At a time when the headlines are dominated by talk of global protectionism, it is a welcome development that this region appears to be opening itself up to foreign capital. While US equities that rallied on the arrival of Donald Trump are now turning lower as trade tensions heat up, regional equities are largely holding up on account of reforms designed to attract foreign investors into them. The Tadawul is up 10 per cent year-to-date while the Abu Dhabi Securities exchange is up 6.5 per cent and the Kuwait index by 3.5 per cent. The major global indices, however, are recording losses with the S&P 500 down 2.5 per cent and the DAX and the Nikkei having lost around 5 per cent so far this year.
Late last month, the Financial Times Stock Exchange decided to include Saudi Arabian equities in its EM indices. According to the index compiler, the country is expected to have an index weight of 2.7 per cent within the FTSE Emerging Market index. The decision will be implemented in five tranches starting in March 2019 and could lead to passive inflows of as much as $5 billion. MSCI, another index provider, is expected to take a call in June 2018 on including Saudi equities in its EM index. If the MSCI follows in the FTSE’s footsteps, that could lead into an additional passive inflows of as much as $10bn.
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An entry into broadly tracked indices would mark the culmination of a series of capital market reforms initiated in Saudi Arabia over 2016 to 2018. These included the simplification of the qualified foreign institutional investor registration process and changes to the settlement and custody model. Perhaps, the most important change was the shift in attitude and a greater desire to draw foreign capital into the economy. The first three months of 2018 saw foreign investors as the net buyers of Saudi equities every week since the start of the year. On an aggregate basis, they have bought equities to the tune of 7.3bn Saudi riyals in the first quarter of this year.
Saudi Arabia is not alone in chasing foreign capital inflows. Kuwait, which was classified as secondary emerging market status in September by the FTSE, has made several changes to gain the same status from the MSCI since the start of the year. The FTSE decision is likely to result in passive inflows of about $800 million into Kuwaiti stocks. As part of the reforms, the stock market in Kuwait was divided into three segments with the Premier Market composed of the largest and most liquid companies. Additionally, all indices were market-capitalisation weighted to better reflect market performance.
It is worth noting here that the period between announcement and actual implementation is generally positive for equity markets given flows from active investors. For the record, Qatar and the UAE received inflows of $2.7bn combined in the year leading up to their inclusion in the MSCI EM index in 2013.
The benefits of such inclusions into broadly tracked indices go beyond immediate short-term inflows. They also attract a new set of investors into the economy, the majority of whom are relatively sophisticated financial institutions. Once invested, these institutions tend to progressively drive positive changes in terms of transparency, corporate governance and financial reporting standards, which often translate into reduced risk premiums and enhanced valuations over longer periods of time.
While the authorities in the region were largely driven into many of these reforms by the need to diversify their energy-dependent economies, the pace and intensity of the steps taken to date suggest the majority of the region’s countries are now on irreversible paths towards opening up their economies to a wider set of reforms and international investors. At a time when other countries touted as beacons of free trade are retreating into themselves, the initiatives in the Mena region are a welcome development that should ultimately be a positive for their markets as well as for the investors in them.
With input from Aditya Pugalia, director of financial markets research at Emirates NBD
Tim Fox is group chief economist and head of research at Emirates NBD
The bio
Favourite book: The Alchemist by Paulo Coelho
Favourite travel destination: Maldives and south of France
Favourite pastime: Family and friends, meditation, discovering new cuisines
Favourite Movie: Joker (2019). I didn’t like it while I was watching it but then afterwards I loved it. I loved the psychology behind it.
Favourite Author: My father for sure
Favourite Artist: Damien Hurst
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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MATCH INFO
World Cup qualifier
Thailand 2 (Dangda 26', Panya 51')
UAE 1 (Mabkhout 45 2')
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
The Freedom Artist
By Ben Okri (Head of Zeus)
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The biog
Hometown: Cairo
Age: 37
Favourite TV series: The Handmaid’s Tale, Black Mirror
Favourite anime series: Death Note, One Piece and Hellsing
Favourite book: Designing Brand Identity, Fifth Edition
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
THE DETAILS
Kaala
Dir: Pa. Ranjith
Starring: Rajinikanth, Huma Qureshi, Easwari Rao, Nana Patekar
Rating: 1.5/5
Results
%3Cp%3E%0D%3Cstrong%3EElite%20men%3C%2Fstrong%3E%0D%3Cbr%3E1.%20Amare%20Hailemichael%20Samson%20(ERI)%202%3A07%3A10%0D%3Cbr%3E2.%20Leornard%20Barsoton%20(KEN)%202%3A09%3A37%0D%3Cbr%3E3.%20Ilham%20Ozbilan%20(TUR)%202%3A10%3A16%0D%3Cbr%3E4.%20Gideon%20Chepkonga%20(KEN)%202%3A11%3A17%0D%3Cbr%3E5.%20Isaac%20Timoi%20(KEN)%202%3A11%3A34%0D%3Cbr%3E%3Cstrong%3EElite%20women%3C%2Fstrong%3E%0D%3Cbr%3E1.%20Brigid%20Kosgei%20(KEN)%202%3A19%3A15%0D%3Cbr%3E2.%20Hawi%20Feysa%20Gejia%20(ETH)%202%3A24%3A03%0D%3Cbr%3E3.%20Sintayehu%20Dessi%20(ETH)%202%3A25%3A36%0D%3Cbr%3E4.%20Aurelia%20Kiptui%20(KEN)%202%3A28%3A59%0D%3Cbr%3E5.%20Emily%20Kipchumba%20(KEN)%202%3A29%3A52%3C%2Fp%3E%0A
The specs: 2018 Honda City
Price, base: From Dh57,000
Engine: 1.5L, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 118hp @ 6,600rpm
Torque: 146Nm @ 4,600rpm
Fuel economy, combined: 5.8L / 100km
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
MATCH INFO
Inter Milan 2 (Vecino 65', Barella 83')
Verona 1 (Verre 19' pen)
THE SPECS
Engine: 3.5-litre V6
Transmission: six-speed manual
Power: 325bhp
Torque: 370Nm
Speed: 0-100km/h 3.9 seconds
Price: Dh230,000
On sale: now
If you go
The flights
Emirates flies from Dubai to Seattle from Dh5,555 return, including taxes. Portland is a 260 km drive from Seattle and Emirates offers codeshare flights to Portland with its partner Alaska Airlines.
The car
Hertz (www.hertz.ae) offers compact car rental from about $300 per week, including taxes. Emirates Skywards members can earn points on their car hire through Hertz.
Parks and accommodation
For information on Crater Lake National Park, visit www.nps.gov/crla/index.htm . Because of the altitude, large parts of the park are closed in winter due to snow. While the park’s summer season is May 22-October 31, typically, the full loop of the Rim Drive is only possible from late July until the end of October. Entry costs $25 per car for a day. For accommodation, see www.travelcraterlake.com. For information on Umpqua Hot Springs, see www.fs.usda.gov and https://soakoregon.com/umpqua-hot-springs/. For Bend, see https://www.visitbend.com/.
A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
