FTSE to announce decision on Saudi's upgrade to EM status today

Index provider FTSE Russell will announce today its decision about upgrading Saudi Arabia to the emerging market (EM) index after US market close (at 11:00 PM Local Time).

In case the index compiler denies the Kingdom’s entry to the EM list, the decision will be delayed to the next assessment next September.  

FTSE Russell had refrained from including Saudi Arabia in its index of emerging market countries in its September 2017 country classification annual review, Argaam reported.

The index compiler lauded the pace of the recent market reforms, describing them as positive, and anticipated that Saudi Arabia would meet the requirements for inclusion as a secondary emerging market from early 2018 when further changes to the independent custody model (ICM) are introduced.

Last October, FTSE launched Saudi Arabia Inclusion Index Series, which comprises 79 firms, including heavyweight Saudi Basic Industries Corp (SABIC), Saudi Telecom Co., Al Rajhi Bank, and state-owned utility Saudi Electricity Co.

The expected upgrade should bring in $23.29 billion worth of investments to the Saudi market, Alistithmar Capital said, adding that the Saudi market would have a potential weight of 2.67 percent in the index.

The index would also include 51 Saudi-listed firms, mainly SABIC with a potential weight of 0.46 percent and Al Rajhi Bank (027 percent), it added.

NCB Capital said Tadawul’s upgrade is likely to attract SAR 11.25 billion in cash flows in the medium term, expecting FTSE index to include 45 Saudi-listed firms.