Tadawul’s MSCI inclusion opens 10 new opportunities: Albilad Capital

Index complier MSCI’s decision to upgrade the Saudi Stock Exchange (Tadawul) to its Emerging Market (EM) index represents an endorsement of Saudi’s compliance with the global investment community’s requirements, Albilad Capital said in a report on Tuesday.

The inclusion is an important development for Tadawul, thanks to the expedited efforts and the big reforms made by the Capital Market Authority (CMA) and Tadawul, the report said.

MSCI’s inclusion of Tadawul in the EM index opens many opportunities for Saudi Arabia, including the following top 10:

1) Fair valuation of included stocks.

2) Developing and maintaining the investment environment and legal framework of the financial market.

3) Raising transparency levels and reducing the cases of asymmetric information between investors, or between investors and companies.

4) Availability of corporate, sectors and ETFs reports.

5) Enhancing market liquidity due to attracting more investments.

6) Increasing market depth.

7) Integrating with the advanced world markets and keeping up with their development.

8) Drawing attention towards the Kingdom’s economy and marketing its investment products.

9) Promoting the role of the institutional investor in the financial market.

10) Improving the balance of payments (BoP)

Meanwhile, Albilad capital’s report highlighted the following three risks:

1) Liquidity setback in case of domestic economy slowdown as active investors exit.

2) Large exits of liquidity may affect and deplete monetary reserves.

3) Pressure on the exchange rate of Saudi riyal against US dollar.