Foreigners remain greatly interested in investing in the Saudi stock market, said Dr. Abdul Rahman Al-Twaijri, president of the Capital Market Authority and secretary general-designate of the Supreme Economic Council (SEC), dismissing talk of a flight of foreign capital from the Kingdom in view of the escalating global economic crisis. Responding to fears of foreign funds fleeing the Saudi market, Al-Twaijri clarified there are no foreign portfolios operating in the Kingdom at present. “We only recently allowed foreigners to enter the market on a limited basis,” he said. “They have shown great interest and we have not noticed any (funds) going out.” Al-Twaijri made the statement to further reassure local investors after the SEC, Saudi Arabia's highest economic body, said on Thursday that Saudi Arabian Monetary Agency (SAMA), the central bank will guarantee bank deposits and liquidity to Saudi banks. SEC said the impact of world financial crisis on Saudi Arabia would be “limited.” “The Saudi Arabian Monetary Agency (SAMA) will monitor the restrictions on liquidity to banks to reduce reserve requirements and costs of financing, if necessary,” the SEC statement said. “The government will continue to ensure the health of Saudi banks and banks deposits,” it said, citing a decision by the Supreme Economic Council which convened under the chairmanship of King Abdullah, Custodian of the Two Holy Mosques. “The process of development continues despite the global nature of the crisis. Its effect on the Saudi economy will be limited because of the local economic boom the Kingdom is witnessing and the soundness of the financial position of Saudi banks,” the statement said, citing the king's comments to the committee, which included senior Saudi princes. On what some people say about some portfolios intentionally cause the market to decline, he said markets around the world have declined at different percentages, and that no market in the world reflects positive rates from the beginning of the year, adding the situation in the world is one of a crisis and that people are in fear. Al-Twaijri said the SEC meeting headed by the King was in itself evidence of the government's concern and prompt response to protect the Saudi banking system. He said that the King has directed all parties concerned with the economy to work in tandem to avoid any problems that may affect the economy or the Saudi people. The real economy of the Kingdom is not affected by the global crisis, Al-Twaijri said. The turmoil in the Saudi market is mainly a spillover of fear and anxiety over what is happening in other markets worldwide, he said. On Sunday, SAMA cut its key benchmark lending rate for the first time in almost two years and lowered bank reserve requirements, saying inflationary pressures had eased. Price rises in recent months hit their highest in 30 years. SAMA also said government investments abroad are safe and that liquidity in the wider economy will not dry up.
