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“Financial Sector Conference Talks 3” Discussed Future of Funds and Debt Capital Market

Riyadh-- The works of the third edition of the “Financial Sector Conference Talks” series, which paves the way for the second session of the conference to be held in March 2023, was concluded this evening in Riyadh, organized by the partners of the Financial Sector Development Program (Ministry of Finance, the Saudi Central Bank, and the Capital Market Authority), in the presence of more than 300 experts and specialists in the financial and business sectors, investment funds management, and the debt market.

The talks sessions witnessed a discussion of the most important topics related to the developments of the investment funds industry, the latest updates on laws and regulations, the role of funds in institutionalizing financial markets, the most prominent challenges faced by funds managers, the importance of marketing and promoting funds for local and foreign investors, as well as the future of the investment funds industry in the Kingdom in line with Saudi Vision 2030.

The sessions also highlighted on the role of the debt instruments market in strengthening the local and international economy, considering international trends, the latest developments in the domestic debt market, and the expansion of the issuance of sukuk and bonds, with the rise of interest rates.

The first session discussed the most important developments in the investment fund industry, the latest updates on laws and regulations, the role of funds in institutionalizing financial markets, the most prominent challenges faced by fund managers, and the importance of marketing and promoting funds for local and foreign investors, while the second session dealt with the future of the investment funds industry in the Kingdom in line with Saudi Vision 2030.

The third session reviewed the role of the debt capital market in strengthening the local and international economy, considering international trends, while the speakers in the fourth and final session discussed the latest developments in the local debt market, and the expansion of the issuance of Sukuk and Bonds, with the rise of interest rates.

During the keynote speech, which opened the sessions, the Chairman of the Capital Market Authority, Mohammed Elkuwaiz, stressed that increasing investment rates requires different and diverse sources of funding. Here comes the role of the financial market in financing projects and emerging sectors, explaining that our talks today deal with two of the most important tributaries of financing and investment in the coming era, namely investment funds on the one hand, and the debt market on the other.

He added that the volume of managed assets in investment funds is about SAR 526 billion, indicating that they have grown at an annual rate of 15% during the past five years, while the number of subscribers in these funds exceeded 675,000, noting that the growth and diversification of assets during the past years was supported by modernization of the regulations of financial market institutions, the regulations of investment funds, and the launch of a regulation for special purposes enterprises that facilitated the work of these funds.

Elkuwaiz pointed out that the goals and plans of the Saudi economy until 2030, and the new projects and sectors it contains, require pumping investments of more than SAR 12 trillion during the same period, part of which is through stocks and finance companies, adding that the development of the debt market has been a high priority during the last period through the formation of a national committee for the development of the debt market that includes all the parties that intersect with the market or influence it.

And he added, "We started focusing on the government debt market, which is the basic building block for any debt market, as the government started with frequent and varying issuances to build the yield curve on which other debt capital is priced based on."

Elkuwaiz said that repurchase agreements (or what is known as Repo) have been activated in government debt capital, which contribute to increasing the liquidity of these financial instruments and the ability of their holders to convert them into cash, noting the licensing step for major credit rating agencies that are now operating in the Kingdom, in addition to the successive amendments in the rules for offering securities to facilitate debt issuance.

For his part, the Director General of the Financial Sector Development Program, Faisal Alsharif, stressed in the closing remarks that the talks of the Financial Sector Conference have become one of the most important financial platforms in the Kingdom and the region, due to the international best practices presented to develop the financial sector and enhance its competitiveness.

He added: "We strive to achieve the objectives of the Financial Sector Development Program through the development and deepening of financial sector institutions, and the development of the Saudi financial market to form an advanced one."

Alsharif stated that the program addressed a number of challenges, including the low level of comprehensive coverage of financial services, the low percentage of savings, the limited funding for small and medium enterprises, and the increase in the need to develop infrastructure for automation, adding that investment funds, as the most important tools for developing the financial market, allow investors to diversify and distribute investments in a systematic way through availability of a wider range of assets and sectors.

He pointed out that the program aims to further deepen the debt capital market in the Kingdom as a percentage of GDP to 24.1% by 2025 out of 14% recorded in 2019, noting the achievements related to debt capital, including linking the financial market with ClearStream and Euroclear to support the government debt capital market and develop the market for repurchase agreements for debt capital.

It is noteworthy that the Financial Sector Conference is considered the most prominent event in the Middle East, and includes a selection of decision makers, senior financial sector institutions, financiers, and beneficiaries. It highlights the distinguished competitive position of the Saudi financial sector in the Middle East and at the global level. It also contributes to introducing the Financial Sector Development Program and its initiatives to achieve the Kingdom's Vision 2030. The program aims to keep pace with global developments in this sector, and achieve qualitative leaps in the field of financial services in line with continuous development in business and services in the Kingdom.

Source: Saudi Press Agency