FTSE Russell launches Saudi inclusion indices ahead of EM upgrade

London Stock Exchange-owned index compiler FTSE Russell has launched a series of standalone indices including Saudi Arabia ahead of the kingdom’s anticipated promotion to its emerging market index next year.

FTSE said the global, regional and country-level indexes are intended to be used as a transitional tool as the country remains on the company’s watch list for potential inclusion in its secondary emerging market index.

The firm maintained Saudi’s position on the list during its annual classification announcement at the end of September and its status will be reviewed during an interim review in March 2018.

Read: Saudi stocks may be hurt, Kuwait uninspired by FTSE’s index decisions

“While Saudi Arabia is not yet included in the widely-followed FTSE Global Equity Index Series, given the advancements Tadawul and the CMA have made toward bringing Saudi Arabia’s market in line with international standards, FTSE Russell has acknowledged the progress made toward becoming included as a secondary emerging market” the index compiler said.

Inclusion on the secondary emerging market index will potentially bring billions of dollars of passive fund flows to the kingdom, which is continuing to undertake stock market reforms to attract foreign investors.

These include the loosening of rules for companies to obtain a licence for asset management and the allowing of foreign investors to take a strategic stake of 10 per cent of more in listed companies.

Read: Saudi market regulator loosens asset management rules

Read: Saudi to let foreigners take strategic stakes in firms

In addition, the kingdom confirmed last week that foreigners would be allowed to invest directly into its Nomu parallel secondary market.

Saudi Arabia is also awaiting its inclusion on the emerging markets index of compiler MSCI after being added to the watch list for a potential upgrade in 2018.

Read: Why China sets an example for Saudi’s MSCI inclusion