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Davos in a Sandstorm, China Opens World's Longest Bridge et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 23, 2018 12:56 PM 3 min read

Good evening reader,


The Future Investment Initiative kicked-off today in Riyadh, Saudi Arabia.


A two-year old annual investment forum, which very proudly adopted the moniker “Davos in the Desert” (after its much illustrious and [now even] more respectable counterpart from the World Economic Forum) has been, metaphorically, caught in a geopolitical sand storm.


Organized by Saudi Arabia’s Public Investment Fund (PIF), which within three years is on track to become one of the world’s largest sovereign wealth funds (AuM targeted to double to $600bn by 2020!), this forum is supposed to demonstrate and showcase the Kingdom’s pull amidst western financiers and executives.


And in 2017 it did. Top representatives from global western names, ranging from Boeing, MasterCard to BlackRock flocked along.


This year would be very different. The scandal around the death of Jamal Khashoggi, a Saudi journalist and US resident within the premises of the Saudi Consulate in Istanbul - allegedly by state agents under orders from the Crown Prince Mohammad bin Salman (MbS) himself, a subject of Khashoggi's criticism, has spurred an unprecedented diplomatic crisis. Underpinning this mystery would be the Kingdom’s perception as a suitable economic and investment partner.


Yes, symbolic withdrawals from today's forum have indeed transpired, be it the head of JP Morgan, BlackRock, or chief of Uber. But corporates can be notoriously short-sighted. One would be too naïve to assume any retrenchment would occur in real terms due to a mere “diplomatic incident”...


One thing however is certain. The lustre and aura surrounding MbS as the youthful Saudi social reformer and the annoyingly self-righteous Silicon Valley eco-system gleefully taking his money, are gone.


Now time for Today's Top 6 Business Stories through our End Of Day Wrap Up:




Repayments worth $16.3bn of commercial paper due in Oct-Dec for NBFCs.

NBFCs may be compelled to tap un-utilized bank facilities to pay down part of the maturing commercial paper, as per a Bloomberg Quint report, in light of their liquidity crisis post IL&FS.


Three advisors appointed by Board to formulate resolution plan for IL&FS.

Arpwood Capital and JM Financial have been appointed as Financial and Transaction Advisors, whereas Alvarez and Marsal (A&M) as Restructuring Advisor of IL&FS by the new Board.

After its first meeting, the Board said a detailed plan for IL&FS needs to be submitted to the National Company Law Tribunal by October 31.


Reliance and BP plan to partner to setup 2,000 petrol pumps in India.

UK-based oil and gas ‘supermajor’ BP and Reliance Industries Limited (RIL) plan to set up 2,000 fuel retail outlets on national highways over the next three years. RIL runs 1,343 petrol pumps currently and BP had received a license to set up 3,500 outlets in 2016.

Post Q2 results, RIL CFO announced that the company had a memorandum of association with BP but there was no definitive agreement.


SEBI considers creating a new industry body to ensure standardization of PMS schemes.

Securities and Exchange Board of India plans to introduce an industry body to draft best practices for portfolio managers and a standard template to bring uniformity in marketing schemes.

Currently, there is no consistent document guiding marketing to prospective customers. Presently performance can be represented by weighted average returns, rolling returns or back-tested returns for newer schemes, even if it does not reflect true returns.




SoftBank CEO cancels speech at Saudi Arabia's Future Investment Initiative.

Masayoshi Son, CEO of SoftBank Group, cancelled his role as a featured speaker at the Future Investment Initiative, over Saudi Arabia's alleged involvement in disappearance and death of journalist Jamal Khashoggi in Istanbul.

He declined to speak at the conference, though would be attending. The Kingdom had invested $45bn in SoftBank’s $100bn ‘Vision Fund’, using it as a vehicle to diversify their investments.


China opens world's longest bridge across the Pearl River Delta to link a regional economic zone comprising 70 million people and a GDP of $1.51tr.

The $20bn Hong Kong-Zhuhai-Macau Bridge has been opened to traffic to create an integrated region called the "Greater Bay Area”. Comprising of 11 cities, the Greater Bay Area produces 37% of Chinese exports and accounts for 12% of its GDP.


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