• La Bourse saoudienne s’ouvre aux investisseurs étrangers. Son attractivité mais aussi son instabilité vont augmenter...

    Saudi bourse opening may double fund flows to Gulf -

    http://english.alarabiya.net/en/business/2014/07/24

    By Olzhas Auyezov | Reuters, Dubai
    Thursday, 24 July 2014

    The opening of Saudi Arabia’s bourse to international investors may double the amount of foreign money flowing into the Gulf’s securities markets, making it more attractive to invest in the region but also bringing new risks.

    Not only Saudi Arabia but other Gulf markets are likely to lure more foreign funds after Tuesday’s announcement that the Saudi bourse will open to direct investment by foreign institutions in the first half of 2015. [ID:nL6N0PX0UX}

    That is because the size of the Saudi market, the Arab world’s biggest, means the Gulf will at a stroke become a much bigger and more diverse destination for international funds.

    The Saudi bourse has a capitalization of about $550 billion, roughly the same as all other Gulf Arab markets combined, and it accounts for approximately two-thirds of the region’s stock trading turnover. Limited liquidity has long been a complaint of foreign investors about the region; that will now improve.

    Just as important is the fact that Saudi Arabia offers a range of companies which the rest of the Gulf can’t match. They include giants such as petrochemical conglomerate Saudi Basic Industries Corp (SABIC) but also firms in fast-growing sectors such as retailing, health care and food production that are directly exposed to the region’s rapid population growth.

    Leading Saudi firms in these fields include retailer Jarir Marketing, food producer Savola Group and hospital management firm Dallah Healthcare, all private firms. Other Gulf markets generally lack such listed firms and are heavily tilted toward real estate, banking and state-run enterprises.

    There are also risks, which is why the Saudis delayed implementing their reform for years. The entry of foreign money could destabilize markets, partly by encouraging local investors to bid stock prices up to unsustainable levels ahead of time.

    It will also expose markets to global instability in a way that the region has not experienced before. Previously, U.S. interest rate increases or emerging market crashes meant little to Gulf investors; now, those events could trigger mass pullouts of money by foreigners.

    Overall, however, the Gulf looks likely to enjoy a “halo effect” from the opening of Saudi Arabia. As more foreign institutions find it worthwhile to establish operations in the region, money will spill over into many of its markets.

    “Markets such as the UAE and Qatar will benefit from the additional investor interest in the region and the spillover effect from investor flows,” said Salah Shamma, co-head of regional equities at big U.S. asset manager Franklin Templeton.

    “We believe the region is taking the right steps in establishing itself as a single, identifiable subset within the general emerging-market universe - like Latin America, southeast Asia or emerging Europe.”❞