New Saudi stocks added to MSCI said to attract $5 billion inflows: IIF

A second batch of Saudi Arabian shares were added to the MSCI emerging markets index on Wednesday, and are expected to attract an additional $5 billion in equity inflows, according to the Institute of International Finance (IIF).

This second batch of shares will bring the weight of Saudi equities in the MSCI index to 2.8 percent.

The country’s stocks were first included in the index earlier this year in May.

Since its inclusion in the MSCI and FTSE indexes the Kingdom has seen billions of dollars of investment flow into the Tadawul, the Saudi Stock Exchange.

Foreign investor ownership has increased dramatically throughout the year. Despite general emerging markets sell-off, Saudi equities have spiked in 2019 as $18 billion in foreign equity inflows – demonstrating the increased exposure foreign investors have given to Saudi equities in the lead up to the upgrade, according to a report issued by the IIF.

In an interview with Al Arabiya, Khalid al-Hussan, the CEO of the Tadawul said that the stock market had exceeded eight percent in foreign equity.

He added that there is an additional 10 to 12 billion riyals ($2.67 to $3.2 billion) additional passive inflows expected to enter the Kingdom as it increases its share of the FTSE emerging index. This will result in foreign ownership reaching around 10 percent, he said.

Saudi’s sovereign wealth fund, the Public Investment Fund (PIF), the 11th largest in the world, remains the biggest investor in the Kingdom’s stock market.

Since the start of 2019, Saudi Arabia’s benchmark index, the Tadawul All Share Index, is up 4.81 percent.

The index, however, was down 1.38 percent by the close of trading Wednesday.