By Netty IsmailSaudi 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 hes concerned about Saudi Arabias governance and commitment to reforms.
Foreign investors dumped a record amount of stocks in October as the kingdom insulated Crown Prince Mohammed bin Salman from Khashoggis 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 isnt 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 nextEven MSCI Inc.s decision to include the nations stocks in its emerging-market gauge next year wont be enough to lure funds that arent benchmarked against the index, Mobius said.
Foreigners currently own less than 5 percent of the Arab worlds 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 thats not the whole story, Mobius said.