Global exchange funds eye Saudi Arabian equities

Global exchange-traded funds are building cash piles to place in Saudi Arabian equities, so says Bloomberg. (Reuters/File Photo)
Updated 20 March 2019

Global exchange funds eye Saudi Arabian equities

  • It comes as the country joins the FTSE Russell emerging markets index
  • Index provider MSCI is also adding Saudi stocks to its own emerging markets index

LONDON: Global exchange-traded funds are building cash piles to place in Saudi Arabian equities, according to a ranking compiled by Bloomberg.
It comes as the country joins the FTSE Russell emerging markets index, which is expected to attract billions of dollars in foreign fund inflows.
“We believe Saudi’s inclusion in the FTSE Russell EM Index will have a significantly positive impact on stock markets, Salah Shamma, the regional head of investment at Franklin Templeton Emerging Markets Equity, told Arab News.
“With an estimated $115 billion benchmarked against the FTSE Russell EM Index, the Kingdom could constitute approximately 2.5 percent of the gauge, resulting in passive fund flows of about $3 billion,” he said.
A London-based exchange- traded fund (ETF) and another fund that trades in New York have together attracted around $327 million in new money since the beginning of January, Bloomberg reported on Tuesday.
The net flow as a percentage of assets for Saudi Arabia funds increased by about 48 percent this year.
FTSE Russell started to include Saudi stocks this week — the first of a five-stage process that will be fully implemented by March 2020.
Index provider MSCI is also adding Saudi stocks to its own emerging markets index.
Positions on the Saudi market through funds based abroad have delivered a return of about
12 percent each since the start of the year, compared with a gain of 10 percent for the Tadawul All Share Index, according to Bloomberg data.
Franklin Templeton’s Shamma believes the inclusion of Saudi equities in the two gauges will help to bring the wider region into the mainstream of emerging market investment.
“The fundamentals of the Saudi economy are strong, and we remain encouraged by the country’s progress in reducing its reliance on hydrocarbon revenues as well as the ambitious reform agenda that is underway there,” he said.
Listed companies in the Kingdom could see holdings by foreign investors rise to 10 percent when their shares are included in index providers MSCI and FTSE’s emerging-market indices, the chief executive of Tadawul told Reuters on Monday.
Saudi Arabia this week joined the FTSE Emerging All Cap Index with a weighting of 2.9 percent.
Khalid Al-Hussan told Reuters that he expected equities on Tadawul to attract $5 billion of passive fund inflows after the FTSE Russell inclusion. Foreign investors currently hold about 5.9 percent of Saudi shares.


Saudi Arabia’s Red Sea mega project awards contracts for international airport

Updated 36 min 27 sec ago

Saudi Arabia’s Red Sea mega project awards contracts for international airport

  • Saudi Arabia plans to develop resorts on 50 islands off the Red Sea coast, offering a nature reserve, coral reef diving and heritage sites
  • Red Sea Development Co, backed by Saudi Arabia’s sovereign fund, the Public Investment Fund (PIF), plans to build the first phase by 2022

RIYADH: Saudi Arabia’s Red Sea Development Company said on Monday it had awarded infrastructure contracts for an international airport that is due to open in 2022.
The company, which is developing a huge Red Sea tourism project, said the contracts were awarded to Nesma & Partners Contracting Co. Ltd. and Almabani General Contractors.
Saudi Arabia plans to develop resorts on 50 islands off the Red Sea coast, offering a nature reserve, coral reef diving and heritage sites.
Red Sea Development Co, backed by Saudi Arabia’s sovereign fund, the Public Investment Fund (PIF), plans to build the first phase by 2022. It aims to attract 300,000 tourists a year in the first phase and 800,000 to 1 million once the development is complete.
Red Sea is one of three major projects backed by PIF, along with the $500 billion NEOM economic zone and the Qiddiya entertainment project.
Saudi Arabia’s NEOM, which is building a $500 billion mega economic zone, said last week it had signed an agreement with Air Products and Saudi Arabia’s ACWA Power for a $5 billion green hydrogen-based ammonia production facility.