Saudi bourse optimistic on getting FTSE tag

Tadawul chair’s remarks come before the inclusion on the emerging market index

The head of Saudi Arabia’s stock exchange says she’s “very optimistic” that FTSE Russell will decide to add the kingdom to its list of emerging markets, a decision that could draw billions of dollars in passive funds to the country.

“The feedback we have heard from investors is positive,” Sarah Al Suhaimi, chairwoman of the bourse, known as Tadawul, said in an interview in New York on Tuesday. “They had certain concerns and we have addressed most of them, so generally we’re optimistic.”

FTSE Russell was expected to announce a decision on whether it will include Saudi Arabia on its list of emerging markets countries yesterday, after markets close in the US. The Tadawul All Share Index has risen close to 10 per cent this year, partially supported by bets that FTSE will grant the country the tag and that MSCI Inc will follow suit in June. EFG-Hermes Holding estimates inflows of about $15 billion (Dh55 billion) if the addition by both index compilers comes to pass.

Saudi officials are trying to attract more foreign investment to the once closed-off kingdom as part of Prince Mohammed Bin Salman’s plan to diversify the world’s largest crude exporter away from oil. The 32-year-old heir to the throne is on a threeweek tour of the US.

So far, foreign interest in the Saudi stock market has been limited. Since the stock exchange opened up to direct foreign investment in 2015, investment from qualified foreign investors and through swaps has risen to about 1.5 per cent of the market capitalisation, Al Suhaimi said. A positive decision from FTSE could draw about $3 billion of investment to Saudi Arabia, she estimated. It would have a potential weight of 2.4 per cent in the index.