The robust domestic consumption in Saudi Arabia and the UAE is unlocking expansive opportunities in non-oil sectors, reinforcing the Gulf region’s position as a standout performer among emerging markets, according to Bloomberg, citing Franklin Templeton.
Salah Shamma, Head of Equity Investment for the Middle East and North Africa at Franklin Templeton (Dubai), stated that Gulf-listed equities are underrepresented in global portfolios, currently accounting for approximately 7% of the MSCI Emerging Markets Index. He anticipates this weighting could climb to 10% within the next five years, driven by ongoing secondary and initial public offerings (IPOs).
Shamma attributes the anticipated growth to a series of ambitious national initiatives: Saudi Arabia’s large-scale development projects under Vision 2030, Qatar’s expansion in gas production, and Kuwait’s pursuit of economic reforms.
Saudi Arabia and the UAE remain Shamma’s top picks in the region, primarily due to strong domestic demand which fuels growth in diversified, non-oil sectors.
“With the widening spectrum of investment opportunities, we expect increasing alignment between foreign investor inflows and the region’s economic potential,” Shamma noted. He highlighted that foreign capital inflows into Gulf markets have doubled to $60 billion over the past two years.
Despite this momentum, Shamma acknowledged that the region, particularly Saudi Arabia, may face near-term pressures.
Foreign direct investment (FDI) into the Kingdom declined for the third consecutive year in 2024. Additionally, lower oil prices could force Riyadh to reprioritize elements of its development agenda, potentially delaying some projects.
Nevertheless, Shamma emphasized the resilience of the region’s long-term strategy, stating that Saudi Arabia is expected to maintain its commitment to Vision 2030 and its broader investment ambitions.
