Rating agency Moody’s has welcomed the recent addition of Saudi stocks to the MSCI Emerging Market index as a credit positive event for the region’s asset managers.
The long-awaited inclusion took place on May 28 and Moody’s associate analyst states that it will deepen the liquidity and trading volume of the stocks in the index and attract a greater number of foreign investors.
It is estimated that about $30 to 40 billion will flow into the Saudi stock market as asset managers and institutional investors following the benchmark will rebalance their portfolios to minimise tracking error.
Consequently, local asset managers such as NCB Capital and Jadwa Asset Management as well as any local managers involved in cross-border products will benefit from the broader demand for Saudi stocks in terms of developing new investment products and enjoying greater diverisification.
The Moody’s report also states that asset managers that build strategies around the Saudi market should also benefit. It refers to Invesco which launched its first Saudi ETF on the London Stock Exchange in June 2018.
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