Index compiler MSCI is to announce whether or not it will grant Saudi Arabia emerging market status on Wednesday, after the kingdom was put on a watchlist for inclusion a year ago.


"The FTSE Russell decision in March was an important achievement for the kingdom, but it is the MSCI upgrade that will truly help catalyse its Vision 2030 efforts", said Salah Shamma, head of Mena Investment at Franklin Templeton Emerging Markets Equity.

Mark Mobius, who has gained a reputation for being optimistic more often than not on emerging-markets' prospects, said earlier this month he isn't completely bullish on Saudi Arabia because the range of offerings is limited and a number of restrictions are still in place. "We believe such factors could be supportive of higher mid-cycle valuations", they said. "Our research has shown that markets have tended to perform strongly in the run-up to inclusion in the MSCI EM Index".

Indonesia's rupiah dropped 1.2 percent - its steepest daily fall in more than two years - after the country's currency markets opened for the first time since June 8 and despite the central bank saying it was ready to act. Judging by stock-market performances, the Middle Eastern kingdom is on top.

"From a market liquidity standpoint, connecting the Saudi market to the rest of the world and having the free movement of capital from global investors to the Saudi market only helps a listing of the size and scale of Saudi Aramco", he said.


In Argentina, hopes for an upgrade had faltered as the peso tumbled, making the central bank jack up interest rates to a world-beating 40 per cent and leading the government to turn to the International Monetary Fund for a record US$50 billion credit line.

Maurel estimates it will lead to $35 billion of inflows.

Among the changes announced this year include rules governing market-making, establishing a company which will ultimately clear all trades on the Saudi bourse, and introducing a new mechanism to set the closing price of shares that is more in line with global standards.

"We won't just see ETFs, we will see more diversity in investment vehicles". The recent selloff in stocks and an "attractive" exchange rate means that Argentine stocks offer "interesting opportunities" for foreign investors, according to BlackRock Inc.


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