UAE Leads GCC in Foreign Capital

The UAE led the region with foreign capital net inflows of US$680.4 million in May, rebounding from the previous month that saw the country follow a GCC-wide negative trend, stemming from escalating tensions in the Middle East and the challenging global economic climate, including higher interest rates.

In a turnaround from April’s net outflow of US$48.6 million, the growth gave a boost to UAE’s year-to-date inflow chart with the country recording US$1.67 billion in total foreign capital contributions, according to figures released by the Dubai-based management consultants and financial advisors Iridium.

Abu Dhabi took the lead in net foreign capital inflows with US$686 million recorded in May, up from -US$19 million in April, while Dubai maintained its net outflows of -US$30 million from the previous month.

In year-to-date figures, Abu Dhabi maintained its pole position with US$1.344 billion in net inflows, with Dubai coming in second in the region at US$323 million.

Saudi Arabia followed behind Dubai with US$224 million in net inflows year-to-date, reflecting its resilience despite intermittent outflows, the report said. In contrast, Kuwait and Qatar had mixed performances, with Kuwait posting net inflows of US$190 million, while Qatar experienced net outflows amounting to -US$125 million.

In May 2024, the GCC equity markets recorded a positive trend in foreign capital flows, with a net inflow of US$616.7 million. The four GCC Emerging Markets combined (Kuwait, Qatar, Saudi Arabia, and the UAE), recorded a higher net inflow of US$636.2 million.

Last month, Iridium stated GCC equity markets have shown significant volatility in foreign capital flows over the previous three quarters due to geopolitical instability. After observing major inflows in mid-2023, the markets encountered steep outflows in subsequent months, especially in October, following the onset of the Israel-Gaza war, with December 2023 recording Israel’s push into Gaza and again in April when ceasefire talks failed.