Mark Mobius Says Fear of What Saudis Might Do Next Will Deter Investors
Foreign investors dumped a record amount of stocks in October as the kingdom insulated crown prince MBS from Khashoggi’s killing.
(Bloomberg) -- Saudi Arabia will find it hard to attract foreign money as the murder of columnist Jamal Khashoggi raises concerns about governance and other political risks, said Mark Mobius, a veteran investor in developing nations.
The 82-year-old, who set up Mobius Capital Partners LLP this year after three decades at Franklin Templeton Investments, said he’s wary of Saudi Arabia’s commitment to reforms. Foreign investors dumped a record amount of stocks in October as the kingdom insulated Crown Prince Mohammed bin Salman from Khashoggi’s killing in the Saudi consulate in Istanbul.
“If the leadership has questionable governance, how about the companies?” Mobius said in an interview in Dubai. “There are other things going on that are very risky.”
Mobius said he would rather invest in Egyptian stocks, because unlike most nations in the Gulf, the North African country isn’t too closely allied with Saudi Arabia.
“Unfortunately because of this incident, a lot of people are afraid of Saudi Arabia,” he said. “Who could be next?”
Even MSCI Inc.’s decision to include the nation’s stocks in its emerging-market gauge next year won’t be enough to lure funds that aren’t benchmarked against the index, Mobius said. Foreigners currently own less than 5 percent of the Arab world’s biggest stock market.
Prince Mohammed wants to wean the kingdom off revenue from crude and attract more overseas investors, a key element of which is the planned sale of a stake in Saudi Aramco, the national oil company. His efforts have been undercut, however, by a domestic crackdown and aggressive foreign policy.
“Initially, we applauded the idea of the Crown Prince coming in and making these liberal changes, but we realize now that’s not the whole story,” Mobius said.
--With assistance from Filipe Pacheco.
To contact the reporter on this story: Netty Ismail in Dubai at nismail3@bloomberg.net
To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Constantine Courcoulas
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