Coinciding with Saudi Arabia’s inclusion in the FTSE Russell Emerging All Cap Index, a Deutsche Bank-hosted webinar looked at how the country’s securities market has evolved in the lead-up to this upgrade
Implementation of dynamic regulatory reforms and the fervent adoption of consequential market liberalisation programmes inside Saudi Arabia have persuaded leading index providers – whose benchmarks are watched by global active and passive investment firms – to reclassify the country as an emerging market. On 14 March 2019, the first tranche of Saudi Arabian securities was added to the FTSE Russell Emerging All Cap Index 1. Another four tranches will now follow over the next 12 months eventually leading to full inclusion, and giving Saudi Arabia an index weighting of 2.86% on the FTSE emerging markets benchmark.
Other leading equity index providers including MSCI and the S&P Dow Jones have also confirmed Saudi Arabia will be added to their benchmarks too. The decision by these indices to include Saudi Arabia, a country with a stock market capitalisation in excess of US$536bn2 and whose bourse – the Tadawul – is the largest in the Gulf Co-operation Council (GCC) is an exciting development for global asset managers who are on the hunt for yield and diversification.
At present, international (i.e. non-GCC) investors own only 5.1% of the market, up from the 4.7% when benchmark inclusion had not yet been announced 3. However, asset managers are confident this will rapidly change.
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