Riyadh may be a parched, inhospitable place for dapper fund managers, but many may start to make more regular pilgrimages to the capital of Saudi Arabia in the coming years – and not just to raise fresh funds, the traditional cause for a visit in the oil-rich state.
Saudi Arabia’s Tadawul stock market, the largest and most liquid in the Arab world, may this year finally allow foreign institutional investors to invest directly into its blue-chip listed companies, rather than the swaps the Capital Markets Authority introduced in 2008.
These swaps have proven moderately popular, particularly among dedicated frontier market investors, but count as derivates – which come under a tight cap for many larger fund managers – and have to be held by locally-authorised brokers, which raises counterparty risks.
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