Arab shares hit high ahead of Saudi market opening to foreigners

Pan-Arab stocks reached their highest level since 2009 after Saudi Arabia confirmed its market will open up on June 15, says S&P

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Arab stock markets in April hit their highest level since 2009, buoyed by news that the Saudi stock exchange will open to foreign investors on June 15, according to S&P Dow Jones Indices.

Saudi Arabia last year signaled it plans to open its market to direct foreign investment from approved institutional investors.

It was confirmed last month that the market will open on June 15, prompting a rally in shares across the region, Tim Edwards, senior director of index investment strategy at S&P Dow Jones Indices said in a market commentary.

“The hope of increased liquidity and capital in the Arab world's largest stock market greatly cheered the region’s equities,” Edwards wrote.

The S&P Pan Arab Composite LargeMidCap index – which includes stocks from 11 Pan Arab markets, including Saudi Arabia – surged on the back of the news, he added.

“April’s 10.1% total return for the index was the highest for any month since the dark days of April 2009,” Edwards wrote.

Shares in the UAE were the best-performing, rising by 14.53 per cent in April, according to the index. Shares in Saudi Arabia were the next best performing, with a 14.19 per cent increase during the month.

All countries on the index rose with the exception of Egypt and Lebanon. “The Egyptian market was an exception; but the S&P Egypt BMI’s decline of 5% was likely due to the implementation of new regulations on capital gains and dividend taxation, opposed to any material change in outlook,” Edwards wrote.

The Tadawul – as the Saudi bourse is known – has a total value of around $532 billion, making it the Arab world's biggest stock market.

Foreign investors outside the Gulf Cooperation Council (GCC) are currently limited to buying Saudi shares indirectly through swaps or exchange-traded funds.

But in a move announced in July, large foreign investors will be permitted to invest in shares starting in the first half of this year.

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