Global investors believe in Saudi growth story, says analyst

The recent uptick in foreign investments in the Saudi stock market (Tadawul) involving billions of dollars underlines the firm belief of the global investor community in Saudi Arabia, Elliot Hentov, Vice President, Head of Policy and Research, State Street Global Advisors, told Argaam.

“One of the positive attractions about the Kingdom [of Saudi Arabia] is that it has a growth story to tell the world, and the global investor community believes in the story too. This is proved by the surge in foreign portfolio investments in Saudi stocks that reached all-time high just a few weeks back,” said Hentov, whose firm is listed on the NYSE and regarded as one of the world's leading providers of financial services to institutional investors.

Also read: Saudi index up 13% in Q1 2019 on FTSE inclusion

Hentov said the global investor community has seen the first tranche of the Kingdom’s inclusion in the FTSE Russel and S&P DJI Emerging Markets indices last month.

“In the short term, the outlook of the Arabian Gulf region as well as Saudi Arabia largely looks positive. Driven by the recovery in crude oil prices, the macroeconomic prospects are improving,” he said, adding that in the short term, crude oil prices are expected to remain stable.

“This [oil prices], coupled with the benign US monetary arrangement, is likely to keep the macro-economy, especially the non-oil sector, in good shape,” he maintained.

Going forward, Hentov said, the Kingdom will continue, at least in the short term, to be one of the most favorite investment destinations for foreign portfolio investment.

“The Saudi stock market has put in place the necessary infrastructure to attract foreign investment,” he further added.

However, he said in the medium term, there are still a few challenges for the Kingdom and the wider region to sustain the economic growth momentum.

“The challenges are likely to emerge from the diminishing demand for crude oil globally after a couple of quarters this year, moderated by the continuing uncertainties in Europe and growth concerns in the US," Hentov added.