FTSE Russell, an index analytics and data provider, announced today that it is launching a Saudi Arabia-focused index. The FTSE ADS Custom Saudi Minimum Variance Index (CSMVI) was launched with ADS Investment Solutions (ADS), an Abu Dhabi-based asset manager.
The CSMVI will not be overly focused on any one sector as it attempts to reflect the broader trends in the Saudi Arabian market. ADS also claim that the new index will help to reduce volatility in the FTSE Saudi Arabia All Cap Index.
FTSE Russell’s CEO, Mark Makepeace, discussed the new index, saying: “We are delighted to collaborate with ADS Investment Solutions, to support the development of the local capital markets and the growing demand for investment in the Middle East.”
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New ETF for a new index
ADS will also be launching an exchange-traded fund (ETF) to track the index. The ETF has been incorporated in Abu Dhabi Global Market (ADGM) and will be listed on Abu Dhabi Securities Exchange.
The launch of the CSMVI comes shortly after FTSE Russell changed Saudi Arabia to emerging market status. Saudi Arabian stocks will be included in FTSE Russell’s emerging markets index from March of 2018. As the Saudi Arabian market is large, stocks will only be gradually introduced to the index and the process will likely be complete in December 2019.
The new index is a reflection of Saudi Arabia’s growing efforts to diversify its economy, moving away from its oil dependency and opening up to foreign investment. In January of this year, the country’s financial regulator, the Capital Market Authority, eased restrictions on foreign investors to encourage investment in its stock market.