MENA Market Overview November 2017

The changing regulatory environment in Saudi Arabia, with MSCI upgrade and FTSE listing expected in 2018, is attracting interest from international investment banks, who have previously been undercut on pricing from the Tadawul listings. With access to international investors likely to become paramount, international banks are set to make significant inroads into the market

Given the above, the privatisation agenda being pursued in Saudi Arabia as part of Vision 2030 has attracted significant interest from bulge bracket platforms in the region. Net new headcount has been created within IBD Coverage teams at Citi, Goldman Sachs, HSBC and Morgan Stanley, amongst others, in order to gain better access to the market from individuals based on the ground in Riyadh

Despite opening up to Qualified Foreign Investors and the impending FTSE and MSCI upgrades, equity markets have seen some of their lowest level of flows in Saudi Arabia for many years. With the reform process aimed at long term goals, the short term impact has seen weakness in the local economy, with the fundamentals of companies dependent on consumer spend particularly effected. International institutional investors are waiting for next year’s changes before committing to investing heavily in the Saudi reform story

Capital markets activity is returning across the region, with the Emaar Development and ADNOC IPOs currently in the market, the former being the first major IPO in three years from Dubai. With privatisation processes in Saudi Arabia and Egypt creating a pipeline of ECM transactions for 2018, banks are looking to boost their ECM product expertise in the Middle East