THE SAUDI ARABIAN ETF OF INVESCO IS ALREADY THE LARGEST INVESTOR IN THAT COUNTRY

  • “Saudi Arabia is carrying out a series of major reforms with the aim of improving its growth and diversifying its revenues from hydrocarbons”.
  • Part of this process is based on the opening of the Saudi stock market, which has made the MSCI incorporate the country to the Emerging Market Index next May.
  • The “Visión Saudí 2030” program seeks to increase the use of renewable energies, increase the international presence of its companies and attract foreign investment.
  • The Invesco MSCI Saudi Arabia UCITS ETF is the first in Europe to offer purely passive exposure to Saudi Arabia and has raised 315 million dollars in 8 months.

The Invesco MSCI Saudi Arabia UCITS ETF has become only eight months in the largest ETF in the world of those who focus on the market in that country. The manager reveals that this ETF, the first in Europe to offer purely passive exposure to Saudi Arabia, has attracted more than 315 million dollars, at the end of February.

Laure Peyranne, head of ETFs of Invesco in Spain, says that there has been strong demand for this ETF because “Saudi Arabia is carrying out a series of major reforms with the aim of improving its growth, diversify its income from hydrocarbons and become in a global center of global commerce.”

According to Peyranne, part of this process is based on the opening of the Saudi stock market, which has caused MSCI to join the country to the Emerging Market Index since May of this year. “This inclusion undoubtedly increases the attractiveness of Arabia for investors,” he says.

Invesco especially highlights the reforms of the program “Visión Saudí 2030”, aimed at reducing the dependence of the economy on government and oil financing. “Among other objectives, it seeks to increase the private contribution in the economy and the use of renewable energies, increase the international presence of its companies and attract foreign investment, ” says the manager. The country will finance part of this program with the planned sale of 5% of state oil company Saudi Aramco.

After the opening of its stock market in 2015, MSCI has decided to add Saudi Arabia to its emerging markets index in two phases, from the end of May to August this year, with an estimated final peso of 2.8% of the index. Taking into account that the Emerging Markets Index has investments of 1.8 trillion dollars, this supposes an inflow of capital of more than 50,000 million dollars only from those investors or funds that replicate the index.

The Invesco MSCI Saudi Arabia UCITS ETF replicates the behavior of the MSCI Saudi Arabia Index 20/35, with the limitations of diversification and excess concentration to ensure that it complies with the UCITS requirements. The index is made up of 30 companies that account for approximately 85% of the free float by market capitalization.

The fund, which is quoted in dollars on the London Stock Exchange, is the first ETF in Europe to offer a purely passive exposure to Saudi Arabia, the largest economy in the Middle East.

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