Cultivating the desert

29 March 2018 By Tom Buerkle

FTSE Russell will add the kingdom to global and emerging-markets indexes. MSCI is likely to follow suit, which could steer billions in index funds to the Riyadh exchange. That will make the Saudi market more international even if Aramco’s privatization stays local – or on hold.

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FTSE Russell on March 29 said it would promote Saudi Arabia to secondary emerging-market status and include the kingdom’s stocks in its indexes, beginning in March 2019.

The inclusion will be phased in over nine months, after which Saudi stocks will have a weighting of around 2.7 percent in the FTSE Emerging Index and 0.25 percent in FTSE Global All Cap Index. If Saudi Aramco, the national oil company, does an initial public offering on the domestic market, the weighting in the Emerging Index would increase to 4.6 percent based on a $1.5 trillion valuation and a 5 percent float, the index company said.

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