Franklin Templeton funds have become Qualified Foreign Investors (QFI) in Saudi Arabia, allowing the funds to invest directly in the kingdom’s stock market, it was announced on Monday.
The kingdom’s stock market is also expected to be included in MSCI’s Emerging Market Index this week, following a similar move by index provider FTSE Russell in March.
“Having operated in the Middle East and North Africa for almost 20 years, we remain dedicated to growing our business alongside the region’s growth,” said Sandeep Singh, Franklin Templeton’s regional head of Central and Eastern Europe, Middle East and Africa and head of Islamic Business.
Singh added that “Saudi Arabia has an exciting story and we want to ensure we are part of its ambitious agenda to reform its capital market.”
According to Singh, Franklin Templeton is evaluating opportunities to deepen Franklin Templeton’s Shariah business, which grew 32 percent in 2017 and manages over $2 billion in assets.
Statistics show that approximately $3 billion in foreign flows have come into the Saudi market in 2018, bringing the total foreign investment in the stock exchange to $9 billion.
Sandeep Singh, Franklin Templeton’s regional head of Central and Eastern Europe, Middle East and Africa and head of Islamic Business and Bassel Khatoun, managing director, frontier and MENA, Franklin Templeton emerging markets equity.
The kingdom’s anticipated inclusion to the MSCI Emerging Market Index is likely to bring additional flows of approximately $35 billion, while Saudi Aramco’s potential IPO will add as much as $50 billion in foreign inflows, depending on valuation.
“Saudi Arabia is a reform story on many levels,” said Bassel Khatoun, managing director, frontier and MENA, Franklin Templeton emerging markets equity.
“Bold fiscal reforms, including steps to reduce its reliance on oil, will put Saudi’s economy on a more sustainable footing over the long term.”
Khatoun added that “social reform continues unabated leading to new investment opportunities across the economy.”
“As a firm we are excited to be part of these positive developments,” he added. “Becoming Qualified Foreign Investors in the kingdom is an important step for us.”
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