Skip to content Skip to Search
Skip navigation

Domestic markets best for Mena investors, says expert

Qatar stock exchange Reuters/Stringer
International investors have traditionally viewed Gulf stock exchanges through the prism of oil prices, but this is changing
  • Global investors underweight on Gulf equities, says Salah Shamma
  • But they should be reassured by reforms to state finances
  • Saudi’s demographics present big opportunities for growth

Gulf stock markets bucked a worldwide trend in 2022. While the MSCI Emerging Market index lost 20 per cent over the year and global stock and bond markets were engulfed by gloom, equity benchmarks in Saudi Arabia and Abu Dhabi reached multi-year peaks in May and November, respectively.

This year the mood has been more jittery. Four months into 2023, the Qatar, Abu Dhabi, Kuwait and Oman indexes are all in the red. Only the Saudi bourse is in positive territory, having risen by around 6.5 percent after hitting a two-year low in March.

Salah Shamma, head of Mena equities for asset manager Franklin Templeton, points out that global investors remain underweight on Gulf equities, despite the region representing around 7.5 percent of emerging market benchmarks.

International investors have traditionally viewed Gulf stock exchanges through the prism of the oil price. But from 2016 to 2019, while oil prices were low, Gulf governments made reforms to address structural imbalances. These have served to put state finances on a stronger, more sustainable footing, according to Shamma, and should underpin market performance.

“As the structural growth story plays out, we should expect foreign participation to increase. That could bring in substantial new liquidity,” he told AGBI.

Economic growth is likely to slow across the Gulf this year, S&P forecasts, although Saudi and the UAE will again be the regional standouts, expanding by 4 percent or more.

That follows robust growth in 2022. Real GDP in Saudi Arabia and the UAE expanded by 8.7 and 7.6 percent respectively in 2022. The increases in Qatar, Kuwait, Oman and Bahrain ranged from 4.3 to 5.9 percent, according to S&P Global.

Saudi Arabia’s demographics present an opportunity, according to Shamma. The kingdom’s birth rate was 2.5 children per woman in 2020, according to the World Bank.

Only Oman – with a rate of 2.7 – was higher in the Gulf. Saudi’s median age, meanwhile, is 31.8, and three-quarters of the kingdom’s population is under 35, according to Princess Reema bint Bandar, Saudi’s ambassador to the US.

Salah Shamma of Franklin Templeton says retail, education and healthcare will all benefit from population growth in the region
Salah Shamma of Franklin Templeton says retail, education and healthcare will all benefit from the region’s demographics

“We’re excited about the demographic story, especially in Saudi Arabia,” said Dubai-based Shamma, whose firm has $1.5 trillion in assets under management.

“As that population ages, there will be huge demand for goods and services within the kingdom.”

This means stocks that serve domestic economies are likely to be attractive.

“Whether it’s in the consumer space, retail, education, healthcare – these are all sectors that will benefit from population growth and the youth bracket coming of age,” he added.

Higher female employment in Saudi Arabia will also boost overall productivity, individual income and consumer spending.

“This further supports a robust and interesting proposition for consumer-focused companies in Saudi.”

Latest articles

Boat, Transportation, Vehicle

Oman signs LNG supply pact with Turkey’s Botas

State-backed Oman LNG has signed an agreement with Turkey’s Botas Petroleum Pipeline Corporation to supply one million metric tonnes per annum (mtpa) of liquefied natural gas (LNG) for 10 years. The agreement will commence in 2025, the state-run Oman News Agency reported. Hamed Mohammed Al Nu’amani, CEO of Oman LNG, said the agreement with Botas […]

Flooding in Dubai affected many people's homes. Emaar has promised .free repairs for its residents, and an upgraded sewerage system is planned

Emaar promises free repairs as Dubai launches sewerage system

Emaar Properties is offering free repairs to residents whose homes were damaged during this week’s extreme flooding, as Dubai also announced an AED80 billion ($22 billion) sewerage system. The developer announced on Friday that it would repair all homes in its communities affected by the historic levels of rain, “at no cost to residents”. Emaar’s […]

A customer paying with a credit card inside the Black Friday Market in Beirut. Lebanon wants more people to move away from cash

Lebanon launches plan to promote use of bank cards

Lebanese central bank Banque du Liban announced a new agreement on Thursday that it hopes will result in a rebound in the use of bank cards. As part of the agreement, Mastercard and Visa will lower card fees on transactions, particularly for people with bank accounts based outside Lebanon. In a press release, the bank […]

Construction work in Kuwait. Nurseries, schools and shops are being built for the new residential district of Al Metlaa

Kuwait signs $140m contracts for Al Metlaa development

Kuwait’s Public Authority for Housing Welfare (PAHW) has signed two contracts worth KD42 million ($140 million) to construct public buildings in Al Metlaa, a new residential district north of Kuwait City. Nurseries, stores, schools and shops will be included, state news agency Kuna reported. Electricity connections have been provided for 109 buildings in the district, […]