Foreign capital inflows to Saudi Arabia will increase significantly into Saudi Arabia after moves by MSCI and FTSE to include the kingdom into their emerging market benchmarks, according to a new report from UBS Global Wealth Management.
In the report, UBS CIO said that the moves could be enhanced by future inclusions in EM sovereign bond indices, which could benefit sovereign bonds in Saudi Arabia, the UAE, Bahrain and Kuwait.
The report also noted that the economic reforms being undertaken by Saudi Arabia face numerous risks, such as renewed oil price weakness, delays or a lack of privatisation and private sector participation, which could cause uncertainty among foreign investors.
“UBS has been on the ground in the Middle East for more than 55 years. We are continuing to focus our presence on strategic locations in line with the significant proliferation of local economic and business opportunities,” said Ali Janoudi, UBS Global Wealth Management’s head of Central and Eastern Europe, Middle East and Africa. “The Chief Investment Office’s expanded coverage reflects our commitment to the region and our focus on serving local and international clients’ needs.”
Michael Bollinger, head of emerging market asset allocation, said that UBS’ clients “clients are expressing increasing interest in Middle Eastern assets as economic reforms and other factors open up local markets to international investors.”
“Our coverage of key instruments such as equities, bonds, and sukuk has steadily expanded to reflect demand, and will likely continue to do so in the years ahead,” he added.
Source Credit: Arabian Business