Business & Money | Wednesday 6 May, 2015 10:17 am |

Finance Minister Ibrahim Al-Assaf expressed full optimism in the ongoing economic diversification for the desired robust growth in nonoil sector and on the opening of the Saudi stock exchange (Tadawul) to foreign investors for the first time.

Addressing the inaugural session of the tenth Euromoney Saudi Arabia conference on Tuesday, Al-Assaf maintained that the two new councils set up by Custodian of the Two Holy Mosques King Salman — the council of economic and development affairs and the council of political and security affairs — are working with stringent mandates to formulate and implement the
country’s political, security and economic policies, which will help a lot in the Kingdom’s concerted efforts to diversifying the economy with positive growth.
"We are the largest economy in the MENA region with signs of positive growth and our strength with foreign reserves and GDP growth rate at five percent allow us to be committed to key reforms in large scale industrial and infrastructure projects despite lower oil prices and pursue an economic diversification strategy to support the growth of private sector and nonoil sector," Al-Assaf added.

"We are doing well in the nonoil sector and private sector," he said, referring to statistics that the nonoil sector's total GDP was pegged at 56 percent in 2014.
"There is no doubt that the Kingdom being the oil-based economy will face certain challenges while diversifying the economy but we are very much hopeful of good prospects with the Saudi Arabian Monetary Agency (SAMA) having comprehensive plan to take every challenge as an opportunity to spur economic growth," the finance minister said.
Commenting on the opening up of Tadawul to foreign investors, Al-Assaf said: “It will have very positive impact for local as well as foreign investors.”
Notably, the Kingdom is allowing foreign investments to the $530 billion stock market effective June 15, a keenly awaited move that will give international investors direct access to the Middle East’s biggest economy.
“Ours is a very stable economy,” Al-Assaf said pointing that Standard & Poor's and Fitch Ratings services have already affirmed their long- and short-term foreign and local currency sovereign credit ratings on Saudi Arabia at "AA" underlining Kingdom's resilience as an investment destination despite lower oil prices and continued spending for robust growth.
Earlier, welcoming the participants to the opening session of the 10th anniversary conference, Euromoney Institutional Investor PLC Chairman Richard Ensor said: "We are here to mark a decade of unprecedented change in the Kingdom; ten years back, we started with 600 delegates to discuss the direction of the Kingdom's economy, today we are here with 1,600 delegates to discuss new opportunities and challenges."
He noted that in these years, the Kingdom embarked on a massive infrastructure and investment program, which created nearly four million new jobs with plenty of job opportunities in the pipeline.

Ensor presented a memento to the finance minister to mark a decade of the key economic conference jointly organized by the Ministry of Finance and Euromoney.
The opening day also had keynote interviews and in the first interview conducted by Christopher Garnett, director Euromoney Conference, BNP Paribas Chairman Jean Lemierre applauded new reforms and ongoing economic diversification in the Kingdom, including the banking sector.

Replying to a question on whether fall in oil prices will cause a funding gap in the Kingdom, he said: “The Kingdom is a very stable market for investors. The Kingdom is a key country built upon knowledge and experience.”
When asked about PNB Paribas in the context of Facebook banking and Google finance, he observed that global finance is probably good for safe banking, but at the same time it is very difficult to be a global bank. “The model we have at BNP is to integrate synergies and the clients for future banking.
Mohammed Aljadaan, chairman of Capital Market Authority (CMA) during his interview with Richard Banks, director, emerging markets, Euromoney Conference, said the opening of the Saudi capital market will attract significant attention from foreign investors due to solid investment mechanism and market stability.

Tariq Al-Sudairy, MD & CEO, Jadwa Investment in his interview conducted by Richard Banks asserted that the opening of the Kingdom's market is a keenly awaited move. "I do see the Saudi market opening as a great opportunity for the local market, although it is difficult to speculate the flow of investment," he added.
He, however, expressed hope that the prospects are high. “I do expect $40-50 billion coming into the Saudi market, and we see significant potential for the continued expansion and development of the Kingdom's capital market, supported by the strong fundamentals of a competitive energy cluster, favorable demographic trends and robust domestic consumption.”

There was a power point presentation on given by Robert Parker, senior adviser, Credit Suisse, on Saudi market opening from and international perspective. He highlighted positives and challenges, maintaining that investors now have access to the largest market in the region, which also allows diversification in the energy and related sectors, whereas regulation is robust with a strong capital market authority to protect investors rights.

Moreover, market liquidity is reasonable and QFII process is transparent and should induce market volatility, he added.
Furthermore, a bank strategy panel also assessed the impacts of oil price volatility on the banking sector in the Kingdom in the first day session and analyzed if capital leverage and regulatory structures properly balance risk with growth.