According to a report on the recent announcements made by the Capital Market Authority (CMA), the proposed changes are likely to significantly impact the Tadawul, going forward. While part of these amendments focus on increasing ownership levels of qualified foreign institutional investors (QFIs), they also outline the introduction of new types of trading options (securities lending & covered short selling) and a new settlement process (from T+0 to T+2 settlement). The report, released by Jadwa Investment, said: "We believe that encouraging QFIs entry into Tadawul will have positive implications for the Saudi economy. Allowing foreign investors access to the Saudi Stock Exchange will increase the participation of institutional investors." The report also highlighted that once these rules are applied, during H1 2017, Tadawul will lead the region in being the first to introduce market instruments and processes that not only increase market liquidity, but also add to institutional confidence and investor choice CMA announcements paved the way for the future inclusion of Saudi Arabia into the MSCI Emerging Market Index. According to the report, the announcements are not motivated by concerns over the slow uptake by QFI in the short-term, but are shaped by wider macro-economic reforms outlined in the Saudi vision 2030. The ‘thriving economy' theme within the Vision 2030 reform plan focuses on diversifying the economy, improving the business environment, as well as creating opportunities through encouraging investment. The report adds that participation of QFIs is one way the ‘thriving economy' theme will be developed. The report further said all the announcements paved the way for the future inclusion of Saudi Arabia into the Morgan Stanley Capital International Emerging Market Index (MSCI EM). Meanwhile, Saudi shares rose Tuesday, lifted by firmer oil prices and news that Saudi Arabia's second-largest telecommunications operator Mobily had secured waivers from all its lenders on breaches of loan agreements. Saudi Telecom and Zain Saudi were up 0.8 and 1.1 percent respectively. Petrochemical shares were strong with the sub-index rising 1.9 percent, heading for its fifth straight session of gains after Brent crude oil hit another high for this year. Saudi Basic Industries, the largest petrochemical producer, rose 0.9 percent. The main index was up 1.0 percent. In Dubai the index added 0.6 percent with Arabtec climbing 0.7 percent to 1.46 dirhams after it said its June 1 general assembly would aim to approve a plan to use "all the statutory reserve to extinguish part of the company's losses". It gave no details. Arabtec has reported losses in the past six quarters, which it blamed on increased costs and tough market conditions. In the last few days analysts at Deutsche Bank cut their price target for Arabtec stock to 1.11 dirhams from 1.14 dirhams while maintaining a "hold" rating, and EFG Hermes raised its target to 1.13 dirhams from 1.07 dirhams while keeping a "sell" rating. Blue chip Emaar Properties jumped 2.3 percent. Vodafone Qatar dropped 3.5 percent after the company reported a net loss of 180 million riyals ($50 million) in the latest quarter, versus a loss of 66 million riyals a year earlier.
