A New Frontier for Equity Investors: The Middle East Transformation

Investors in emerging-market equities haven’t typically paid much attention to the Middle East. It’s time to take a closer look.

Many global equity investors have historically held limited positions in Middle Eastern countries, which barely registered in emerging market (EM) benchmarks. But new investment opportunities are drawing attention as transformation of the region accelerates.

Since the global pandemic ended, rising oil prices have flooded the Middle East with cash. From a low of less than $20 per barrel in 2020 to a peak of over $120 per barrel in 2022, oil revenues have boomed. But this has also raised questions about how long the region’s dependence on fossil fuel income can continue.

In fact, the Middle East is already actively moving away from its reliance on hydrocarbons. Led by Saudi Arabia and the United Arab Emirates (UAE), this transformation has included strategic initiatives and investor-friendly reforms that offer potentially meaningful opportunities for equity investors.