Ziad Tarek Abdullah Aba Al-Khail, Managing Director and CEO of AlJazira Capital talks about Saudi capital markets.
In your opinion, what is the outlook for the capital market in Saudi Arabia?
The outlook for the capital markets is bright. Several developments indicate that Saudi Arabia has diversified beyond just oil. The Kingdom has vast untapped reserves of minerals – companies like Ma’aden and other similar companies in the northern region have invested over SAR 130 billion in the mining sector. The sector could become one of the fastest growing sector in the economy.
Moreover, the Kingdom is focusing on its insurance business; insurance represents 1% of GDP, which is low in comparison to developed countries. While some insurance companies remain unprofitable, many have started to become profitable. The insurance sector is poised to become one of the growth stories in the economy.
In addition, the new initiatives within the housing market in Saudi Arabia by the government will eventually create growth opportunities for cement, construction and real estate sectors.
Finally, the market saw the introduction of qualified foreign financial institutions (QFFIs) four months ago. After a slow start, we expect the activity to increase, and this is just the start of a wave of investments from outside the Kingdom that will come in preparation for the MSCI inclusion time frame of 2017-2018.
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