Tadawul likely to maintain rally in short term, analysts

The Saudi Stock Exchange (Tadawul) is expected to maintain its uptrend in the short-term, until the second inclusion in the MSCI emerging markets index in August 2019, analysts told Argaam.

“Tadawul will likely continue going up in the near term, as the market reacted positively to the inclusion of Saudi Arabia into the FTSE Russell Emerging Markets (EM) index. The outstanding stocks are the most beneficiaries of such a rally, I think,” stated Muhammad Faisal Potrik, Senior Vice President, Head of Research, Riyad Capital.

The second tranche of the FTSE EM upgrade is scheduled to be implemented on May 1, 2019.

Saudi Arabia is expected to attract cash flows of up to $1 billion in the second tranche of inclusion, said Sanat Sachar, portfolio manager at Al Mal Capital.

He added that Tadawul is likely to maintain its uptrend until the final stage of inclusion in the MSCI indexes next August.

Nishit Lakhotia, Head of Research, SICO Bank, told Argaam earlier that the expected passive inflows are estimated at around $1 billion, but he ruled out the market would see a big rise upon the implementation of the second tranche.

“Investors’ appetite is still positive as foreign investors main their positions in the Saudi market, upon the MSCI inclusion” he added.

Saudi Arabia will witness five tranches of FTSE inclusion during 2019 starting March and ending in December. The MSCI inclusion will be in two tranches – first taking place in May followed by the next in August.