As foreigners can now invest in Saudi Arabia's open stock markets, more investors are pulling out of stock in developing countries to pour cash into the Middle East's largest economy, Bloomberg reported Monday.
Saudi Arabia's $590 billion stock market opened to foreign investors Monday, nearly a year after the kingdom announced its plans to allow international investors the option.
While there's no consensus on which developing country will be affected most by the move, Bloomberg said most analysts agree energy nations will be hit the hardest.
"The event of Saudi Arabia opening up is a very positive development for the entire Gulf region, as it graduates to becoming an investment destination for emerging-market funds," said Rami Sidani, of frontier markets at Schroder Investment Management Ltd. in Dubai, according to Bloomberg. "The Gulf market won’t be able to be disregarded by international investors as an asset class.”
Investors for now, though, showed slow to jump on the new market. There was no significant input from foreign investors, Reuters reported, as the bourse turned slightly negative on opening day. The stock market showed an uptick of 0.5 percent in the opening minutes but decreased 0.3 percent.
Before the open Saudi Arabia only allowed foreigners to invest in the stock market indirectly through swaps.
The oil-rich country and OPEC authority has mainly relied on petroleum exports as its key source of income, but low oil prices have encouraged Gulf Cooperation Council nations to diversify their funding.
