Saudi market surprise sparks speculation of Sukuk access

Saudi Arabia’s plan to open its $531 billion stock market to foreigners is prompting analysts’ speculation that Islamic bonds will be next. Saudi Arabia capital market authority said last week that the stock-market change would take place in the first half (H1) of next year. The move may lead to the country’s inclusion in MSCI indexes, which are used to measure performance by money managers with an estimated $9 trillion of assets. Opening the local-currency sukuk market would give foreign investors access to companies that sold 42 billion riyals ($11.2bn) through a dozen sales in the past year. However, access to the kingdom’s debt market may appeal more to investors wanting to broaden their exposure than to those seeking yield.