Gulf markets urged to cut investment barriers

MUSCAT, NOV 14
Gulf capital markets need closer regulatory cooperation, more shares available for trading and stronger investor access to turn regional wealth into deeper investment pools, exchange executives and financial specialists told a forum in Muscat.
Differences in market rules, concentrated ownership and obstacles to holding and settling securities continued to complicate cross-border investment despite progress in listings and market infrastructure, speakers at the U Capital Investment Dialogue 2027 said.
Mansoor Malik, Founder and Senior Partner at Al Busaidy, Mansoor Jamal & Co, said international institutions faced the cost and complexity of navigating six separate GCC markets, each with its own requirements.
Those differences extended across offerings, prospectuses, disclosure, corporate governance, settlement and takeovers, he said. “A GCC passport regime and a mutual recognition of prospectuses and licences would materially increase cross-border investments,” Malik said.
He also identified foreign ownership restrictions, investor eligibility requirements and approvals for substantial holdings as barriers requiring attention.
Market access alone was insufficient if investors continued to face restrictions on the size of their holdings or uncertainty over custody, settlement and shareholder rights, he said.
Abdullah bin Salem al Salmi, Executive President of Oman’s Financial Services Authority, said regional integration remained important, although earlier efforts to unify legislation had encountered the difficulty of accommodating six different systems.
“GCC markets need to get together,” he said. “We need to have some sort of integration.” Passporting mechanisms could help institutions operate across borders, he said, while greater sector diversity would make exchanges more representative of their underlying economies.
Al Salmi also called for capital markets to play a larger role in financing long-term investment across the region, broadening funding sources beyond the banking system.
Hamed Ali, Chief Executive Officer of Dubai Financial Market, said Dubai’s experience showed that quality listings and consistent regulation could attract international participation.
He told the forum that investors from outside the UAE accounted for 51 per cent of trading activity on the exchange, while approximately 75 per cent of new investors came from overseas.
Ali said expanding the investor base was important because relying primarily on domestic participants meant competing for a limited pool of liquidity.
Companies considering a flotation also needed time to prepare their governance, investment proposition and engagement with prospective shareholders.
“Companies need to be ready when they’re coming into the market,” he said.
Ali said exchanges should examine the amount of stock available for public trading and ensure IPO pricing took account of subsequent market performance. Strong initial demand did not guarantee that an aggressive valuation would prove sustainable.
Haitham bin Salem al Salmi, Chief Executive Officer of the Muscat Stock Exchange, said regional cooperation could also support product development and help turn market-making activity into broader investor participation.
“Bringing ETFs, derivatives and other products can really help the markets,” he said.
Improving visibility and removing practical obstacles to investor access were priorities alongside liquidity, he said. A wider range of instruments could give participants additional ways to invest and manage portfolios.
Chirag Shah, Senior Executive Advisor at the International Financial Centre of Oman, said the expansion of Gulf financial centres could create additional channels for international capital rather than simply redistribute existing business.
Established centres had helped connect the region with investors and financial services demand in Africa, South Asia and Central Asia, he said.
For asset managers, confidence in legal and regulatory arrangements came before financial incentives. “The first important thing is trust in the system,” Shah said.
Clear licensing, access to skilled employees and efficient business procedures could then help firms establish and expand operations, he said.
Malik said deeper liquidity would also require attention to concentrated holdings, limited free float and legal certainty around securities lending, collateral and insolvency protection, allowing institutions to enter, manage and exit investments efficiently.