It appears that Saxo Bank finally realized that the market won’t remain in its hands forever. From being one of the leading Forex firms Saxo became a pretty boring and content regional player over the past few years. Unlike FXCM and Gain who understood well enough that the market is shifting, changing and moving and you “either keep up with the pace or drop out of the race” Saxo realized this fact only recently.
I speculated that it might make sense for Saxo to dispose of its retail assets and stick to its core institutional clients completely; however Saxo had something else in mind. Last month Saxo announced the establishment of its Dubai office as well as several Eastern European offices. A few days ago it also announced the acquisition of Capital Four Management and 51 % of the share capital of Global Evolution to develop its activities in asset management and added ~$2.65B to its asset management division.
Yesterday it announced plans to expand into Saudi Arabia as alternative investment vehicles grow. Saxo Bank expects to invest as much as $50m in the region over the course of three years.
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Full release is below:
JEDDAH – Against the backdrop of volatile equity markets amid global economic slowdown and geopolitical unpredictability, investors are now looking for alternatives that are relatively safe and have brighter prospect of profit.
And among these alternative forms of investment vehicles, CFD or a contract for difference is gaining popularity, an official of a bank that is always regarded as one of the foremost facilitators for online investment trading and online wealth management services, said recently.
Wahb Ahmed, Saxo Bank manager for Middle East (private sector), told the Saudi Gazette that there is a growing number of investors who diversified into CFD due to losses incurred in the local equity markets.
In Saudi Arabia alone, Saxo Bank Group has established a strong presence over the past 8 years.
With already a very strong partnership and institutional relationships with a number of important regional financial institutions, “the group views Saudi Arabia as a very important, strategic market place,” Saxo Bank (Dubai) Limited Chief Executive Officer Robin Shailendra Patel said in response to written questions.
Saxo Bank is a Danish online investment bank, internationally renowned for its capital markets trading services through online trading platform in instruments such as forex, stocks, CFDs, ETFs (exchange-trade funds), futures, funds and bonds aside from private wealth management services. ETFs are attractive as investments because of their low costs, tax efficiency, and stock-like features. ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.
The bank has recently established subsidiary operation in Dubai to help foster and build closer relations with the important stock and commodity exchanges throughout the region and “thereby bring the regional market place to Saxo Bank Group’s award winning, global financial markets’ trading platform,” Patel said.
Ahmed explained that CFD is getting a lot of interest in the Middle East region since it allows investors to take long or short positions, and unlike futures contracts, have no fixed expiry date, standardized contract or contract size.
Trades are conducted on a leveraged basis with margins typically ranging from 1 percent to 30 percent of the notional value for CFDs on leading equities.
He noted that CFD operates in a similar manner like the put option, as the latter gives the holder the right to sell a certain quantity of an underlying security to the writer of the option, at a specified price up to a specified date. In CFD, the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. (If the difference is negative, then the buyer pays instead to the seller.)
Another advantage of CFD, he said, is that it allows investors to take long or short positions, and unlike futures contracts, have no fixed expiry date, standardized contract or contract size, hence “you can exploit to make profit.” Trades in CFD are conducted on a leveraged basis with margins typically ranging from 1 percent to 30 percent of the notional value.
Saxo Bank, which has invested in the GCC countries and the Middle region for almost 10 years, have a growing professional and institutional clientele as well as very successful business partner, Patel further said.
Ahmed added that there is a “huge demand” for its services in the region which “has lots of liquidity”, saying that Saudi Arabia is among the top five of its investors in the Middle East.
“In support of our long-term business growth plans for the region, Saxo Bank anticipates investing up to a further $50 million over the next 3 years,” Patel pointed out.
He moreover said that Saxo Bank Group already has a well-established presence of professional, institutional clients and partners in the region, noting that the majority of its growth in the region is expected to continue from the customer segments.
“Today our Middle East business contributes 5 percent of the group’s total revenue contribution and the group expects that the recent Dubai-based investment will help take this contribution to between 8 percent and 10 percent during the next 3 years,” Patel added.
Saxo Bank will continue developing its market share and business throughout the region “from a responsible, prudent and regulated status,” Patel said.
“Through a well-developed business growth and expansion strategy, the group anticipates further strengthening its brand as well as client and partner presence, while continually assessing opportunities to further expand in the key markets throughout the region,” he stressed.