Inclusion in global indices reflects continued progress of capital market reform under Vision 2030
RIYADH, Saudi Arabia, June 21, 2018 /PRNewswire/ -- The Saudi Stock Exchange (Tadawul) is pleased to announce today that MSCI, a leading provider of global equity indices, upgraded the Kingdom of Saudi Arabia to "Emerging Market" from its previous "Standalone Market" status in its Annual Market Classification Review. The Kingdom, which was also recently added to the FTSE Russell as a "Secondary Emerging" market in March 2018, will be included in MSCI's Emerging Market Index in two phases concurring with the May 2019 Semi Annual Index Review and the August 2019 Quarterly Index Review.
In its decision, MSCI cited the further market enhancements introduced by Tadawul and the Kingdom's Capital Market Authority (CMA) during the past year since being added to MSCI's Emerging Market Index Watch List last June. Many of those developments have fulfilled criteria set by the MSCI Market Classification Framework that must be met in order for a market to be classified as Emerging Market in its indices. The Saudi Arabia Index, with 32 securities, is expected to have a weighting of 2.6% within the MSCI Emerging Markets Index.
His Excellency Mohammed El-Kuwaiz, Chairman of the Capital Market Authority (CMA) commented:
"The inclusion decision shall enhance the diversity of the investors' base as well as the liquidity of the Saudi Capital Market. We, at the CMA, will continue to further develop the Saudi Capital Market to ensure that the market facilitates investments, promotes confidence and protects investor and market participants."
"Today's announcement from MSCI, so close on the heels of KSA's reclassification in the FTSE Russell Global Equity Index Series, marks the further integration of the Kingdom into global capital markets," said Sarah Al Suhaimi, Chairperson of Tadawul. "It is the culmination of Tadawul's ongoing efforts to work closely with Saudi regulatory authorities and leading emerging market investors to implement far-ranging reforms and market enhancements to strengthen the effectiveness of the Saudi capital market and foster an attractive investment climate for local and international investors. We are proud that these efforts have gained Saudi Arabia inclusion in the leading global indexes and benchmarks."
"Inclusion in the MSCI Emerging Market Index is an important milestone and further affirmation of the tremendous progress Tadawul has made in the past year in broadening investor access to the Saudi capital market, enhancing market efficiency and further aligning market practices with global best practices," said Khalid Al Hussan, Chief Executive Officer of Tadawul. "Our work is never done, and additional market enhancements are in the pipeline as we continue to strengthen and grow investor confidence in the Saudi market."
The Road to MSCI Emerging Market Index Inclusion
Saudi Arabia was added to the MSCI Emerging Market Index Watch List in June 2017. In its February 2018 Consultation on the proposed reclassification of Saudi Arabia to Emerging Market, MSCI highlighted the Kingdom's progress in implementing positive market reforms across a range of market accessibility criteria, including foreign ownership limits, easing of registration requirements for Qualified Foreign Investors (QFIs), enhancements to the clearing and settlement process and introduction of securities lending and short selling. Since then, Tadawul and the CMA have continued to move ahead with implementation of significant market reforms and enhancements 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. Measures announced to be implemented since the beginning of 2018 include:
Key reforms previously implemented include:
QFI Program
Saudi Arabia's QFI Program was introduced in June 2015 to facilitate participation by international investors in the Saudi capital market. The QFI Program was enhanced in 2016 and again in January 2018 to further ease the qualification requirements for qualified foreign investors and expand the range of institutional investors eligible for the program. Through the QFI program, international investors now have direct and full access to Tadawul, the largest equity market in the GCC and MENA regions with a market capitalization of $522 billion1, and average daily trading value of nearly $972.6 million as of May 20182. QFI qualifying criteria and foreign ownership limits were recently eased and the Saudi IPO market is now open to QFIs.
Since inception of the QFI program, over 150 international financial institutions have joined with more than 200 others at various stages in the qualifying process. As of January 2017, QFIs can participate in all Saudi domestic IPO offerings. This accelerated growth in the QFI program reflects the progress that Tadawul has made in aggressively moving forward with several initiatives to reform the exchange and attract foreign capital.
For more information on today's announcement from MSCI click here.
About Tadawul
The Saudi Stock Exchange (Tadawul) is the sole entity authorized in the Kingdom of Saudi Arabia to act as the kingdom's securities exchange (the Exchange), listing and trading in securities. With a market capitalization of over $522 billion, the Saudi stock market is the 23rd largest stock market among 68 members of the World Federation of Exchanges, and is the dominant market in the Gulf Cooperation Council (GCC) comprising 48 percent of total GCC market capitalization and 75 percent of value traded. For more information on Tadawul, please visit www.tadawul.com.sa.
Tadawul Contact:
Abdullah Al-Sharif
Tadawul
abdullah.sharif@tadawul.com.sa
+966 555 114 404
Media Contacts:
Amy Rosenberg
Hill+Knowlton Strategies
amy.rosenberg@hkstrategies.com
+1 212 885 0581
Bobby Morse
H+K Financial
bobby.morse@hkstrategies.com
+44 (0)20 7466 5151
Investor Relations Contact:
Rouaa Fadl
Marco
rouaa@marco.sa
+966 599 589 552
1 https://www.tadawul.com.sa/wps/wcm/connect/6073e5f6-37ce-469e-b72b-e0a33ed45c8b/Saudi+Stock+Exchange+%28Tadawul%29%2CStatistical+Report+%E2%80%93+May+2018.pdf?MOD=AJPERES- Market capitalization listed at SAR 1,957.59 billion (USD $522.02 billion) in May 2018
2 https://www.tadawul.com.sa/wps/wcm/connect/6073e5f6-37ce-469e-b72b-e0a33ed45c8b/Saudi+Stock+Exchange+%28Tadawul%29%2CStatistical+Report+%E2%80%93+May+2018.pdf?MOD=AJPERES– average daily trading value listed at SAR 3,648,083,207.52 (USD $972,614,734.34 million) in May 2018
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