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Saudi Arabia Part of FTSE Russell and S&P Dow Jones Emerging Market Indices

Traders Magazine Online News, March 28, 2019

John D'Antona Jr.

The first phase of Saudi Stock Exchange’s inclusion into the FTSE Russell and S&P Dow Jones Indices (S&P DJI), both leading providers of global equity indexes, is now complete.

FTSE Russell Emerging Markets Inclusion

Inclusion of Saudi Arabia into the FTSE Russell Emerging Markets (EM) index will occur in five tranches over the next 12 months, the first of which will be completed today. This initial tranche of 25% will be split over March 2019 and April 2019 (10% and 15% respectively) to ensure a smooth transition. The remaining 75% will be implemented in conjunction with quarterly reviews in June 2019, September 2019 and March 2020.

Waqas Samad, CEO of FTSE Russell, noted, ‘Saudi Arabia’s promotion to Emerging market status within FTSE Russell’s global equity benchmarks is a significant achievement. 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. FTSE Russell has a strong track record of working closely with exchanges, regulators and market participants in the Middle East to help meet the demand from international investors for benchmark and analytic solutions to facilitate their investments into the region. We look forward to remaining at the forefront of providing innovative solutions for our global clients.”

S&P Dow Jones Indices’ Global Benchmark Indices

Inclusion of Saudi Arabia into the S&P Dow Jones Emerging Market Indices’ (DJI) Global Benchmark Indices (BMI) commenced today with the first of 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.

On completion of the first phase, Alex Matturri, CEO at S&P Dow Jones Indices, commented, “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. 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. S&P Dow Jones Indices looks forward to continuing to provide innovative index-based solutions in the Middle East region.

Tadawul to continue its commitment to market reforms

Capital market reforms and enhancements implemented over the past two years have paved the way for index inclusion and reflect Tadawul’s continued commitment 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 index inclusion will further enhance liquidity and trading in the Saudi market, which is already among the most liquid of emerging markets worldwide, and further diversify opportunities for issuers and investors.

Tadawul is determined to become an active player in global capital markets as a source of capital and an investment destination, building on its current role as the regional hub leading capital market development in the GCC and the wider MENA region. 

Commenting on the inclusion into the FTSE Russell and S&P Emerging Market indices, Khalid Al Hussan, CEO of Tadawul, said:

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