After a slow start to the year, private capital inflows to EMs are projected to subside to $981 billion this year, which would be the weakest outcome since the global financial crisis. In part, the weakness in flows projected for 2015 reflects developments that have already occurred as capital inflows are estimated to have reached a six-year low in 2015Q1 in the context of weak EM GDP growth. We project a pickup in flows in 2016, but stress downside risks related to the possibility of more aggressive Fed tightening and continued stagnation in global growth.
The decision to publish regulations governing direct ownership of shares listed on the stockmarket, Tadawul, by Qualified Foreign Financial Institutions marks an important step to open the Saudi economy to foreign equity investors. A growing allocation to Saudi stocks by global investors could translate to significant inflows within a few years if the country is eventually included in major benchmarks such as the MSCI emerging market index. Allowing ownership of shares by QFIs is intended to reduce market volatility, increase efficiency and transparency, and, ultimately, support economic growth.
On May 29, the IIF SAG submitted its response letter to the Exposure Draft issued by the IASB to defer the effective date of IFRS 15 and to the Exposure Draft issued by the FASB to defer the effective date of Revenues from Contract with Customers.