MSCI’s decision to include Saudi Arabia in the MSCI Emerging Markets Index will be a game changer for Saudi capital markets, as the Saudi Stock Exchange (Tadawul) has already seen record international inflows this year in anticipation of the move, at around $3.5bn, Antoine Maurel, head of global markets MENAT at HSBC, told Daily News Egypt on Monday.
MSCI announced the inclusion of Saudi Arabia in the MSCI Emerging Markets Index effective June 2019, representing a weight of approximately 2.6% of the index with 32 securities.
This will follow a two-step inclusion process, the first of which will coincide with the May 2019 Semi-Annual Index Review, while the second will be in the August 2019 Quarterly Index Review.
“Our expectation is that the exchange will see at least a further $35bn of inflows as a result of the MSCI Index inclusion. This will create a much deeper and more liquid market, which will support the long-term development of the Tadawul as a global exchange,” said Maurel.
He added that HSBC was the first institution to provide international investors with access to the Tadawul through the P-Note and Swap programme in 2008.
Maurel explained that since then, alongside affiliates SABB and HSBC Saudi Arabia, HSBC has grown to be the leading international bank on the Tadawul.
“Our focus is now on ensuring that we are able to play an even bigger part in the growth of Saudi Arabia’s capital markets,” he added.
MSCI also announced the reclassification of the MSCI Argentina Index from frontier market to emerging market status.