Today began the first phase of the inclusion of Saudi Arabia’s stock exchange (Tadawul) into the FTSE Russell and S&P Dow Jones Indices (S&P DJI)—both leading providers of global equity indexes.
The inclusion of Saudi Arabia into the FTSE Russell Emerging Markets (EM) will occur in five tranches over the next 12 months. This initial tranche of 25% will be split over March 2019 and April 2019 (10% and 15% respectively). The remaining 75% will be implemented in conjunction with quarterly reviews in June 2019, September 2019 and March 2020.
“Saudi Arabia’s promotion to Emerging market status within FTSE Russell’s global equity benchmarks is a significant achievement,” said Waqas Samad, CEO of FTSE Russell. “The CMA and Tadawul have long been committed to improving Saudi Arabia’s capital markets infrastructure and today marks a culmination of their efforts to meet the rigorous requirements for inclusion”
The inclusion of Saudi Arabia into the S&P Dow Jones Emerging Market Indices’ (DJI) Global Benchmark Indices (BMI) will occur over two phases, with the second phase to be completed in September 2019. Saudi Arabia is eligible for inclusion at 50% of float-adjusted market capitalization (FMC) from today and at 100% of FMC on September 23, 2019.
“Saudi Arabia’s recent move in our country classification to emerging market from stand-alone is a result of an ongoing consultation with market participants,” said Alex Matturri, CEO at S&P Dow Jones Indices. “It reflects the strong consensus among members of the global investment community and recent positive market structure reforms that support foreign investment in the country.”
Capital market reforms and enhancements implemented over the past two years have paved the way for the index inclusion. Tadawul has committed to enhance the effectiveness of the Saudi capital market, foster an attractive investment environment for local and international investors and align its regulatory frameworks with international best practices.
Investment inflows resulting from the index inclusion is expected to further enhance liquidity and trading in the Saudi market, diversifying opportunities for issuers and investors.