Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.

SAUDI STOCK EXCHANGE NAMED TO WATCH LIST FOR MSCI EMERGING MARKET INDEX

  • Addition to Watch List affirms positive impact of market reforms Tadawul and Saudi government have introduced as part of Vision 2030
  • The Exchange commits to continue strengthening the Saudi market as it eyes 2018 for potential Index inclusion 

The Saudi Stock Exchange (Tadawul) is pleased to announce today that it has been named by MSCI to the organization’s Emerging Market Index Watch List. The announcement comes on the heels of a series of market reforms that Tadawul and the Capital Market Authority (CMA) have undertaken as part of the Kingdom of Saudi Arabia’s Vision 2030 economic transformation program, which in part seeks to bring the Saudi market into alignment with its emerging and developed market peers and gain recognition for the country as an indexed emerging market.

“Saudi Arabia’s addition to the MSCI Watch List is an important milestone for Tadawul, and reflects the Kingdom’s significant progress in capital market reform in support of Vision 2030,” said Sarah Al Suhaimi, Chairperson of Tadawul. “Potential inclusion in MSCI’s Emerging Market Index signals to international investors that the country’s capital market has attained greater maturity in terms of efficiency, governance and regulatory framework.”

The Kingdom’s addition to the Watch List and anticipated inclusion in the MSCI Emerging Market Index will ultimately make Tadawul, its constituent listed companies and investors who trade on it, benefit from what is anticipated to be a greater allocation of weighting of global emerging market funds to the Exchange. Overall, growth in emerging markets globally is expected by the International Monetary Fund to improve for the second consecutive year, rising to a projected 4.5 percent in 2017, compared to 4 and 4.1 percent in 2015 and 2016 respectively.[1]

Over the past year, Tadawul has worked closely with Saudi government bodies and leading emerging market investors to introduce Vision 2030 capital market reforms, and these have in turn helped move the needle further on achieving Watch List status. Key reforms to date have, among others, included:

  • The introduction of T+2 settlement and securities borrowing and lending, which have significantly enhanced the ease of trading and created new opportunities for market participants.
  • Adoption this past January of the Global Industry Classification Standard (GICS) which enhances comparability of corporates across markets and enables easier analysis of sector performance.
  • A Delivery versus Payment Model (DvP) to comply with the principle of DvP, to provide an extra layer of trade execution security to investors that trade securities on Tadawul.
  • Adoption of new corporate governance rules issued by the Saudi Capital Market Authority (CMA) in February to enhance the rights of shareholders and board members and provide greater clarity and more transparency around determining commercial strategic planning, and roles, responsibilities and oversight of corporate entities and third parties.
  • Investor relations training for Tadawul’s 24 corporates with the most international exposure and liquidity to enhance transparency and disclosure and enhance investor relations capabilities within Saudi listed companies.
  • Enabling foreign participation in Saudi IPOs.
  • Introduction of Nomu, a parallel equity market for Qualified Investors that offers lighter listing requirements and serves as an alternative platform for companies to go public.
  • Launch of a Real Estate Investment Trusts’ (REITs) market to further broaden and diversify investment opportunities.
  • Enhancements to the Independent Custody Model which enable custodians to reject the settlement of unconfirmed trades executed by the executing brokers.
  • Dropping the Exchange requirement of cash prefunding for specific investors to align trading practices with international standards and standardize institutional investors’ trading processes.
  • Spin-off of the Securities Depository Center (SDC) to enhance the efficiency of deposit and registration services offered by the depositary center.

“Today’s announcement from MSCI is an immense achievement for Tadawul and the Saudi market. However, it is still just another stepping stone toward gaining full Index inclusion,” said Khalid Al Hussan, Chief Executive Officer of Tadawul. “We must continue to make efforts to further strengthen the market through reforms and build investor confidence so that we may maximize our position in 2018 to be formally listed alongside other global markets in MSCI’s Emerging Market Index.” 

Continued Al Hussan: “With anticipated MSCI index inclusion now one step closer and a number of other favorable dynamics taking place in the Saudi market, Saudi Arabia’s ongoing economic transformation through diversification and privatization and favorable demographics for sustainable growth makes it a uniquely attractive emerging market.”

Saudi Arabia, which opened its market to international investors in June 2015 through its Qualified Foreign Investor (QFI) program, has to date registered more than $ 5.48 billion worth of investable assets. The value of QFI holdings increased more than 3.5 times during Q1 of 2017, while value traded on the Exchange increased by 19.9 percent month-over-month in May 2017.