FTSE Russell Consider Upgrading Saudi Debt Market, at the End of September

“FTSE Russell” set the last day of this month of September, to take a decision on upgrading the Saudi debt stock exchange to the “FTSE bonds index of government bonds in emerging markets denominated in local currency”, in one of the most important financial turning points related to foreign investment in the history of financial markets. The local market after a series of continuous upgrades to the stock market indices that occurred between 2019 and 2020.

In a statement, FTSE indicated that it will consult the regional advisory body for fixed income instruments in the coming days, before its meeting on September 30, i.e. 17 days from now, to discuss upgrading the Saudi debt market.

The index is attracting the attention of foreign investors because it gives them the possibility to invest in a limited number of debt markets in emerging markets, in the local currency of each country, according to the Saudi Economic Journal.

This step would contribute to attracting billions of dollars from foreign investors to the local debt markets, after the upgrade took effect.

These developments come after the meeting that took place in late March, the results of which showed that the FTSE committees decided to postpone granting Saudi Arabia, along with India, a rating of “1”, which would have been sufficient to obtain a direct upgrade to the international index.

We will wait until the next meeting in September of this year to know the evaluation of the FTSE committees. According to a statement issued by “FTSE”, consultations took place during the last period between investors and “FTSE” with local regulators in Saudi Arabia.

The past period witnessed a noticeable increase in the number of brokerage firms that succeeded in addressing the technical problems of electronic trading platforms, enabling individuals to carry out buying and selling operations on government instruments in the same way they trade in shares.

Government sources revealed that the number of brokerage firms, which have the infrastructure to accept requests for buying and selling fixed income instruments, has risen to eight, 27 months after the announcement of reducing the nominal value of the instrument from one million to one thousand riyals.

This data means that the number of brokerage firms specialized in trading debt instruments “through individuals” has jumped by 300% compared to what it was previously when this number stood at only two companies.

While the number of brokerage firms in the Saudi stock market is 30, this number varies with the sukuk and bond market.