Cars drive past the Kingdom Tower in Riyadh, Saudi Arabia Image Credit: REUTERS

New York: Index provider MSCI said on Wednesday it will give emerging market status to Saudi Arabia, effective mid-2019.

The move will sharply broaden the Saudi investor base in a move that could be supportive of local equities.

International investors’ expectations are now “that the current privatization effort in Saudi Arabia will continue to grow the investable opportunity set available to them and hence, all other things being equal, contribute to an increased weight of Saudi Arabia in the Emerging Markets Index in the future,” Sebastien Lieblich, MSCI managing director and global head of equity solutions, said in a statement.

The Saudi index has been among the best performing in the Gulf region, up 13.3 per cent year to date.

There is high anticipation over the market listing of Saudi state-controlled energy company Aramco, which could be the largest publicly-traded company globally.

Saudi Arabia could see $30-45 billion of portfolio inflows in the next two years if it reaches the same level of foreign ownership in stock markets as the UAE, according to investment bank EFG Hermes.