We look at how the two markets compare with each other
Thursday 30 Jan 2020 Author: Tom Sieber

Kuwait is creeping closer to its elevation to emerging market status as the standing of Middle East equities in global market terms improves.

The experience of Saudi Arabia, after making the leap in 2019, shows the benefit of being promoted from a frontier to an emerging market. Kuwait is on track to make the same move in May 2020.

Since its full inclusion in the MSCI Emerging Markets index in late August 2019, the Saudi Taduwal benchmark has ticked higher.

This is impressive given the backdrop, with a significant amount of regional geopolitical strife in the interim including attacks on oil facilities in Saudi Arabia in September 2019 and mounting tensions between the US and Iran in the first days of 2020.

So how does Kuwait’s stock market compare with that of Saudi Arabia? The MSCI Taduwal 30 Index, including the 30 largest Saudi stocks, is heavily weighted towards financials at just more than 50%.

Materials stocks stand at around a quarter of the index and despite the float of Saudi Aramco in December 2019, energy represents a relatively modest 6.7%.

The MSCI Kuwait index shows this market is even more dominated by the financials sector, accounting for more than 80% of its total value. The National Bank of Kuwait alone accounts for nearly 50% of
the index.

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit here.

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