The region’s markets are expected to be affected by upgrading the Saudi market to emerging-market status of Morgan Stanley – however the impact will vary based on the status of the market.
Beltone Financial Holding said that the impact of this upgrade on the Egyptian market will be limited given the foreign flows it witnessed during the past period.
Morgan Stanley announced listing Saudi shares in the beginning of June 2019 with weight 2.6 percent – the joining will occur on two phases: the first in revising the half annual index in May 2019 and the second in revising the quarter annual index in August of the same year.
Beltone said in a memorandum, which Asharq Al-Awsat got a copy from, that Egyptian market index EGX30 witnessed foreign flows during the past months, dropping 9.2 percent as an impact of possibilities to list Saudi Arabia.
The Saudi index rose 3 percent this is why Beltone expected a limited effect of the listing on the Egyptian local market.
Abu Dhabi and Dubai indices dropped after the upgrade 5.2 percent and 3.3 percent respectively. Further, the weight of the Egyptian market is considered relatively small, less than 0.15 percent, and is therefore expected to drop with the actual listing of the Saudi market.
Saudi stock executive manager expected foreign flows no less than $10 billion and up to $40 billion next year after listing Saudi Arabia in the MSCI index. During an interview with Bloomberg, he said that Tadawul aims to increase foreign participation in the market from its current 5 percent to 20-2 percent in the coming two years.
