Shortly after we highlighted the utter ridiculousness of the bubble frenzy in Dubai stocks (30x IPO oversubscription for a firm that did not exist), the Dubai General Financial Markets Index tumbled 30% popping an epic 250% rally since The Fed started QE3. It seems Saudi Arabia is getting nervous at its neighbor’s fall and so The Kingdom has decided it needs more great fools to keep its dream alive… and as The WSJ reports today, Saudi Arabia plans to open its $530 billion stock market to foreigners for the first time early next year, a move that will allow the Middle East’s biggest economy to attract more international investment and reduce its dependence on oil revenue. Did we just find another China inflation outlet?
The kingdom in 2008 began allowing foreign investors indirect access to the market through swaps, but it has hesitated to open the market fully.
The kingdom is among the last of the big markets to limit international access, but it was expected to open the doors to foreign cash while it rolls out plans to spend hundreds of billions of dollars to build infrastructure and provide employment across the country.
Analysts and investors welcomed the plans, noting that it will cut through red tape and help them avoid fiddly instruments that aim to mimic local stocks.
It’s nothing but great news (for EM asset managers)…
“As the largest equity market in the Middle East and North Africa, this will certainly put the region back on international investors’ radar and is likely to be transformative for regional equities,” said Bassel Khatoun, the head of MENA equities at Franklin Templeton Investments.
Wondering who will be buying? Only the very biggest names (cough Sovereign funds and central banks cough)
“According to draft documentation, QFIIs [Qualified Foreign Institutional Investors] would need minimum assets under management of $5 billion and to have been engaged in securities activities for over five years,” said Fahd Iqbal, the head of Middle East research at Credit Suisse. “This is in line with the regulatory authority’s preference for long-term investors over short-term speculators.”
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Greater Fool hot money flows here we come…
via Zero Hedge http://ift.tt/1txGqIY Tyler Durden