MSCI Index Changes Reflect Saudi Market Evolution
RIYADH, SAUDI ARABIA – November 6, 2024 – MSCI has announced adjustments to its Saudi Arabian equity indices, adding Al Rajhi Takaful, Flynas, adn SMC Healthcare, while removing seven companies and downgrading the weighting of another. The changes, effective November 30, 2024, signal a recalibration of the index provider’s view of the Saudi stock market and are expected to trigger shifts in investment flows.
These index modifications are notable for both domestic and international investors. Inclusion in MSCI indices often leads to increased demand for a company’s shares as index-tracking funds are compelled to buy them, perhaps boosting valuations. Conversely, exclusion can result in selling pressure.The moves reflect MSCI’s ongoing assessment of Saudi Arabia‘s evolving market dynamics, liquidity, and accessibility following recent reforms aimed at attracting foreign capital.
Additions & Removals
MSCI will add Al Rajhi Takaful, a leading Islamic insurance provider; Flynas, a prominent Saudi airline; and SMC Healthcare, a key player in the Kingdom’s healthcare sector, to its MSCI Saudi Arabia Standard Index. Concurrently, seven companies will be removed from the index: Alinma Bank, Arab national Bank, Banque Saudi Fransi, Jarir Marketing, Leejam Sports, National Medical Care, and Saudi Basic Industries corporation (SABIC).
Additionally, MSCI has downgraded the weighting of Saudi Telecom Company (STC). The specific reasons for the removals and downgrading were not detailed in the announcement, but MSCI routinely re-evaluates constituents based on factors including market capitalization, liquidity, and free float.
Context & Implications
saudi Arabia’s stock market has undergone significant liberalization in recent years, including opening up to foreign ownership and easing investment restrictions. MSCI has gradually increased the weight of Saudi Arabian equities in its emerging markets indices, recognizing the kingdom’s growing economic importance and market maturity. These latest changes underscore the dynamic nature of the Saudi market and MSCI’s commitment to reflecting its evolving composition. Investors will be closely watching the impact of these adjustments on trading volumes and stock performance in the coming weeks.
