Foreign investments stimulate the post-pandemic recovery of Arab region

By Amirtha P S, Desk Reporter
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On the second day of the Arab Federation of Exchanges, the keynote speakers highlighted the key role taken by the foreign investors in supporting the Arab region’s post-pandemic recovery.

During a session discussing the Arab markets’ response to COVID-19, the CEO of Saudi Stock Exchange Company (Tadawul) Khalid Al-Hussan opined that stimulating foreign investments in the region would help to diminish the impact of the pandemic. “Looking at COVID-19, if we are an isolated exchange, we would be impacted more by the pandemic compared to if we were an integrated platform and economy,” he added.

Saudi Arabia is currently working on mobilizing investments in the country following the Kingdom’s Vision 2030. The recent privatization law and the initiation of several high-profile megaprojects, like the revolutionary zero-carbon city “The Line” and the “Coral Bloom” luxury Red Sea project are part of these efforts.

Mr. Al-Hussan points out that Saudis are interested to open up the country and integrate it with the rest of the world and “Tadawul has benefitted from opening this channel. The inclusion we made has positively impacted the cash inflow by billions in the Saudi market.”

In 2020, Tadawul collected $1.46 billion in share sale proceeds. Despite the pandemic, the market represents a year-on-year increase of 34 percent, excluding the bumper 2019 Aramco Initial Public Offering (IPO). 

According to Ahmed Shams El-Din, the managing director and global head of research at EFG Hermes, Saudi Arabia is the most diversified market in the region. “The Kingdom has a very active IPO compared to other markets.”

By the end of last year, Tadawul saw an increase of 22 percent in the number of qualified foreign investors (QFI). “We have been witnessing a big activity since the beginning of this year with QFIs owning around 15 percent of the free float shares in a market worth $2.5 trillion,” Tadawul Chief of Markets Mohammed Sulaiman Al-Rumaih stated.

The 11th annual conference of the Arab Federation of Exchanges was the largest gathering of regional financial institutions in the region this year. During the first day of the virtual event, keynote speakers focused on the role of environmental, social and corporate governance practices in achieving economic growth and financial prosperity.

Related: Saudi Stock Exchange Tadawul opens up short-selling to all investors