Foreign ownership of Saudi stocks to reach 10%

March 18, 2019
Khalid Al-Hussan
Khalid Al-Hussan

Saudi Gazette report

Riyadh —
Saudi Arabia’s listed companies could see holdings by foreign investors rise to 10 percent when shares are included in index providers MSCI and FTSE’s emerging markets indices, the chief executive of Tadawul told Reuters on Monday.

Khalid Al-Hussan said he expected equities on the Saudi bourse, Tadawul, to attract $5 billion of passive funds inflows after the FTSE Russell inclusion. Foreign investors currently hold 5.9 percent of Saudi shares.

Saudi shares, which have gained 9.6 percent so far this year, on Monday joined the FTSE Emerging All Cap Index with a weighting of 2.9 percent. In May, Saudi shares will join the MSCI Emerging Markets Index.

The number of qualified foreign investors is expected to double from the current 730 prior to the MSCI inclusion, Al-Hussan told Reuters.

The Saudi main equities index rose 0.2 percent at the opening on Monday.

Al-Hussan said the inclusion of Saudi Stock Exchange (Tadawul) into the FTSE Russell and S&P Emerging Market indices is a testament to growing investor confidence in the Saudi market.

Monday marked the commencement of the first phase of Saudi Stock Exchange’s inclusion into the FTSE Russell and S&P Dow Jones Indices (S&P DJI), both leading providers of global equity indexes.

The inclusion into the FTSE Russell Emerging Markets (EM) index will occur in five tranches over the next 12 months, the first of which was completed on Mobday.

The inclusion into the S&P Dow Jones Emerging Market Indices’ (DJI) Global Benchmark Indices (BMI) commenced on Monday with the first of two phases. The second phase will be completed in September 2019.

Al-Hussan said the inclusion into these pre-eminent indices reflects the successful implementation of far-ranging capital market reforms in line with the Financial Sector Development Program (FSDP) and Vision 2030 that have further enhanced the accessibility of Tadawul to international investors.

“We look forward to welcoming the constituent participants who will invest in these indices, and to building a long term relationship as the Saudi capital market continues to consolidate its leading position in the Middle East and the broader region as a whole.”

Waqas Samad, CEO of FTSE Russell, said, “Saudi Arabia’s promotion to Emerging market status within FTSE Russell’s global equity benchmarks is a significant achievement. The CMA and Tadawul have long been committed to improving Saudi Arabia’s capital markets infrastructure and today marks a culmination of their efforts to meet the rigorous requirements for inclusion.”

Alex Matturri, CEO at S&P Dow Jones Indices, said, “Saudi Arabia’s recent move in our country classification to emerging market from stand-alone reflects the strong consensus among members of the global investment community and recent positive market structure reforms that support foreign investment in the country.”

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