$ 20 billion in extraordinary flows

Between Russia and Mexico after joining the emerging stock markets

Saudi Arabia's accession to major emerging market equity indices as of Monday is expected to attract about $ 20 billion of inactive fund flows. Saudi Arabia will be the main new addition to the global indices, the most important of which is the MSCI Markets index, Reuters said. To which he adheres in May and will give the MSCI kingdom a weight of 2.7%, a status between Russia and Mexico.

Saudi Arabia hopes that membership, which begins Monday with the FTSE Emerging Markets Index, will strengthen its desire to become a major destination for foreign capital.

Analysts estimate that this will help attract about $ 20 billion of inactive fund flows in 2019, which will take foreign participation from about 2%, one of the region's lowest, to 6%. %, according to Al Mal Capital.

"The initial proportional weighting of 2.7% of the index (for the MSCI index) is significantly higher than the past consolidation of the index over the last decade," said Freddy Radman , Head of Emerging Equity Strategy at Credit Suisse.

"Given the fact that the assets managed by inactive funds in emerging markets are much larger than in previous entries in the index, this would mean that there will be a large number of purchases foreign net of Saudi shares. "

Net purchases abroad since the beginning of the year have increased to $ 2.1 billion, but remain below expected inflows of inactive and active funds of up to $ 60 billion. according to Capital.

"We expect government-related entities, such as the Public Investment Fund, to meet demand for shares in a controlled manner," said Farajesh Bhandari, portfolio manager at Capital Capital in Dubai.