Riyadh – Mubasher: The Saudi Stock Exchange (Tadawul) has attracted $10.8 billion in foreign equity investments on the back of joining the MSCI emerging markets (EM) index, the Institute of International Finance (IIF) said in a recent report.

“Foreign investors have significantly increased their exposure to Saudi equities” ahead of MSCI's upgrade, which began late May, the report said.

IIF noted that May was generally a poor month for EM equities, with total outflows of $14.7 billion.

Meanwhile, the GCC nation’s stock market saw $4.5 billion of inflows in the same month, Zawya reported.

“We expect Saudi Arabia to continue reaping the benefits of the capital markets reform and the inclusion in global indices,” the IIF said.

It added the Saudi Stock Exchange (Tadawul) will eventually be the eighth-largest component in MSCI's Emerging Markets index, with a total weighting of 2.7%.

Commenting on the valuations of Saudi stocks, IIF said that the kingdom's equities are currently “fair relative to historical levels, but they seem stretched on a P/E (price/earnings) basis” relative to other emerging markets.

Since the beginning of 2019, Tadawul has raised in value by 11.66%, Eikon data said.

From a technical perspective, Kamco Research said that “the current picture remains in favour of the bulls”, adding that hovering over the level of 9,100 points could see the market move sharply higher. However, Kamco warned that if it were to fall below 8,550, it could face further contraction pressures.