The first tranche of Saudi Arabia’s inclusion in the FTSE Russel and S&P DJI Emerging Markets indices begins today.
The Kingdom will be the largest recent inclusion in the global indices, the biggest of which is the MSCI Emerging Markets Index, which it joins from May.
Also read: Here's a look at how Tadawul prepared for MSCI inclusion
FTSE Russel said Tadawul’s inclusion in the emerging markets index will take place in five tranches over the course of 12 months, starting today.
Saudi Arabia is estimated to have an index weight of 0.25 percent in the FTSE Global Equity Index Series, and 2.7 percent in the FTSE Emerging All Cap Index. The country's inclusion in the global indices this week is expected to attract $20 billion in passive inflows.
"The inclusion into these pre-eminent indices is a testament to growing investor confidence in the Saudi market and 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," said Khalid Al Hussan, CEO of Tadawul.
"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," he added.
|
FTSE Inclusion Stages |
|||||
|
Tranches |
1st tranche |
2nd tranche |
3rd tranche |
4th tranche |
5th tranche |
|
2018 |
|||||
|
Review date |
March 2019 |
April 2019 |
June 2019 |
September 2019 |
March 2020 |
|
Tranche size |
10 % |
15 % |
25 % |
25 % |
25 % |
|
Total |
10 % |
25 % |
50 % |
75 % |
100 % |
The Kingdom’s Capital Market Authority (CMA) expects the inclusion to boost inflows from FTSE’s foreign institutional investors, who use the index to monitor and evaluate major assets under management.
“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, said Waqas Samad, CEO of FTSE Russell.
Last March, Mark Makepeace, FTSE Russell’s former CEO, said Tadawul’s inclusion in the index will make it the largest market in the Middle East, with $5.5 billion worth of inflows.
S&P DJI Inclusion
Tadawul’s upgrade to the emerging markets on S&P DJI will take place in two tranches: the first will begin today and will be a 50 percent tranche; the second will take place in September 2019, and will be the full inclusion.
S&P DJI will add the first tranche of eligible Saudi shares to its S&P Global BMI, S&P/IFCI Composite, Dow Jones Islamic Market World Index, S&P Global BMI Shariah, Dow Jones Global Index and S&P Property Index.
On completion of the first phase, Alex Matturri, CEO at S&P Dow Jones Indices, commented: “Saudi Arabia’s recent move in our country classification to emerging market from stand-alone is a result of an ongoing consultation with market participants.”
“It reflects the strong consensus among members of the global investment community and recent positive market structure reforms that support foreign investment in the country,” he added.
S&P previously estimated Saudi Arabia could ultimately have a 2.57 percent weighting in its emerging benchmark index, and a 0.28 percent weighting in its global index.
|
S&P DJI Inclusion Stages |
||
|
Tranches |
1st tranche |
2nd tranche |
|
Inclusion date |
March 18, 2019 |
Sept. 23, 2019 |
|
Market Size |
50% |
100% |
Comments
{{DisplayName}}
{{ElapsedTime}}