Deutsche sees Saudi inflows topping $35bn
29 May 2017 - 23:20
Dubai: Saudi Arabia could attract tens of billions of dollars in foreign investments in the Arab world’s biggest stock market if it’s added to MSCI Inc.’s emerging-markets index, according to Deutsche Bank AG’s chief executive officer for the Middle East and Africa.
Our “research anticipates a figure of up to $35bn of inflows,” Dubai-based Jamal Al Kishi said in an interview. “Given the recent developments in Saudi Arabia and the turmoil in some other emerging markets, Saudi Arabia could potentially attract more significant inflows in my view, but this will not be instantaneous.”
The world’s largest oil exporter allowed qualified institutional investors from outside Gulf Arab states to trade the kingdom’s stocks directly from June 2015. This year it moved to a T+2 settlement cycle as part of a drive to diversify its $640bn economy away from oil. The Tadawul All Share Index declined 5.4 percent this year.
“Saudi Arabia has moved so fast since it announced its reform plans that it’s too ambitious to expect foreign institutional investors to have had the time to make a proper assessment of what is going on in the country. The amount of progress made by the Capital Market Authority in the last few months is equivalent to years of progress in other jurisdictions.”
On the pace of Saudi reform impactin investors, Jamal said " Emerging-markets investors have been busy. Pakistan has just been upgraded, Russia, South Africa and Turkey have faced periods of extended volatility. Saudi Arabia is a huge market with a reputation for being less agile -- then all of a sudden Saudi is moving at a head-spinning pace.”
Asked what is needed to improve foreign investments, he said: “We definitely could do a lot of things to improve the landscape for incoming capital from abroad. The more transparency in the regulatory and legal frameworks, the more clarity we shed on the legal rights and obligations of counterparties in the Saudi economy and the more convincing we appear about protecting the rights of foreign investors.”