Foreign investors have been increasingly snapping up Gulf stocks in recent years as countries in the region open their capital markets and continue to diversify their economies from oil revenues.

The Gulf Cooperation Council (GCC) has seen foreign equity inflows double to $60 billion by the end of 2024, compared to 2022, largely driven by regulatory changes that led to the inclusion of GCC states in the MSCI Emerging Market Index, according to Franklin Templeton Emerging Markets Equity (FTEME).

The market capitalisation of GCC markets has also grown four-fold to $4.2 trillion, while turnover has doubled to $690 billion, thanks to increased foreign participation in the region’s stock markets.

Four out of the six countries in the GCC have been included in the MSCI emerging market index, with Oman potentially joining in 2027. The inclusion has been facilitated by GCC reforms, as well as eased foreign ownership and upgraded financial infrastructure.

“Increased foreign participation in the region’s equity markets has contributed to higher turnover and liquidity in the region’s equity markets,” Franklin Templeton noted.

“Since Saudi Arabia was admitted to the [index], the market capitalisation of GCC markets has increased four-fold.”

The region has also become more attractive to foreign investors due to its declining equity risk premium (ERP), which has dropped from 6.6% in 2016 to 2.4% in March 2025. This indicates a lower perceived risk for investors, according to Franklin Templeton.

“Despite global uncertainties, the GCC region offers a unique combination of economic diversification, ambitious infrastructure investment programs and dynamic financial reforms that create a compelling investment landscape,” said Salah Shamma, Head of Investment and Portfolio Manager, MENA Equities at Franklin Templeton.

During the first quarter of 2025, foreigners invested a net amount of $2.8 billion in stocks across the GCC, according to Kamco Invest. Among the indices in the region, Abu Dhabi saw the highest inflows, with total net buying estimated at $2.3 billion.

(Writing by Cleofe Maceda; editing by Seban Scaria) seban.scaria@lseg.com