Thursday, September 6, 2007

US Subprime Mortgage Crisis Affects Kingdom

by Khalil Hanware from Arab News

According to Riyadh-based Jadwa Investment’s September Monthly Bulletin released yesterday, higher credit spreads would increase the cost of borrowing, even after taking into consideration any reduction in the Fed funds rate ... This presents an opportunity for large Saudi investors who are not reliant on new or foreign borrowing and therefore better positioned to acquire foreign assets, generally at cheaper prices than prior to the recent market moves. Brad Bourland, chief economist and head of research at Jadwa Investment, told Arab News, “Another possible winner from the turmoil in global markets is the Saudi stock market. There is speculation in the market that Saudi investors have repatriated funds owing to concerns about further falls in international markets, although data to confirm this are not yet available ... With the Saudi market not open widely to foreign investors, it can be considered something of a safe haven during times of global financial market uncertainty.”

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