FTSE Russell: The Saudi stock market has joined the emerging market index of government bonds


Global index provider FTSE Russell announced that the Saudi Stock Exchange has joined the FTSE Emerging Markets Government Bond Index -EMGBI.

The FTSE Russell Emerging Markets Index of Government Bonds was joined as a result of the tangible developments and efforts made by the Capital Market Authority, in addition to its efforts with the relevant authorities concerned in developing the sukuk and debt instruments market, as the Saudi sukuk and debt instruments market took only 6 months since joining the list. Monitoring of the index on March 2021 until its actual accession to the index on September 30, 2021.

It is noteworthy that the accession will allow the Saudi sukuk and debt instruments to be part of the sukuk and debt instruments market indicators that international investors follow. Categories of investors in the local market in 2018, and foreign investors were allowed to invest directly in debt instruments during the year 2020. Also, during the same year, issuers wishing to offer debt instruments publicly were exempted from paying the financial compensation collected to the Authority when submitting an application for registration, studying the application and upon registration. Until the end of 2025, and in 2021, the Authority approved the instructions for international securities depositories, which provided an additional channel for foreign investors to invest in the local sukuk and debt instruments market.

Among the most prominent efforts taken by the authority in coordination with the relevant authorities within the framework of the (financial sector development) program, which is one of the programs of the Kingdom’s Vision 2030, is the reduction of the nominal value of government debt instruments to 1,000 Saudi riyals in 2019, and the restructuring of the financial compensation for services related to registration, listing and trading in The Sukuk and Debt Instruments Market by the Saudi Tadawul Company. During the year 2020, a new special index was created in the local Sukuk and Debt Instruments market, and the new index was launched on the Saudi Tadawul website.

The Capital Market Authority seeks to contribute to achieving the goals of the Kingdom’s Vision 2030 through the Financial Sector Development Program, and in light of its strategic plan and main axes concerned with developing the market for sukuk and debt instruments, and creating an attractive environment for all categories of local and international investors alike. The Authority’s efforts contributed to raising foreign investors’ ownership of sukuk and debt instruments to 223% during the first half of 2020 until the second half of 2021.

The Capital Market Authority believes that this step will contribute to expanding the base of investors in the financial market and improving its levels of liquidity, and that it is continuing to implement its strategic initiatives to ensure a financial market that facilitates financing, stimulates investment and supports the confidence of dealers in it.

It is worth noting that the Saudi stock market completed its accession to the most important emerging market indices at the beginning of 2020, by joining the MSCI Emerging Markets Index (MSCI), the FTSE Russell Index, and the S&P Index.

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