Jul

6

 Saudi Stock Exchange (Tadawul) Opens Up To Foreign Investment:

With the opening up of the Saudi Stock Exchange (Tadawul) last month, H+K Financial's Bobby Morse writes in Banker Middle East about the new communication priorities this brings for companies in the Kingdom.

Worth more than all regional Gulf markets combined, Saudi Arabia's Tadawul is arguably the jewel in the GCC's capital markets' crown. It is home to some of the region's most prized investment targets, including blue-chips in key sectors such as petrochemicals and banking.

Up until now these investment opportunities have been largely out of the reach of the vast majority of non-Saudi investors, except through complicated swap arrangements. However, from June 15 this is set to change as the exchange opens to foreign investors.

With the world's most powerful fund managers now eyeing the Kingdom's brand new and extremely attractive opportunities, we can expect to see Saudi Arabia's companies concentrate on their internal structure and external profiling.

anonymous writes: 

It's not really open in the sense that most US equity investors would expect. Foreigners still need to be approved as a Qualified Foreign Investor in order to buy Saudi shares. JP Morgan put out a SA investment primer last month in which they termed the qualification process as "somewhat cumbersome." I got the sense that the Kingdom wants only the most passive of foreign share owners, with significant limits on foreign holdings in each particular company, and there is inability to effect takeovers or present as an activist.

It also isn't clear what the solution is to a structural budget deficit problem might be (other than the possibility of higher energy prices). Their economy seems to be the antithesis of what libertarian minded folks (such as on this site) would want to see in a marketplace. You can get exposure to a somewhat corrupt and deficit-burdened energy sensitive economy by allocating assets to Russian equities, at far lower valuations than are offered in SA.


Comments

Name

Email

Website

Speak your mind

1 Comment so far

  1. Salim Sebbata on July 7, 2015 4:46 am

    To get access as a QFI you need to demonstrate $5bn in assets under management and a 10 year track record of investing/managing money.

Archives

Resources & Links

Search