S&P Dow Jones Indices considers upgrading Saudi Arabia to emerging market status

Investors pictured in front of a trading screen on the Tadawul in Riyadh. (Reuters)
Updated 17 May 2018
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S&P Dow Jones Indices considers upgrading Saudi Arabia to emerging market status

  • Upgrade could boost foreign fund inflows
  • Follows FTSE Russell upgrade

Equity index compiler S&;P Dow Jones said it was consulting investors on whether to upgrade Saudi Arabia to emerging market status, a new sign of growing interest in the Kingdom among global fund managers.

An upgrade by S&P Dow Jones could draw more foreign money to the Saudi stock market, although considerably less than the amounts linked to similar upgrades by MSCI and FTSE Russell, fund managers believe.

S&P Dow Jones has been considering a Saudi upgrade for several years but decided against one last year because of limited market access for foreign investors. The kingdom is currently ranked as a “stand-alone country.”

After reforms such as an easing of licensing requirements for foreign investment in stocks and changes to custody rules, the index compiler has begung gathering feedback from investors, it said in a statement.

It is asking whether Saudi Arabia should be upgraded, whether that should happen all at once or in stages, and whether the change should occur as soon as September this year, in 2019 or later.

FTSE Russell decided in March to begin upgrading Saudi Arabia in March 2019, which fund managers expect will ultimately attract about $5 billion of “passive,” index-linked money.

MSCI will decide on the issue in June; an MSCI upgrade could attract around $10 billion in passive funds.

S&P Dow Jones estimated Saudi Arabia could ultimately have a 2.57 percent weighting in its emerging benchmark index. It did not immediately respond to a question on how much money is benchmarked to that index.


Fujifilm wins appeal in battle with Xerox over scrapped merger

Updated 36 min 45 sec ago
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Fujifilm wins appeal in battle with Xerox over scrapped merger

  • Xerox in May scrapped a $6.1 billion merger deal with Fujifilm
  • A US court overturned preliminary injunctions requested by activist investors that had blocked a planner merger

TOKYO: Fujifilm Holdings Corp. has won an appeal in its legal battle with Xerox Corp, with a US court overturning preliminary injunctions requested by activist investors that had blocked a planner merger.
Xerox in May scrapped a $6.1 billion deal with Fujifilm in a settlement with investors Carl Icahn and Darwin Deason that also handed control of the US photocopier giant to new management.
The ruling by the New York State Appellate Court could give Fujifilm leverage to bring Xerox management back to the negotiating table.
The court found in its ruling that Xerox’s former CEO Jeff Jacobson had neither misled or misinformed the board.
“The board, which engaged outside advisers and discussed the proposed transaction on numerous occasions prior to voting on agreeing to present it to the shareholders, did not engage in a mere post hoc review, nor was the transaction unreasonable on its face,” the ruling also said.
Fujifilm said in a statement that it stands by its view that the original planned merger remains the best option for the shareholders of both companies.
“(The) Court’s decision will allow us to discuss with Xerox the fulfillment of the original agreement. All Xerox shareholders ought to be able to decide for themselves the operational, financial, and strategic merits of the transaction to combine Fuji Xerox and Xerox,” it said.
The two companies agreed in January to a complex deal that would have merged Xerox into their Asia joint venture Fuji Xerox and given Fujifilm control. That prompted Icahn and Deason, who own 15 percent of Xerox and argued the US firm was being undervalued, to launch a proxy fight.
Representatives for Xerox and Deason were not immediately available for comment.