Strategy Note /
Saudi Arabia

Saudi Arabia: FTSE Russell Semi-Annual Review | March 2023

  • FTSE Russell announced changes related to FTSE Saudi Arabia Free Index Series

  • There was one deletion (SGS) from Saudi Free Index with no new additions

  • The Saudi market weight in the FTSE Emerging Market largely remains unchanged at c4.4%

SNB Capital
13 March 2023
Published bySNB Capital

FTSE Russell announced changes related to FTSE Saudi Arabia Free Index Series as part of its March 2023 Semi-Annual Index Review (SAIR). There was no addition, while Saudi Ground Services (SGS) was deleted. Investability weights of Emaar EC was also reduced. On a pro-forma basis, the Saudi market weight in FTSE Emerging Market index is 4.44. We estimate a net outflow of cSAR70mn–SAR120mn, mainly related to SGS (cSAR65mn) and Emmar EC (cSAR20mn).

  • FTSE Russell announced the outcome of its September 2023 Semi-Annual Index Review (SAIR), with changes to be implemented on the closing of 17 March 2023 for Saudi indices (effective day 20 March 2023). We believe these changes will be implemented on 16 March 2023 as the Saudi Exchange will be closed on 17 March 2023 (Friday).

  • There was one deletion (SGS) from Saudi Free Index with no new additions. Accordingly, the total number of Saudi stocks in FTSE EM declined to 53. Furthermore, the investability weights of Emaar EC was reduced.

  • On a pro-forma basis, the Saudi market weight in the FTSE Emerging Market largely remains unchanged at c4.4%.

  • For Small Cap index, there were 3 additions. SGS was downgraded from the main index, while AlDawaa and AMAK were included as they now achieved investable market cap.

  • Overall, we expect a net outflow of cSAR70mn-cSAR120mn, largely related to SGS and Emaar EC.

  • We estimate an outflow of cSAR65mn (cUS$17mn) in SGS, following the downgrade from the main index. From an ADTV perspective, this represents outflows equivalent to 8 days based on the average trading volumes of the last 3 months. We also expect an outflow of cSAR20mn (cUS$5mn) in Emaar on account of change in the investability factor, equivalent to 2 trading days of the 3 month ADTV.

  • For all the other stocks, the inflow/outflow are non-material