"...emerging markets will grow faster than the
developed world for decades to come."

Gideon Rachman, The Financial Times

Winds of Change in Saudi Arabia Investment Climate

Winds of Change in Saudi Arabia Investment Climate

The winds of change are blowing in Saudi Arabia, carrying the potential to dramatically shift the investment climate there. One of the most anticipated financial events in the Middle East region seems as if it could finally come to pass in the near future — the opening of the Saudi Arabian stock market to foreign investors.

The origins of Islam trace back to Saudi Arabia, a place where the world’s Muslims seek spiritual refuge in the holy cities of Mecca and Medina. The country has been considered by many as impenetrable in the past due to its harsh, dry desert with extreme temperatures. The investment climate may become more hospitable though to foreign investors after the Kingdom’s financial regulator, the Riyadh-based Capital Market Authority (CMA), announced foreigners would be able to buy and sell shares on Saudi Arabia’s Tawadul All Share Index starting in 2015. Until this landmark decision is implemented, investors from outside the six-nation Gulf Cooperation Council (GCC) now have only indirect market access – namely through swaps and exchange traded funds.

Saudi Arabia’s accession into the World Trade Organization (WTO) in 2005 helped lay the groundwork for opening the Kingdom to wider foreign investment, encouraging the Saudi Arabian government to continue engaging in economic reform and diversification.

From my point of view, the CMA’s announcement is a game-changer for the region. The US$745-billion1 Saudi economy dwarfs many others in the region, and its market is well-capitalized and mature. Trading liquidity in the Saudi Arabia stock market is the highest in the region, and Saudi Arabia has the strongest pipeline of initial public offerings (IPOs) in the region as well. Some pundits are speculating that Saudi Arabia could receive an emerging market classification from index provider MSCI within the next two years, leapfrogging the “frontier” classification and likely drawing more investor interest as a result.

Saudi Arabia is the Organization of Petroleum Exporting Countries’ (OPEC) biggest producer. Oil has been a huge driver of government revenues as well as GDP. However, in our view the Saudi economy has more to offer investors than just its oil riches. We have found the management of many Saudi companies to be impressive, and not only within the energy sector. We favor banks as well as consumer-oriented companies, like retailing or food and beverage, that cater not only to the Saudi market but also the wider Middle East market. There are a lot of potential opportunities in Saudi Arabia, in our view, and we are eagerly seeking them out. Important for us—particularly in light of the market excitement the news of potentially allowing foreign direct investment generated—is finding shares at attractive prices too. Over the medium term, we would expect foreign investor interest to steadily rise in preparation for Saudi Arabia’s likely eventual inclusion in global indices. However, there could be some speculative excess akin to what we saw in the United Arab Emirates and Qatar when MSCI announced these markets would be moved up from frontier to emerging market status, both of which subsequently experienced sharp corrections. Hopefully, the Saudis will work to help prevent that type of market volatility with the proper framework for investors and perhaps a more gradual foreign integration.

Saudi Arabia saw a strong current account and fiscal surplus in 2013 as a result of high oil revenues – both production and price-led. There has been robust government spending in recent years on a number of projects to diversify its economy and to encourage economic growth. In our view, Saudi Arabia is in a strong position to continue to spend, with foreign exchange reserves currently above 100% of GDP.2 The country’s growth rate has been impressive as well; GDP growth has averaged above 6% in the past four years, although for 2014 the pace of growth looks to be a little slower. 3

Challenges in Saudi Arabia

While the economic and investment climate appear positive to us, a few clouds hang over the country, particularly the high rate of youth unemployment. The median age of Saudi Arabia’s population is 26.44, and as of 2010, there were roughly 8.5 million expatriate workers in the Saudi economy, nearly a third of the total population.5 You can thus see why employment has been an important issue among its locals. Officials have been attempting to address the challenge; the government has helped promote job training and education by launching the King Abdallah University of Science and Technology. In my chats over the past couple years with Saudi officials, it seems there has been an increased focus on training and hiring efforts aimed at its large youth population, which generally lack the education and technical skills the private sector needs. In the short- to medium-term, a mismatch between the output of the national education system and the requirements of the private sector could continue.

Overall, we think more private sector employment is needed; two-thirds of Saudi citizens work in the public sector. And, in our view, the youth need more incentive and training to work in a wider variety of skilled jobs the economy needs. Interestingly, the Kingdom of Saudi Arabia’s Ministry of Labor recently announced it has teamed up with Harvard University and the Massachusetts Institute of Technology to launch an online education venture in the country this fall. The effort includes a unique pilot program directed to Saudi women, youth, the disabled and citizens in rural communities, who have often had less access to education and employment opportunities.

Of course, geopolitical concerns are an ongoing issue in the region. The Arab Spring, a pressure point for some countries in the Middle East, saw limited calls for protests in Saudi Arabia. This was partly due to the strengthening economy and overall rise in living standards, along with the popularity of the King and his reforms. More recent tensions in the region so far haven’t had a significant impact on Saudi Arabia’s economy, other than perhaps creating some oil price volatility.

We view Saudi Arabia a good proxy for growth in the Gulf region, and think increased investor interest in Saudi Arabia is likely to have a spillover effect. We are optimistic more foreign investment could bring long-term benefits to the country and region, and are excited about the potential opportunities this watershed event could provide us as investors.

 

Dr. Mobius’s comments, opinions and analyses are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.

Important Legal Information 

All investments involve risks, including possible loss of principal. Foreign securities involve special risks, including currency fluctuations and economic and political uncertainties. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets. Currency rates may fluctuate significantly over short periods of time and can reduce returns.

 


1. Source: WorldBank, 2013, GDP (current US$).
2. Source: IMF World Economic Outlook database, April 2014. © by International Monetary Fund. All rights reserved.
3. Ibid.
4. Source: CIA the World Factbook, 2014 est.
5. Source: Information Office of the Royal Embassy of Saudi Arabia in Washington, DC, 2010 Census.
Mark Mobius

Mark Mobius

Mark Mobius, Ph.D., executive chairman of Templeton Emerging Markets Group, joined Templeton in 1987. Currently, he directs the Templeton research team which is based in 18 global emerging markets offices, and manages emerging markets portfolios. Dr. Mobius has been investing in global emerging markets for more than 40 years and has received numerous industry awards, including being named one of Bloomberg Markets Magazine’s “50 Most Influential People” in 2011.


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64 comments

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  1. Marcel Hupe
    Marcel Hupe 24 November, 2014, 20:18

    My country is primed for long term growth with exciting prospects across the infrastructure, manufacturing, and energy related sectors

    Reply this comment
  2. Rafeek Mohammed
    Rafeek Mohammed 24 November, 2014, 20:23

    These are exciting times. Big things happening in the region.

    Reply this comment
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    thay man hinh iphoen 6 September, 2016, 01:35

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  4. japanese samurai
    japanese samurai 17 October, 2016, 09:45

    Literally unbreakable! My son loves it. Hurts like hell though when you get thwapped my a 6 year old

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  5. Clay Tempered Sanmai Blade sword
    Clay Tempered Sanmai Blade sword 23 October, 2016, 15:33

    Thesaurus beautiful very sharp only complaint as in the picture it shows a dark place with the silver tip the entire blade is silver I think they lied at it that way to show the folding marks besides that a great Buy

    Reply this comment
  6. Musashi Tsuba Katana
    Musashi Tsuba Katana 23 October, 2016, 15:59

    I love this sword. So pretty. Great weight!

    Reply this comment
  7. ture katanas for sale
    ture katanas for sale 23 October, 2016, 18:30

    Just recived my katana,iam vary pleased.definlety would do a number on some,zoombie’s.it’s the real deal.you can’t go wrong for the price.

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  8. Best Sword
    Best Sword 23 October, 2016, 18:35

    Great quality

    Reply this comment
  9. battle ready katana
    battle ready katana 19 November, 2016, 18:46

    My son loves to collect these, we gave it to him for Xmas and he loves it. Of course we do control when and how he handles it. He shows it off to all his friends. Great addition to his collection

    Reply this comment
  10. Samurai Swords
    Samurai Swords 20 November, 2016, 14:17

    This is an awesome weapon. Yes, weapon. This is not a toy or a show piece. This Katana came very sharp and battle ready. A few passes in my ceramic sharpener and it is razor sharp. The details, from the braided silk over sting ray skin hilt to the carbon steel blade are impressive. And I paid about half the price listed on the “Cold Steel” site. Bottom line… If you want a heavy sword that is a SWORD you can’t beat this blade.

    Reply this comment
  11. Buy Tsuba
    Buy Tsuba 20 November, 2016, 15:45

    Definitely not the quality I expected from a lower price sword, an ingenious design as well. The blade also came surprisingly sharp compared to others I have purchased in the past.

    Reply this comment
  12. Naginata for sale
    Naginata for sale 21 November, 2016, 04:13

    The sword is relatively well balanced, ever so slightly tip heavy but overall the Katana feels comfortable in my hand and the weight doesn’t throw me off. I had some slight difficulty removing the mekugi closest the tsuba but other than that the Katana came apart cleanly for inspection and cleaning.

    Reply this comment
  13. real sword
    real sword 21 November, 2016, 04:37

    The sword I received arrived in a quality printed Musashi package that demonstrated more care than is typical of similar products on the market that come in a generic brown box billowing packing peanuts.

    Reply this comment
  14. ray skin saya
    ray skin saya 21 November, 2016, 10:21

    It is a beautiful sword, beautiful workmanship, honest real ray skin. phenomenal product, very very happy, have a second one on the way. I will never waste my money on another product line again, I will continue to purchase from Handmade Sword. Thanks so very much.

    Reply this comment
  15. real swords
    real swords 21 November, 2016, 14:46

    I don’t have much experience playing with Japanese sword. But I definitely feel the quality when I unpack it, it comes with a certificate and even a carrying bag! The details of this sword is nice and clean, material feels solid and grace. I am very satisfied with this purchase.

    Reply this comment
  16. real swords
    real swords 21 November, 2016, 15:13

    Very nice value. Beyond my expectations

    Reply this comment
  17. ninja swords
    ninja swords 21 November, 2016, 19:24

    This is my first sword. It came in perfect condition. The handle and wrapping were tight. The blade was very nice with no defects. The sword has a good edge but needed some final sharpening to slice stuff up. I filled a plastic bottle with water and it busted/cut it some and knocked it into the bushes. I sharpened it a little and re-tried my test. It sliced through with so little resistance it was a little scary. This thing is ready to go now. I also waxed the scabbard and it really made it shine. If its as tough as the videos show…its a keeper. I also bought a bokken to practice with…..which was a good call because a mistake might cost me some stitches or worse. 😀

    Reply this comment
  18. katana Sword
    katana Sword 21 November, 2016, 19:24

    Wasn’t expecting much at this price point but the katana delivered was very nice, pommel, tsuba, wrapping all very tight,the blade looked gorgeous as well as functional,way more sword than I need at my skill level (which is zero). Maker and seller delivered a very nice product that I am more than happy with and can display proudly. Thank you Amazon for bringing me this wonderful deal.

    Reply this comment
  19. real swords
    real swords 21 November, 2016, 19:31

    Great sword for the price, the swordsmith left his name and markings on the tang, it cam with a certificate of authenticity and also the way it was made.

    Reply this comment
  20. true swords
    true swords 22 November, 2016, 04:44

    Quality steel. Not very sharp.

    Reply this comment
  21. katana Sword
    katana Sword 22 November, 2016, 05:37

    Exceptional sword. It came razor sharp and after about 80 hours of use it is still in perfect condition. Good grip, weight, and leverage as well.

    Reply this comment
  22. real katana swords
    real katana swords 22 November, 2016, 21:41

    This is a pretty nice sword however for the money there are better swords. When i received mine i saw on the blade that it appeared to have 2 hamons… yeah one was much more prominent than the other and its hardly noticeable and blade also looks scratchy. the tsuka was very nice and all the fittings were nice. All in all this is a good buy, you will be satisfied

    Reply this comment
  23. Chinese Sword
    Chinese Sword 22 November, 2016, 23:52

    This is a good sword It is well built. The blade is heavy and powerful it also came to me razor sharp. The customer service is very good as well I had one small issue and they solved the problem right away. I will b getting another sword from them in the future.

    Reply this comment
  24. japanese sword bags
    japanese sword bags 23 November, 2016, 12:26

    Honestly I love it I just got it today, it’s a beautiful sword nice and sturdy but there’s a few minor problems (which is why I only give 4 stars) 1.) one of the clips for the belt is broken 2.) the blade is slanted to the right a bit. Other than those minor problems i love this sword a lot.

    Reply this comment
  25. katana Swords
    katana Swords 23 November, 2016, 13:12

    I purchased it for my son-in-law, and he loves it.

    Reply this comment
  26. ninja weapons
    ninja weapons 23 November, 2016, 13:18

    I spent hours going through the hundreds (thousands?) of swords offered by Amazon, attempting to find a high quality Samurai Sword that I could afford. After looking at many prospects, I saw this beauty that was hand forged and folded and less than $200. Could this be possible? It looked good and I had a good intuition about it so I took a chance and ordered it. Am I ever glad I did.

    Reply this comment
  27. Wakizashi Katana Sword
    Wakizashi Katana Sword 23 November, 2016, 13:18

    i was very impressed on the quality of this katana, its the first sword i have ever purchased and i would definitely buy from this company again. it arrived here quicker than expected and nothing was wrong with it. very, very pleased with this sword

    Reply this comment
  28. ninja weapons
    ninja weapons 23 November, 2016, 14:59

    sword is as advertised. the tsuba,s gold trim is a bit rough and the blade isn’t as sharp as I would expect. otherwise it’s really a bang for the buck sword.

    Reply this comment
  29. custom katana swords
    custom katana swords 23 November, 2016, 20:45

    It’s nice and solid not too heavy not too light just overall nice size and shape for one hand

    Reply this comment
  30. japanese katana swords
    japanese katana swords 24 November, 2016, 01:08

    Love it came to me just as they said it would and by far the sharpest blade I ever got out of box. Very happy

    Reply this comment
  31. Tsukas
    Tsukas 25 November, 2016, 01:00

    I know this is not a true Japanese Katana but in the hand this sword still exudes an aura that requires respect. Well made,sturdy, and beautiful as it stands.

    Reply this comment
  32. katana Sword
    katana Sword 25 November, 2016, 02:08

    I purchased this Katana to protect myself from zombies. You can imagine my disappointment when shipping was so slow that zombies had killed my whole family before it finally got to me. However, when it finally got here I was very impressed with the attention to detail. It is very sharp and light weight. The colors are beautiful. I have already used it to kill 7 zombies. One of which was the UPS man who had me sign for it. I didn’t get a good look at him before I struck, but he appears to have turned back into a human after my fatal blow. I am currently hiding in a window well and spying on the zombies to learn their ways. When the time is right, I will strike. 5/5 would buy again!

    Reply this comment
  33. Japanese Samurai Sword
    Japanese Samurai Sword 25 November, 2016, 03:47

    Sharp, quality, and attractive, Full hilt, feels sturdy in both hands.

    Reply this comment
  34. katana
    katana 25 November, 2016, 10:24

    Is the real Hattori Honso katana (Masahiro) I didn’t know it was the real thing! Im honored to own it. I cherish it.

    Reply this comment
  35. 五毛
    五毛 25 November, 2016, 16:18

    每周都来这外加投币

    Reply this comment
  36. japanese samurai
    japanese samurai 27 November, 2016, 15:35

    Received it yesterday and was blown away from it’s appearance. I saw the layers on the sword that made it really stand out. Well balanced and sharp. Really a truly, beautiful while a fully functional and a battle ready sword. I would recommend getting this katana to anyone….5 stars all the way.

    Reply this comment
  37. Real Tachi Sword
    Real Tachi Sword 28 November, 2016, 00:31

    The blade fits tightly in the scabbard, no rattle, the fittings appear to be a non-magnetic alloy (blackened brass, perhaps), but everything from the sword collar and hand guard down through the handle is solid, maybe a touch overbuilt as far as thickness, but the fullers, or grooves (which are also well carved/executed), help its balance and make it sing. The handle wrapping is done in the proper alternating pattern, something all to rare in budget katana-style swords; the scabbard also has an alloy end cap, reinforcing the ‘yanone’ or arrowhead theme of the sword’s fittings. The polish is satin and plain, good for hiding scratches from fibrous cutting media, and the long tip is counterpolished. Overall, a good choice for someone’s ‘first’ or ‘only’ katana, or as a user/spare/surrogate for a more expensive or cherished blade.

    Reply this comment
  38. Samurai Swords
    Samurai Swords 28 November, 2016, 02:41

    Literally unbreakable! My son loves it. Hurts like hell though when you get thwapped my a 6 year old

    Reply this comment
  39. Wakizashi Sword for sale
    Wakizashi Sword for sale 28 November, 2016, 04:53

    Excellent workmanship! Beautiful blade!

    Reply this comment
  40. 印度阿三
    印度阿三 28 November, 2016, 07:37

    语速略快啊。

    Reply this comment
  41. battle ready samurai swords
    battle ready samurai swords 28 November, 2016, 07:41

    Great sword, but not the sharpest, need to buy a whetstone with it

    Reply this comment
  42. cold steel swords
    cold steel swords 28 November, 2016, 13:13

    Nice sword at the price.

    Reply this comment
  43. authentic katana swords for sale
    authentic katana swords for sale 28 November, 2016, 15:46

    Cold steel awesome products like always. That is why I am a big fan of cold steel, they are a little high but have never been unhappy with the product.

    Reply this comment
  44. handmade katana
    handmade katana 28 November, 2016, 23:25

    this is a fine weapon. It came sharp as a razor from the factory, still wrapped and oiled. The saya is wooden, no rattle and the sword will not fall out under duress. The hamon is real, not wire brushed, as other reviewers have stated. I agree with the previous poster, this is no toy. The Blade is undamaged after cutting the box it came in into slithers, and then a bleach bottle filled with water clean in half in one clean stroke. In practiced hands, this katana could make an attacker, or would be attacker, wish they hadn’t crossed you in the first place. Zombies would fall in droves before the might of this blade!!!

    Reply this comment
  45. katana swords
    katana swords 29 November, 2016, 12:09

    My first katana, and I’m very impressed. It’s solidly made, and looks good. It’s coming from China so it will take more than a week to arrive.

    Reply this comment
  46. Buy Tanto
    Buy Tanto 29 November, 2016, 14:41

    Super sharp out of the box, well packaged , beautiful sword.

    Reply this comment
  47. ninja sword for sale
    ninja sword for sale 27 June, 2017, 16:09

    Bad ass sword! Perfect size for women under 5’6″.

    Reply this comment
  48. real swords
    real swords 27 June, 2017, 17:36

    This sword is absolutely beautiful. Great quality, good weight and balance. My only issue with the sword is the claw and the wrapping that’s tied to it. The wrapping is a really cheap looking material that appears worn on the edges. Also unlike most samural swords it’s not beautifully tied/wrapped around the sword. Aside from that I really like the sword. Oh and one more thing, the picture used to show the sword is accurate so don’t expect it to be white as it is in the movie. However in my opinion, the color of this sword/sheath is better than that of the movie.

    Reply this comment
  49. katana bags
    katana bags 27 June, 2017, 20:10

    Godammm this sword is beautiful. Well made. Looks authentic

    Reply this comment
  50. real swords
    real swords 27 June, 2017, 22:47

    beautiful sword. was NOT customized as per my request(they could have just said no, i still would have bought it), but whatever, i’ll just buy more swords(probably not from this seller, tho). it is still a fine addition to my collection. on par with other swords in this price range, but barely. hamon appears to be real, as far as i can tell. beautiful, shiny finish, almost flawless. unique saya and tsuba. i got the sword in the pics and i am happy with it. it makes a LOUD chopping noise, which is very cool, but i think i would have preferred it without bo-hi, as i am more interested in devastating damage than sounding cool. i do not think this one will be getting much use in the bamboo grove.

    Reply this comment
  51. importadorcomsucesso
    importadorcomsucesso 18 July, 2017, 12:43

    There is already a time that I am dedicating myself to studying more about investing in Saudi Arabia, it seems to me a great deal, very good indeed.

    Reply this comment
  52. Naginata Sword
    Naginata Sword 18 July, 2017, 15:10

    Beautiful sword, product came to me in great condition..

    Reply this comment
  53. Sobre o Código Afrodite
    Sobre o Código Afrodite 26 July, 2017, 07:07

    Lovely article

    Reply this comment
  54. https://asuasolucao.com/bingadsexpress/mini-curso-gratuito
    https://asuasolucao.com/bingadsexpress/mini-curso-gratuito 5 August, 2017, 16:16

    Lately I am researching a lot about investments in Saudi Arabia and it seems to be a good deal, I really liked the article because it clarified many doubts I had.

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    https://academiadosimportadores.com.br/sobre-o-filipe-barcellos-e-o-curso/ 5 August, 2017, 16:43

    Surely this is one of the best articles I have ever had the opportunity to read about investments in Saudi Arabia, there is a time that I am researching a lot on this topic, excellent and thanks for posting.

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  56. best katana in the world
    best katana in the world 9 August, 2017, 09:33

    Great Very nicely made and looks quite authentic.

    Reply this comment
  57. http://segredosdoimportador.com
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  58. ricardo
    ricardo 7 December, 2017, 03:44

    Godammm this sword is beautiful.

    Reply this comment
  59. Pai Abel de Yemanja
    Pai Abel de Yemanja 14 January, 2018, 13:56

    otimo artigo excelente

    Reply this comment
  60. Pai de Santo em Vitoria da Conquista
    Pai de Santo em Vitoria da Conquista 14 January, 2018, 13:57

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