Saudi upgrade to EM from S&P Dow Jones Indices MARKETS
Global equities index provider S&P Dow Jones Indices will change the status of Saudi Arabia’s $530 billion equity market, the biggest in the Arabian Gulf, to an emerging market next year.
S&P DJI took the decision to upgrade Saudi Arabia’s standalone status “in response to recent positive market structure reforms to support foreign investment and a strong consensus among members of the investment community”, it said.
The classification change will become effective in two phases: from the beginning of March 2019, the quarterly rebalancing of S&P DJI and the second in the annual reconstitution of indexes in September 2019, the index provider said.
S&P Dow Jones Indices is the third index complier to elevate the Saudi market to emerging market status. These upgrades are expected to bring tens of billions of dollars of investment to Saudi equities from global money managers that track these gauges.
FTSE Russell in March this year upgraded Saudi Arabia after the kingdom introduced a series of reforms to develop its capital markets in line with its Vision 2030 economic diversification strategy.
MSCI last month also followed
suit with a similar move that will pave the way for an estimated $40 billion of additional flows to the Saudi stock exchange, known as Tadawul.
The MSCI inclusion will take place in two phases, in May and August next year. The index compiler has given Saudi stocks a representative weighting on a pro forma basis of about 2.6 per cent of its emerging market index, with 32 securities included in the gauge.
The potential listing of a 5 per cent stake in Saudi Aramco, the world’s biggest oil producer, in 2019 would further cement the Middle East’s international profile, raising the kingdom’s weighting to “up to 4.4 per cent”, Sebastien Lieblich, the MSCI’s managing director and global head of equity solutions, told The National last month.
Saudi Arabia has been making key steps to clinch the