MSCI implements periodic changes in Saudi market today

Changes will be implemented today during closing auction and Trade-at-Close sessions

The Saudi market will see MSCI implement its changes today, Aug. 31, following the periodic review of its indices announced on Aug. 13.

In line with the requirements of global index providers, the changes will be implemented today during the closing auction and Trade-at-Close sessions, which typically see significant trading activity in the value and volume of shares affected by the changes, as funds and portfolios tracking these indexes execute orders.

The index provider excluded Mouwasat Medical Services Co., Saudi Logistics Services Co. (SAL), Saudi Tadawul Group Holding Co., and Bank AlJazira from its MSCI Global Standard Index during its periodic review. However, they were added to the MSCI Small Cap Index. 

Meanwhile, Arabian Internet and Communications Services Co. (solutions) was removed from the global index.

Moreover, Advanced Building Industries Co. (SENAAT), Rabigh Refining and Petrochemical Co. (Petro Rabigh), Ataa Educational Co., Middle East Pharmaceutical Industries Co. (Avalon Pharma), Jadwa REIT Saudi Fund, Modern Mills Co. and Miahona Co. were removed from the MSCI Small Cap Index.

The number of companies listed on the MSCI Small Cap and MSCI Global Standard indices reached 81 and 29, respectively.

These changes are part of MSCI’s periodic reviews of its global indices to reflect changes in company sizes, liquidity, free-float ratios and the eligibility criteria applicable to the indices.

Global index reviews are closely watched by investors due to their potential impact on trading activity in affected stocks, particularly during the implementation session and closing auction, as funds and portfolios linked to these indexes rebalance their investment positions in line with the new changes.

Why Do Global Index Changes Matter?

Global index reviews typically affect trading activity in the shares concerned, particularly on the implementation date, as funds and portfolios tracking these indexes rebalance their investment positions in line with the new changes.

An addition to or deletion from an index does not necessarily reflect a change in a company’s fundamentals, as index providers base their decisions on criteria including market capitalization, liquidity, free-float ratios and the specific eligibility requirements of each index.

The trading impact of index reviews is typically concentrated on the implementation date, particularly during the closing auction and Trade-at-Close session, while the changes officially take effect within the indexes on the date specified by the index provider.