Saudi equity inflows surge to $11 bln so far this year: IIF

Supported by the MSCI upgrade, Saudi Arabia has attracted $10.8 billion in foreign equity inflows so far this year, the Institute of International Finance (IIF) noted in its report on Sunday.

The ongoing surge in inflows to Saudi Arabia stands in sharp contrast to other emerging markets (EMs), IIF said.

Total equity outflows from EMs amounted to $14.7 billion in May, half of which come from China.  During the same period, Saudi Arabia received more than $4.5 billion in foreign equity inflows, becoming the top equity investment destination among EMs, IIF report added.

“For the first half of this year, foreign equity inflows to Saudi Arabia are close to India and China, remarkable given that the Saudi’s economy is just a fraction of the ones of India and China,” the report maintained.

IIF expects Saudi Arabia to continue reaping the benefits of the capital markets reform and the inclusion in global indices.

“In the absence of major domestic and external shocks and deterioration in EM investment sentiment, Saudi Arabia can count on additional equity inflows from active investors whose portfolios are benchmarked to the MSCI EM index,” IIF noted.

Given Saudi Arabia’s allocated weight and $1.8 trillion in assets tied to the MSCI EM index, potential allocation from active investors could reach up to $40 billion in years to come.