The Saudi Stock Exchange (Tadawul) has completed Saudi Arabia’s full inclusion into the MSCI Emerging Markets Index with the successful implementation of the second and final tranche of index inclusion.

It brings the kingdom’s weighting to 2.8 per cent of the index’s total market capitalisation, said a statement.

A total of 31 Tadawul-listed companies are included in the MSCI Emerging Markets Index, it said.

As Saudi Arabia is phased into the leading emerging market and global indices over the course of 2019, Tadawul trading data shows record buying of Saudi shares by foreign investors from around the world.

In 2019, through July 31, trading activities of foreign investors, including QFIs, totalled in $56 billion, representing 21 per cent of total market trading activities.

Khalid Al Hussan, chief executive officer of Tadawul, said: “Full inclusion in the MSCI Emerging Market Index represents an important milestone in advancing the Saudi capital market and further opening Tadawul to international investors, in accordance with the goals of the Financial Sector Development Program (FSDP) and Vision 2030.”

“Execution of index inclusion has been smooth and flawless, reflecting the success of the many market enhancements implemented by Tadawul to strengthen market infrastructure and align its regulatory and market frameworks with international best practices,” he said.

“At the same time, we are seeing significant investment inflows from foreign institutional investors, further supporting liquidity in what is already one of the most liquid emerging markets in the world, and expanding and diversifying opportunities for issuers and investors alike,” he added.

Henry Fernandez, chairman and CEO, MSCI, said: “The decision to include Saudi Arabia in the MSCI Emerging Markets Index was taken in consultation with international institutional investors.”

“It followed a number of regulatory and operational enhancements in the Saudi Arabian equity market that effectively improved market access for such investors and we are pleased the implementation of the two-step inclusion process, starting in May of this year, has been completed,” he said.

MSCI added Saudi Arabia to its Watch List in June 2017 and the kingdom was upgraded from Standalone Market to Emerging Market in June 2018, marking the fastest progression from Watch List to Emerging Market status of any market in the history of the index.

Saudi stocks were phased into the index in two tranches with a 50 per cent inclusion factor for each, where the implementation of the first tranche took place in May 28, and implementation of the second tranche occurred in August 28, it stated. – TradeArabia News Service