Currently in London, new York and, to a lesser extent, in Paris financiers in the Persian Gulf countries are buying up everything that moves in the financial markets. The PR firm and lobbying governments hypocritically claim that sovereign wealth funds save Western capitalism, allowing the most valuable industries in a globalized economy to avoid collapse. Or to protect her from the Chinese newcomers, as Chinese funds also went on the hunt.
In London always prefer to do business with the oil Emir, and not with Chinese companies.
The real situation on the market is that Gulf countries are starting to cheat. On the one hand, they buy a lot of valuable stock, the prices of which fell by more than 50% in two months. On the other hand, they take the opportunity to join the large companies in the digital market, which will surely hit a big jackpot on the crisis. We are talking about Saudi Arabia, with its huge sovereign wealth Fund, which operates not only in the country but also in neighboring princes.
Thus, in the course of a month, billions of dollars were invested in Western markets with their desantirovanie industrial shares. As soon as their value has lost 50% of the price compared with the end of last year, oil revenues immediately put a paw on securities. In just one quarter, the portfolio of sovereign wealth Fund of Saudi Arabia has grown from $ 2 billion to $ 10 billion. If we add to this, the investments of Qatar, UAE, Dubai, Abu Dhabi, Oman, Bahrain and Kuwait, the amount will exceed $ 20 billion. Mostly in new York and London. Special forces of the financial analysts were sent throughout the West to find and to use every opportunity. The hunt for successful trades still open.
First in the queue to the oil sector. In late March, buyers from Middle East countries paid visits to the offices of BP, Total, Shell and two other canadian producers of shale gas. They received 3 billion dollars. All these companies suffered in the stock market, primarily due to a price war launched by Saudi Arabia and Russia, and then because of the fall and stop the economy.
But Saudi Arabia also sees in these companies the necessary capacity to organize in the future an alternative to oil in the area of clean energy. Companies like “Total”, for example, completely ready to the energy transition. The company has achieved high rates of recovery after the crisis.
The second sector, which seeks oil monarchies, consists of companies affected by the crisis: “Boeing”, “Airbus”, hotel chains such as “Marriott” or “Accor”, “Booking”, the cruise company, who was in distress (for example, “Carnival”, lost 80% of its market value), as well as many entertainment companies, concert organizers or producers of TV programs. This list includes football clubs, including Newcastle, even if most of them are in Europe negotiating, because most of the major clubs in Europe for sale.
And finally, the third sector, especially tasty for the Saudis, which is not affected neither the oil crisis nor сovid 19: “Disney”, “Facebook”, “IBM”, “Cisco”, “Pfizer”. All of these companies only developed with the beginning of the crisis, as they have growth potential, and especially because sovereign wealth funds have shown interest in them.
Thus, we can say that these investment flows have always fueled the financial markets due to the redistribution of oil revenues, and that the strategy of the new generation of princes, who are in power, including the Mohammed bin Salman of Saudi Arabia are preparing for life after oil…
The reality is that the Gulf countries are at the last breath. Economic and financial situation in these countries deteriorated…. Qatar, UAE, Abu Dhabi, Dubai, Bahrain, Oman, Kuwait and especially Saudi Arabia are trapped between the collapsed oil price and the impact of the pandemic. By the end of March the region’s GDP (excluding oil) fell by 5%.
And the reason for the plight of the monarchies was not сovid-19. With the exception of Iran, where damage is done to all segments of society, and the government until recently did not want to understand the complexity of the situation, all the other countries in the Middle East relatively little affected. Basically, the epidemic has hit Asian workers who live in poor conditions and have poor working conditions. But above all, tourism is the sector in which the Emirates like Dubai or Abu Dhabi, has invested a lot of money, under threat of ruin. Dubai, which suffered holding the “World Expo 2020”, gets half of its GDP, non-oil, tourism and trade.
But the economy of the region lives mainly due to the revenues from hydrocarbons. 2020 will be terrible. Crude oil fell from $ 60 in February to less than $ 20 in April. Agreements and OPEC cutting production, will further reduce revenues.
As a result, not all countries get to make ends meet. They have to take loans either in international markets or to use domestic savings national loans from families for whom this fee is mandatory. Sometimes resorted to very unusual means. For example, in Saudi Arabia, Mohammed bin Salman has locked the most important princes in luxury hotels until they agree to take the loan. In other words, until they pay the ransom. And they all paid. Of course!
A turning point in the history of the country: the government of Saudi Arabia announced early in the week, a number of austerity measures by cutting public spending, postponing some investments and, above all, tripling VAT, which will be reduced from 5% to 15% after Ramadan. Pilgrimage to Mecca (the main source of income from the Muslim world) will cost more. All luxury items — cars, boats, fashion accessories and jewelry — will be taxed.
Certainly, no one would cry during meetings of the Royal families, but it will be a lot of unhappy. Because, as said Jacques Brel, “these people, this generation that came to power, never worked or even tried to learn (which is the real problem), they have always lived at the expense of rent, and had no idea that such a tax. Not yet had!