Sarah Al-Suhaimi, chairwoman of Saudi Arabia’s stock exchange says she’s “very optimistic” that FTSE Russell will decide to add the kingdom to its list of emerging markets. According to her, the decision that could draw billions of dollars in passive funds to the country.
She says, “The feedback we have heard from investors is positive. They had certain concerns and we have addressed most of them, so generally we’re optimistic.”
The decision will be announced on Wednesday whether or not FTSE Russell will include Saudi Arabia on its list of emerging markets countries on Wednesday, after markets close in the US. If the FTSE decides to add the kingdom to the list, it could draw about $3 billion of investment to Saudi Arabia. It would have a potential weight of 2.4 percent in the index.
According to Al-Suhaimi Saudi officials have spoken to investors to “understand what’s needed to change” and then “incorporated that feedback into our plans.” She’s “equally optimistic” on the emerging markets inclusion decision in June from MSCI, she said.
After a series of market overhauls including a shift to a T+2 settlement system from T+0 last year, Saudi Arabia’s next big step is “establishing our clearing house that will allow us to have derivatives in the kingdom,” Al-Suhaimi said.
“We’re working now on establishing the company and it should be launched by end of 2019, sometime in the second half.”
She expects “another wave” of interest and engagement with foreign investors if the FTSE decision Wednesday is positive, she said.
Saudi officials continue to try to attract more foreign investment to the once closed-off kingdom as part of Prince Mohammed bin Salman’s plan to diversify the world’s largest crude exporter away from oil.
Currently, Prince Mohammed bin Salman is on a three-week tour of the US with a delegation of hundreds of officials to promote investment opportunities and also improve the kingdom’s image as a forward moving nation.
Foreign interest in the Saudi stock market had been limited up until now. However since the stock exchange opened up to direct foreign investment in 2015, investment from qualified foreign investors and through swaps has risen to about 1.5 percent of the market capitalization.
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