Inclusion of Saudi equities in MSCI EM Index positive for asset managers

Tadawul/Bloomberg

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Moody’s said that about $30-$40 billion will flow into the Saudi stock market.

Wednesday 12, June 2019 BY MUZORIWA KUDAKWASHE

Moody’s said that the inclusion of Saudi equities in the MSCI EM Index will deepen the liquidity and trading volume of the stocks in the index and is likely to attract a growing number of foreign investors, a credit positive for Saudi asset managers such as NCB Capital, Jadwa Asset Management as well as managers involved in cross-border products.

The move is expected to increase foreign-investor ownership in the Saudi equity market, which was around five per cent of total market capitalisation as of April 2019, well behind that of its GCC neighbor, who are already part of the MSCI EM Index.

“Saudi equities' inclusion in the MSCI EM Index will facilitate investors’ accessibility to the local stock market and we expect more international institutional investor participation in the onshore, largely retail-driven market,” said Moody’s.

The ratings agency expects asset managers that build strategies around the Saudi market to increase their assets under management and international asset owners managing passive investment strategies in the emerging market sector to diversifying their assets.

The Saudi equities will be added into the MSCI EM Index in a two-step process to reach a weight of 2.6 per cent at the end of August 2019 from 1.4 per cent initially.

MSCI included Saudi Arabia equities in its MSCI Emerging Markets index on 28 May.

 

TAGS : Moody’s , Saudi equities, MSCI EM Index , NCB Capital, Jadwa Asset Management

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