Index provider MSCI announced on Monday (13 May) that it will include the MSCI Saudi Arabia and MSCI Argentina indexes in its wider emerging markets index.
Some 30 Saudi Arabian securities and eight Argentinian stocks will be added to the index as of the close on 28 May, in a move that is likely to draw billions into these stocks.
The inclusion of the Saudi Arabian securities will represent an aggregate weight of 1.42% in the MSCI Emerging Markets index, with the Argentinian securities will make up 0.26% of the index on aggregate.
The three largest additions to the MSCI Emerging Markets index each come from the Saudi Arabian market, with AI Rejhi Banking and Investment Corporation, Saudi Telecom Company and Saudi Basic Industries Corporation all being added to the index.
At the same time, MSCI confirmed plans to increase the weighting of Chinese A-shares in the index, adding 26 new securities, 18 of which will be ChiNext stocks.
Additionally, the inclusion factor for 238 existing constituents will be increased from 0.05 to 0.10. China A-shares will have an aggregate weight of 1.76% in the emerging markets index, and 5.25% of the aggregate weight of MSCI China.
This weight increase of China A-shares will be implemented through a three-step process: the FIF-adjusted market capitalisation of the A-share will be increased to 0.15 as part of the August 2019 Quarterly Index Review, then increased to 0.20, while the inclusion of mid-cap China A-shares is the final step taking place as part of the November 2019 Semi-Annual Index Review.
As part of the reshuffle, the MSCI All Country World index will see 122 securities added and 41 deleted, the three largest additions originating from Germany and the USA: Knorr-Bremse (Germany), Snap A (USA) and Twilio A (USA).
This article was first published by Investment Week, a sister title to International Investment