Saudi market regulator expects MSCI inclusion by late 2018

Saudi Arabia is expected to be actually included in the US-based MSCI Emerging Market index by the end of 2018, said Mohammed El-Kuwaiz, vice chairman of the board of the Capital Market Authority (CMA).

He said as a result of the Kingdom’s economic reforms and the actions taken to develop the stock market, MSCI has shown keen interest in upgrading, according to a report in ‎Asharq Al-Awsat newspaper.

After implementing the T+2 settlement cycle the Kingdom has completed most of MSCI’s requirements, he added.

“Launching Nomu Parallel Market and delisting firms with accumulated losses of 50 percent or more, have revived the market and led to a 38 percent year-on-year profit increase in Q1 2017 among Saudi-listed companies,” El-Kuwaiz said.

MSCI is set to decide on Tuesday whether to include Saudi Arabia on its watch list for potential reclassification as an emerging market. Once that that step is taken, the index provider will receive reviews from MSCI-listed international investment firms on the local market situation.

While this phase usually takes between two to three years, the fast pace of the Kingdom’s reforms indicates a more optimistic time-line, El-Kuwaiz said.

The third and final steps, which would extend up to 12 months, would give portfolio managers a chance to gradually amend their portfolios.