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Tadawul Joins Global Emerging Markets Indices

Tadawul Joins Global Emerging Markets Indices

Tuesday, 19 March, 2019 - 11:00
An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia June 29, 2016. (File Photo: Reuters)

Saudi Stock Exchange Tadawul commenced Monday its inclusion into the FTSE Russell and S&P Dow Jones Indices, both leading providers of global equity indexes.

Investment inflows resulting from index inclusion will further enhance liquidity and trading in the Saudi market, which is already among the most liquid of emerging markets worldwide, and further diversify opportunities for issuers and investors.

Observers believe the recent economic reforms will enhance the local financial market.

Commenting on the inclusion into the FTSE Russell and S&P Emerging Market indices, Tawadul CEO, Khalid al-Hussan, indicated that 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.

Inclusion of Saudi Arabia into the FTSE Russell Emerging Markets index will occur in five tranches over the next 12 months. The first tranche of 25 percent will be split over March and April 2019, 10 percent and 15 percent respectively to ensure a smooth transition. The remaining 75 percent will be implemented in conjunction with quarterly reviews in June 2019, September 2019 and March 2020.

CEO of FTSE Russell Waqas Samad asserted that Saudi Arabia's promotion to Emerging market status within FTSE Russell's global equity benchmarks is a significant achievement.

“The Capital Market Authority (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.”

Inclusion of Saudi Arabia into the S&P Dow Jones Emerging Market Indices commenced with the first of two phases, with the second phase to be completed in September 2019.

The Kingdom is eligible for inclusion at 50 percent of float-adjusted market capitalization (FMC) and at 100 percent of FMC on September 23, 2019.

Upon the completion of the first phase, CEO at S&P Dow Jones Indices Alex Matturri considered Saudi Arabia's recent move in “our country classification to emerging market from stand-alone is a result of ongoing consultation with market participants.”

Matturri added that this reflects the strong consensus among members of the global investment community and recent positive market structure reforms that support foreign investment in the country.

Over the past two years, capital market reforms and enhancements paved the way for index inclusion and reflect Tadawul's continued commitment to enhancing the effectiveness of the Saudi capital market. This fosters an attractive investment environment for local and international investors and align its regulatory frameworks with international best practices.

Tadawul is determined to become an active player in global capital markets as a source of capital and an investment destination, building on its current role as the regional hub leading capital market development in the GCC and the wider MENA region.

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