MSCI and Tadawul launch tradeable index

Tadawul, the Saudi stock exchange, and index provider MSCI have teamed up to launch the MSCI Tadawul 30, a tradeable index designed to provide investors with a benchmark for the largest and most liquid stocks in the kingdom.

It is made up of the 30 largest stocks listed on the exchange which is itself the largest in the GCC region in terms of market cap and turnover. Stock selection will be based on their free float market capitalisation and screened for liquidity and international investability.

According to MSCI, the index will be rebalanced four times a year and the stocks, which will be capped at a maximum 15% weighting, could vary between 25 and 35 to reflect any changes in the underlying market.

The tradeable index, which was first announced in September 2018, follows Saudi Arabia’s upgrade to emerging market status by index providers MSCI and FTSE, and it is hoped that it will serve as the basis for index futures and other financial products including derivatives, mutual funds and exchange-traded products said Robert Ansari, head of the Middle East at MSCI.

“With additional derivatives launches in the pipeline, including the introduction of an associated exchange-traded index futures contract, we expect to make significant strides this year in further enhancing market efficiency and creating new opportunities for investors to diversify risk and broaden exposure to the Saudi market, which continues to be the largest and most liquid in the region,” added Khalid Al Hussan, chief executive officer of Tadawul.

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