EUR 25.60 For Business Accounts Only

MSCI November 2021 SAIR playbook | Active market actions sustain GCC flow impetus

UAE: IHC UH eligible for inclusion in Standard Index; Etisalat and DIB’s FOL hikes taking effect. IHC UH inclusion would trigger inflows of cUSD900mn (12DTT). Etisalat UH and DIB UH’s FOL hikes to 40% to result in USD250mn (22DTT) and USD6mn (1DTT) of inflows, respectively (assuming the inclusion of IHC UH). Emirates UH is estimated to be the most affected by sizable outflows (USD250mn, 69DTT). We flag DAMAC UH’s possible delisting and/or not meeting liquidity criteria to provide room in the Small Cap Index for either WAHA UH or RAKCEC UH. While WAHA UH is the runner up in terms of size, its liquidity may miss inclusion criteria.

Saudi: RESEARCH AB’s market cap doubling y-t-d fulfils Standard Index criteria. This could trigger USD30mn (5DTT) of passive inflows in RESEARCH AB. AOTHAIM AB and SACCO AB are possible candidates for migration to the Small Cap from the Standard Index, prompting USD32mn and USD30mn of outflows, respectively. We expect four additions to the Small Index (ASTRA AB, BAWAN AB, ZIIC AB, and CHEMANOL AB). PIF reportedly mulls retaining 50% of the 70% stake in STC AB, without disclosing an implementation timeline. This would potentially result in USD770mn/35DTT of inflows when implemented and reflected by MSCI FIF.

Qatar: Implementing FOL hikes before cut-off date to trigger USD560mn of inflows in three banks. On 18 August, Cabinet approved 100% FOL for: i) QNBK QD, ii) QIBK QD, iii) CBQK QD, and iv) MARK QD from 49% previously. Changes would mostly benefit QIBK QD, CBQK QD, and MARK QD (on deviation between free float and foreign ownership limit), resulting in potential inflows of cUSD250mn, cUSD170mn, and cUSD130mn, respectively. This is subject to the stock market’s implementation of the changes before the cut-off date (any of the final ten business days of Oct-21).

Monitor IPO pipeline for potential inclusions, with a focus on Abu Dhabi and Saudi Arabia. In Abu Dhabi, ADNOC Drilling’s listing should be followed by Fertiglobe (Oct-21) and Abu Dhabi Ports (4Q21); also very sizable IPOs. To be included in the Standard Index, they must meet the UAE’s market cap cut-off (currently at cUSD5.4bn, highest among our coverage). The UAE is currently at the target number of stocks for the investable universe, limiting room for inclusion in the Small Index. Saudi Arabia’s market maintains substantial room for further inclusions (target of 100 stocks vs. 83 currently). ACWA Power (Oct-21) is among significant IPOs expected in Saudi Arabia, while in Egypt, e-finance is to be listed this month.