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Saudi Arabia ETF Jumps on Strong Earnings, ‘Future Investment Initiative’

This article was originally published on ETFTrends.com.

Saudi Arabia country-specific exchange traded funds were among the best performers Thursday, paring some of the latest political risk-off selling, after the kingdom posted strong corporate earnings and investor sentiment improved on the prospects of increased investments in the emerging economy.

On Thursday, the iShares MSCI Saudi Arabia Capped ETF (KSA) gained 5.5%, and the ETF was testing both its short- and long-term resistance at the 50- and 200-day simple moving averages. Investors can also take a look at the recently launched Franklin FTSE Saudi Arabia ETF (FLSA) for a cheap way to access the Saudi Arabia market.

Despite the lingering negative perception surrounding the killing of Saudi dissident Jamal Khashoggi, the government announced $56 billion in deals at at an investment conference and expected the U.S. to remain a key business partner despite the partial boycott of the event over the Saudi journalist, Reuters reports.

“The crown prince’s message at FII (Future Investment Initiative) was more on the positive side and there is improved sentiment in the market on the back of that, and there has been a lot more retail money coming in, which shows the public is supportive,” Nadi Barghouti, head of asset management at Emirates Investment Bank, told Reuters.

Over two dozen top officials and executives from the U.S. and Europe, including U.S. Treasury Secretary Steven Mnuchin and chief executives of big banks, refrained from the investment conference over the killing of Khashoggi inside a Saudi consulate.

Political Fallout

Saudi Arabia's equity market was hit over the uncertainty from a potential fallout and blow to Riyadh's reputation, with potential sanctions on the line, in response to Khashoggi affair.

Nevertheless, Saudi Energy Minister Khalid Al-Falih reassured observers that ties to the West remain intact.

"The U.S. will remain a key part of the Saudi economy because the interests that tie us are bigger than what is being weakened by the failed boycotting campaign of the conference," Al-Falih told state television.

Further supporting the market rebound Thursday, corporate earnings showed a vibrant economy. Al Rajhi Bank reported a 13.6% rise in third-quarter profit, which was in line with analyst estimates. Arab National Bank also revealed third-quarter profit rose 14.7% due to lower operating expenses.

For more information on the developing economies, visit our emerging markets category.

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