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Aramco Up for Third Session With Eye on Passive Flows: Inside EM


By Filipe Pacheco

(Bloomberg) Saudi Aramco shares advance for a third session — though the market valuation remained below $2 trillion — with investors focusing on the energy company’s inclusion in major international equity indexes this week.

The stock climbed 1.6% in Riyadh, extending gains since it started trading on Wednesday to 17%. The main Saudi index also advanced, along with most peers in the Middle East, as they caught up with global markets after the U.S. and China agreed on a phase-one trade deal last week.

MSCI Inc., which compiles the most popular emerging-market equities index, will add Aramco to its benchmarks using the closing price of Dec. 17. FTSE Russell will follow suit using the price of Dec. 19.

Aramco’s addition will probably trigger about $1.16 billion of flows into the stock, according to Arqaam Capital. EFG-Hermes foresees passive inflows of as much as $1.24 billion.

HIGHLIGHTS:
  • The MSCI Emerging Markets Index advanced 3.6% last week, the biggest weekly gain since June. An index tracking currencies in developing countries gained 0.9%
  • EM Review: Phase-One Trade Deal Hopes Give Fresh Boost to Assets
  • More: Oil Climbs to Level Last Seen After Saudi Attacks in September

MIDDLE EASTERN MARKETS:

  • Aramco closes at 37.40 riyals. The Tadawul All Share Index advanced 0.6%
    • NOTE: Company needs a price of 37.50 riyals for a market valuation of $2 trillion
    • NOTE: Aramco will be added to the main Saudi gauge at the start of trading on Dec. 18
    • Alinma Bank jumps 6.5%, the most since June 2017, after the lender’s board proposed increasing capital through the issuance of one bonus share for every three held
  • Kuwait’s main index rises 0.9%, extending the winning streak to eight sessions
    • MSCI said it will announce on Dec. 18 the classification result on Kuwait and Argentina
    • NOTE: Index compiler said in June that Kuwait would be added to its main index tracking stocks in emerging markets next year once some trading mechanisms were improved
    • READ: MSCI Supports Kuwait, Outlook More Doubtful for Saudi, U.A.E.
  • Stock indexes in Dubai, Qatar, Bahrain, Egypt climb as much as 1%. Gauges in Abu Dhabi, Oman and Israel lose as much as than 0.2%


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