US investment heavyweight BlackRock is bullish on Saudi Arabia, with the Kingdom representing an attractive, resilient investment while the global economy scrambles in the face of the coronavirus pandemic, a senior member of the bank said.
Saudi Arabia “represents a very attractive investment. BlackRock is currently overweight Saudi debt relative to our other emerging markets,” Terrence Keeley, global head official institutions group at BlackRock said in a webinar Tuesday night.
The coronavirus crisis will likely cause the worst global recession in nearly a century, the IMF warned last month. In this context, BlackRock has begun to focus more on resilient, high-quality debt, rather than riskier stocks, Keeley said.
Compared to other countries around the world, Saudi Arabia has very low government debt and strong commitment to business – the Kingdom climbed jumped 30 spots in the World Bank’s Ease of Doing Business 2020 index earlier this year.
“[Saudi Arabia is] for us a place… where there’s a possibility for resilient investment opportunities,” Keeley noted.
BlackRock manages an enormous investment portfolio, with assets under management totaling nearly $6.5 trillion as of March earlier this year.
The asset management firm has previously been moving to expand its presence in the Kingdom, opening an office in September last year, a decision which the investment giant plans to take advantage of in the future.
“With our Riyadh office open and fully staffed we know we will be watching those opportunities very carefully,” Keeley said.
In particular, Keeley highlighted infrastructure as an opportunity in the Kingdom, noting the recent 7 billion riyal investment in the King Abdulaziz Port in Dammam, with the involvement of Singapore port operator PSA, as an example.
“I think BlackRock and all of our investors will have our eyes wide open for those type of opportunities within the Kingdom,” he said.
Coronavirus recovery years away
The coronavirus pandemic could cost the world as much as $8.8 trillion, almost 10 percent of global GDP, the Asian Development Bank warned last week. Lockdown and social distancing measures have kept people at home and disrupted normal economic activity, with the long-term damage to supply chains still unknown.
Keeley highlighted BlackRock’s view of the crisis, noting that a recovery could take years, and that interest rates could remain lower “forever.”
“BlackRock does not expect global GDP to regain where it was in the first quarter of 2020 before the second quarter of 2022,” he added.
Saudi Arabia moves to combat coronavirus
Saudi Arabia has moved to curb the economic fallout of the coronavirus pandemic, opening the Kingdom’s considerable coffers to shelter its private sector throughout the crisis.
In total, Saudi Arabia has planned more than 120 billion riyals ($32 billion) in economic stimulus, equal to around 4 percent of the Kingdom’s gross domestic product, to combat the coronavirus.
Earlier this month, Saudi Arabia’s General Organization for Social Insurance (GOSI) disbursed approximately 1.2 billion riyals ($319 million) to more than 400,000 Saudi nationals working in private sector companies that have been affected by the virus.
While these steps may have served to blunt the edge of the coronavirus recession, the Kingdom’s Minister of Finance Mohammed al-Jadaan warned earlier this month that more “painful” steps for the economy are ahead.
Health Ministry Spokesman Dr. Mohammed al-Abd al-Ali also announced nine new fatalities, raising the Kingdom’s death toll to 329.
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