• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Taxation
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Directory
  • Video
  • Advertise with us
  • Directory
  • Events
  • European Fund Selector
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Directory
  • Events
    • Upcoming events
      event logo
      International Investment Nordic Forum 2021

      International Investment is delighted to announce the 2021 International Investment Nordic Forum which will take place on Tuesday March 9, at 9am (GMT). This curated virtual event will be broadcast live and will feature a series of fund manager interviews and presentations, as well as interviews with some of the Nordic regions top fund selectors.

      • Date: 09 Mar 2021
      • ONLINE, ONLINE
      View all events
  • European Fund Selector
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Video
  • Equities

Saudi Arabia pushes into portfolio awareness

Saudi Arabia pushes into portfolio awareness
  • Jonathan Boyd
  • Jonathan Boyd
  • 21 June 2018
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

Saudi Arabia may have been dumped out of the World Cup, but the investment case for buying Saudi assets has taken a giant step forward with the news that it has been entered into the ubiquitous MSCI Emerging Markets index following the latest index review, generating generally positive reaction by investors around Europe and beyond.

MSCI said that the country will make up “approximately 2.6% of the index with 32 securities, following a two‐step inclusion process. The first inclusion step will coincide with the May 2019 semi‐annual index review. The second step will take place as part of the August 2019 quarterly index review.”

Related articles

  • New QFI rules, MSCI inclusion, Aramco IPO: what comes next for Saudi Arabia
  • Saudi Arabia's emergence out of index exclusion
  • MSCI, Tadawul to create tradeable index of Saudi equity market
  • MSCI, Tadawul to create tradeable index of Saudi equity market

Reacting to the review news, Dominic Bokor-Ingram, portfolio adviser, Fiera Capital, said: “Saudi Arabia is the largest, most liquid emerging market in the world with practically no foreign involvement to date. Saudi is only 2% owned by foreign investors with the next lowest emerging market, Qatar, being 10% owned and markets like Turkey being 65% foreign owned.”

“Saudi Arabia’s elevation to EM status will be welcomed by many investors as a new and undiscovered investment opportunity. The upgrade is hugely positive for the Saudi market and the future potential for Saudi companies to reduce their cost of capital further by having greater access to equity financing. The two key reforms mentioned in the initial review: increase in foreign access to the market particularly for international institutional investors, and expansion of the settlement cycle, have been in effect for over a year, with the focus of the consultation on implementation and effectiveness. The next major milestone in the Saudi reform and restructuring process is the 24 June this year when women will officially be able to drive for the first time.”

Bassel Khatoun, managing director, Frontier and MENA, Franklin Templeton Emerging Markets Equity, said: “Saudi Arabia is a reform story on many levels, and its upgrade to MSCI emerging market status is a huge win for its capital market. Since MSCI added Saudi to its watch list in June 2017 the kingdom’s Capital Markets Authority and Tadawul have continued to make substantial modifications to its equity market infrastructure and accessibility to ensure it met the criteria for this MSCI EM inclusion.”

“The positive decision will be extremely supportive in attracting more foreign investment. With $1.9trn of funds tracking MSCI’s EM index, the 2.6% that Saudi will initially command is likely to result in equity flows of approximately $40bn. The IPO of Saudi Aramco could also potentially add another $50bn of inflows into the market. Foreign investors’ portfolio holdings in the Tadawul currently account for a mere $9bn, making the level of potential inflows into Saudi Arabia quite unprecedented.”

“We anticipate that the bulk of new investment that will enter the Kingdom will come from other emerging market constituents, the largest of which are China, Korea and Taiwan. In our view, this is just the start of the journey in terms of deepening Saudi Arabia’s equity market. We also expect that foreign ownership levels will substantially increase, which at approximately 2%, significantly lag those of the UAE and Qatar (14% and 9% respectively). The prospects for more growth and foreign investment in Saudi Arabia are, in our view, substantial.”

“The next significant milestone in Saudi will be the much anticipated IPO of Saudi Aramco, an event that we believe will trigger more privatizations across the kingdom and set the standard for local corporate governance and transparency. While Saudi has already implemented reforms to align better with international standards, an Aramco listing on a deep, actively traded market will attract a broader range of global investors who will help further enhance corporate governance frameworks.”

“The kingdom has an exciting reform story to tell and the seat it has now secured at the MSCI emerging market table is just reward for the improvements made to its equity market infrastructure.”

Vanessa Robert, a vice president and senior credit officer at Moody’s Investors Service, said: “The inclusion of Saudi stocks in the MSCI Emerging Markets 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. USD1.9trn in assets are currently benchmarked to the MSCI Emerging Markets index suite.”

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • Equities
  • Equities
  • Emerging Markets
  • Equities
  • Initial public offering (IPO)
  • MSCI
  • Saudi Arabia
  • Rest of World

More on Equities

Comment: Navigating equity markets in the year ahead

  • Comment
  • 21 January 2021
M&G taps Value Partners for £500m Chinese equities mandate

  • Equities
  • 16 December 2020
Global equities tumble on covid-19 fears and US jitters

  • Equities
  • 27 October 2020
BMO Global AM launches sustainable equity fund in China

  • ESG
  • 25 August 2020
HSBC Singapore launches first AI-powered equity index structured note

  • Equities
  • 13 August 2020
Back to Top

Most read

More than 250,000 expats left Saudi Arabia in 3Q2020
More than 250,000 expats left Saudi Arabia in 3Q2020
FSCS warns industry of £1bn compensation bill
FSCS warns industry of £1bn compensation bill
Dubai regulator to develop cryptocurrency framework
Dubai regulator to develop cryptocurrency framework
Jersey Finance partners with Durrell trust to launch global rewilding fund
Jersey Finance partners with Durrell trust to launch global rewilding fund
Aegon UK partners HSBC Global AM to embed ESG across in-house default funds
Aegon UK partners HSBC Global AM to embed ESG across in-house default funds
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading