Weekly Insights - The Gulf Advantage: Capital, Confidence and Long-Term Positioning

Global and regional investors remain focused on the Middle East as macro developments, strategic policy actions, and institutional positioning reinforce the region’s growing prominence in global capital allocation strategies. This week’s edition covers fresh moves by a major US asset manager into the Gulf, Saudi Arabia’s economic performance across multiple indicators, industrial policy shifts, foreign reserve dynamics, central bank monetary policy decisions, and global growth forecasts.

Guggenheim Eyes Broader Gulf Expansion

US-based Guggenheim Investments, which manages approximately USD 357 billion in assets, is actively considering establishing a new office in Riyadh as part of its Gulf expansion strategy. The firm also confirmed that the licensing process for an Abu Dhabi office is already underway. Guggenheim’s Chief Investment Officer Anne Walsh told Reuters that the firm intends to deploy more capital across the region with a focus on infrastructure, transportation, and artificial intelligence and technology opportunities. The firm already operates from an existing Dubai International Financial Centre office. These moves reflect intensifying interest from global asset managers in direct regional presence to capitalise on emerging investment windows and deepen client engagement across the Gulf.

Saudi Economic Momentum and Structural Indicators

Recent official data highlight a continuation of robust economic activity in the KSA. Real GDP expanded by 4.8% YoY in the third quarter of 2025, supported by both oil and non-oil sector growth. Oil activities grew 8.3% while non-oil activities grew 4.3%, underscoring the ongoing diversification momentum. Seasonal adjustments show sequential quarterly growth in oil, government, and non-oil segments.

Industrial production continues to support this narrative, with the Industrial Production Index increasing 8.9% in October compared with the same month last year. The broad rise in mining and quarrying, manufacturing, utilities, and key sub-sectors reflects strength under Vision 2030 objectives to grow industrial capacity and diversify productive output.

Deposit dynamics within the Saudi banking system also signal underlying liquidity and confidence. Total deposits reached SAR 2.9 trillion by October 2025, up SAR ~189 billion YoY, with the growth driven predominantly by time and savings deposits held by companies, individuals, and government entities. Demand deposits declined modestly, reflecting shifts in portfolio preferences. These deposit trends illustrate a growing base of stored financial assets while marking evolving behaviors in domestic financial intermediation.

Foreign reserve assets in Saudi Arabia expanded meaningfully in November, rising around 4.9% MoM to SAR 1.74 trillion according to preliminary data from the Saudi central bank (Sama). Foreign currency reserves, accounting for the majority of international assets, also saw a strong increase.

Global Growth and Technology as a Structural Driver

From a global macro perspective, Deutsche Bank’s Capital Markets Outlook projects that artificial intelligence will be the core engine of global economic growth in 2026 even as geopolitical tensions and policy uncertainty persist. AI-linked investment is expected to remain a structural driver, anchored by continued technology spending in the United States and China. The bank highlighted the importance of diversification across asset classes including private equity, infrastructure, and private credit. It also noted risks from potential overinvestment in AI, energy supply constraints, and rising state intervention through subsidies and export controls.

Deutsche Bank anticipates broad earnings expansion across regions, with equity markets such as the S&P 500 and Eurostoxx 50 expected to finish 2026 higher, and strategic sectors beyond Big Tech gaining prominence including industrials, energy suppliers, and data center construction. A reallocation toward income from interest over capital gains may also emerge given evolving yield conditions in sovereign bond markets.

Monetary Policy Alignment and Market Response

Monetary policy developments also captured market attention this week. The Saudi central bank cut interest rates by 25bps, lowering the repo rate to 4.25% and the reverse repo rate to 3.75%. This was in line with the US Federal Reserve’s rate decision, whereby it lowered the target for its key lending rate to a range of 3.5% to 3.75%, the lowest since 2022. The Federal Reserve’s decision marked its third rate cut this year and included new guidance suggesting the next policy move remains uncertain given mixed economic signals on inflation and labor market strength. Following the announcements, equity markets rallied and bond yields declined, underscoring the sensitivity of financial markets to shifts in monetary conditions.

Closing Thoughts

Saudi Arabia’s continued integration into global investment flows and its policy focus on performance tied incentives reflect an evolving landscape where competitiveness is increasingly linked to technological adoption and productivity gains. At the same time, global drivers such as AI and diversified asset strategies underscore the value of forward-looking investment frameworks that balance opportunity with risk management.

Sources

• Guggenheim’s Gulf expansion including Riyadh consideration and Abu Dhabi licensing: Gulf Business

• Saudi Arabia’s GDP growth and its sector composition in Q3 2025: Saudi GASTAT

• Industrial production growth of 8.9% in October: Arab News PK

• Saudi banking sector deposit growth: SAMA

• Saudi foreign reserve increase: SAMA

• Deutsche Bank’s outlook positioning AI as a structural growth driver: Deutsche Bank

• Saudi central bank’s rate cut synchronized with the US Federal Reserve: Saudigazette

• Market reaction to the Federal Reserve policy: Reuters