Many commentators have claimed that Saudi Arabia’s anti-corruption drive, launched dramatically in early November, has had the unintended consequence of scaring away foreign investors just when the kingdom needs them.
Do those thinking of purchasing assets in Saudi Arabia have grounds for fearing arbitrary expropriation?
The short answer is “no”, and the view circulating from these commentators is a combination of strategic misinformation and ignorance. Let us explore why.
First of all, by way of background, all the Arabian Gulf countries, including Saudi Arabia, have an excellent track record when it comes to respecting property rights, especially of foreigners. This is to be contrasted with the performance of many Middle East republics, as well as lots of other emerging economies, where governments have succumbed to the temptation of seizing domestic, foreign-owned assets.
For example, as recently as 2012, Spain accused Argentina of expropriating its oil company, YPF, while the Gulf oil companies were all nationalised in a manner acceptable to the original owners. The is why countries like Bahrain and the UAE have been able to attract large amounts of foreign capital over the past 20 years.
However, it is fair to say that the actions of the Saudi government in early November were shocking and represented a seismic change in the way the country is run, necessitating a close examination by investors. When you search for what conclusions these investors have arrived at, ask yourself two questions.
First, does the person expressing the opinion have an incentive to deliver accurate information?
Second, does the person expressing the opinion have the knowledge required to deliver accurate information?
Let us start with the easiest corner in this matrix: people who know what they are talking about and have an incentive to tell the truth. The most salient occupant of this quadrant are international credit rating agencies - who dedicate their efforts to this task and whose livelihood depends upon it. None of the three major ones (Moody’s, S&P, Fitch) have changed Saudi Arabia’s rating. In fact, S&P issued an update in late November where they affirmed the A/A2 rating, with a stable outlook, and the focus of the report was fiscal consolidation. They even remarked that the reforms “could empower Saudi citizens and make Saudi Arabia more attractive to investors over the medium term”.
What about people who deliberately try to mislead the general public? In the case of Saudi investment, there are two types who fall into this category.
___________
Read more:
Economics 101: Contribution of Muslim economists needs greater acknowledgement
Economics 101: research studies are not easily swayed by conflict of interests
___________
First, actual investors. If you have discovered a good investment - especially one where the opportunity to invest will soon be available but isn’t yet officially open - then is it a good idea to tell everyone about this great investment? Actually, you want to do the precise opposite, to drive prices down. Once you have made your investment, you are happy for others to join on, but Aramco, Neom, and other projects are not yet open for business. So if a journalist contacts one of these experts, it’s absolutely in their incentive to talk negatively.
Naturally, there are experts who are prepared to professionally convey what credit agencies report, but they have little incentive to harry media outlets into interviewing them, and their basic “business as usual” view is unattractive to readers and viewers - and therefore to media editors.
Second, people who dislike Saudi Arabia. Geo-politically, the kingdom has as many friends as foes, so we can assume that they about cancel each other out. But normal journalists - who tend to lean left politically - dislike Saudi Arabia for three reasons: it’s a monarchy; clerics have historically had a strong role in government and society; and many (mistakenly) liken the kingdom’s oil wealth to an aristocrat’s “unearned” inheritance. It’s basically a dystopia for 18th century French politician Maximilien Robbespiere. Thus, such journalists’ default propensity is to write negatively about Saudi Arabia, and it’s not hard to see hyperbolic examples in the media on a daily basis. This is exacerbated by the general currents of Islamophobia and racism among readers and viewers that adversely affect the coverage of any Middle East country.
That leaves uninformed but well-intentioned reporters. They take their lead from the aforementioned experts or from their colleagues who express conviction, both of which tends to push them in the direction of negative coverage, too.
We shouldn’t be too dismissive of scepticism about investment in Saudi Arabia, however, as the global financial crisis of 2007 shows that credit rating agencies are capable of spectacular errors.
But you should remind yourself that successful investors do not get their ideas watching experts ruminate on satellite news channels: by the time they have reached the morning news, “hot tips” are typically useless. The stakes in investment are so high, and financial assets can be transferred so quickly, that mainstream media is a uniquely terrible source of information about the investment-worthiness of a particular stock, bond, or country.
Basic conflicts of interest mean that asking Warren Buffet to comment on the Aramco IPO will always be more precarious than asking Pele to comment on the future star of the Brazilian football team.
Omar Al-Ubaydli (@omareconomics) is a researcher at Derasat, Bahrain.
Company%20Profile
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COMPANY%20PROFILE
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Indoor Cricket World Cup Dubai 2017
Venue Insportz, Dubai; Admission Free
Day 1 fixtures (Saturday)
Men 1.45pm, Malaysia v Australia (Court 1); Singapore v India (Court 2); UAE v New Zealand (Court 3); South Africa v Sri Lanka (Court 4)
Women Noon, New Zealand v South Africa (Court 3); England v UAE (Court 4); 5.15pm, Australia v UAE (Court 3); England v New Zealand (Court 4)
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
A%20QUIET%20PLACE
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if you go
The flights
Emirates flies to Delhi with fares starting from around Dh760 return, while Etihad fares cost about Dh783 return. From Delhi, there are connecting flights to Lucknow.
Where to stay
It is advisable to stay in Lucknow and make a day trip to Kannauj. A stay at the Lebua Lucknow hotel, a traditional Lucknowi mansion, is recommended. Prices start from Dh300 per night (excluding taxes).
EA Sports FC 25
Developer: EA Vancouver, EA Romania
Publisher: EA Sports
Consoles: Nintendo Switch, PlayStation 4&5, Xbox One and Xbox Series X/S
Rating: 3.5/5
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
About Okadoc
Date started: Okadoc, 2018
Founder/CEO: Fodhil Benturquia
Based: Dubai, UAE
Sector: Healthcare
Size: (employees/revenue) 40 staff; undisclosed revenues recording “double-digit” monthly growth
Funding stage: Series B fundraising round to conclude in February
Investors: Undisclosed
THE%20SPECS
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
SPECS
Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now
COMPANY%20PROFILE%20
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Scores
Bournemouth 0-4 Liverpool
Arsenal 1-0 Huddersfield Town
Burnley 1-0 Brighton
Manchester United 4-1 Fulham
West Ham 3-2 Crystal Palace
Saturday fixtures:
Chelsea v Manchester City, 9.30pm (UAE)
Leicester City v Tottenham Hotspur, 11.45pm (UAE)
In numbers
Number of Chinese tourists coming to UAE in 2017 was... 1.3m
Alibaba’s new ‘Tech Town’ in Dubai is worth... $600m
China’s investment in the MIddle East in 2016 was... $29.5bn
The world’s most valuable start-up in 2018, TikTok, is valued at... $75bn
Boost to the UAE economy of 5G connectivity will be... $269bn
UAE currency: the story behind the money in your pockets
DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 3/5
UAE currency: the story behind the money in your pockets
Building boom turning to bust as Turkey's economy slows
Deep in a provincial region of northwestern Turkey, it looks like a mirage - hundreds of luxury houses built in neat rows, their pointed towers somewhere between French chateau and Disney castle.
Meant to provide luxurious accommodations for foreign buyers, the houses are however standing empty in what is anything but a fairytale for their investors.
The ambitious development has been hit by regional turmoil as well as the slump in the Turkish construction industry - a key sector - as the country's economy heads towards what could be a hard landing in an intensifying downturn.
After a long period of solid growth, Turkey's economy contracted 1.1 per cent in the third quarter, and many economists expect it will enter into recession this year.
The country has been hit by high inflation and a currency crisis in August. The lira lost 28 per cent of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.
The villas close to the town centre of Mudurnu in the Bolu region are intended to resemble European architecture and are part of the Sarot Group's Burj Al Babas project.
But the development of 732 villas and a shopping centre - which began in 2014 - is now in limbo as Sarot Group has sought bankruptcy protection.
It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.
'Downton Abbey: A New Era'
Director: Simon Curtis
Cast: Hugh Bonneville, Elizabeth McGovern, Maggie Smith, Michelle Dockery, Laura Carmichael, Jim Carter and Phyllis Logan
Rating: 4/5
APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
Company%20Profile
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The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
SCORES IN BRIEF
Lahore Qalandars 186 for 4 in 19.4 overs
(Sohail 100,Phil Salt 37 not out, Bilal Irshad 30, Josh Poysden 2-26)
bt Yorkshire Vikings 184 for 5 in 20 overs
(Jonathan Tattersall 36, Harry Brook 37, Gary Ballance 33, Adam Lyth 32, Shaheen Afridi 2-36).
Company%20profile
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The biog
Name: Samar Frost
Born: Abu Dhabi
Hobbies: Singing, music and socialising with friends
Favourite singer: Adele
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
Draw:
Group A: Egypt, DR Congo, Uganda, Zimbabwe
Group B: Nigeria, Guinea, Madagascar, Burundi
Group C: Senegal, Algeria, Kenya, Tanzania
Group D: Morocco, Ivory Coast, South Africa, Namibia
Group E: Tunisia, Mali, Mauritania, Angola
Group F: Cameroon, Ghana, Benin, Guinea-Bissau