Saudi stocks receive landmark emerging markets upgrade from MSCI

Saudi Arabian equites are poised to attract up to $40 billion worth of foreign inflows, following the landmark decision by index provider MSCI. (REUTERS)
Updated 21 June 2018
Follow

Saudi stocks receive landmark emerging markets upgrade from MSCI

  • Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months
  • MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds

LONDON: Saudi Arabian equites are poised to attract up to $40 billion worth of foreign inflows, following a landmark decision by index provider MSCI to include the Kingdom’s stocks in its widely tracked Emerging Markets index.

"MSCI will include the MSCI Saudi Arabia Index in the MSCI Emerging Markets Index, representing on a pro forma basis a weight of approximately 2.6% of the index with 32 securities, following a two-step inclusion process," the MSCI said in a statement late on Wednesday night Riyadh time.

“Saudi Arabia’s inclusion in MSCI’s EM Index is a milestone achievement and will likely bring with it significant levels of foreign investment,” Salah Shamma, head of investment for MENA at Franklin Templeton Emerging Markets Equity, told Arab News. 

“It is a recognition of the progress Saudi Arabia has made in implementing its ambitious capital markets transformation agenda. The halo effect of such a move will be felt across the stock exchanges of the entire Gulf Cooperation Council (GCC).”

Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months to bring local capital markets more in line with international norms, including lower restrictions on international investors, and the introduction of short-selling and T+2 settlement cycles.

Such reforms prompted index provider FTSE Russell to upgrade the Kingdom to emerging market status in March, opening the country’s stocks up to billions worth of passive and active inflows from foreign investors.

MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds. The inclusion of Saudi stocks in the index, alongside FTSE Russell’s upgrade, is forecast to attract as much as $45 billion of foreign inflows from passive and active investors, according to estimates from Egyptian investment bank EFG Hermes. 

The upgrade announcement was widely expected by the region’s investment community, following a similar emerging markets upgrade announcement by fellow index provider FTSE Russell in March. 

“MSCI index inclusion will be a historic milestone for the Saudi market as it will allow for sticky institutional money to make an entry in 2019 which will help deepen the market,” said John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh. 


Saudi businesses step up AI use as adoption reaches 27.6%: GASTAT 

Updated 5 sec ago
Follow

Saudi businesses step up AI use as adoption reaches 27.6%: GASTAT 

RIYADH: Artificial intelligence adoption among businesses in Saudi Arabia rose to 27.6 percent in 2024, reflecting a steady expansion in the use of advanced digital tools across the Kingdom’s private sector, according to official data. 

The information and communications sector recorded the highest uptake of AI technologies at 52.8 percent, followed by finance and insurance at 44.7 percent and education at 42.1 percent, the General Authority for Statistics said in its Establishments’ ICT Access and Usage Statistics 2024 report. 

This data underscores the growing digital maturity of the Kingdom’s private sector, with certain industries leading the transition toward advanced technologies.   

The professional services sector showed a notable 39.2 percent adoption rate, while other sectors, such as real estate at 28.2 percent, wholesale and retail trade at 25 percent, and manufacturing at 26 percent, reflected varying levels of engagement with AI tools.    

In contrast, sectors like construction at 25.8 percent, human health and social work at 29.9 percent, and arts, entertainment and recreation at 20.1 percent lagged behind, highlighting differences in AI integration across the economy.   

Other sectors showing moderate uptake of AI technologies include transportation and storage at 38.3 percent and mining and quarrying at 32.4 percent.   

Meanwhile, industries such as administrative and support services at 25.2 percent, and electricity and gas supply at 25.7 percent, reported lower levels of AI adoption compared to digital frontrunners.    

The report also revealed that internet access among establishments across Saudi Arabia reached 98 percent in 2024, marking a 0.3 percentage point increase over the previous year.    

Social media usage was reported by 63 percent of establishments, and 76.3 percent of businesses used internet platforms to conduct electronic banking transactions.   

In addition to AI, the adoption of cloud computing technologies grew significantly. A total of 46.8 percent of establishments reported using cloud services, with the most common uses being ready-made office applications at 53.5 percent, email services at 50.3 percent, and file storage at 41.1 percent. 

Meanwhile, Internet of Things technologies were widely employed for building security at 68.4 percent, energy management at 36.5 percent, and maintenance purposes at 21.1 percent.  

The Establishments’ ICT Access and Usage Survey is conducted using internationally aligned methodologies and follows the Statistical Business Process Guide and standards set by the UN Conference on Trade and Development, GASTAT stated.