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MSCI November 2019 SAIR playbook: Eye four additions across UAE, Qatar, and Saudi; ENBD the main driver for UAE in 2020

Look for three inclusions in the Standard indices; ADIB UH in the UAE, QIIK QD in Qatar, and ARNB AB in Saudi. We expect ADIB UH to join the Standard index in Nov-19, with anticipated flows of USD33.14mn (9 DTT), capturing 5% of the index. Qatar’s QIIK QD obtained approval to increase its FOL to 49% from 25%, increasing its FFMC and qualifying it to join Qatar’s Standard index in Nov-19, with a weight of 4.8%. In Saudi, we expect ARNB AB to join the Standard index, as it meets all size and liquidity requirements, making it a possible inclusion in the Nov-19 SAIR.

Expect two weight increases and actions in the Small Cap indices. SABB AB and BUPA AB should see their weights increase, on the foreign strategic investor adjustment. BUPA AB would witness inflows of USD96mn (20 DTT) and SABB AB USD322mn (36 DTT). MERS QD’s weight could rise to 5.6% from 2.8%, due to its FOL increase, with USD314mn (116 DTT) in inflows. SHUAA UH is a candidate for the UAE’s Small Cap index, with USD34.1mn (18 DTT) of inflows. In Egypt, SKPC EY and AMOC EY fail the Small Cap cut-off, and their stock performance in October would be key for their positioning in the index. If deleted, AMOC EY and SKPC EY would witness outflows of USD2mn (8 DTT) and USD2.2mn (4 DTT), respectively.

EMIRATESNBD UH could join UAE index in May/August 2020, main driver for UAE index changes in 2020. EMIRATESNBD UH has increased its FOL to 20% from 5%, paving the way for the stock to join the Standard index in the May or August 2020 reviews, after meeting the liquidity requirements. EMIRATESNBD UH currently fails 4Q19 and 1Q19, on the back of adjusted liquidity, after using a new FIF of 20%. Following the potential inclusion, the stock could capture a weight of 8.0%, triggering inflows of USD340mn (121 DTT). EMIRATESNBD UH’s inclusion would risk the deletion of EMAARDEV UH and EMAARMLS UH, on falling 49% below the cut-off. However, this is conditional on stock price changes until May/August 2020.     

UAE FOL hike theme could benefit ETISALAT UH, DIB UH, EMAAR UH, and ALDAR UH. Companies that increase their FOL to 100% will highly benefit, if their current free float % is above the current FOL, leaving room for inflows. Only four stocks in the MSCI UAE Standard index meet these conditions, namely ETISALAT UH, DIB UH, ALDAR UH, and EMAAR UH. If these stocks’ FOL is lifted to 100%, the index would witness inflows of USD1.2bn, distributed as ETISALAT UH (USD712mn), DIB UH (USD373mn), EMAAR UH (120mn), and ALDAR UH (6.43mn).