GCC Equity Markets Experience Decline In Foreign Investor Inflows

2025-02-11 01:23:32

(MENAFN- The Arabian Post)

The Gulf Cooperation Council equity markets have observed a downturn in net foreign investor inflows, with January figures decreasing to $939 million from December's $1.04 billion, marking a significant 41% drop compared to November's numbers. This trend is highlighted in the 'Foreign Flow Analysis' study by Iridium Advisors, a Dubai-based management consulting firm. CEO Oliver Schutzmann interprets this as foreign investors becoming“more selective in their allocations.”

In contrast, the United Arab Emirates equity markets have demonstrated resilience. Data from Kamco Invest's GCC Trading Activity Quarterly Report indicates that UAE stocks attracted net foreign investments of $2.4 billion in the fourth quarter of 2024, up from $2 billion in the previous quarter. This positions the UAE ahead of Saudi Arabia, which recorded $1.1 billion in net foreign investor inflows during the same period.

The broader GCC region saw net foreign investor inflows totaling $3 billion in the fourth quarter of 2024, a decrease from $3.7 billion in the third quarter. Analysts attribute this decline to factors such as regional market trends, initial public offerings , the economic health of individual countries, and fluctuations in crude oil prices.

Saudi Arabia has recently implemented measures to attract more foreign capital. The country announced that it will permit foreign investment in publicly listed companies owning real estate in the sacred cities of Mecca and Medina. This initiative aims to boost liquidity for existing and upcoming projects related to Islamic pilgrimage, a significant revenue source for the nation. The Capital Market Authority specified that foreign investments would be limited to shares and convertible debt instruments, with a cap of 49% ownership by non-Saudi nationals.

See also Saudi Arabia Opens Real Estate Investment in Makkah, Madinah

The Saudi sovereign wealth fund, Public Investment Fund , has invested $200 million as a seed investor in State Street Global Advisors' newly launched Europe-listed ETF. This ETF provides exposure to US dollar-denominated Saudi sovereign and quasi-sovereign bonds and local currency-denominated Sukuk bonds with a 10-year maturity. This move aligns with Saudi Arabia's Vision 2030 economic reform plan, which seeks to reduce dependency on oil revenues.

Despite these efforts, most Gulf stock markets have faced challenges amid global economic concerns. For instance, markets fell due to apprehensions about U.S. trade policy, with Saudi Arabia's index dropping 0.1%, impacted by declines in major companies. However, the real estate sector provided some support, with firms like Jabal Omar Development Company experiencing gains following new regulations allowing foreign investment in Mecca and Medina.

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