Saudi Arabia was the top destination for foreign equity inflows among emerging markets so far this year, beating out Asian giants China and India to attract $18 billion, according to the Institute for International Finance.

The report by the Washington-based association came as Saudi Arabia’s stock exchange, the Tadawul, reached full integration in the MSCI Emerging Markets Index.

“Supported by the #MSCI upgrade, #SaudiArabia has attracted $18 billion in foreign equity inflows so far this year,” the IIF tweeted. 

The Tadawul beat out economic powerhouses India and China, a feat the IIF called “remarkable given that Saudi Arabia’s economy is just a fraction of the size.”

Economist David Butter cautioned, however, that the preference for Saudi Arabia is more a reflection of caution over Beijing, currently in a trade war with the Trump administration, and Delhi.

“That is mainly a function of the MSCI inclusion and a reflection of poor market sentiment for China and India. Saudi equities are not that liquid,” Butter told Asia Times. 

A Bloomberg report on Wednesday found investors are tending to favor “safer asset classes”, such as Saudi bonds, as opposed to higher-yield debt, such as Lebanon’s, whose credit rating was last week downgraded to CCC by Fitch.

“The spread on monthly returns for the Bloomberg Barclays Emerging Markets Investment Grade Index and its high-yield counterpart has widened to more than 6 percentage points in August,” it said.

Bloomberg further pointed out this was the biggest disparity observed between the two indices since October 2008, following the implosion of Lehman Brothers.

“A strong dollar going into a global slowdown and over-indebted emerging markets with no domestic stimulus capabilities equals party over,” a London-based fixed-income analyst told Asia Times on condition of anonymity.

“More Argentinas and Lebanons coming,” he added.

Also read: Lebanon lacks ‘credible’ plan to tackle debt: Fitch