi officials in Riyadh King

Bahraini crown prince meets Saudi officials in Riyadh

Bahrain Crown Prince Salman bin Hamad Al-Khalifa held talks with Saudi officials in Riyadh this week. His visit…


Popular in GULF TV

PIRELLI “DREAMING” – THE CAL 2019 making of Full Version | Fashion Channel


A photographic tale of the aspirations of four women and their determination to achieve their goals, each one…

Latest videos in GULF TV





Science & Technology