Would You Invest In Saudi Arabia? How About Iran?

Adam Feik - INO.com Contributor - Energies

Saudi Arabia opened its $590 billion stock market to foreign investors Monday – a move aimed at helping the country’s companies endure a potentially extended period of lower oil prices.

Interestingly, only about one-fifth of the companies traded on the Tadawul Saudi Stock Exchange are directly in the oil business. But most others are, of course, heavily affected by oil, which has long been the major driver of Saudi Arabia’s economy.

By opening the exchange to all foreign investors, the Saudis hope to help its domestic companies raise significant capital, thereby helping to strengthen – and diversify – the country’s economy. The Kingdom may also be hoping some new foreign investment can help plug a hole in its budget, which has expanded to pay Saudi companies that rely on government contracts for construction, infrastructure, agriculture, education, and other areas. According to the Saudi Gazette on Sunday, the country’s breakeven crude oil price has risen from just under $75 in 2009 to about $90 today, translating into an estimated $38.6 billion budget deficit for fiscal year 2015. Continue reading "Would You Invest In Saudi Arabia? How About Iran?"

Why Investing In Chinese Stocks Can Leave Investors Vulnerable To Risk

Something about the deal smelled fishy.

China Marine Food Group Ltd., a Chinese company then on the New York Stock Exchange, spent $27 million in January 2010 to acquire a firm whose main asset was "algae-based drink know-how." The weird thing: Three months earlier, the beverage formula had been valued below $8,800.

But when the U.S. Securities and Exchange Commission tried to review the deal, it got nowhere. The company's Chinese accounting firm refused to provide documents. And the SEC has been stymied since.

And China Marine? Its share price topped $8 in 2010. It's now around 12 cents.

The case represents a cautionary tale for investors eager to invest in Chinese companies on American exchanges. Chinese companies like Alibaba Group Holding Limited (NYSE:BABA), whose initial public offering this year set a record high, operate under lax standards compared with other stocks on U.S. exchanges. That means higher risks for investors. Continue reading "Why Investing In Chinese Stocks Can Leave Investors Vulnerable To Risk"