BSF Capital outlines likely Saudi index changes in MSCI review

BSF Capital expects Makkah Construction stock to be downgraded from the MSCI Saudi Arabia Standard Index to the Small Cap Index during the November 2026 periodic index review.

However, United International Holding Co. (Tasheel) and Bawan face a high probability of exclusion from the Small Cap Index. Elsewhere, solutions stock remains a medium-probability candidate for inclusion, BSF Capital said in a recent report.

The changes will take effect on Dec. 1, 2026.

The research firm explained that the expected downgrade of Makkah Construction is due to its total market capitalization reaching $3.56 billion as of October 29, 2026, standing 13% below the estimated $4.11 billion cutoff required to retain Standard Index inclusion.

The potential downgrade is likely to trigger outflows of SAR 796 million from emerging markets funds, albeit partially offset by inflows of approximately SAR 292 million from small-cap funds, it added.

BSF Capital added that there is a very low probability of a downgrade for ADES stock, as its free-float-adjusted market capitalization stands at $1.55 billion, topping the $1.38 billion retention threshold. If downgraded, it would trigger about SAR 715 million in outflows from emerging markets funds, partially offset by inflows of around SAR 263 million from small-cap funds.

The likelihood of Petro Rabigh being included in the Standard Index is very low, following its exclusion from the Small Cap Index in August 2026. Its free-float-adjusted market capitalization of $1.98 billion stands almost 5% below the $2.07 billion Standard Index entry threshold. Inclusion would attract around SAR 913 million in passive inflows.

BSF Capital expects Tasheel and Bawan to be excluded from the Small Cap Index with a high probability, while the likelihood of Arabian Cement exclusion is considered low.

It noted that Tasheel's market capitalization stood at $410 million, compared to $430 million for Bawan, placing them 17% and 13% below the Small Cap retention cap, respectively. Arabian Cement's market capitalization hit $480 million, dipping slightly below the retention threshold during the final days of the data selection window.

The research firm estimated that the resulting investment outflows from the exclusion of these companies would be limited, at approximately $9 million to $11 million each.

BSF Capital expects solutions to be included in the Small Cap Index with a medium probability, following a decline in its total market capitalization to $5.86 billion, below the estimated $6.16 billion threshold for the Standard Index.

It added that the company's free-float-adjusted market capitalization stood at $1.1 billion, above the threshold required for inclusion in the Small Cap Index. The expected inclusion could generate investment inflows of approximately SAR 187 million.

BSF Capital estimates that executing all high- and medium-probability changes could result in net foreign investment outflows of approximately SAR 386 million.

BSF Capital - MSCI Saudi Arabia Standard Index