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The iShares MSCI Saudi Arabia ETF is an ETF that tracks the performance of the Saudi Arabian stock market. The ETF is heavily swayed by the financial exposures, which are benefiting structurally from the Vision 2030 plan underway in Saudi Arabia.

The iShares MSCI Saudi Arabia ETF offers global investors access to Saudi Arabia's equity market and its evolving economy. The drivers fueling the growth of Saudi Arabia's economy into 2024 and beyond are varied, demonstrating a comprehensive strategy aimed at strengthening and diversifying the economy. The valuation metrics of the ETF compared to those of a hypothetical U.S. ETF highlights potential undervaluation, making it an appealing investment option considering the market dynamics and growth opportunities.

The iShares MSCI Saudi Arabia ETF provides access to Saudi Arabian equities. Saudi Arabia's economy has some promising growth prospects built around its young population and diversification away from oil. However, the KSA ETF is heavily concentrated, with the top 10 holdings accounting for 56% of the portfolio and Financials accounting for 40% of the fund. With the KSA ETF trading at a 16.4x P/E, Saudi Arabian equities as represented by the KSA looks fairly priced.

iShares MSCI Saudi Arabia ETF is not as cost competitive as other alternatives in this space. Reduced crude production is likely to weigh heavily on the GDP landscape whilst non-oil metrics are slowing too. The lag effects of higher cost of funding are likely to put pressure on the NIM trajectory of Saudi banks which comprise 40% of the portfolio.

Saudi Arabia should outperform other emerging markets this decade. However, oil needs to remain above $80/barrel. Equities trade at a premium to MSCI Emerging Markets.

The iShares MSCI Saudi Arabia ETF offers investors access to Saudi equities, a historically closed-off section of the emerging markets universe. With the Saudi government still in the early stages of its economic reforms, the runway for earnings growth and valuation upside remains extensive.

The Gulf Cooperation Council area has so far withstood global challenges, with year-on-year GDP growth accelerating to 6.9% in 2022, driven by high oil prices and stronger growth rates in non-oil sectors. Inflation rates in the Gulf Cooperation Council countries remain below the regional and global levels and are subsiding faster, expected to average about 2.7% in 2023, down from 3.2% in 2022.

KSA offers investors broad exposure to firms in Saudi Arabia. Saudi Arabia is currently relying less on oil production and higher oil prices than it has in previous years, focusing on transforming its economy.

KSA invests in Saudi Arabian equities. The fund offers a potential IRR of 8% on the lower end to as much as 11% on the higher end.

The iShares MSCI Saudi Arabia ETF provides single-country exposure with growth potential. Saudi Arabia has a long history of conflict with Iran which remains a key geopolitical risk for your investment.