The Saudi stock market is expected to start joining the emerging global indices as of the second quarter of 2018. Britain's FTSE is expected to announce within three months the listing of the Saudi stock market among the list of global emerging markets indices.
The Saudi stock market is facing a new phase of economic openness to the whole world. This comes after the FTSE index put the Saudi market index within its circle of interest, meaning that, as of the second quarter of this year, Saudi stock market index may become at the top of the list of emerging market indices in global indices.
At the end of September, FTSE Russell said Saudi Arabia will soon meet criteria to be promoted from unclassified status to a secondary emerging market. During the International Market Review, FTSE said it would assess the upgrade of the Saudi market in March 2018.
This coincides after global index compiler MSCI said it would consider upgrading Saudi Arabia to emerging market status, the largest index in the world. MSCI will announce its decision in June 2018, and any move to upgrade would take effect in two phases - in May and August 2019
On Tuesday, the Saudi stock market ended transactions with a slight decline of 0.3 percent, closing at 7,172 points, a loss of only 22 points, amid trading worth $1.1 billion.
In light of these developments, the Saudi Stock Exchange Tadawul released data last month showing an increase in the purchasing liquidity of companies and investment funds. The figures show that the net purchase of shares by local companies last month reached $1.36 billion.
This increase in cash flow to the Saudi stock market reflects the positive extent of change in the balance of investment in the local capital market.
Saudi Arabia has taken a number of important steps towards developing the financial market and increasing its chances of being included in the global market indices. It recently decided to ease restrictions on foreign capital and to apply international accounting standards to companies' lists.
Saudi Arabia also made other important decisions to remain level with global markets. This was achieved through the launch of the parallel stock market "Nomw", which relates to the shares of SMEs, and the cancellation of listing companies whose losses exceeded 50 percent of the capital.
The Saudi Capital Market Authority (CMA) is working closely with individual investors and investment funds in the local market. The authority put forward its new draft resolutions and regulations to a vote by investors.
In this regard, the development program of the financial sector, announced by Saudi Arabia as part of Vision 2030, has become an important step towards the development of the local capital market and placing it among the top 10 financial markets in the world.