Economics
Saudi Arabia Emerging-Market Tag Comes With Sobering History
- FTSE adding Saudi Arabia to emerging markets group next year
- Outperformance tends to end after index inclusion: RenCap
Photographer: Fayez Nureldine/AFP via Getty Images
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As Saudi Arabia celebrates its first ever emerging-market classification by a major index compiler, history suggests the market may be headed for a retreat.
The Saudi stock benchmark advanced to the highest since 2015 last week before FTSE Russell said it’s classifying the country as a secondary emerging market, with actual inclusion set to happen in stages starting a year from now. MSCI Inc., which has more investors tracking its emerging-market indexes, may make a similar decision in June.