Why global finance is moving closer to the Gulf

RIYADH: Global financial institutions are rapidly expanding across the Gulf as market reforms and economic transformation programs reshape the region into one of the world's fastest-growing capital markets. The shift is particularly visible across Saudi Arabia and the UAE, with wave of regional headquarters, investment banking teams, asset management businesses and senior executives relocating to the region. In July, Deutsche Bank secured a regional headquarters license in Saudi Arabia, joining JPMorgan, Goldman Sachs, Morgan Stanley and others in expanding their presence in the Kingdom. The move comes as Saudi Arabia steps up efforts to position Riyadh as the Middle East's leading business hub through its Regional Headquarters Program, which requires foreign companies seeking government contracts to establish bases in the Kingdom. The investment case is becoming increasingly difficult to ignore. Foreign investors recorded $1.6 billion in net purchases on the Saudi Exchange during the second quarter of 2026, making it the only GCC market to post net foreign buying during the period, according to Kamco Invest. Structural reforms reshape the Gulf's financial landscape Executives and market specialists believe the Gulf's appeal today extends well beyond its sovereign wealth funds, reflecting years of structural reforms that have strengthened financial markets and improved the investment environment. 'The Gulf's attractiveness is increasingly institutional rather than merely financial,' Naman Sharma, partner at Kearney Middle East and Africa's financial services practice, told Arab News. He said deeper domestic capital markets, greater participation by sovereign investors, predictable tax regimes, regulatory reforms and stronger financial infrastructure have fundamentally changed how international financial institutions view the region. 'The Gulf is establishing itself as an important center of regional financial activity,' Sharma noted. Naman Sharma, partner at Kearney Middle East and Africa's financial services practice. The transformation is becoming increasingly evident in Saudi Arabia's capital markets. According to the Capital Market Authority, assets under management more than doubled from SR612 billion ($163 billion) in 2020 to SR1.244 trillion by the end of 2025, while listed companies rose 89 percent to 392 and foreign ownership doubled to SR417 billion. The UAE is experiencing similar momentum, with Abu Dhabi Global Market attracting 11 international financial institutions representing more than $9 trillion in assets, reinforcing its position as one of the region's fastest-growing financial centers. Global institutions expand beyond fundraising Industry leaders say one of the biggest changes is that international financial institutions no longer view the Gulf primarily as a destination to raise capital. Increasingly, they are building permanent operations, managing portfolios and developing investment products from within the region. 'The most important shift I observe… is that these countries are moving from being primarily a client and fundraising market for international financial institutions to becoming a place where they manufacture products, manage portfolios, operate regional businesses and deploy their own capital,' Sharma told Arab News. He pointed to firms including Franklin Templeton, BlackRock and Goldman Sachs expanding their operational presence in Saudi Arabia, arguing that Riyadh is increasingly becoming home to regional management, private wealth, portfolio construction and investment capabilities. The UAE is witnessing a similar evolution. Sharma said Dubai International Financial Center now hosts more than 1,000 regulated financial firms, over 500 wealth and asset management companies, and more than 100 hedge funds. Abu Dhabi Global Market is home to more than 170 asset and fund managers overseeing around 250 funds, while assets under management grew 36 percent during 2025. Financial firms build permanent regional teams The Gulf's transformation is also reshaping how global institutions recruit talent, with banks increasingly relocating experienced professionals into the region rather than serving clients from overseas offices. Nathan Ross Fox, head of investment management search at recruitment agency Aventus, said the change has accelerated significantly over the past five years. 'The talent conversation has changed,' Fox told Arab News. 'Previously we have seen our clients service the region through EMEA deal teams based in London or Paris, sometimes New York.' Nathan Ross Fox, head of investment management search at recruitment agency Aventus That model is now giving way to a much stronger local presence. 'To capture the best of this market, we have seen our clients want bankers who are on the ground in Riyadh, Dubai and Abu Dhabi every day, not just flying in for face-to-face pitches,' he said. Perhaps the clearest sign of changing perceptions, he added, is how international firms now classify the region. 'The Middle East isn't spoken about as an 'emerging market' anymore,' Fox said. 'It's now treated as a core growth market.' Diversified investment opportunities broaden the investment case While sovereign wealth funds remain among the world's most influential investors, experts say they are no longer the sole driver attracting Wall Street firms to the Gulf. Sharma said international financial institutions are increasingly drawn by expanding investment opportunities across logistics, power, utilities, artificial intelligence and digital infrastructure, alongside growing corporate financing requirements. He added that Saudi Arabia is also expected to generate increasing investment opportunities in manufacturing, mining and tourism as Vision 2030 projects continue to advance. Fox pointed to a similar trend, saying Saudi Arabia and the UAE are deploying significant capital into sectors such as technology, AI, infrastructure and energy with the objective of building entirely new industries rather than relying on traditional sources of economic growth. Ugur Injaz, CEO of Injaz Co.Consulting From regional market to global financial center For Ugur Injaz, CEO of Injaz Co.Consulting, the Gulf's growing importance reflects a structural shift in the global financial system rather than a temporary investment cycle. 'Five years ago, the Gulf, particularly Saudi Arabia and the UAE, was a destination for capital,' Injaz told Arab News. 'Today it is competing to be a source of it.' He argued that sovereign investors' increasing focus on direct co-investment, regulatory reforms and stronger deal flow have created a competitive urgency for international financial institutions to establish permanent operations in the region. 'We are witnessing a permanent operational migration,' he said. Injaz believes the region is not 'simply replicating' London or New York, saying: 'It is building a parallel financial architecture with its own logic.'