MSCI emerging-markets status inclusion of Saudi expected to attract $40 billion FDI to kingdom’s capital market

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  • 2.6% of MSCI Benchmark Index for the kingdom is vital for Saudi Arabia.
  • Britain and Saudi Arabia set out an ambition to build $90.29 billion of trade and investment ties in coming years, which entail highly positive impact on UAE market

Post-oil Saudi Arabia successfully launched economic reforms that gained massive attention of global investor confidence. Opening of Saudi Arabia is a milestone for the Kingdom’s economy, which brought a strategic $90.29 billion investment and trade ties between Britain and Saudi Arabia implanted in coming years. Bilateral ties will have positive repercussions on the UAE and GCC market.

Salah Shamma, Head of Investment, MENA Equity, Franklin Templeton UAE, said: “MSCI emerging-markets status inclusion of Saudi expected to attract $40 billion FDI to kingdom’s capital market, which is larger than some of the bigger emerging markets such as Russia and has strongly positive impact on UAE and other GCC market economies. 2.6% of MSCI Benchmark Index for the kingdom is a game-changer.”

“The recent upgradation of Saudi equity markets by the MSCI to its group of emerging markets will help the country attract billions of dollars into MENA’s biggest stock exchange, which has a market capitalisation of $500 billion. Despite risks, the country has already received the attention of the global investor community and following further reforms, we expect the Kingdom’s economy to attract a large pool of investment and talent pool to spearhead the execution of large-scale projects. These developments offer greater opportunities for the global investor community – who are already taking note of the changes and have already started to shift their investments in to the GCC,” says William Mullally.

Speakers at the Wealth Arabia Summit Dubai say Saudi equities have outperformed as its market rebounds which will continue in 2019. However, the Kingdom’s reforms started exodus of expatriates, which affected certain businesses in telecommunication, construction, housing, health, and insurance industries.

A Q&A session in Wealth Arabia Summit followed was moderated by William Mullaly, editor of WEALTH Arabia magazine and led by Kay Van-Peterson, Global Macro Strategist of Saxo Bank, Singapore, and Salah Shamma, Head of Investment, MENA Equity, Franklin Templeton UAE.

Speakers said Aramco IPO is the cornerstone of Prince Salman’s Vision 2030 strategy for Saudi Arabia. Saudi Vision 2030 is a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. Goals include reinforcing economic and investment activities, increasing non-oil industry trade between countries through goods and consumer products, and increasing government spending on the manufacturing equipment and ammunition.

Saudi Arabia is ramping up efforts to lure international companies and revive Crown Prince Mohammed bin Salman’s plans for an economic makeover, after foreign investment fell to a 14-year-low in 2017.

WEALTH Arabia Summit unveiled investment trends looking toward 2019, shared actionable investment advice and addressed key issues facing individual investors as it held a one-day exclusive event for more than 200 qualified decision-makers including over 100 high-net worth individuals, family offices, wealth managers, private bankers, real estate investors and senior investment executives on November 29, 2018 at the JW Marriott Marquis Hotel in Dubai.

Kay Van-Petersen, Global Macro-Strategist at Saxo Bank, gave the first keynote and will discuss global macro inflection points – trading opportunities and risks in 2019. The presentation ran through the challenges facing global macro and long-term investors, highlighting geopolitical role on market prices and analysis of top trends that will affect money in 2019 as well as identifying top priorities for investors for 2019 onwards.

Carefully selected keynote topics and speakers solidify the summit’s objective of providing actionable investment advice. William Mullally said, “Thankfully, in 2019, there is no ‘get rich quick’ scheme to be had—nothing to give more calm heads the oft misleading fear of missing out and point them in a rash direction. What we’re left with is the sort of landscape which is difficult to navigate as an inexperienced investor, but on which the greatest thrive.”

Sponsors for WEALTH Arabia Summit 2018 include Sobha Realty, CS Global Partners, IG, and FFA Private Bank. Exhibitors include INSEAD, Invest Cyprus, Aristo Developers, Pafilia, KHGP and KIBRA.

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