PointState Capital CEO bets against Saudi Arabia


10 May AtoZForex, Vilnius The founder of PointState Capital, Zach Schreiber, predicted that within two or three years Saudi Arabia will be "structurally insolvent". As the result of the current cheap oil and the struggle of keeping up with spending commitments. At the 21st Annual Sohn Investment Conference, he noted that there is a limited time left until the oil kingdom “hits a wall”.

Another bold prediction comes true?

The opinion of the PointState Capital CEO Schreiber is valuable for the global markets. You might be wondering why? Back in 2014, at the Ira Sohn conference, Zach Schreiber made a bold prediction about an oil price crash. Two years ago, when the oil price was over $100 a barrel, he said “If you're long, I feel sorry for you", foreseeing the 75% value loss which happened in February.” Remarkably, Zach Schreiber's bold prediction was correct and through this analysis, he earned up to $1 billion for his firm.

Prediction of Zach Schreiber is based on the fact that the kingdom’s economy is oil-reliant.“No wonder they're now issuing tons of debt." – stated Schreiber. Despite Saudi Arabia has recently set a goal to go off oil by 2030, trough increasing non-oil income. The country has already increased domestic prices for petrol up to 40% and is currently entering on abundant subsidies for electricity, petrol and water, although before the prices were kept low for residents of the country as a social welfare measure.

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PointState Capital CEO is short on Saudi Riyal

Another critical review is the nation’s plan to sell out the shares in Saudi Aramco. Saudi Aramco is a state-owned oil company that controls 10% of oil output in the world. “If they sell the golden goose, how do they fund anything? It's insane. Saudi is mortgaging away its future to buy time,” said Schreiber, doubting that the new strategy will help.

Based on these arguments, the PointState Capital CEO Zach Schreiber projects a rising US dollar, while pairing it with the short on the Saudi riyal. Do you have the same thoughts like Zach Schreiber or do you have a different view?

Let us know down in the comments section.

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