Saudi Arabia has been the economic juggernaut of the Middle East region for some time now. But the insular country has proven to be a tough nut to crack for foreign investors, and recent developments may not be making it any easier.
In August, the Saudi government announced it was returning to the bond market with a plan to raise US$ 27bn by the end of 2015. Although this may help reduce the rate at which they draw down their foreign exchange reserves (currently at the astonishing rate of 30 percent per year), this was taken by investors as yet another sign that the downward trajectory of oil prices is placing considerable strain on the country’s fiscal deficit. Saudi Arabia’s Tadawul, one of the largest exchanges by market capitalization across all emerging markets, had a somewhat calamitous August with shares down over 17%.
Despite these financial headwinds, confidence in the country’s long-term growth trajectory appears to remain strong. In late August, it was reported that three of the biggest private equity firms in the GCC region are vying for the purchase of a majority stake in the well-known Saudi supermarket chain ‘Al Raya for Foodstuff Co.’ Although information on the sale has not been made public, the current stakeholders, Dubai-based Levant Capital and The Rohatyn Group (TRG), allegedly stand to triple their investment only three years after acquiring the grocer