When investors think of the Middle-East, almost all of them think oil. While oil still makes up the majority of the region’s income, there has been a recent push to diversify its revenue sources.
According to Bloomberg, Saudi Arabia is exploring this by allowing foreigners to invest in small-cap IPO’s on its stock market. This is a huge step for what has been one of the world’s most singularly focused economies.
The stock that has garnered the most interest is Aramco, the state owned oil giant that has access to one of the largest proven oil sources in the world. Reuters reports that the company will be selling a portion of its shares to the public:
Amin Nasser, chief executive of Saudi Aramco, has repeatedly said that there will be a dual-listing — one in Saudi Arabia and a second on in an international market. He has also said that this remains on track for 2018.
Aside from the country’s lucrative oil stocks, investors are excited about new initiatives that are being undertaken.
Over the last few days, Saudi Arabia has also announced a $500 billion plan to build an area for business and industry connecting with Jordan and Egypt, during the Future Investment Initiative conference — also known as the “Davos in the desert.” – via Reuters
This diversification has the potential to completely reshape the economic makeup of the region as well as the global oil trade. The Kingdom seems like it is positioning itself to capitalise on its petro-dollars and convert them into other assets in a similar vein to Abu-Dhabi.
Investors should be excited about this new opportunity because it will open a brand new door into one of the world’s most closed off regions. While the market may be limited at the moment, the Saudis will likely expand this initiative going forward.
To read Bloomberg’s article on Saudi Arabia opening its markets, click here.
To read Reuters’ article on Saudi Arabia’s diversification, click here.
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