Saudi Arabia’s net foreign assets hit almost $600b
By Rizwan Khatik - Thu Apr 26, 3:15 am
Saudi Arabia’s combined foreign assets grew rapidly in recent years to stand at $707 billion at the end of 2010, Jadwa Investment said Tuesday. With Saudi entities and individuals owing $213 billion to foreigners, total net foreign assets stood at $494 billion at the end of 2010.
It estimated that the Kingdom’s net foreign assets rose to almost $600 billion at the end of 2011. This is very high and represents a core source of strength for the economy.
Data published by SAMA shows that reserves rose by $96 billion in 2011, to $541 billion, and the net foreign assets of the banking sector increased by $9.3 billion.
Over the first three quarters of 2011 holdings of foreign assets grew by a greater amount than foreign liabilities (net outflows of portfolio and other investment totaled $12 billion each, while net inflows of foreign direct investment were $10 billion). As a result, Jadwa assume the Kingdom’s total foreign assets exceeded $800 billion at the end of last year and the net international investment position was almost $600 billion.
Direct investment by Saudi companies abroad grew by 56 percent over the three years to end-2010, but at $26.5 billion it was well below investment by foreign companies into the Kingdom and accounted for only 3.8 percent of total foreign assets.
Liabilities grew at a faster pace than assets, rising by 84 percent between end-2007 and end-2010. This is almost entirely the result of inflows of direct investment. Improvements in the business environment, greater foreign access to local opportunities and the relative attractiveness of the Kingdom compared to other investment destinations caused the total value of foreign direct investment to surge by 132 percent over the three years to end-2010.
Foreign portfolio investment was very low, both as a proportion of total liabilities (1.7 percent at end-2010) and compared to the size of the economy (0.8 percent) reflecting the limited foreign access to the local stock market and small amount of debt issued.
The data, known as the international investment position, gives a full picture of the Kingdom’s financial position versus the rest of the world. Produced by SAMA, it shows the value and types of assets that are owned, and the liabilities owed, by all parts of the Kingdom’s economy. Data on the position of the government and the banks are reported on a monthly basis by SAMA, but this is the first time that data has been issued which includes the private sector.