Saudi Arabias listing in MSCI EMI to boost MENA markets: Franklin Templeton

Dubai – Mubasher: Franklin Templeton Investments has expected that the Kuwaiti market will follow Saudi Arabia's steps toward the listing in MSCI Emerging Markets Index.

The inclusion of the kingdom in the MSCI EM Index will propel global financial institutions to invest in the MENA region, Bassel Khatoun, director of Portfolio Management at Franklin Templeton Investments, Frontier and MENA, told Mubasher.

So far, the MENA markets account only for 1.6% of the emerging market index, but the inclusion of the Saudi bourse will boost this share, which will make the Middle East an important economic region that investors will find it difficult to ignore, Khatoun added.

Saudi Arabia’s listing in the MSCI EMI reflects the biggest Arabian economy’s efforts to upgrade its infrastructure in an effort to meet the globally adopted standards, the top official noted.

This major step could attract $90 billion investments in the Saudi market, $40 billion on the back of the actual listing in the MSCI EMI, and $50 billion following the initial public offering (IPO) of Saudi Aramco, Khatoun revealed.

Earlier in June, Saudi minister of energy, industry, and mineral resources Khalid Al-Falih stated that the timing of Aramco's IPO is not critical and can be postponed to 2019 or afterwards.

Kuwait is expected to be listed in the emerging markets index soon, as index compiler MSCI Inc. announced that it is planning to include the GCC country in its 2019 annual market classification review, Khatoun continued.

However, the inclusion of Saudi Arabia in the MSCI EMI had a negative impact on regional stock markets, including the Egyptian Exchange, whose benchmark EGX30 tumbled 9.2% over the last two months, he remarked.

Also, the general indices of Dubai and Abu Dhabi stock markets declined 5.2% and 3.3%, respectively during the same period following the addition of Saudi Arabia in the emerging markets index, he added.

Translated by: Muhammad Khalid