Hi Spot; A new dawn for Saudi market, scepticism on Dubai.

Hi Spot; A new dawn for Saudi market, scepticism on Dubai.

Saudi Arabia announces plans to open its course to foreigners leading experts to expect a bullish response from investors.

Following last month’s news that the Tadawul exchange will open up to direct foreign investment, more than two thirds of leading investors have expressed their interest in increasing their stakes in the $550 billion valued STOCK MARKET, a Reuters survey has found.

Although there has been no official indication, the move is set to pave the way for Saudi Arabia’s inclusion in the MSCI EMERGING MARKETS index.

Speaking to AMEInfo’s sister publication TRENDS, head of Mena Equities, Bassel Khatoun, explained: 

“Entry into the MSCI EM index would likely boost TRADING volumes, enhance market liquidity and potentially bring down transaction costs through improved scale effects.”

The benefits to the Saudi economy will be vast, as the government attempts to revamp its non-oil industries. 

Namely, the introduction of foreign investors is also likely to accelerate M&A activity, as its private sector will be monitored more closely. 

Anum Saleem of the Eversheds Saudi Arabia office says 

“this will bode well for the Saudi private sector as their BUSINESS VALUATIONS are likely to increase serving as an impetus to entrepreneurship and employment opportunities for the local population.”

Moreover, according to Mena Equities, 

“such measures are likely to lead to an increase in initial public offerings (IPOs), thus leading to a much-needed deepening of the equity market in the region and improved sentiment from global investors.”

While sentiments and investor confidence in the region may well boom with this development, concerns have been raised that companies and shareholders from around the GCC may redirect much of their capital to Riyadh.

According to the Reuters survey, INVESTMENT MANAGERS have responded bearishly to the UAE’s market forecast, with only seven per cent willing to increase their equity allocations and 47 per cent expected to slow down their UAE activity. 

Citing overheated prices and inadequate regulation, particularly brought to light throughout Arabtec’s market roller coaster in previous months, the opening of Tadawul to foreign investors may redefine the appeal of the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX).

In saying this, experts remain adamant that there will be no mass outflow of funds from other GCC MARKETS into the Tadawul. Instead, new capital will be created. Moreover, with development giants Damac and Emaar’s retail branch, Emaar Malls, expected to be listed on the DFM in the coming weeks, with a total market capitalisation of $12.5 billion, Dubai’s market is also set for an exciting H2.

Saudi hospitality sector unveiled.

Hi Saudi hospitality sector worth $18.1bn by 2016;

A rise in the number of pilgrims visiting the Kingdom for Hajj and Umrah, are boosting domestic tourism growth, with Saudi residents making 22.5 million overnight trips per annum. Tourism receipts for Hajj and Umrah currently account for around 3% of GDP and, according to tourism officials, the country gained a reported $16.5bn from tourism in 2012, representing a 10% increase on the previous year.

The largest hospitality market in the GCC, Saudi Arabia also accounts for the bulk of international tourist arrivals, at 46% according to an October 2012 GCC Hospitality Industry Report from Alpen Capital, representing a 50% year-on-year increase against 2011 figures.

"The Kingdom is investing heavily in it's infrastructure as expansion plans for the new $7bn Jeddah airport project move ahead, with the airport projecting annual passenger volume of up to 80 million passengers within the next two decades," said Mark Walsh, Portfolio Director, Reed Travel Exhibitions, organizer of Arabian Travel Market.

The Red Sea port of Jeddah is the gateway to Makkah and Medina, a favored destination for domestic tourism in the summer, as well as a commercial trading hub for the west coast of Saudi Arabia.

In addition, Riyadh the capital city and seat of the government, is also experiencing increased demand from business travelers. Saudi government investment into key infrastructure projects including airport expansion, railways and roads, is pegged at around $80bn between now and 2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9%.

According to the Alpen report, tourist arrivals are expected to grow at a CAGR of 4.0% between 2012 and 2022, driven by strong growth across all sectors, with occupancies set to jump from 67.5% in 2011 to 74.2% by 2016 and a US$30 increases in ADR to US$258.4.

"In tandem demand for hotel rooms means that aggressive development and expansion plans for a number of major international hotel groups is also on the short-term agenda. InterContinental Hotels Group has said that Saudi Arabia is one of the markets representing the most opportunity for its Middle East business to grow in 2013, with two new properties set to open in Riyadh this year, and a total of eight hotels by 2018," said Walsh.

Hotel room supply in the Kingdom is expected to increase at a CAGR of 1.5% between 2011 and 2016, increasing from 243,117 rooms in 2011 to 262,049 in 2016, with 69 properties currently in the planning or construction phase.

"The tourism sector is now the country's second largest industry, with around 8% of total jobs, and industry growth presents a huge opportunity for job creation in the local market, with Takamul [an SCTA affiliate] organizing a number of job fairs around the country and working hand in hand with tourism companies to attract young Saudis looking to embark on a career in hospitality," added Walsh.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its 20th anniversary, the show has grown to become the largest showcase of its kind in the region and one of the biggest in the world.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its 20th anniversary, the show has grown to become the largest showcase of its kind in the region and one of the biggest in the world.

New to the 2013 event, ATM is launching the Digital and Technology Day focusing on online travel developments and showcasing headline speakers from across the industry. 

Taking place again this year is the New Frontiers Award, which was created to recognise outstanding contributions to tourism development in the face of overwhelming adversity. 

Industry Careers Day will wrap up the week providing the opportunity for visitors looking to make a career move to meet with the exhibitors' HR contacts looking for their next recruit.