"Saudi Arabia is eligible to join emerging markets indicators like some of other markets in the region," Al-Tuwaijri said while addressing the first forum for financial papers in Riyadh.
Prince Muhammad bin Salman, personal adviser to Riyadh Gov. Prince Salman opened the forum on Saturday.
"Saudi bourse is one of the largest and most important emerging markets in the world in terms of volume, organization and response," SPA quoted Al-Tuwaijri as saying.
"The Saudi stock market enjoys high rate of transparency in the region. It's the only stock market whose listed companies publish their financial results regularly at the required time," he pointed out.
Saudi Arabia is the largest stock market in the Gulf Arab region and fund managers have been scrambling to get an exposure in the market, considered more diverse than most other Gulf markets.
Al-Tuwaijri said three new regulations related to financial sufficiency, solvency and credit classification of companies and agencies would be issued this year. "We participated in the organization of the forum in order to shed light on new developments in the Saudi stock market," he said.
“Being admitted to an index run by an international provider such as MSCI, would result in large inflows of foreign funds into the stock market. There are many funds that track the indexes run by MSCI and if Saudi Arabia became a component of the MSCI emerging markets index, for example, those funds would also need to invest in the Kingdom. These investors are primarily institutions and so they would bring greater stability to the market,” Paul Gamble, head of research at Jadwa Investment, said.
However, he said, before the Kingdom can join the MSCI emerging markets index it needs to undertake various stock market reforms, including a greater opening up to foreign investors.
Commenting on the Tadawul move, Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: “Because of the technicalities involved in the application and vetting process, as well as obstacles such as limitations on foreign ownership, inclusion in the MSCI benchmark indices is unlikely to become reality in the near term for Saudi Arabia. However, it is an extremely important strategic objective and something that has made a critical contribution to the development of many emerging capital markets.”
He said: “Inclusion in such indices amounts to a formal recognition of the development, sophistication, and openness of a stock market. But its most important value comes from the use of such benchmarks by many institutional investors the world over in their asset allocation decisions. Gaining this status would give Tadawul access to precisely the kind of sticky, institutional, long-term money that the market needs and wants. This would reduce volatility, improve access to new capital sources, and inform the decisions of retail investors as well.”
Meanwhile, petrochemicals and banking stocks weighed on the Tadawul All-Share Index (TASI), which slipped 0.34 percent to 6,690.68 points on Sunday. The value of Saudi traded shares crossed SR6.62 billion.
