The opening of the Saudi Stock Exchange to foreign institutional investors in June 2015 has had a significant effect on capital flows in the GCC region, according to the sixth annual Middle East Asset Management Study from Invesco.
The study is based on qualitative answers from some 167 interviews with sovereign wealth funds, state pension funds, local insurers, family offices, banks and IFAs.
Key findings include the shift in regional investor attitudes towards the UAE and Bahrain, which last year were perceived more as safe havens, but since have been subject to factors such as geopolitical changes, which have increased the relative attractiveness of Saudi Arabia.
Investors have responded positive to the opening of the Saudi capital amrkets, including the Tadawul, the local stock market, to international investors. This move is seen as a first step towards market liberalisation and additional reforms, the study suggests. The performance of the local stock market over the past year, and opportunities to participate in IPOs have also attracted investors.
Nick Tolchard, head of Invesco Middle East, said: “Our conversations in the region show that whilst there has been optimism surrounding the regional economy and capital markets, concerns such as the oil price and government finances persist. Whilst things can change quickly in the Middle East, it will be interesting to see if positive sentiment amongst local, especially Saudi, investors translates into reality over the next 12 months and whether the anticipated effects of the opening of capital markets take hold.”