A $600bn Decision Looms for Saudis, Argentina on MSCI Nod

Saudi Aramco Clears Another IPO Hurdle | OilPrice.com

For Argentina, MSCI's reclassification will reverse a downgrade to "frontier market" status made in 2009 after the Latin American country imposed capital controls. Both decisions will take effect starting mid-2019. That includes selling shares in government-owned Saudi Aramco, which is expected to stage an initial public offering in Riyadh that could be the world's biggest. MSCI's gauges are used by investment funds worldwide, with some $1.7 trillion of active and passive money benchmarked against its EM indexes.

Mohammed bin Abdullah Al-Jadaan, Saudi Arabia's Finance Minister has affirmed the listing in MSCI Emerging Markets Index as significant addition to the Saudi market. She was proud that MSCI had upgraded Saudi Arabia after only one year on its watchlist, which she said was the shortest period on record.

The Saudi index.TASI has been among the best performing in the Gulf region, up 13.3% year to date, according to Reuters.

Featuring 32 stocks and with a weighing of 2.6%, Saudi Arabia's Tadawul index is the Middle East's largest stock exchange with a market capitalization of about $500 billion.

Featuring 32 stocks, Saudi would be the third-largest constituent country from the Europe, Middle East and Africa region, behind South Africa and Russian Federation.

European Union tariffs on United States products have gone into force
According to the China Daily, the USA is trying to preserve the global economic system, which is working to America's benefit. The EU, which is the world's biggest trading bloc, has taken its case to the World Trade Organization.

"The news on Saudi and Argentina will boost inflows to those markets short-term, but the outlook for EM assets will depend more fundamentally on global conditions - notably the USA dollar, U.S. yields and the risk of an escalating trade war", said Geoff Dennis, head of global emerging-market strategy at UBS in Boston.

VIDEO: How did Saudi stocks push Tadawul over 8,000 for 1st time since 2015?

"These inclusions will result in the expansion of the global investment opportunity set and allow for greater diversity in the MSCI Emerging Markets Index, which is important to investors".

"That means up to 8.36 trillion won would come out of the local stock market starting next year", the analyst added.

Maurel estimates it will lead to $35 billion of inflows.

Oil falls on rising output, escalating China-U.S. trade spat
Non-OPEC members including Russia, Oman and Mexico also agreed to cut 558,000 bpd off their production to stabilise the market. Iran, Iraq, and Venezuela are opposed but according to reports there are signs of an agreement.

Khalid al-Hussan, CEO of Tadawul, told a news conference in Riyadh that MSCI's move had created market capacity to absorb liquidity and would be the main element in feeding new IPOs.

The MSCI promotion would follow a similar move by FTSE Russell in March and be a second achievement for the kingdom, which has been implementing a series of reforms to develop its capital markets in line with its Vision 2030 economic diversification strategy.

"Since MSCI added it to its watch list in June 2017, the necessary infrastructure has been upgraded and we believe all required criteria have been met". Can it afford to?

"From a market liquidity standpoint, connecting the Saudi market to the rest of the world and having the free movement of capital from global investors to the Saudi market only helps a listing of the size and scale of Saudi Aramco", he said. "In anticipation of being included in the MSCI emerging market index, Saudi stock market has already seen inflows of over $3.4 billion from foreign institutional investors so far this year".

Sarri identifies first signing for Chelsea
Chelsea could have to pay £4.5m if they were to employ Sarri before July 1 but that figure would go up to £7m after that date. The coach is known to be a master tactician and would also work well within the structure of the club's transfer policy.

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