Saudi Shares Extend Rally to 6-Year High on Foreign Access

Saudi shares jumped for a second day after the country’s market regulator said foreign institutional investors will have direct access to the Arab world’s biggest bourse in 2015.

The Tadawul All Share Index rose 1.4 percent to 10,162.73 at the close in Riyadh, the highest since February 2008. The gauge exceeded 10,000 yesterday for the first time in six years. Saudi Basic Industries Corp., the world’s biggest petrochemicals producer, climbed to the strongest level since August 2008. Al Rajhi Bank, the world’s biggest publicly traded Islamic lender, rose 1 percent.

The country’s Capital Market Authority will publish rules next month allowing participation for the first time by qualified foreign financial institutions in the first half of 2015, it said on its website yesterday. The Tadawul could become part of MSCI Inc.’s Emerging Markets Index by 2017 at the earliest and comprise as much as 4 percent of the gauge, said Sebastien Lieblich, executive director of MSCI Index Research.

“It’s exciting news and we expect Saudi shares to continue to do well in the short- to medium-term,” Ramez Merhi, director of asset management at Dubai-based Al Masah Capital, which manages $545 million, said by e-mail. Medium- to large-cap stocks are expected to attract more attention as investors position themselves for “the eventual international flow of funds seeking broad exposure to the market,” he said.

Index Inclusion

Sabic increased 5 percent to 129.51 riyals, taking its two-day gain to 12 percent. Al Rajhi climbed to 68.43 riyals, the highest since July 10. Samba Financial Group added 4.2 percent to 43.77 riyals, the strongest level since February 2011.

The inclusion of Saudi stocks in MSCI’s index depends on the details of the government’s plan to grant foreigners access, Lieblich said. The country’s exchange is currently limited to domestic investors and foreigners from the six-nation Gulf Cooperation Council. Overseas investors can access it through equity swaps and exchange-traded funds.

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