---

Some international rating agencies and institutions such as the IMF are being criticized for practicing a double standard when dealing with economic scenarios in different parts of the world.

“We can fix the economy from inside. We don’t need foreign economic prescriptions,” said Sami A. Al-Nwaisir, chairman of the board of Al-Sami Holding Group.

Such reports or hasty assessments from global agencies might fuel negative sentiment in the local stock market at a time when oil prices are already trading lower, Al-Nwaisir warned.

“They prescribe medicines without proper diagnosis,” he quipped.

He also stressed the need to revamp what he termed as the Kingdom’s financial infrastructure to overcome modern challenges.

Al-Nwaisir and Basil Al-Ghalayini, CEO of BMG Financial Group, were guest speakers at the Arab News Business Dialogue that took place in Jeddah recently.

John Sfakianakis, Middle East director at Ashmore Group, joined the discussion with a team of Arab News journalists in Jeddah via conference call from Riyadh.

The economists also voiced confidence about the progressive role of the Council of Economic and Development Affairs, chaired by Deputy Crown Prince Mohammed bin Salman.

They expressed support for the newspaper’s initiative in promoting dialogue and interaction between the media and business personalities and economic experts.

Al-Nwaisir added: “We witnessed the international reports that came during the Asian financial crisis in 1997. The IMF was prescribing medicine to the Asian countries. They were recommending to raise retirement age, increase working hours and to impose more taxes. But when they suffered a similar crisis in 2008, they did not prescribe the same medicine. So, definitely there is a double standard…. There is a rush to saying things.”

Al-Nwaisir’s remarks come in the wake of a recent move by the Saudi Arabian Monetary Agency (SAMA) tapping the local debt market.

He suggested that fiscal monetary decision makers should work toward revamping the Kingdom’s financial infrastructure.

“We have cash reserves. We have low debt. We have many things that go in the right direction hopefully,” said Al-Nwaisir.

“So the big challenge is fixing the infrastructure rather than the economic risk factors.”

He called for more focus on economic diversification and increasing local awareness about financial issues to strengthen the system. “I am optimistic on the positive side,” he stressed.

Other speakers, Al-Ghalayini and Sfakianakis, were also optimistic about a better outlook for 2016.

But Al-Ghalayini cautioned Saudi stock market investors against being influenced by rumors spread by social media.

“Social media keeps us connected. But there is a negative side,” said.

Al-Ghalayini also pointed out that lower oil prices are affecting leading shares of Saudi petrochemical companies.

But he said it was not clear whether the fall is directly related to their cost or driven by the sentiments of the market traders because of panic spread by the social media.

Al-Ghalayini was commenting on possible reasons for nearly 10 percent losses suffered by the Saudi stock market this year.

The Tadawul All-Share Index (TASI), however, rose by 76.73 points (1.04 percent) on Monday ahead of the Eid Al-Adha holidays.

“People act very prematurely without looking at the financials and fundamentals of a company because of the viral effect of certain rumors,” he said.

According to latest Tadawul statistics, Petrochemical Industries index lost nearly 17 percent so far this year. Petrochemical stocks gained 0.41 percent on Monday, led by Saudi Basic Industries Corporation (SABIC).

“If we can reduce the reliance on rumors, we will witness a slightly better TASI performance.”

Asked to comment on his outlook for the rest of this year, Al-Ghalayini added: “The picture is not clear. I think we still see some kind of turbulence.”

He also believes that recent sanctions against Saudi Binladin Group was also affecting investor sentiment.

World oil prices, which have dropped by more than 50 percent since June 2014, fell as much as 2 percent on Tuesday.

November Brent crude futures were down 75 cents, or 1.5 percent, at $48.17 a barrel by 1345 GMT, having hit an intraday low of $47.70. On Monday, Brent rose as much as 3 percent.

US West Texas Intermediate (WTI) crude futures for November were down $1.11 at $45.85 a barrel.

Commenting further on the volatile market, Al-Nwaisir said that lower crude prices would hurt some major US oil firms in states such as Texas, Nebraska, Louisiana, Oklahoma and North Dakota. There are likely to be layoffs in these companies, he said.

Al-Nwaisir said investments in alternative energy sources are also being affected by lower prices. China, for example, has

He, however, said that the Kingdom needs to be more serious in arresting domestic oil consumption for electricity generation, while calling for more state-of-the-art power plants to meet growing demand.

In his conference call, Sfakianakis downplayed the risks of oil price plunging to $20 in coming months as recently suggested by researchers at a major investment bank. “There is a bit of a downtrend and exaggerated expectations for oil prices.”

He said: “We saw similar tendencies to exaggerate in 2008-2009.

Sfakianakis predicted an increase in prices next year to the range of $55 to $60 per barrel and listed falling investments in the oil sector as one of the reasons for this — while he saw an increase in demand for hydrocarbons in the US and Europe.

“I don’t think that oil prices are going to $70 or $80 anytime soon,” he said. “The health and wellbeing of the global economy is a bit more healthier than the doomsday scenario we are seeing today. There is a lot of negativity right now.”

Sfakianakis added: “We don’t have a financial crisis today although we see spots of uncertainty and lower growth. But we are not anywhere close to the financial collapse of the US.”

He was also pessimistic about Iranian oil exports. “I think the state of the oil industry in Iran is more desperate and more difficult than we thought,” he said.

Commenting on the US shale oil industry, Sfakianakis said the US is not going to be able to be close to where Saudi Arabia is in terms of strategic production of oil for many years to come. The shale is here to stay, he said, adding that Saudi Arabia has no intention to take out shale. “It is an illogical intention. I don’t believe this is the case.”

Technological advancement is a win-win situation for oil producers in Saudi Arabia and the US because it brings down the break even price.

Shale oil producers in the US will bounce back although this will not change Saudi Arabia’s dominant position as the top oil exporter.

But he acknowledged that the US shale “is going through an environment of lower production for some months to come because the breakeven is much higher than what we have today.”

Sfakianakis also suggested that Saudi Arabia should acquire leading shale oil firms with the aim of boosting its technological prowess.

Asked to comment on rising domestic consumption, Sfakianakis proposed a scheme of “smart subsidies” to save energy.

Commenting on the same issue, Al-Nwaisir asserted that Saudi Arabia’s policy of maintaining its oil market share is very clear.

---

---

[wpResize]

---

Related articles across the web

• Saudi Binladin Group sanctioned over deadly crane crash
• SAUDI ARABIA: #Update King suspends the SBG Construction over Health & Safety #Mecca crane collapse killing 107-people '
• Saudi Arabia partly blames Binladin Group for Mecca crane crash
• Saudi Arabia Places Blame for Crane Deaths
• Mecca crane collapse: Saudi king sanctions Binladin Group after deadly accident
• The 25 Best Interior Designers in Los Angeles
• President Sargsyan congratulates film director Henrik Margaryan on 90th birthday
• Saudi king visits site of Mecca crane collapse, assures investigation
• G20 launches W20 group with 20 women leaders for gender inclusive economic growth
• Saudi Arabia 'ready to thwart' any Hajj attacks