Saudi Arabia is in the final stage of evaluation for being upgraded under emerging markets by MSCI (Morgan Stanley Capital International) index, its regional chief said in Abu Dhabi.
MSCI has three main elements of classification before it can upgrade Saudi Arabia from frontier to emerging markets.
“There are three main elements to the classification. The first one is those changes in the rules have to be taken or made, second thing is those are put into practice and the third thing is how are those changes happening in practice so literally can we test the rules and how long do we need to test the rules before we are happy to those changes on paper are working in practice. So the third element is what we are in the process of doing it right now, “said Robert Ansari, Executive Director and Head of Middle East, MSCI.
He said whatever Saudi has to do on paper has been done and currently MSCI is talking to investors for feedback.
“We are in the mode of getting feedback from investors and they would know in June this year.”
Asked whether the ability of the Saudi stock market to absorb the mega Aramco IPO is a factor in MSCIs decision, he said, “It’s not a factor. Aramco and MSCI are independent of one another.”
Saudi Arabia has outlined plans to divest five per cent of the Saudi Aramco in 2018 with the aim of raising around $100 billion.
Talking about the challenges to upgrade Saudi as an emerging market, he said, “The main challenge is the fact that the market is closed for foreign investors. In a very short space of time, a complete overhaul of the entire capital market framework needs to be done primarily for the purposes of advancing the markets.”
Ansari made the comments while speaking at MENA Investors Congress in Abu Dhabi on Thursday.