Investors pull record sums from Saudi in Middle East fund flight
By Libby George and Bansari Mayur Kamdar
LONDON (Reuters) -Foreign investors pulled a record amount of money from U.S. equity funds tracking Saudi Arabia in October as the Middle East's worst violence in decades shook the region's business-friendly narrative.
The iShares MSCI Saudi Arabia ETF saw record net outflows in October of more than $200 million, LSEG data shows, cutting 20% from what it held at the beginning of the month.
Exchange traded funds (ETFs) providing exposure to stocks in Qatar, the UAE and Israel also suffered outflows, with investors worried about instability, and flows have been muted this month.
«Capital flight can be quite indiscriminate,» said Torbjorn Soltvedt, principal analyst for the Middle East and North Africa with Verisk (NASDAQ:VRSK) Maplecroft.
«It's not necessarily 100% based on the fundamentals for each country. And so obviously, right now, there's a perception that risks are increasing throughout the region. And we're seeing a negative impact as a result of that,» he added.
The iShares MSCI Qatar ETF lost $7.7 million in funds in October, while the iShares MSCI UAE ETF suffered outflows of $2.75 million.
Exchange-traded funds tracking Israel such as the iShares MSCI Israel ETF, ARK Israel Innovative Technology ETF and BlueStar Israel Technology have seen net outflows between $2.5 million and $9.3 million since Oct 7 attack by Hamas militants.
The outflows from ETFs tracking Gulf countries far outpace those from most emerging markets in the same period, while outflows from Israel are also above average.
Israel's war with Hamas is the second time Israeli markets have faced turmoil this year after the earlier fallout from the government's judicial reforms ramped up pressure on them.
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