AlJazira Capital: Saudi market emerging as global portfolio core

Jassim Al-Jubran, Head of Research at AlJazira Capital

Jassim Al-Jubran, Head of Research at AlJazira Capital, said recent regulatory amendments allowing full foreign ownership in the Saudi market represent a structural shift that will support liquidity and enhance the market’s standing within emerging market indices.
 

He added that the Saudi market is on track to become a core component of modern global investment portfolios.
 

Speaking at the Investment Conference 2026 in Kuwait, Al-Jubran noted that this move paves the way for a new phase involving higher foreign ownership limits, which—if approved in the coming months—could attract institutional inflows estimated at $10–15 billion.
 

He explained that these changes have already begun to reshape the market structure, with foreign and institutional investors’ share rising to 55% in 2025, compared to just 9% four years earlier.
 

Al-Jubran added that narrowing the foreign ownership gap compared to markets such as South Korea and Taiwan not only represents an opportunity for additional capital inflows, but also reflects growing global investor confidence in Saudi Arabia’s reform and economic diversification trajectory. This positions the Saudi market to become a key component of emerging-market portfolios in 2026 and beyond.
 

He noted that despite its size and status as the largest market in the Gulf, the Saudi market still carries a relatively modest weight of around 3.3% in the MSCI Emerging Markets Index, attributing this to previous restrictions on foreign ownership. He expects this weighting to rise gradually in the coming years following the recent changes.
 

Al-Jubran pointed out that while the Saudi benchmark index declined by 12.8%, the MSCI Emerging Markets Index recorded gains exceeding 34%, alongside broader global market gains driven by momentum in artificial intelligence and a slowdown in monetary tightening. He attributed this performance divergence to two main factors.
 

The first factor was the decline in oil prices due to excess supply, which pressured government revenues and negatively affected valuations of large, heavyweight index constituents linked to energy prices.
 

The second factor was tighter liquidity in the banking sector as a result of the lending boom associated with Vision 2030 projects. This widened the gap between SAIBOR and US interest rates to historic levels, prompting a shift of part of the liquidity toward alternative investment instruments and increasing pressure on highly leveraged stocks.
 

Despite these challenges, Al-Jubran stressed that the Saudi market is currently trading at a discount of around 15% to its historical average, representing an attractive long-term investment opportunity amid early signs of improvement in energy prices and banking liquidity.
 

On sectoral opportunities, Al-Jubran called for a thematic investment approach focused on sectors aligned with economic transformation. He highlighted that the construction sector is benefiting from projects valued at more than $350 billion, and the tourism sector is experiencing rapid growth with annual visitor numbers exceeding 122 million. He also pointed to rising opportunities in the pharmaceuticals and healthcare sectors, supported by privatization and the localization of 40% of pharmaceutical production.
 

As for the banking sector, Al-Jubran said despite liquidity-related challenges, it is trading at a discount of around 18% to its historical valuation average, making it attractive over the long term, particularly with an expected improvement in liquidity supported by higher oil production and sukuk issuances.
 

Al-Jubran said 2026 is not a year to question the case for investing in Saudi Arabia, but rather a year to focus on smart positioning within the market. With accelerating integration into global indices and a narrowing foreign ownership gap compared to other emerging markets, the Saudi market is moving toward becoming a cornerstone of modern global investment portfolios, benefiting from current valuation discounts and unprecedented reform momentum.
 

Discussing the economic outlook, Al-Jubran said that 2026 presents a fundamentally different landscape, with data pointing to strong economic fundamentals driven by progress in implementing Vision 2030 projects. This has raised the non-oil GDP contribution to 56% in 2025, compared to 45% in 2016.
 

He added that hosting major events such as Expo Riyadh 2030 and international sporting tournaments is boosting tourism, hospitality, retail, and infrastructure as key growth drivers.
 

Al-Jubran noted that public debt has declined to around 29% of GDP, providing Saudi Arabia with a significant safety buffer compared to the G20 average. He emphasized that economic diversification has reduced the impact of oil price volatility and helped shield the Kingdom from deeper economic crises.