Crown Prince Mohammed’s Promotion, MSCI Announcement Jolts Saudi Stock Market to Big Gains

Saudi Arabia’s stock market soared for a second straight day following two big storylines that are giving investors confidence: the promotion of Prince Mohammed bin Salman to first-in-line to be King of Saudi Arabia, and news that the Kingdom may be considered for MSCI Emerging Market index inclusion as soon as 2019.

The announcement of Prince Mohammed’s promotion gives greater certainty to investors and traders of the Kingdom’s line of succession. It also doubles down on the young prince’s ambitious Vision 2030 economic and social reforms to turn the Kingdom’s economy into a sustainable and prosperous one.

The promotion of Prince Mohammed bin Salman means he will be second-in-line to be King of Saudi Arabia.

The promotion of Prince Mohammed bin Salman means he will be second-in-line to be King of Saudi Arabia.

According to Reuters, Riyadh’s stock market added 1.2 percent to a 20-month high of 7,426 points in heavy trade, and is now up 6.8 percent in reaction to the appointment of Prince Mohammed bin Salman to crown prince.

The Saudi government also retroactively reinstated bonuses and allowances for civil servants and military personnel that were suspended in September, at a cost the government about 5 or 6 billion riyals ($1.3 billion to $1.6 billion), the finance ministry said on Thursday, according to Reuters.

On the same day of the promotion announcement, index provider MSCI announced the addition of Saudi Arabia to the 2018 annual review cycle for potential inclusion in the MSCI Emerging Markets index the following year. The announcement means that Saudi Arabia could become the ninth largest country on the MSCI Emerging Market index if it wins inclusion in 2019, potentially attracting more than $38 billion of inflows, Arabian Business reports.

There were 10 countries originally on the MSCI index when it was first compiled in 1988, and now there are 24. In the Gulf, the UAE and Qatar have been on the index since 2014.