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Tadawul to attract $5 billion in second phase of MSCI upgrade

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Saudi Arabia’s stock market, worth approximately $549 billion, is the largest in the region and it will have a weight of 2.8 per cent on the MSCI index.

Thursday 29, August 2019

The Institute of International Finance (IIF) said that after the full inclusion on the MSCI emerging markets Index (EM Index), the Tadawul is expected to attract an additional $5 billion in equity inflows.

The IIF stated that investor appetite for Saudi equities spiked in August and foreign equity inflows to the Kingdom surpassed those of India and China during first eight months of this year, a remarkable development given that Saudi Arabia’s economy is just a fraction of the size of the two other countries.

Garbis Iradian, the IIF’s Chief Economist for MENA, said, “In the absence of major domestic and external shocks and further deterioration in emerging market (EM) investment sentiment, Saudi Arabia can count on additional equity inflows from active investors whose portfolios are benchmarked to the MSCI EM index.”

The Chief Executive of Tadawul expects ownership of equities by foreigners to triple by 2022, driven by flows from index trackers, as the country awaits the listing of Saudi Aramco.

The IIF said that after a positive performance in the first quarter of this year, renewed US-China trade tensions sparked a sharp decline in equity flows to most emerging markets.

The Kingdom received more than $4.5 billion in foreign equity inflows in May and $2 billion in the first three weeks of August 2019, becoming the top equity investment destination among emerging markets, said IIF.

TAGS : MSCI EM Index, Tadawul, emerging market , Saudi Aramco, US-China Trade tension

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