The Weekly Brief (25 May 2015)Contributor Global Markets Insights Strategy Team
In just a few weeks, Saudi Arabia will allow qualified institutional investors to invest directly in its USD570bn equity exchange - an exchange with a market cap larger than that of Russia’s MICEX and Poland’s WIG. Perhaps surprisingly, the index has not only diversified impressively over the past years, but its 169 constituents are not solely oil-related.
Average daily trading volume of USD2.3bn makes the Tadawul All Share Index the fourth most liquid amongst the emerging markets. Once the exchange opens on 15 June, we would anticipate a further increase in liquidity, which will contribute to market stability and reduce volatility of the country’s stocks. But the effects are not just on the technical side: longer term investors will be pleased as Saudi Arabian corporations are expected to improve transparency and governance.
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