Complex Made Simple

Fast money managers are nervous about Saudi; longer term investors are not

Ryan Lemand, head of asset management at ADS Securities, discusses what a corruption probe in Saudi Arabia means for investors. He speaks on “Bloomberg Markets: Middle East.”

He said there are two views; one for short term investors like fast money and hedge funds managers, and the other being long-term investors like ADS Securities.

Read: Did anyone see the Saudi clampdown on corruption coming

“Fast money managers are nervous and they cannot hedge because the GCC forbids short selling, options and futures, so their only option over the short-term to remove volatility is to sell their position,” he said, adding, “And that’s exactly what we have seen happen here.”

“For longer term investors, we are investing because fighting corruption is a very positive thing and we shouldn’t be shocked if we see some princes settling their corruption charges with cash, like what happens in the west.”

Read: Saudi Prince Miteb released; who will reach a financial settlement next?

He said his company is investing in the medium to long term but cherry picking from non-subsidized, non-oil related, non cyclical stocks.

“These sectors are doing well, and will continue to do so and only as the image in Saudi gets clearer will we be investing in oil related stocks or areas more prone to geopolitical fluctuations,” he concluded.