$11bn in inflows from Saudi inclusion on JPMorgan emerging markets index

Saudi issues will account for 3.1 percent of the weight of the indices
$11bn in inflows from Saudi inclusion on JPMorgan emerging markets index
A JPMorgan statement sent to investors said that Saudi Arabia, along with Kuwait and the UAE, are eligible for inclusion in the JPMorgan’s EMBI Global Diversified, EMBI Global and EURO-EMBIG indexes.
By Bernd Debusmann Jr
Sun 30 Sep 2018 09:05 AM

Saudi Arabia’s inclusion in the JPMorgan Emerging Markets Index next year will lead to inflows of approximately $11 billion, according to the kingdom’s Ministry of Finance.

Last week, a JPMorgan statement sent to investors said that Saudi Arabia, along with Kuwait and the UAE, are eligible for inclusion in the JPMorgan’s EMBI Global Diversified, EMBI Global and EURO-EMBIG indexes.

The countries will be phased in over a nine month period beginning on January 31, 2019. Both conventional bonds and sukuks will be eligible for inclusion in the indexes.

According to the Saudi Ministy of Finance, Saudi issues will account for 3.1 percent of the weight of the indices, “which will add support to the investor base as well as improve liquidity levels for the government’s issues as well as the issuances of government-owned companies.”

“Continued communication with investors globally has also contributed an increase in strategic initiatives such as index inclusion,” a ministry statement said. “The Office [The Ministry of Finance’s Debt Management Office] expects estimated inflows of approximately $11 billion as a result of this listing.

The move comes after similar announcements earlier this year that S&P Dow Jones Indices, MSCI and FTSE.

According to UBS Global Wealth Management’s chief investment office, the MSCI inclusion alone should translate into $10 billion from passive and $35 billion from active investments, compared to $5 billion in inflows stemming from the FTSE inclusion.

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