Saudi bourse up despite MSCI disappointment, other Gulf markets mixed

Gulf stock markets were narrowly mixed in early trade on Wednesday with Saudi Arabia holding up despite disappointing news that MSCI did not put the country on a list for possible reclassification to emerging market status.

The Saudi index edged up 0.2 per cent in the first half-hour of trade as Saudi Electricity, which has surged this week on news of a novel financing method for two planned solar power plants, gained a further 0.3 per cent.

In its annual market classification review, MSCI welcomed market reforms announced by Saudi authorities last month but merely said that once implemented by mid-2017, they would “bring the Saudi equity market closer to Emerging Market accessibility standards”.

This appeared to suggest that the Saudi market is unlikely to be included in the MSCI emerging index before mid-2018 at the earliest. In a research note, investment bank EFG-Hermes noted that if MSCI followed its standard timeframe – which it does not always do – May 2019 would be the earliest possible inclusion date.

Investors had not been betting heavily that Saudi Arabia would be placed on the review list, fund managers said, so MSCI’s decision did not push the market down.

Dubai’s index added 0.3 per cent as eight of the 10 most heavily traded stocks rose. Most of the gains were minimal, except for real estate developer Deyaar, which climbed 3.0 per cent as it posted the largest volume.

Abu Dhabi’s index fell 0.3 per cent although Union National Bank AD rose 1.4 per cent. Qatar’s index was flat although several blue chips gained strongly, with Qatar National Bank rising 2.0 per cent and Mesaieed Petrochemical adding 3.0 per cent.

MSCI also decided on Tuesday to delay including Chinese A-shares in its emerging markets index. This was modestly positive for the United Arab Emirates and Qatar, since Chinese inclusion would have diluted their weightings in the index.

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