S&P Dow Jones to classify Saudi Arabia as emerging market
Index compiler S&P Dow Jones Indices will change the status of Saudi Arabia’s bourse from a stand-alone market to an emerging market, following similar moves from MSCI and FTSE.
In a statement S&P DJI said it will add Saudi stocks with a 50 percent weighting on its global index in March 2019.
In September 2019, the weightings will adjusted to 100 percent.
The statement added that the move is “in response to positive structure reforms to support foreign investment and a strong consensus among members of the investment community.”
In March, FTSE Russell announced it would upgrade the kingdom to an emerging market, which was followed by a similar MSCI announcement in June.
According to UBS Global Wealth Management’s chief investment office, the MSCI inclusion should translate into $10 billion from passive and $35 billion from active investments, compared to $5 billion in inflows stemming from the FTSE inclusion.
In a statement, UBS noted that potential IPOs and an increased quota for foreign investor holdings might trigger additional inflows in coming months, with the market supported by fundamentals including higher energy prices and an ongoing recovery of corporate earnings.