Wealth of Options

Given the Kingdom’s increasing privatization, what role can investment companies play in supporting the private sector?

Investment companies play a critical role in the privatization process itself. Foremost, investment companies are able to give a signal to the government of what the market will or will not tolerate, thereby establishing a sort of market test to help governments negotiate the best deal. Secondly, to attract buyers who are willing both to pay a reasonable price for an entity and to invest in improving the efficiency of the entity, governments must make the public enterprises more attractive. This may require steps like balance sheet restructuring, valuation of financial and non-financial assets, introduction of corporate governance processes and several other preliminary works where investment companies can play an advisory and execution role. Finally, the entire IPO process, can be efficiently and effectively executed only through the support of investment companies. For example, this may include advising on the type of securities to be offered and more importantly, underwriting of the offered securities.

From which sectors of the economy do you expect positive performances in the short term?

Keeping in view the current socio-economic baseline and the regulatory framework, three to four sectors have the potential to reflect a positive performance in the near term. The hospitality sector should benefit from religious tourism, which continues to grow. As envisaged in the Saudi Vision 2030, plans to increase Umrah pilgrims from 8 million a year to 30 million a year, and convert these visas to tourist visas, will have tremendous growth implications for this sector as well as the real estate and cement sectors. The cement sector should also benefit from real estate development given the imposition of fees on undeveloped land. This should excite construction activity. Agriculture, the food sector, and healthcare will benefit from demographic factors. A growing population will ensure consumption growth while lower global commodities prices will keep margins intact for companies despite rising operational costs.

What are the most important elements that make Alistithmar Capital different from its competitors?

Integrity, sustainable performance, and personalized customer service. ICAP has always ensured its long-term commitment to its clients and assumed an ethical, managed-risk and cognizant approach to investment decisions while managing and handling investors’ funds. Our integrity is our USP. This trusted investment approach has also ensured value creation for our clients over the long run. We refrain from getting carried away by short-term, irrational market volatility. Our willingness to serve each and every client with peculiar attention has been the reason behind the long-term associations that we have maintained with our clients. All our HNW and institutional clients have direct access to our senior management, including myself, and we do not refrain from addressing their account services’ needs, no matter how elementary.

What measures would you like to see implemented to unleash the Saudi stock market’s potential?

Tadawul has already taken some positive initial steps that will help to increase participation of foreign investors, as the current participation through QFI is too low relative to other emerging markets. Secondly, new promising industries, for example education, energy, and healthcare services, are not appropriately, distinctively presented in the market, hence a re-categorization of sectors to reflect the true economic diversity of Saudi Arabia will prove to be more effective. The listing of other types of securities and investments such as preferred shares, Saudi riyal-denominated bonds and sukuks, REITS, ETFs, and funds units will increase the depth and range of the TADAWUL and the Saudi investment market. The introduction of new indices SMEs is essential as more companies are being listed. The infrastructure and resources that are available in the Saudi stock and financial market is one of the best in world, and, hence, it has a lot of potential to become one of the leading emerging markets.