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UBS CIO sees rising foreign investment in Middle East, boosts coverage of GCC markets

July 2018

UBS CIO sees rising foreign investment in Middle East, boosts coverage of GCC markets

July 31, 2018 | 11:45 | Dubai – UBS CIO sees rising foreign investment in Middle East, boosts coverage of GCC markets

  • UBS Global Wealth Management’s Chief Investment Office (UBS CIO) expects international investors to increase their exposure to the Middle East due to growing inclusion of the region’s assets in financial indices, ongoing reforms and a favorable economic outlook for Gulf Cooperation Council (GCC) countries
  • A potential inclusion of the UAE, Saudi Arabia, Qatar, Bahrain and Kuwait in emerging market sovereign bond benchmarks could attract further inflows, following Saudi stocks’ recent inclusion in MSCI and FTSE indices
  • UBS CIO has steadily increased its analytical coverage of the region, including in Arabic, to better serve local and international clients

UBS Global Wealth Management’s Chief Investment Office (UBS CIO) today published a new report on the Middle East’s growing importance for the international investment landscape. Following recent decisions by major index providers MSCI and FTSE to include Saudi Arabia in their respective EM benchmarks, it is expected that foreign capital inflows to the country will increase significantly. This effect could be enhanced by future inclusions in emerging market sovereign bond indices, which could benefit sovereign bonds from Saudi Arabia, the UAE, Qatar, Bahrain, and Kuwait.

In its report, UBS CIO points out that the path of bold and ambitious reforms taken by Saudi Arabia and other countries also faces numerous risks, such as renewed oil price weakness, which could affect fiscal flexibility to implement socially-sensitive programs and weaken the external position of the region. Other risk factors include potential delays in reform programs or a lack of privatization and private sector participation, which could trigger uncertainty for foreign investors. However, the region’s overall economic outlook is supported by sound fundamentals, the report concludes, thus making it attractive for foreign investors and likely to lead to continuous prosperity for GCC economies.

Financial analysts have also experienced growing demand for research on the Middle East due to the growing availability of investable assets in the region. CIO has expanded its coverage of the region and now provides regular updates on the credit profiles of all sovereigns as well as several banks and corporations in the GCC. CIO’s coverage of sukuk instruments, one of the fastest-growing fixed income segments, has also widened, and the Saudi stock market will be covered regularly in its equity-related publications.

Ali Janoudi, Head of Central and Eastern Europe, Middle East and Africa, UBS Global Wealth Management, said: “UBS has been on the ground in the Middle East for more than 55 years. We are continuing to focus our presence on strategic locations in line with the significant proliferation of local economic and business opportunities. The Chief Investment Office’s expanded coverage reflects our commitment to the region and our focus on serving local and international clients’ needs.”

Mark Haefele, Chief Investment Officer, UBS Global Wealth Management, said: “The Middle East is an important region for investors around the world. As it continues to grow in wealth and power, it is a natural expansion for us to publish investment views in Arabic.”

Michael Bolliger, Head of Emerging Market Asset Allocation, UBS Global Wealth Management Chief Investment Office, added: “Our clients are expressing increasing interest in Middle Eastern assets as economic reforms and other factors open up local markets to international investors. Our coverage of key instruments such as equities, bonds, and sukuk has steadily expanded to reflect demand, and will likely continue to do so in the years ahead.”

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