EME Strategy: Saudi Aramco’s inclusion in MSCI EM = USD 42m outflows from EME
Yesterday (11 December), the MSCI confirmed the inclusion of Saudi Aramco into the MSCI EM index, effective as of the 17 December close. After the analysis of investors participating in the IPO, the index provider noted that the company’s free float (FF) will be set at 0.5% vs. the 1.5% stake placed (out of which institutional investors account for 1.0ppt, while retail investors for 0.5ppts). The MSCI added that it will consider retail investors (0.5%) as non-FF for the first 180 trading days. This is because, if retail investors keep their shares for 180 days, they will receive bonus shares, i.e., an additional bonus share of Saudi Aramco for each 10 stocks owned, with a cap of 100 bonus shares. The bonus shares will be allocated by the selling shareholder. Therefore, we believe that, following this period, when the bonus stocks are allocated, the MSCI may increase Saudi Aramco’s FF further, by 0.5ppts.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
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