Tuesday 30 June 2015

Saudi Arabia Open For Foreign Investors

The largest country in the middle east, Saudi Arabia has decided to open it's Tawadul (Stock Exchange) for foreign investors. The Saudi Arabian stock market capitalisation is around $528 billion which about two-thirds of Saudi GDP. The move comes after steep decline in oil prices in 2014. Saudi Arabia no longer want it to be an oil dependent economy. It aims to attract foreign investemnt through it's Tawadul and smart cities like King Abdullah Economic City. The steep decline in oil price has affected Saudi Arabia economy by about -2.7%.

The reforms comes at the right timing. Saudi Arabia's economy has doubled since 2006. The total value of FDI resulted to around $208 billion by the end of 2014. Financial services are improving as much as 65% of women having a bank account (this is a big deal). Insurance premiums have grown by around 20%. According to the Telegraph, the best stocks to invest in are Saudi Basic Industries Corporation, Saudi Telecom and National Commercial Bank.

Foreign Investors also have plenty reasons to stay out of Tawadul.
They are :  1) Growing influence of ISIS.
                 2) War with Yemen
                 3) Greece Bailout
                 4) Saudi Arabia's fiscal deficit
                 5) India and China look more promising.

By - Chaitanya Kulkarni ( twitter.com/chai2kul )

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