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MSCI upgrades Saudi Tadawul to emerging market status

MSCI upgrades Saudi Tadawul to emerging market status
The inclusion of Tadawul in MSCI’s EM index will be implemented in two phases

Riyadh – Mubasher: The global index compiler MSCI has announced upgrading the Saudi Stock Exchange (Tadawul) to an emerging market (EM) status, from standalone market in its annual review.

The inclusion of Tadawul in MSCI’s EM index will be implemented in two phases. The first will be in May 2019 with the semi-annual index review, while the second will coincide with the August 2019 Quarterly Index Review, MSCI said in a statement late on Wednesday.

“The inclusion of Saudi stocks in the MSCI Emerging Markets (EM) Index will facilitate investors’ accessibility to the local stock market and will attract foreign investments into Saudi Arabia. International asset owners managing passive investment strategies in the emerging market space will see their investment universe broadened. $1.9 trillion in assets are currently benchmarked to the MSCI Emerging Markets Index suite,” vice president and senior credit officer at Moody’s Investors Service Vanessa Robert said.

“MSCI will include the MSCI Saudi Arabia Index in the MSCI Emerging Markets Index, representing on a pro forma basis a weight of approximately 2.6% of the index with 32 securities," the leading provider of global equity indexes added.

The upgrade decision will provide various base of investors, in addition to boosting the liquidity of the Saudi capital market, the Capital Market Authority’s (CMA) chairman Mohammed El-Kuwaiz said. The CMA “will continue to further develop the Saudi Capital Market to ensure that the market facilitates investments, promotes confidence and protects investor and market participants,” he noted.

CEO of Tadawul Khalid Al Hussan said that the inclusion in the MSCI Emerging Market Index is a key step and highlights "the tremendous progress" that the Saudi bourse has made over the last year to broaden investor access to the Saudi capital market.

“By supporting the inclusion of Saudi Arabia and Argentina in Emerging Markets, international institutional investors confirmed that they are now able and ready to access and operate in these markets,” Sebastien Lieblich, MSCI Managing Director and Global Head of Equity Solutions, noted.