A Whisper from Saudi Arabia Is Music to Passport Capital

John Burbank III was working in his office, with a full view of San Francisco Bay, when he heard the news on July 22: King Abdullah of Saudi Arabia had just announced that he would open the country’s stock market to foreign investors, starting in the first half of 2015. At the offices of Burbank’sPassport Capital，这是高五次的。

“有点”因为40亿美元的公司，专门从事全球股票挑选，一直在上市的公司蝌蚪, as the Riyadh stock exchange is called, since 2009 by going through the back door — that is, buying swaps and promissory notes through local brokers. In four of those five full years, the firm generated double-digit returns, partly attributable to long positions in Saudi companies that few other investors knew much about. Saudi stocks currently make up about 10 percent of the firm’s equity portfolios.

Burbank and Passport’s other portfolio managers believed that the Saudi government would eventually allow foreign investors to buy stocks directly. As the firm sees it, the Tadawul contains some of the investment world’s best-kept secrets, with growing industries that aren’t dependent on global growth and a great many undervalued stocks with low correlations to the world markets. So they’ve been investing with an eye toward the day when more foreigners can come in and drive up valuations.

Passport的创始人和首席投资官Burbank表示，然而，没有必要赶出沙特阿拉伯。Abdullah国王和资本市场权威，监督金融部门的监管机构，定时宣布，以便投资者通过购买或销售有很大的时间来利用。塔德瓦尔于7月21日至7月24日之间升级了4.7％，但交易所在7月25日至8月2日期间关闭了，假日标志着斋月的伊斯兰圣洁月结束。事实证明，护照的战略和沙特政府有很多共同之处：两者都将从逐渐增长中受益于外国投资者的踩踏事件。

In the past, the Saudi market has not been for the faint of heart. With domestic retail investors dominating activity, a bull market rally and a spate of initial public offerings drove the market up sharply in the middle of the past decade, only to see the market index drop by more than 60 percent in 2006. The market rocketed again in the second half of 2007 before suffering an even bigger shakeout, plunging by 65 percent between January 2008 and March 2009. Allegations of insider trading and market manipulation were rampant.

CMA在2008年携带外部投资者来旨在注入一些稳定，允许外国投资者在没有实际所有权的情况下拥有股票的经济利益，仍然是王国的政治禁忌。护照利用这些改革来获取其沙特曝光，这一举措是一项令人享受的举动。蝌蚪所有股票指数从2009年的股价上升了147％，达到10,214.73;它仍然近13％低于2008年1月的高峰。

The timing of the new announcement might have helped avoid a rush into the market. But most likely the main concern of the king and his economic ministers was to be as low-key as possible about an important economic reform, says Jean-François Seznec, who teaches at Georgetown University’s McDonough School of Business and the School of Advanced International Studies at Johns Hopkins University, and runs the Lafayette Group in Annapolis, Maryland, an investment and consulting firm that specializes in Gulf banking and industrial policy. “Not much happens in the markets during Ramadan, so there wouldn’t be many people around to complain,” says Seznec.

沙特阿拉伯的部长与阿卜杜拉国王设定了语气，采用了国家产业战略。该计划的规定目标之一是将制造业的规模增加到2020年，从目前的11％增加到2020年的经济体。股票市场的开放是一系列改革的一部分，该改革还包括劳动和抵押贷款改革，旨在吸引外国直接投资，以帮助建立制造业，缓解经济dependence on oil exports。仍然，在国内拥有的国家仍然存在一个保守的派系，而不是Abdullah国王，他们于8月1日起90岁，并处于生病状态，而他的两个指定的继任者，79岁的皇冠萨尔曼·萨尔曼符合68岁的副皇冠王子Muqrin。在30岁以下的人口中有三分​​之二，该国努力为其青年创造足够的工作岗位。经济改革是努力抵御高失业率，并具有青春叛乱的潜力。

The anticlimactic announcement is making life easy for Passport’s portfolio managers. They can hang on to their Saudi holdings for now and wait to see where prices go. The firm’s flagship Passport Global Strategy, which invests in global equities through long and short positions, rose 23.02 percent last year, fueled in part by investments in individual Saudi companies such as Mobily, the country’s second telecoms license holder, and the Al Tayyar Travel Group, both based in Riyadh. Burbank estimates that if the MSCI adds沙特阿拉伯to its Emerging Markets Index, the stock market, now worth roughly $530 billion, would get about $35 billion to $40 billion in outside investor flows. But as of now foreigners, and institutions in general, own a small percentage of the market, and share prices are driven largely by local retail investor sentiment. “We’re a long way from stocks being efficiently priced by professional investors,” says Burbank. He is still bullish on the potential for stocks in such industries as chemicals, mobile phones and travel services, particularly companies that are doing a good job of tapping the domestic consumer market.

“我们喜欢国内经济，它一直是我们对该地区投资的重点，”伯班克说。然而，随着市场开放的，他们还将对新外国投资者最有可能购买的股票来保持眼睛。“这可能是越来越多的液体，易于理解的公司，例如石化和银行，”他说。

在推特上关注Jan Alexander@jananyc。