Saudi stocks up 16.6% over 3 months
Since October 2016, we’ve seen Middle East’s largest stock index, the Tadawul Index surge pursuant to Saudi Arabia record $17.5 billion bond sale. The iShares MSCI Saudi Arabia Capped ETF (KSA) has surged 16.6% over the last 3 months.
According to EFG-Hermes’s calculations, Saudi Arabia’s bourse aims to attract as much as $11 billion in new investment, if it is successful in bagging the emerging market status for itself. The exchange has already introduced a new industry classification system for stocks and is in the process of moving to a T+2 settlement cycle by the second quarter this year.
Caution with other Middle Eastern regions
While the Middle East is a new addition to many fund managers’ portfolios for 2017, investors should note that not all regions in the Middle East are doing as well as Saudi Arabia. The WisdomTree Middle East Dividend ETF (GULF) with 24% of its portfolio invested in each of Kuwait, Qatar, and UAE, has risen 7% over the last three months. The SPDR S&P Middle East & Africa ETF (GAF) is down 0.25% on account of its 74% exposure to Africa.