A record $50bn Non-residential capital flow for Saudi Arabia in 2019

According to the International Institute of Finance, the most prominent Arab league economy, Saudi Arabia, expects to seek a 35 percent rise in Non-residential capital inflow, this year.

The economic momentum has gathered the pace, and a lot is flocking by International Portfolio managers to make investments in the country’s equity market.

UAE, however, remains to be the most highlighted one among Arab League countries for the foreign direct investments which have climbed to $ 10.4bn.

Through the sharp increase in portfolio investments, the International Institute of Finance seeks to record $ 50billion (Dh183.5bn) of nonprivate capital inflows are expected to be in the country.

Saudi Arabia is among the top countries in the Middle East, North Africa and Pakistan (Menap) region in terms of non-residential inflows. The region is expected to receive a whopping $ 217bn this fiscal year, equating to 7 percent of the regions overall Gross Domestic Product (GDP).

The Opec’s top oil producer, Saudi Arabia would witness a surge in capital inflow over the non-residential inflow in 2019. This happens due to the modest narrowing of the current account surplus and a decrease in oil and gas rates.

According to IIF, “The equity inflows will make significant contributions to the portfolio flow.

•   According to Garbis Iradian, chief economist at IIF, there would be a modest pick-up in non-oil GDP growth of 3.3 percent in 2019. It will also support continued fiscal stimulus as well as modest recovery in the growth of the private sector . “

•   Saudi Arabia stock market Tadawul got admitted to FTSE emerging-market gauge in a five-phase inclusion process.

•   The kingdom’s stocks will also get added to the MSCI Emerging Market Index within May, and the eighth-largest constituent of the measure, accounting for 2.6 percent of its weight.

•   Mr. Iradian, also adds to the point that the Inclusions will boost the confidence measures of the investors, to attract the higher equity inflows, and the projected at $ 12bn.

He also stated that “The growth rate of Non-residential capital inflow is expected to attain 3% in 2019-2020 in UAE.”

IIF also quoted that “The non-residential capital flow is expected to decelerate in Egypt, Arab league’s most populous region, due to the lower refinancing demand.”

The report also predicted UAE’s external position to remain in an advantageous position of strength, due to lower oil exports there is an expected slight downfall of the current account surplus to be at $ 23bn, equal to 6% of the overall GDP (Gross Domestic Product ).

It also indicated UAE to remain the global, regional destination of FDI inflows touching a figure of $ 10.4bn in 2018, accounting for 20% of Menap’s total as a result of whopping 200% arises in foreign public assets, so contributing to surging in overall GDP within 2020.