The agreements, which involve institutions such as the Agricultural Bank of China, China Export and Credit Insurance Corporation, Bank of China, Export-Import Bank of China, and the Industrial and Commercial Bank of China, focus on facilitating two-way capital flows through both debt and equity. Photo/Supplied
Updated 02 August 2024 August 01, 2024 15:26
RIYADH: Saudi Arabia’s sovereign wealth fund has signed six agreements valued at up to $50 billion with top Chinese financial institutions to enhance bilateral capital flows.
According to a press release issued on Thursday, the Public Investment Fund signed memorandums of understanding with China Construction Bank, Agricultural Bank of China, China Export and Credit Insurance Corp., Bank of China, Export-Import Bank of China, and the Industrial and Commercial Bank of China.
The agreements focus on facilitating two-way capital flows through both debt and equity. PIF’s strategy includes cultivating global institutional partnerships, as emphasized by Fahad Al-Saif, head of the Global Capital Finance Division and the Investment Strategy and Economic Insights Division at PIF. He highlighted that these MoUs reflect PIF’s robust and expanding relationships with leading financial institutions worldwide.
“The MoUs demonstrate PIF’s strong and deepening relationships with leading financial institutions and accentuate PIF’s commitment to enhancing partnerships globally.”
This move is part of Saudi Arabia's broader efforts to strengthen economic ties with China. In June 2024, PIF-backed Riyadh Air signed a significant agreement with China Eastern Airlines to enhance future connectivity and collaborate on digital transformation, further cementing its entry into the Chinese market.
The Saudi wealth fund has also forged strategic partnerships with Singapore Airlines and Air China, focusing on interline connectivity, codeshare arrangements, and potential collaborations in areas such as frequent flyer programs, cargo services, customer experience, and digital innovation.
Since its inception in 2017, PIF has founded 95 companies and is actively building a diversified portfolio across 13 strategic sectors both domestically and internationally. As outlined in the PIF Program 2021-2025, a Vision 2030 realization program, the fund aims to inject at least SR150 billion annually into the local economy, support promising sectors, and increase local content through private sector partnerships.
Overall, these recent agreements and strategic partnerships underscore PIF’s pivotal role in advancing Saudi Arabia’s economic transformation and global economic integration.
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Saudi Arabia launches strategy to boost market transparency, foreign investment /node/2571465/business-economy
RIYADH: Saudi Arabia’s Capital Market Authority has unveiled a plan for 2024-2026 to develop a robust debt market and enhance the international competitiveness of its asset management industry.
The strategy emphasizes safeguarding investors’ rights by increasing transparency and ensuring market integrity. It revolves around three main pillars and includes over 40 initiatives aimed at boosting market growth and efficiency. A key aspect of this approach is enhancing the stock market’s role in capital raising.
To achieve this, the authority plans to introduce special purpose acquisition companies on the parallel market and facilitate the issuance of Saudi depositary receipts. These measures are designed to offer more diverse investment opportunities and make the market more attractive to both domestic and international investors.
Highlighting the plan’s bold objectives, CMA Chairman Mohammed El-Kuwaiz said: “Our new strategy emphasizes the creation of a robust debt market, the enhancement of the asset management industry, and the attraction of increased investments to the national economy.”
The top official made these remarks during the Debt Markets and Derivatives Forum held in Riyadh last week.
The undertaking will build on past successes while aligning with Saudi Vision 2030, which supports the national economy by facilitating an advanced financial ecosystem and attracting international investments.
The plan focuses on increasing transparency, spurring innovation in financial technology, and expanding financing options. It represents a significant step toward realizing the goals of Saudi Vision 2030, which seeks to enhance the national economy by creating a sophisticated financial ecosystem and attracting global investments.
These initiatives are designed to build on past achievements and position Saudi Arabia as a leading financial hub in the region.
Additionally, the CMA is focusing on developing the sukuk and debt instruments market by creating regulatory frameworks for green, social, and sustainable debt instruments. This aligns with the global push toward environmental, social, and governance criteria.
To stimulate market activity and support Saudi Arabia’s broader financial sector development goals, the CMA is simplifying the regulatory processes for offering, listing, and registering debt instruments. The objectives include increasing the stock market’s value to 80.8 percent of gross domestic product by 2025, up from 66.5 percent in 2019, and expanding the debt instruments market to 24.1 percent of GDP by the same year.
Central to this strategy is a strong emphasis on investor protection, which involves enhancing market transparency and supervisory mechanisms.
In response to recent increases in penalties and compensation for market violations, El-Kuwaiz highlighted the importance of protecting investor interests. “Trust is vital for a successful market,” he said, underscoring the CMA’s commitment to developing class action compensation procedures and improving the resolution process for complaints between financial institutions and their clients. These efforts are aimed at creating a transparent, accountable market environment that strengthens investor confidence.
The CMA’s plan also emphasizes empowering the financial market ecosystem, particularly through support for financial technology, or fintech.
Recognizing the crucial role of technology in fostering competition and efficiency within the financial sector, the CMA intends to promote the growth of fintech companies and facilitate open finance applications within the market framework. This strategy aims to integrate advanced technologies into the financial sector, streamlining operations and enhancing user experiences.
Building on the successes of the CMA’s 2021-2023 agenda, which saw a significant 52 percent increase in the number of listed companies—from 204 in 2019 to over 310 by the end of 2023—the new strategic plan seeks to further advance the market. These achievements have laid a solid foundation for the current strategy, highlighting the global recognition of the Saudi financial market’s expanding prominence.
The new plan aims to enhance the market’s appeal to foreign investors, with the goal of establishing the Saudi financial market as a regional and international leader by the end of 2026. This includes doubling the number of companies licensed to engage in fintech activities and increasing the volume of managed assets.
A notable aspect of the plan is its comprehensive approach to regulatory reforms and market development. This includes reforms to regulatory frameworks for offerings and listings, the development of investment fund regulations, and improvements to class action compensation procedures. The CMA’s focus on enabling more flexible fund structures and advancing the asset management industry reflects a forward-thinking approach to market growth and sophistication.
The CMA’s initiatives reflect the Kingdom’s ambition to position itself as a leading regional and global financial hub. By concentrating on ESG-aligned financial instruments, enhancing market transparency, and prioritizing investor protection, the CMA is laying the groundwork for a sustainable and resilient market environment.
