Goldman was top broker in Saudi market in May as foreign interest surged

The headquarters of Goldman Sachs is pictured on April 17, 2019 in New York City. (AFP)
Updated 11 June 2019
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Goldman was top broker in Saudi market in May as foreign interest surged

  • Foreign interest in investing in Saudi Arabia has picked up
  • Goldman Sachs handled 18.6% of trades by value and 12.3% by volume in May

DUBAI: Goldman Sachs was the top broker in the Saudi market in May, both in terms of value and volume of trades, stock exchange data showed, as foreign banks benefitted from a surge of international money into the Kingdom.
Foreign interest in investing in Saudi Arabia picked up ahead of the inclusion of the country’s stock market in global index provider MSCI’s emerging market indexes last month.
Goldman, which was not even among the top ten brokers in Saudi Arabia in April, handled 18.6% of trades by value and 12.3% by volume in May, according to data from Tadawul, the Saudi bourse.
It was followed by HSBC Saudi Arabia, which handled 9.4% of trades by value last month.
In 2017, Goldman received approval to trade equities in Saudi Arabia, joining the growing band of western investment banks and fund managers expanding in the Kingdom.
“They managed to make inroads to both local and foreign businesses,” said a financial industry executive.
Of the 10 top brokers in May, five were foreign, the data showed.
Goldman was the lead manager for the initial public offering (IPO) of Arabian Centers, which listed last month. It was the first IPO in the Kingdom under Rule 144a, which allows the sale of securities primarily to qualified institutional buyers in the United States.
Saudi securities firms such as NCB Capital and Al Rajhi Capital have traditionally been top brokers in the domestic market. The Saudi market opened to foreigners in 2015.
Late last month, the Saudi equity market joined the first phase of passive fund inclusion in the MSCI Emerging Market Index, which is expected to trigger billions of dollars of foreign fund inflows.
In May, foreigners bought a record 17.62 billion riyals ($4.70 billion) of Saudi stocks, according to Saudi stock exchange data.
Foreign ownership of Saudi stocks stood at 6.64% as of May 30, the bourse data showed.
The Saudi index has gained over 12% so far this year, making it among the best performers in the Gulf region this year.


Kuwaiti equities to be in main MSCI emerging markets index

Updated 8 min 14 sec ago
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Kuwaiti equities to be in main MSCI emerging markets index

  • The index compiler will include the MSCI Kuwait index in the emerging market index in the May 2020 semi-annual index review
  • The Kuwaiti market has outperformed markets in the Middle East this year in anticipation of the MSCI move

DUBAI: MSCI plans to upgrade Kuwaiti equities to its main emerging markets index in 2020, a move that could trigger billions of dollars of inflows from passive funds.
The index compiler will include the MSCI Kuwait index in the emerging market index in the May 2020 semi-annual index review.
MSCI, the world’s largest index provider, whose emerging-market group of indexes has about $1.8 trillion of assets tied to it, also said it would start a consultation on reclassifying the MSCI Iceland Index to Frontier Markets status. It said it would announce the results of this by Nov. 29.
Kuwait’s Market Development Project was implementing several regulatory and operational enhancements in the Kuwaiti equity market, said Sebastien Lieblich, global head of equity solutions and chairman of the MSCI Equity Index Committee.

 

MSCI expects Kuwait to introduce more reforms before the end of 2019, such as introducing omnibus accounts that would allow foreign investors to trade while remaining anonymous, offering the same privileges that local investors now have.
The Kuwaiti capital market regulator has announced plans for such facilities to be available to the wider market by November, Arqaam Capital said. “These enhancements have significantly increased the accessibility level of the Kuwaiti equity market for international institutional investors,” Lieblich said.
The Kuwaiti market has outperformed markets in the Middle East this year in anticipation of the MSCI move.
The benchmark premier index is up about 20 percent so far this year. It was down 0.5% in early trade on Wednesday.
“MSCI EM inclusion could represent the biggest ever liquidity event for Kuwait’s stock market,” said Salah Shamma, head of investment MENA at Franklin Templeton Emerging Markets Equity, adding that a 0.5 percent representation in the MSCI EM index could attract investor flows of about $10 billion.

FACTOID

MSCI is the world’s largest index provider, whose emerging-market group of indexes has about $1.8 trillion of assets tied to it.