Gulf countries speculation in Western financial markets
US, WASHINGTON (ORDO NEWS) — Financiers of the oil monarchies are actively increasing investments in the financial markets of London, New York and partly Paris, writes Atlantico. At the same time, they are interested in both hydrocarbon producers, who have a hard time, companies in the tourism sector, which have become much cheaper during the crisis, and stable crisis-resistant Disney, Facebook, IBM.
Gulf financiers began to buy ” everything that moves” in the financial markets of London, New York and partly Paris, writes Atlantico. As their PR specialists explain, they supposedly come to the aid of Western capitalism, which now feels bad, and do not allow Western companies to fall into the hands of the Chinese. Moreover, Europeans have always preferred to deal with the oil emirates than with the Chinese.
However, as the author of the article notes, in fact, the Gulf countries are speculating on shares. On the one hand, they are buying up those values that have fallen in price by more than half. On the other hand, they are interested in digital companies, which, undoubtedly, will emerge victorious from the crisis. As a result, the Saudi Arabian sovereign investment portfolio grew from $ 2 billion to $ 10 billion over one trimester. If you add investments from other countries in the region, you will get more than $ 20 billion.
First, financiers set their sights on the oil sector. Buyers came to BP, Total, Shell and two Canadian producers of shale gas. All of these companies experienced a downturn in the exchange, which was first caused by the oil war between Saudi Arabia and Russia, and then by a decrease in demand for oil due to quarantine. However, it is important for Saudi Arabia that in the future these companies can provide an alternative to oil as clean energy, so for Riyadh it is an investment in the future.
The second sector that interested Arab financiers was companies that were hit hard by the crisis. This includes Boeing, Airbus, the Marriott and Accor hotel chains, Booking, companies that organize cruises, concerts, performances, telecasts, and football clubs.
Finally, the third object of attention of the Saudi financiers were those companies that, on the contrary, were not affected by the oil crisis or the epidemic: Disney, Facebook, IBM, Cisco, Pfizer. All of them have been growing recently due to their own potential and due to investments.
So the author of the article concludes: although the Gulf countries are still interested in oil companies, they are also trying to prepare for the future that will come after the oil era. According to him, these countries are now in a critical situation, because the economic and financial situation there has deteriorated along with the fall in oil prices and the impact of the pandemic. So by the end of March, GDP in the region, excluding the oil sector, fell by 5%.
At the same time, with the exception of Iran, all other countries in the region were not affected by the coronavirus to a large extent. Of course, he hit migrant workers from Asian countries who live in poor conditions. But, most importantly, tourism has suffered because of the pandemic, in which various emirates have invested a lot of money. For example, Dubai receives half of its GDP from non-oil areas: from tourism to trade.
However, it will be difficult for others who live on revenues from the trade in hydrocarbons to coordinate their budgets in the context of new oil prices. So they will have to borrow money either in international markets or with their population. Some take extreme measures, forcing the local rich to lend money to the state.
Moreover, for example, the Saudi government announced the introduction of austerity measures and tax increases. The pilgrimage to Mecca Hajj will cost much more, and the tax on luxury goods will be more.
As the author of the article in Atlantico notes, although, of course, they will not be poor in the monarchies of the Persian Gulf, but they will feel the impact of the crisis. After all, the current generation has never worked there, was not even trained to work, but only lived on rent.
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