State Street says war delaying Gulf investment decisions

• ‘No indication’ of market direction
• Investors keep Gulf allocations
• State Street playing ‘long game’

The US-Iran war and wider market volatility are prompting investors to delay some decisions on Gulf assets but international institutions are keeping the region in their portfolios, the regional investment chief at US bank State Street has said.

“It’s really challenging to be making bold investment decisions — in many cases in new asset classes — against that kind of volatility and uncertainty backdrop,” State Street Investment Management’s head of Middle East, Africa and official institutions, Emmanuel Laurina, told AGBI.

“There’s really no indication of where the market is likely to go.”

Investors from the region had been looking beyond their home markets in previous years, with Gulf family offices, endowments and foundations showing greater interest in global asset allocations, Laurina said.

That trend continued into 2026, but geopolitical uncertainty has prompted some to hold cash that might otherwise have been deployed through portfolio rebalancing.

“We’ve seen this across pretty much all our client types, including institutional clients as well,” he said.

State Street has not, however, seen international clients withdraw from the Gulf or Middle East.

“The vast majority of our investors would typically include Gulf and Mena markets as part of their emerging market allocations,” Laurina said.

State Street manages more than $6 trillion globally. It established its Middle East and North Africa headquarters in Riyadh last year and plans to start local custody operations in Saudi Arabia.

It has announced a new UAE base in Al Ain, where 300 financial services jobs will be created in the next four years under a deal with Abu Dhabi Investment Office.

“We’re opening up our operating centre starting end of next year,” said Jack Keshishian, State Street’s head of Middle East and North Africa, at the Al Ain Future Business Forum earlier this month.

Saudi Arabia’s stock market has grown into the largest in the Arab world, with capitalisation of about $2.5 trillion, while assets under management in the country’s capital markets passed SAR1 trillion ($267 billion) last year.

In April, the Saudi Public Investment Fund anchored State Street’s Saudi Arabia Enhanced Active Equity UCITS exchange-traded fund, designed to give European investors access to Saudi stocks. The move followed the launch of State Street’s Saudi government and quasi-government bond ETF in 2025.

Laurina said the Saudi bond product had attracted interest from international investors, particularly in Europe, because it offered diversification and a yield pickup relative to US Treasuries without sacrificing investment-grade quality.

“It’s not just a fund,” he said of the investment approach, adding that State Street was playing “the long game”.

State Street is also seeing growing demand from Gulf investors for international assets. Laurina said China and Asia more broadly, as well as private markets, had been prominent areas of interest among Middle Eastern pension funds, sovereign wealth funds and other large investors.

At the same time, he said there was little evidence that regional investors were reducing their appetite for US assets.

“I don’t feel like clients are having cold feet about deploying capital,” Laurina said. “The political will is there and we are reconfirming that across the board with all our clients.”

State Street says its regional strategy extends beyond asset management into custody, data and other investment services.

Laurina said the company expects to continue expanding in the Gulf, despite the uncertainty: “We have pretty big ambitions for this region.”

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