Saudi stocks not strong enough to make EM ranking

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Riyadh – A prominent emerging market (EM) investor said he believes that Saudi stocks have not been performing well lately and therefore the market is unfit to be ranked as an EM.

“We are not necessarily bullish on Saudi stocks, simply because the range of offerings is limited and a number of restrictions are still in place,” German-American businessman Mark Mobius told Bloomberg.

Ranking as an EM is part of Saudi Arabia's efforts to attract large investments and reduce its reliance on oil.

“Many difficulties remain for Saudi market entry,” the 81-year-old EM investor stated.

Next week, the MSCI is set to reveal its additions to the EM ranking, which may include adding Saudi Arabia to its index, while FTSE International Limited trading (FTSE Russell) is also considering adding the Saudi Stock Exchange (Tadawul) to its index listing in March 2019.

Mobius also tackled the planned initial public offering (IPO) of Saudi Aramco which is likely will be implemented in 2019, saying that “The Aramco IPO has corporate governance problems.”

“Since it is an instrument vital to the Saudi budget, the question always will be if the interests of minority shareholders will be subsumed under the dictates of the Saudi government,” Mobius concluded.

The MSCI announcement is due on Wednesday, 20 June.

Over the past three years, Saudi Arabia has been launching a number of initiatives to attract and bolster foreign investment in its market, including opening its bourse, the largest in the Middle East, to foreign investors.

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