Riyadh – Mubasher: Saudi Arabia has recently been upgraded to emerging market (EM) status, but it does not have the crises of other EM economies, CIO and founding partner at Amwal Capital Partners said on Tuesday.
Investors, who are wary of injecting further funds into EMs, should not dismiss the GCC country amid the soaring US interest rate and heightened trade dispute, Fadi Arbid told CNBC.
Since the beginning of 2018, the Saudi Stock Exchange (Tadawul) has attracted about $3 billion in inflows, as investors are interested to pump their liquidity before the bourse’s listing on the MSCI Emerging Markets Index in June 2019.
The kingdom also started implementing a raft of procedures in this year in a bid to reduce its budget deficit, including the introduction of the value added tax (VAT) and trimming fuel and electricity subsidies.
Moreover, the growth in global oil prices, currently hit$80 per barrel (pb), has contributed to Saudi Arabia and other oil exporters’ recovery from the economic crunch stoked by the 2015 slippage in crude prices, Arbid added.
“The currency is pegged (to the dollar), that's also not the case with other EM markets that have a crisis, such as Argentina or Turkey, and the third thing is that Saudi is not affected by these trade wars,” Amwal Capital’s CIO told CNBC’s Capital Connection.
On the other hand, state-run Saudi Aramco’s initial public offering (IPO) raises question marks for the foreign investors.
The possible date of Aramco’s local and international IPOs “does seem to be in limbo,” Arbid indicated.
The CEO of largest global oil company did not confirm whether the IPO would be in 2020 or not, CNBC reported on Monday.
The analyst said that adding Saudi Arabia to the MSCI EM index would be in favour of Aramco as this will attract more investments to the Organization of Petroleum Exporting Countries’ (OPEC) kingpin nation.
