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Saudi Arabia Reports Sharp Rise In Inward Investment To Its Highest Level In Four Years – Forbes

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Saudi Arabia has reported its highest rate of inward investment for four years, in figures just released covering the final quarter of 2020.

The Central Bank of Saudi Arabia revealed in its latest set of monthly statistics that the kingdom attracted $1.87 billion in foreign direct investment (FDI) in the fourth quarter of last year.

That was up 72% on the previous quarter and up 80% on the same period a year earlier. It also marked the highest level of quarterly FDI since Q4 2016, when the kingdom reported inflows of just over $2 billion.

The overall figure for 2020 reached $5.49 billion, some 20% higher than in 2019 and the highest full-year total since 2016, when it was $7.45 billion– the following year, investment levels collapsed to just $1.4 billion.

However, while the improved performance will be welcomed by Riyadh, it is still far short of the amount the country needs to fulfil the ambitious goals set by Crown Prince Mohammed Bin Salman in his plan to reshape the Saudi economy, known as the Vision 2030 strategy.

Among the targets is to increase FDI to 5.7% of Saudi Arabia’s gross domestic product (GDP) by 2030. However, even with the rise last year, it remains below 1% of GDP.

Foreign investors are also a key element of projects such as the $500 billion futuristic city of Neom in the sparsely-populated northwest of the country.

Foreign dollars are important because of the skills and technologies that generally accompany any commercial investment – both of which are vital if the country is to create the number of well-paying jobs needed to employ its large young population.

The government has been using a carrot and stick approach to persuade more companies to come to the kingdom. Last year it set up a new Minister of Investment to encourage more FDI, replacing the old General Investment Authority. In mid-February this year, the state-owned Saudi Press Agency cited an unnamed “official source” who vowed that, from January 2024, the government would not sign any new contracts with companies unless they had their regional headquarters in the kingdom. Investment Minister Khalid al-Falih subsequently added that companies would be expected to show a real commitment and not just open a ghost office while basing their senior staff elsewhere.

At this stage it is not clear what was behind the sharp rise in inward investment in the final months of last year. It also remains to be seen if the government can sustain or further increase the amount of investment coming into the country, particularly given the toxic reputation of the crown prince, wider concerns about human rights abuses in the kingdom and the brutal war Riyadh is waging in neighbouring Yemen.

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More China coal investments overseas cancelled than commissioned since 2017

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More China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, research showed on Wednesday, highlighting the obstacles facing the industry as countries work to reduce carbon emissions.

The Centre for Research on Energy and Clean Air (CREA) said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period.

Coal-fired power is one of the biggest sources of climate-warming carbon dioxide emissions, and the wave of cancellations also reflects rising concerns about the sector’s long-term economic competitiveness.

Since 2016, the top 10 banks involved in global coal financing were all Chinese, and around 12% of all coal plants operating outside of China can be linked to Chinese banks, utilities, equipment manufacturers and construction firms, CREA said.

But although 80 gigawatts of China-backed capacity is still in the pipeline, many of the projects could face further setbacks as public opposition rises and financing becomes more difficult, it added.

China is currently drawing up policies that it says will allow it to bring greenhouse gas emissions to a peak by 2030 and to become carbon-neutral by 2060.

But it was responsible for more than half the world’s coal-fired power generation last year, and it will not start to cut coal consumption until 2026, President Xi Jinping said in April.

Environmental groups have called on China to stop financing coal-fired power entirely and to use the funds to invest in cleaner forms of energy, and there are already signs that it is cutting back on coal investments both at home and abroad.

Following rule changes implemented by the central bank earlier this year, “clean coal” is no longer eligible for green financing.

Industrial and Commercial Bank of China, the world’s biggest bank by assets and a major source of global coal financing, is also drawing up a “road map” to pull out of the sector, its chief economist Zhou Yueqiu said at the end of May.

 

(Reporting by David Stanway; Editing by Kenneth Maxwell)

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Bank of Montreal CEO sees growth in U.S. share of earnings

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Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.

“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”

($1 = 1.2145 Canadian dollars)

 

(Reporting by Nichola Saminather; Editing by Leslie Adler)

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GameStop falls 27% on potential share sale

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Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.

The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.

“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”

Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.

Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.

Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.

AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.

“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”

Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.

GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.

GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.

The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.

In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.

 

(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)

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