EUR 22.11 For Business Accounts Only

MSCI AUGUST 2020 QIR PLAYBOOK: HRHO EY could replace SWDY EY in Egypt; Limited changes in GCC

HRHO EY could replace SWDY EY in Egypt’s Standard index. HRHO EY could replace SWDY EY in Egypt’s Standard index. HRHO EY’s recent rally (30% over the past three weeks) positions the stock as a strong candidate to migrate to Egypt’s Standard index and replace SWDY EY in the Aug-20 QIR. This is conditional on SWDY EY falling 50% below the index’s market cap cut-off (gap is currently 8% only). Additionally, HRHO EY’s FFMC should surpass 1.5x SWDY EY’s FFMC (currently 2% below this level). We will monitor SWDY EY’s price performance in the coming period, as an 8% drop in the stock’s price would lead to its exclusion from the Standard index, allowing HRHO EY’s migration to take place. If HRHO EY joins the index, it could see inflows of cUSD70.44mn (47 DTT), while SWDY EY would move to the Small Cap index, with estimated outflows of USD72.8mn (36 DTT).

One potential addition in the UAE’s Standard index; ADIB UH gets approval for FOL hike, potential inclusion in Nov-20 SAIR. IHC UH is a potential candidate for inclusion in the upcoming Aug-20 QIR. If it joins, IHC UH would weigh 10.2% of the index, with inflows of USD464mn (32DTT). ADIB UH is set to join the UAE’s Standard index in the Nov-20 SAIR, as it received regulatory approvals to push its FOL to 40% from the current 25%. This would result in a weight of 4.2% for ADIB UH and trigger inflows of USD191mn (42 DTT). DIB UH and ENBD UH are also awaiting regulatory approvals to increase their FOLs to 40% from the current 25% and 20%, respectively. If this happens before the Nov-20 SAIR, ENBD UH’s weight would increase to 15.7% from 9.1%, with estimated inflows of USD298mn (26 DTT), while DIB UH’s weight could increase to 7.9% from 5.6%, with estimated inflows of USD104mn (19 DTT).

Potential NCB AB/SAMBA AB merger could create an entity with a weight of 12.3% of Saudi Arabia’s Standard index. Based on the announced swap ratio for the deal and the FOLs of both NCB (45%) and SAMBA (49%), we expect the new entity to potentially weigh 12.3% of the index and trigger inflows of cUSD857mn, if the deal materialises. NCB AB’s current weight is 7.3% and SAMBA AB is c3.2%. As such, RJHI AB would lose 0.4% of its current weight, with outflows of USD73mn, while SABIC AB would lose 0.2%, with estimated outflows of USD32mn.

Kuwait’s long-awaited EM upgrade to take place in Nov-20. We expect Kuwait’s IMI to include 19 constituents, eight of which would be in the Standard index, with no change to the previous constituents, and 11 constituents in the Small Cap index. We continue to expect Kuwait to witness inflows of cUSD2.65bn, of which NBK KK would be the biggest beneficiary with USD1.18bn (84 DTT) of inflows, followed by KFH KK, with USD572mn (27 DTT). The financial sector comprises 47.5% of Kuwait’s IMI, followed by industrials at 21.1% and real estate at 10.5%.