In just a few weeks, Saudi Arabia will allow qualified institutional investors to invest directly in its USD 570bn equity exchange – an exchange with a market cap larger than that of Russia’s MIECX 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 USD 2.3BN makes the Tadawul All share index the fourth most liquid amongst the emerging markets. Once the exchange opens on 15th 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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