Saudi shares could be going up in value following S&P Dow Jones Indices’ (S&P DJI’s) decision to upgrade the Saudi stock market (Tadawul) to ‘Emerging Market’ status.
The move raises the market’s international profile and is expected to bring more overseas capital into the Saudi market, lifting both trading volumes and prices. S&P DJI’s reclassification of the Tadawul builds on upgrades by both MSCI and FTSE Russell in recent months.
“S&P DJI’s decision caps a period of tremendous progress for Tadawul and the Saudi capital market, which over the past six months have gained inclusion in all three of the pre-eminent global benchmark indices,” said Khalid Al Hussan, Chief Executive Officer of Tadawul.
“It is a testament to growing investor confidence in the Saudi market and reflects the successful implementation of far-ranging capital market reforms in line with Vision 2030 that have further enhanced the accessibility of Tadawul to international investors.”
Following S&P DJI’s upgrade, Tadawul will become eligible for inclusion in certain S&P Dow Jones global indexes in two phases, starting with the March 2019 quarterly rebalancing, followed by the September 2019 annual reconstitution.
Saudi stocks that are currently part of the S&P Saudi Arabia BMI will initially be eligible for phased inclusion in the S&P Global BMI, S&P Global BMI Shariah, S&P/IFCI Composite, Dow Jones Global Index and Dow Jones Islamic Market World Index. Eligibility for inclusion in other S&P DJI index families will begin in September 2019.
The Tadawul All-Share Index (TASI) currently stands at around 8,350, up from around 7,000 at the start of the year.
Jadwa Investment predicted that it could reach 10,000 in early 2019, partly as a result of the recent upgrades.