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Capital Markets

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

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 accumulated net investment under QFI is just $9.2 million; QFI funds account for a barely visible 0.03% of the overall Saudi stock market.

Are the numbers disappointing? Adel Al-Ghamdi, chief executive of the Saudi Stock Exchange until his surprise resignation on November 12, says not.