The Saudi Market opens the appetite of foreigners with cheap stocks and wide reforms

An accelerated rate of reforms facilitates the entry of foreign investors into the Saudi market, and increases investor confidence in the ability of the local stock exchange to compete with global markets in the future, despite the current performance of stocks and the decline in trading volumes. Within one week during July, Saudi Arabia announced a series of regulatory changes that enable the residents of the Gulf cooperation council countries to trade local shares, and foreign enterprises give the option to issue deposit certificates, as well as reducing the restrictions on investment funds and asset managers in the stock market. The Kingdom of Saudi Arabia has also approved a new law that facilitates foreigners to own real estate. Despite the challenges, analysts and experts in the field of investment in institutions such as “Morgan Stanley” and “Elisa Bernstein”, a message of dedication from Saudi Arabia is that these reforms are combined, which is renewed evidence of Saudi Arabia’s serious dedication to turning into a global business center, despite the existing challenges. “Saudi Arabia wants to become a financial power on the global scene similar to the Emirates and Singapore, and is using international best practices to improve foreign capital flow and expand access to capital markets,” said Gitania Kandari, Deputy CEO of Investment at Morgan Stanley Investment Management. She added: “All of these reforms indicate a deliberate transformation of an oil -based economy to a global investment destination.” The development of more powerful and development markets is also a basic pillar in the “Vision 2030” under the supervision of Prince Muhammad bin Salman. Diversification of the economy and reducing oil dependence. Saudi Arabia seeks to attract foreign investors to promote the wheel of economic activity and support the new sectors, as part of its efforts to reduce its dependence on oil revenue. In order to encourage the flow of foreign capital, Saudi Arabia has worked to diversify the initial public proposals, strengthen its efforts to attract high -frequency trading companies and reduce some obstacles facing foreign investors. One of the indicators of progress in this road is that foreign investors from outside the Gulf cooperation council countries form a record number of 35% of shares purchases in the second quarter, according to the data of “Bloomberg Intelligence”. Saudi shares -judgments, despite the expenses of the kingdom to restructure its economy, still have challenges in the short term. The sale has recently led to a decline in Saudi stock reviews to their lowest levels compared to the global markets for almost nine years. During July, the Saudi shares listed in the “Tassi” index were traded with a 32% discount compared to the shares in the “MSCI Acui” index, based on the repetition of the estimated profitability, which is the lowest relative evaluation since the late 2016. At the same time, the average daily trading value in July, it reached the lowest level in more than two years, up to $ 1.25, with 1.25 billion. According to Deniz Besiroglu and Nicholas Phillips, according to Deniz Besiroglu, the two analysts are at ‘Bloomberg Intelligence’. Recent repairs are likely to take some time before it has a concrete effect on trading activity. The priority of attracting investments to Saudi Arabia has made the fall in oil prices to attract foreign investment is a priority for the kingdom. Brent Ru, the global standard, traded below $ 70 a barrel, in light of the continued “OPEC+” coalition to increase the offer, while expectations are still limited to a limited recovery among analysts. The Kingdom has already reduced the financial awards for some projects and announced its commitment to spending control, steps that can contribute to attracting foreign investors who see a practical and realistic approach in these decisions. The funds investing in Saudi shares are also witness to continuous financial flow this year, which puts the kingdom in fourth place between the countries of Europe, the Middle East and Africa in terms of the number of funds allocated by the funds to invest in, according to the data of the (EPFR). Sami Suzuki, head of the shares in the emerging markets of “Elisa Bernstein”, believes that more shares can attract more foreign investors. He added that the activity of foreign investors began to rise during May and June. Suzuki continued: “We are monitoring all the reforms carefully, whether large or small, which can contribute to the increasing liquidity in the market and the expansion of the basis of the businesses in which can be invested.” The opening of the Saudi Golf Market, the Capital Market Authority said in a statement to “Bloomberg” which opened the way for the population of the wave states as a ‘logical and natural step’ as a result of the strong economic, social and regulatory relationships in the region, and pointed out that it is currently studying the feasibility of the market for all investors. The residents of the Gulf Cooperation Council countries can open investment accounts and trade shares directly in the main market for the first time. They will also be allowed to continue trading, even after moving to stay outside the region. Deposit certificates are a new market test that represents the launch of Saudi deposit certificates, which enable foreign businesses to issue local certificates linked to their global shares and based on Saudi -Riyal, a test of the scope of this business’s demand for the Saudi market. The Saudi Tadawal group, which works for the stock market, receives requests from banks that charge deposit certificates and companies that want to issue, and told “Bloomberg” that its approval procedures and time schedules would expect, similar to those accredited in double inclusion or primary public proposals. But time can remain the most important factor in crystallizing the results. “The reforms need a long time to pay,” said Kandari of “Morgan Stanley”.