MSCI and Saudi bourse to bring back indexes

JEDDAH, Saudi Arabia, (Reuters): Saudi Arabia’s stock exchange (Tadawul), the largest in the region, has signed an agreement with index provider MSCI to create Saudi equity market indexes, it said on Monday, as the bourse prepares to open to foreign investors.

The move comes nearly two years after MSCI withdrew its Saudi indexes after a licensing rights dispute with Tadawul.

“MSCI will reintroduce coverage of the Saudi Arabia equity market with the release of standalone country indices. MSCI will also reintroduce the MSCI GCC countries Index and the MSCI Arabian Markets Index as well as domestic versions of existing regional indexes,” a bourse statement said.

MSCI also will make the MSCI Saudi Arabia Domestic Indices, and related regional benchmarks, available in the course of June 2012, it added.

Saudi Arabia, the Arab world’s largest stock market with around 150 listed companies, is in the process of opening up to foreign investors. Currently foreigne investors can only buy Saudi stocks through swap agreements and via a small number of exchange-traded funds (ETFs).

Earlier this month, the Capital Market Authority’s Chairman Abdulrahman al-Tuwaijri said Saudi Arabia would open its stock market to foreigners in a “gradual” manner in order to protect the bourse’s stability.

Analysts have predicted that the Saudi stock market would open to direct foreign investments this year.

“If Saudi stocks become part of the MSCI then it will be a major step for attracting foreign investors and a good indicator that Saudi Arabia is heading toward opening up the market,” said Abdulwahab Abu Dahesh, a Saudi economist.