Market confidence drives global finance chiefs to Saudi Arabia

Blackrock CEO Larry Fink - “This is an economy that we have a lot of confidence in. I think the future is bright.”

Sunday 28/04/2019
Cars drive past the King Abdullah Financial District in Riyadh.  (Reuters)
Booming market. Cars drive past the King Abdullah Financial District in Riyadh. (Reuters)

RIYADH - Global finance chiefs who boycotted a Saudi investment meeting last year following the killing of journalist Jamal Khashoggi returned to Riyadh as the Gulf kingdom gets business back on track.

Dozens of Western politicians and business executives pulled out of Saudi Arabia’s showcase gathering last October amid global uproar over Khashoggi’s death inside the kingdom’s Istanbul consulate three weeks earlier. A Saudi court has charged 11 suspects in the killing and Western allies imposed sanctions on individuals.

Big investors in Saudi Arabia appear to be focused on potential deals in the largest Arab economy and the world’s top oil exporter as it opens up under a transformation drive led by Prince Mohammed bin Salman bin Abdulaziz.

HSBC CEO John Flint and Blackrock CEO Larry Fink, who stayed away from last year’s event, joined panels at a financial forum April 24-25 as did JPMorgan Chase & Company Co-President Daniel Pinto.

“This is an economy that we have a lot of confidence in. I think the future is bright,” Flint told the gathering. “We are excited about the role that we can continue to play here.”

Fink told another panel: “The changes here in the kingdom in the last two years are pretty amazing.”

Among the announced attendees were the CEO of the London Stock Exchange and the chairman of Japan’s Mitsubishi UFJ Financial Group, whose CEO abstained from the October meeting.

Riyadh has been trying for months to refocus attention on its reforms, sending a senior delegation to the World Economic Forum in Davos and unveiling an industrial plan to attract hundreds of billions of dollars in investments in January.

The recent meeting took place days after Saudi security forces thwarted an attack on a state security building in central Riyadh province, which authorities blamed on the Islamic State.

On April 23, Saudi Arabia announced it had executed 37 people in connection with terrorism crimes.

Asked how Saudi Arabia was addressing national security issues, Saudi Finance Minister Mohammed al-Jadaan told the audience the Gulf region is “one of the safest worldwide.”

“These incidents will happen,” he said of the Riyadh province attack. “We are working with the world to make sure that we combat the financing of terrorism” and “we work very closely with the West and the regional forces

to make sure that we intercept and fight terrorism.”

Earlier this month, state oil giant Saudi Aramco received more than $100 billion in orders for its first international bond issue, a record-breaking vote of market confidence.

Saudi Energy Minister Khalid al-Falih told the forum that Aramco would be active in debt markets and that the $12 billion it raised in its debut bond issue was “only the beginning.”

The Saudi stock market has also seen an upsurge in foreign fund flows since the start of 2019 as the market enters global emerging market benchmarks. The index is up nearly 18% year-to-date, one of the best performing markets in the region.

The domestic financial sector is seeing a relative uptick in activity this year, fuelled by an economic recovery from higher oil prices and government-led spending on big projects.

Jadaan said the Finance Ministry was introducing a $3.3 billion initiative to support private sector growth in the kingdom.