![\"Cathy](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/Cathy-Gibson_Bio_700x700-300x300-1-e1760345296201-300x200.jpg\")
Cathy Gibson, global head of trading, Ninety One<\/p>\nAfter boosting equity market infrastructure and aligning with international standards, Middle Eastern countries have seen surging capital inflows and IPO pipelines on the back of indexation changes. Market participants tell Global Trading about the quirks of trading this fast growing market<\/p>\n
In September, the Saudi Capital Market Authority announced that it may lift the 49% cap on foreign ownership of listed companies. The announcement sparked a rally in the market, which jumped 5% and recovered almost half of its losses year-to-date.<\/p>\n
\u201cIf the cap is lifted and the MSCI and FTSE indices would rebalance, you could see between<\/p>\n
Cathy Gibson, global head of trading, Ninety One<\/p>\n
US$9 billion and US$10 billion of inflows into the region,\u201d noted Cathy Gibson, global head of trading at Ninety One. \u201cIt\u2019s a clear indication that Saudi is open to foreign investment, which is definitely a positive for the region.\u201d<\/p>\n
Foreign participation in the Saudi market has already skyrocketed over the past decade, according to UBS\u2019s Ahmed Badr, head of global markets execution services MENA. \u201cIt used to be less than 1% of daily turnover. Today, it can go up to 30%, whether by QFI or swaps,\u201d he says. \u201cYou\u2019re talking about a huge difference.\u201d<\/p>\n
A long road<\/p>\n
It\u2019s been a long journey to get to this point. \u201cNorth African countries, and specifically Egypt, have been open to international investors for quite some time. They were quite<\/p>\n
![\"Salah](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/Untitled-design-12-300x200.png\")
Salah Shamma, head of investment and portfolio manager, Franklin Templeton<\/p>\n
advanced early on, from the early 2000s, and interacting with international investors. The culture was geared towards trying to attract that investment. GCC countries didn\u2019t have that. These were mainly local markets, relatively new in nature, dominated by local investors, mainly retail,\u201d says Franklin Templeton\u2019s head of investment and portfolio manager Salah Shamma.<\/p>\n
In 2012, the UAE and Qatar began to push for their markets to be included in emerging markets analysis. After developing market infrastructure to fit the criteria, aligning better with best practices and establishing disclosure agreements for international investors, foreign capital began to flow in.<\/p>\n
When a country\u2019s stocks are added, it often boosts their appeal to foreign investors and can potentially result in significant capital inflows. Inclusion in such indices tends to enhance<\/p>\n
![\"Belinda](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/bm-e1760345518463-300x200.jpeg\")
Belinda Mar, equities market structure and product development, Bank of America Merrill Lynch<\/p>\n
liquidity in local equity markets and provides access to international investment that was previously out of reach,\u201d explained Belinda Mar, equities market structure and product development at Bank of America Merrill Lynch. Seeing the success, other countries in the region were inspired and followed suit, Shamma notes.<\/p>\n
Increased activity in the region, which the Saudi market represents about 80% of, has made MENA a formidable presence in emerging markets indices. \u201cIf you wind the clocks back, before 2019 these markets were not a part of MSCI,\u201d Badr says. \u201cNow, MENA is more than 8%. It\u2019s quite significant, especially with the exit of Russia. It\u2019s on every international investor\u2019s radar, in the basket of every investor. We\u2019re seeing a lot of inflows from that perspective.\u201d<\/p>\n
\u201cIt\u2019s a region to be reckoned with, and it\u2019s no longer an opportunistic trade,\u201d Shamma affirms. \u201cAs GCC markets entered emerging market indices, international investors had to adjust their allocations, resulting in a marked increase in foreign ownership and participation.\u201d<\/p>\n
\n Select Size Metric:
\n
\n Market Cap (USD)
\n 1Y Average Volume
\n Last 7 Days Average Volume
\n Last 7 Days Turnover (USD)
\n 1Y Average Turnover (USD)
\n 30 Days Average Turnover (USD)
\n
\n
\n Select Color Metric:
\n
\n 30 Days Return
\n Last 7 Days Return
\n 1Y Return
\n Last 7 Days Volatility
\n 1Y Volatility
\n 30 Days Volatility
\n
\n <\/p>\n
\n Disclaimer: This visualisation is a reconstruction of the MSCI World index using available public sources,
\n without the involvement of MSCI Inc. There may be significant differences between the data shown here and the actual index.
\n <\/p>\n
And the region\u2019s importance is only going to increase, he says. \u201cBased on our expected IPO pipeline, expected increases in foreign ownership limits and potentially further sell-downs or strategic sell-downs, that size potentially increases to 10-11% of the EM index.\u201d<\/p>\n
Exchanges are keen to keep momentum up. \u201cThey\u2019ve been very active with the investment banks,\u201d says Badr. \u201cThere are full teams in the Saudi and Dubai financial markets attending<\/p>\n
![\"Ahmed](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/ab-e1760345618442-300x200.jpeg\")
Ahmed Badr, head of global markets execution services MENA, UBS<\/p>\n
conferences, going on the road, seeing investors globally. They\u2019re very active in promoting their exchanges to international institutional investors, and they\u2019re really listening to how they need to develop further to attract more foreign investment.\u201d<\/p>\n
In Saudi, authorities have been \u201creasonably active\u201d in their attempts to boost foreign investor participation, Gibson says \u2013 and have also been upping their own participation in local markets and encouraging local investments to the region.<\/p>\n
\u201cRetail investors play a critical role in enhancing market liquidity and diversity,\u201d Mar says, further supporting the overall market. Gibson adds that high net worth individuals, of which there are a concentration in the region, are also highly influential. Encouraging these players to invest in the region is key to keeping the markets liquid and attracting more foreign investors.<\/p>\n
And the foreign investors are coming; Middle Eastern markets have shifted from being overwhelmingly retail-led to having a more balanced, 50\/50 retail\/institutional split.<\/p>\n
Of the ten banks with the highest equity capital markets (ECM) revenues in the Middle East for the first nine months of the year, ranked by Dealogic, just three are regionally specific. SNB Capital sits in seventh place by ECM revenues, with US$12 million and a 4% market share, while First Abu Dhabi Bank (FAB) ranked ninth with a reported US$10 million and a 3.3% share. Saudi Fransi Capital was in 10th place, with US$9 million and a 3.2% share. The three banks fell from fifth, sixth and eighth spot respectively.<\/p>\n
At the top of the table, Morgan Stanley had the greatest share of ECM revenues in the region \u2013 12.9%, represented by US$38 million. It was followed by Citi (US$30 million, 10.2%) and Jefferies (US$23 million, 7.8%). All three rose in the rankings year-on-year, from third, fourth and ninth.<\/p>\n
\u201cIf we look back to when we started trading the Saudi Arabian markets here at T Rowe<\/p>\n
![\"Nick](\"https:\/\/www.globaltrading.net\/wp-content\/uploads\/2025\/10\/nw-e1760345725663-300x200.avif\")
Nick Wilkes, head of EMEA equity trading, T Rowe Price<\/p>\n
Price, we primarily found ourselves trading against local investors. This has changed however as the market has evolved rapidly over the past 10 years. There\u2019s a broad international investor community now active in this market,\u201d said Nick Wilkes, Head of EMEA equity trading at T Rowe Price.<\/p>\n
\u201cI think we\u2019ve got a very nice balance. I don\u2019t think it needs to be more institutionalised now,\u201d Badr muses. \u201cOther structural changes are more important.\u201d<\/p>\n
There have also been significant trading infrastructure investments across the region in recent years, including colocation facilities in Saudi and Turkey \u2013 creating fertile ground for low-latency, high-frequency trading. Jane Street announced earlier this year that it would be opening an Abu Dhabi office, and Citadel has been set up in Dubai since 2008.<\/p>\n
READ MORE: Jane Street breaks into MENA<\/a><\/p>\n \u201cEvolving technology and brokers providing colocation have enticed quant and high-frequency trading firms to the market, changing the liquidity profile,\u201d says Wilkes. \u201cIt\u2019s modernising, and we have to adapt to that.\u201d<\/p>\n ID, please<\/p>\n The majority of Middle Eastern countries run ID markets, which require foreign investors to identify themselves at each stage of a transaction. In the UAE, Kuwait and Qatar this is known as a National Investor Number (NIN), and in Saudi Arabia as a Custody Portfolio Account (CPA). IDs are not required in Turkey or Israel.<\/p>\n Opinions on this structure are mixed. Earlier this year, Invesco senior equity dealer Adrian Bradshaw told audiences at TradeTech that ID markets are labour intensive and prevent firms from using some algos when trading.<\/p>\n \u201cIf we have multiple funds on an order, we can\u2019t use an algorithm \u2013 you have to set up five separate orders,\u201d he explained.<\/p>\n That\u2019s not the only thing limiting algo use. \u201cUltimately, these are single-exchange markets and so your tools aren\u2019t necessarily going to work the same way as they do in other markets,\u201d Wilkes said. \u201cWe talk about low-touch algorithms, they\u2019re great for fragmentation, especially in liquidity seeking modes, but there aren\u2019t necessarily secret liquidity pools out there at this stage in these markets. As they evolve, that could change.\u201d<\/p>\n UBS\u2019s Badr agrees that the ID market is a challenge. \u201cEvery portfolio, every fund, has to have an ID, and you allocate for them in the beginning,\u201d he said. \u201cThere\u2019s no omnibus structure in these markets, no post-trade allocation. Obviously, people want to send one line and then allocate everything post-trade.\u201d<\/p>\n However, he acknowledges that exchanges in the region are listening to market participants\u2019 calls for change: \u201cThey understand the needs of the market and the necessity of development.\u201d<\/p>\n Others are less concerned about the impact that an ID market has on international investor appetite.<\/p>\n \u201cI don\u2019t think it\u2019s hindered them from coming into the market,\u201d says Shamma. \u201cIt\u2019s not unique to the region. Other markets in the EM space require the same thing.\u201d<\/p>\n \u201cWe can still block trade,\u201d Gibson adds; it just requires a little more work for allocations to be made on an individual account level.<\/p>\n Primary<\/p>\n In the primary markets, the Middle East was flourishing in 2024 \u2013 with the region\u2019s bourses outpacing European listings.<\/p>\n