Tadawul inclusion into MSCI, FTSE Indices hinges on investor community, says El-Kuwaiz

The addition of the Saudi Stock Exchange (Tadawul) to the MSCI Emerging Market Index and FTSE Russell Index depends on the global index providers, whose decision hinges on the investor community, Mohammed A. El-Kuwaiz, chairman of the Saudi market regulator, the Capital Market Authority (CMA), told Argaam on the sidelines of the PIF’s Future Investment Initiative (FII).

“The investor community is concerned about the structural issues related to the market—whether regulatory or pertaining to infrastructure—and the foreign investors’ interest in the market,” he said.

As for FTSE’s country classification review in March, El-Kuwaiz said Saudi Arabia will meet the requirements for inclusion as a secondary emerging market from early 2018 when further enhancements to the Independent Custody Model (ICM) are scheduled to be introduced.

Last September, FTSE Russell did not add Saudi Arabia to its index of emerging market countries amid its September country classification annual review, data compiled by Argaam showed.

As for the IPO of Saudi Arabian Oil Co. (Saudi Aramco), El-Kuwaiz stressed that the Tadawul is ready for the offering, adding that the CMA has inspected its legislative, technical and operating regimes, including the instructions of the book-building process, which were modified in line with the potential offering.

The potential IPO will be referred to the regulatory authorities as well as the CMA for approval.