The Gulf region stands as the most “ambitious” economic reform stories globally as it continues to distinguish itself in a world where many emerging markets face significant headwinds, a senior executive at Templeton Investments said.
Senior Managing Director, Portfolio Manager, and Director of Research at Templeton Investments, Bassel Khatoun’s comments came in an interview with Arabian Business on the sidelines of the Future Investment Initiative (FII) in Riyadh on Tuesday.
He highlighted the unique position of the Gulf states in implementing comprehensive structural changes amid a challenging global economic landscape, including Saudi Arabia’s economic blueprint, Vision 2030.
“If you think about it, really, from a broad global landscape today, we’re seeing global growth is fairly sluggish. We’re seeing emerging markets being mixed bags,” Khatoun told Arabian Business.
”There’s a few areas of the world today where you can look at and say there’s an embedded structural, multi-year structural growth story.”
The transformation encompasses multiple dimensions, he noted. “The stories are folding in many different ways. But there’s economic reform, there’s capital markets reform, and there’s social reform, and for investors like us, that’s unlocking tremendous opportunities.”
Gulf markets show stability
Despite regional geopolitical tensions, investment risks in Gulf markets remain well-contained, with key markets maintaining stability.
“At the moment, the risks have been contained. The key markets that we invest in in the Gulf are Saudi Arabia resident GCC,” Khatoun explained.
He added that while broader risks exist, particularly regarding potential disruptions to oil supply, markets continue to operate orderly with support from OPEC and OPEC+.
This stability is reflected in current market performance, with Khatoun noting, “If you look at equity market performance here today, it’s flat. Bond markets are behaving very sensibly. And at this stage, the risk is very contained.”
In Saudi Arabia, ambitious tourism initiatives form a crucial part of the economic transformation.
“They’re targeting 100 million people by 2030, 10 per cent of GDP, 37 million visitors,” Khatoun revealed.
This creates numerous investment opportunities across various sectors, including “hospitality assets, car rental companies, entertainment companies, and again, bringing other forms of tourism, including sports tourism and personalities and exhibition.”
The consumer sector has emerged as another significant growth driver, benefiting from fundamental demographic and social changes.
“Here in Saudi, disposable income is up. You’ve got new women participation in the workforce, which is increasing the number of employees in the workforce,” Khatoun explained. These changes are creating new consumer patterns and business opportunities, including in previously underdeveloped sectors like fitness and entertainment.
The entertainment sector has shown particularly strong performance, with Khatoun highlighting a 35 per cent revenue increase in the first nine months of the year.
“These domestically driven stories create a reform agenda that supports government policy, is aligned with it, are backed by very young demographics that’s increasing in purchasing power,” he noted.
What sets the region apart, according to Khatoun, is its unique combination of financial strength and growth potential.
“This region stands out because it has both the economic means, through very limited debt, lots of reserves to fund these plans. So it’s got this resilience, in case the global economy takes a turn for the worse, but at the same time, it’s got this growth story as well, which is very exciting for emerging markets investors and quite rare in a mutual growth environment,” he added.
The transformation is creating new investment avenues that didn’t previously exist.
“Some of the areas that they’ve unlocked are areas that didn’t used to exist for us,” Khatoun said, pointing to new sectors emerging from the reform agenda.
These changes are particularly significant given the challenging conditions in other emerging markets, with Khatoun comparing the Gulf’s position favourably to markets like China, which is currently grappling with “lower consumption, real estate problems that they’re only starting to address now.”
Follow us on
