Saudi Arabia expected to lure huge cash inflows: FTSE Russel

The Kingdom of Saudi Arabia's flag

Saudi Arabia will likely attract huge cash inflows, as the FTSE Emerging Markets Government Bond Index (EMGBI) is deemed as an important reference for local and global clients, especially inactive investors and many exchange-traded fund (ETFs), Shobhit Thapar, Head of Index Sales, Middle East Africa (MEA), told Al-Arabiya TV.

They closely monitor the index based on their inactive policy, which will lead to huge cash inflows, he added.

Capital flows are measured by two methods. First, stock flows, Thapar explained, adding that FTSE witnessed strong demand by institutional clients to invest in Saudi Arabia and the GCC using the FTSE Saudi Arabia Index, including inactive investors or ETFs.

The top official also indicated that the second method is cash flows for fixed-income tools, noting that FTSE Russell included Sharia-compliant government sukuk in Saudi riyal to its index for emerging market bonds, which is widely used by local and global customers. 
 

"The stake of Saudi assets in portfolios of those investors rose, which means increased cash flows to Saudi debt market or fixed-income market," said Thapar. 
 

The sukuk added to FTSE Russell indices are Saudi governmental sukuk, amounting to 45 sukuk, or nearly SAR 336 billion ($89.7 billion) of market capitalization, he added.