ALBAWABA – Investors pulled a record amount of money from the United States (US) equity funds tracking Saudi stocks in October in the wake of the surprise Gaza attack and the ongoing Israeli onslaught on Gaza.
According to Bloomberg, the violence, which erupted on October 7, is the worst the region has seen in decades. More so, it undermines the business-friendly narrative Middle East countries have been promoting for years.
The iShares MSCI Saudi Arabia ETF saw record net outflows in October of more than $200 million, London Stock Exchange Group (LSEG) data shows.
The index fell 20 percent since the beginning of the month.
Exchange-traded funds (ETFs) providing exposure to stocks in Qatar, the United Arab Emirates (UAE) and Israel also suffered outflows, Bloomberg reported. Investors worried about instability are pulling out and flows have been muted so far in November.
Saudi stocks have taken a tumble in october, down 20 percent - Shutterstock
"Capital flight can be quite indiscriminate," Torbjorn Soltvedt, principal analyst for the Middle East and North Africa with Verisk Maplecroft, told Bloomberg.
"It's not necessarily 100 percent 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 (QAT.O) lost $7.7 million in funds in October, while the iShares MSCI UAE ETF (UAE.O) also losing 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 October 7.
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.
