Middle East: Saudi Arabia takes cautious first steps to an open market

Chris Wright
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Saudi Arabia is six months into its programme to attract international institutional investors to its stock market. The verdict so far: an impressive willingness to listen and communicate, but slow progress in terms of getting any money in.

Only half a year after opening up to international fund houses, the Saudi Stock Exchange has already registered nine Qualified Foreign Investors (QFI) and a further two QFI clients. On paper it sounds impressive: between them, these businesses have more than $5.65 trillion under management.

However, that sum is skewed by BlackRock, the world’s largest fund manager, which accounts for $4.5 trillion of the total, based on its asset position on September 30, and the extent of its investment to date is the setting up of a New York-listed Saudi ETF under its iShares arm.

A total of $126 million of Saudi Arabian stock market assets are currently held under the QFI framework – and $115 million of that is the transfer of swap holdings, under the previous P-note structure for investment, into the underlying stock, as any new QFI licencee is obliged to do. The total...