Saudi bourse may get limited boost from MSCI, Aramco billions: report

An influx of portfolio funds expected in the wake of potential index upgrades by MSCI and FTSE may do little to boost the depressed Saudi stock market, Reuters said in an analysis.

Global equity index compiler MSCI will announce on June 20 whether it is putting Saudi Arabia on a list for possible upgrade to emerging market status, while index firm FTSE will decide in September whether to make Riyadh a secondary emerging market.

In addition, Saudi Arabia plans by late 2018 to list national oil giant Saudi Aramco in Riyadh, selling about 5 percent in what is likely to be the world's biggest initial public offer of shares.

All this could result in inflows totaling over $50 billion in the next two or three years but that could be offset by cash-strapped local institutions selling stocks and may not trigger a strong rise in the Saudi market.

Low oil prices are keeping buyers wary, while austerity steps planned by the government, as it confronts a huge budget deficit, will dampen corporate profits. Local regulations mean there may be little room left for foreigners to raise their stakes in some firms.