Fourth Quarter | 2023

A decade ago the Gulf was not in the MSCI EM Index. By the end of 2023 it carried a 7.4% weight, and over the past three years the region raised more capital through IPOs than South Korea or India. We believe Gulf companies remain underrepresented all the same. This year-end commentary examines the four drivers that should lift the region's weight: more listings, gradually rising free floats, higher foreign ownership limits, and South Korea's eventual upgrade to developed market status. We then look in depth at Dubai, where recent state-owned listings were heavily oversubscribed but floated too little to warrant index inclusion or real liquidity, and at Saudi, where secondary stake sales of listed companies have proved harder than many expected. We would like to see Gulf governments list larger free floats at IPO, even at slightly lower valuations, and raise foreign ownership limits sooner rather than later. Timing these decisions around oil prices or valuations is a forecast no one makes reliably.