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The Saudi Stock Exchange, also known as the Tadawul All Share Index, in Riyadh, Saudi Arabia
Saudi Arabia’s stock exchange, the Tadawul, took its first step Monday of inclusion in two major international indexes: the FTSE Russell and S&P Dow Jones’ emerging markets indices.
The inclusion marks a continuation of efforts by the Saudi kingdom to open up its market to international investors, Tadawul CEO Khalid Abdullah al-Hussan told CNBC’s Hadley Gamble in Riyadh.
“We haven’t seen any turbulence on inflows of cash for the first tranche of FTSE and it was very smooth by both the sellers and as well as the buyers, which in my opinion confirmed the confidence of international investors to participate in the Saudi markets and the regulatory framework of the Saudi capital market,” al-Hussan said.
Al-Hussan expects this inclusion to bring in around $15 billion in passive inflows across the indices, adding that calculating the expected active funds is more challenging.
Inclusion in the FTSE Russell Emerging Markets index will take place in five tranches over the next 12 months, while that of the S&P Dow Jones Emerging Markets indices will be completed with a second phase in September of this year. Monday’s initial tranche of 25 percent “will be split over March 2019 and April 2019 (10% and 15% respectively) to ensure a smooth transition,” according to a Tadawul press release.
Capital markets reforms and economic liberalization have been core tenets of Saudi Arabia’s Vision 2030, which aims to spur greater foreign investment to diversify its economy away from its reliance on hydrocarbon revenues and grow private-sector jobs.
