MSCI, the US index publisher, said on Tuesday it will include 234 Chinese large cap stocks in its global and regional indexes on June 1, setting the stage for capital markets in the world’s second-biggest economy to get a boost from a potential surge of foreign money.
In a quarterly review, MSCI ejected nine companies and added 11 from the proposed MSCI China A Inclusion Index, slightly altering the expected weighting that the Chinese stocks will have in MSCI’s emerging market index. It did not explain why some companies were added or removed.
The 234 yuan-denominated stocks, or China A-shares, will represent an aggregate weight of 0.39 percent in the MSCI Emerging Markets Index at a 2.5 percent partial inclusion factor during the first step of the China entry. The second phase of the entry will take place in September, which will double A-shares’ aggregate weight to 0.78 percent.
The long-awaited inclusion of Chinese stocks in MSCI’s indexes next month is expected to draw increased foreign capital into China’s markets, where foreign ownership now amounts to about 2 percent.
The inclusion “sends a message that global investors can’t afford to ignore onshore China equities anymore,” Howard Wang, Head of Greater China Equities at J.P. Morgan Asset Management, wrote in a note.
The US asset manager expects that in the next five years, China A-shares’ weighting in the MSCI EM index could rise to 9 percent, bringing in about $230 billion of index flows.
The top five companies added to the China A Inclusion Index on Tuesday by market cap were Shanghai Electric Group , Zhangzhou Pientzehuang Pharmaceutical Ltd. Heilan Home Co. Ltd, Zhejiang Century Huatong Group Co. and Perfect World Co. Ltd. .
The MSCI China A Inclusion Index is heavily weighted toward financials, consumer, and real estate.
The firms include China’s biggest lenders such as the Industrial and Commercial Bank of China, Bank of China and China Construction Bank , the country’s top consumer brands Kweichow Moutai and Qingdao Haier, as well as China’s major metal producers including Baoshan Iron & Steel.
Telecommunications equipment maker ZTE Corp, which has been buffeted by trade frictions between China and the United States, remained on the list and will be among those included.
Although much of the impact has been priced in already, the imminent China MSCI entry has rekindled interest in Chinese blue-chips recently.
Raymond Ma, portfolio manager at Fidelity International said he believed the inclusion of A-shares in the MSCI indices would help the A-share market to become more sophisticated, improve liquidity and be driven by fundamentals rather than speculative factors.
“I am most constructive on consumer, information technology and industrials sectors after the MSCI inclusion,” he said.
“Thanks to ongoing consumption and industrial upgrading in China, these sectors are likely to deliver sustainable and solid growth in the next three to five years. We expect them to outperform in the medium to long term.”
Over the past two months, Chinese mutual fund houses have raised over 10 billion yuan through a dozen newly-launched funds that track MSCI’s A-share indexes, while April’s foreign inflows via the Shanghai-Hong Kong stock connect hit a monthly record.
MSCI said last June that Chinese stocks could initially represent a 0.73 percent weighting in the MSCI EM Index at a 5 percent partial inclusion factor, with the inclusion to be completed in a two-stage process, on June 1, and on September 3.
MSCI’s latest announcement means the China A-share weighting would rise slightly to roughly 0.78 percent.
Irmak Surenkok, portfolio specialist at T. Rowe Price, said that foreign investor participation in A-shares increased by about 30 percent since MSCI’s China inclusion announcement last year.
However their share was still modest at little over 2 percent, compared with nearly 40 percent foreign participation in other Asian markets such as Taiwan and Korea, he said.
“While many investors focus on top-down indicators such as GDP growth or the debt burden, in our view, it is the underlying bottom-up opportunities that illustrate how compelling and still under-appreciated the China investment story is.”
Darwin Hung, index analyst at Instinet Pacific Ltd, said that investors don’t expect MSCI to accelerate the inclusion of A-shares in the short-term.
However, “everyone will still be interested to know when MSCI will expand the list to include midcap and non-Stock Connect stocks as that would greatly increase the weighting of A-shares in its Emerging Market Index,” he said.
MSCI lists 234 Chinese stocks for index inclusion in boost to capital markets
MSCI lists 234 Chinese stocks for index inclusion in boost to capital markets
- MSCI's emerging market index is used as a benchmark for around $1.6 trillion worth of global assets.
- Stocks included in the index automatically attract significant investment from passive funds such as exchange
QatarEnergy strengthens global footprint with offshore expansion in Namibia
RIYADH: QatarEnergy has expanded its portfolio through a new agreement with TotalEnergies to increase its ownership stakes in two offshore blocks in Namibia’s Orange Basin.
According to a press release, the state-owned energy firm will acquire an additional 5.25 percent interest in block 2913B and an additional 4.7 percent interest in block 2912 under the new deal, subject to customary approvals.
Once finalized, QatarEnergy’s share in these licenses will rise to 35.25 percent in block 2913B and 33.025 percent in block 2912.
Saad Sherida Al-Kaabi, Qatar’s minister of state for energy affairs and CEO of QatarEnergy, said: “We are pleased to expand QatarEnergy’s footprint in Namibia’s upstream sector. This agreement marks another important step in working collaboratively with our partners toward the development of the Venus discovery located on block 2913B.”
TotalEnergies, the operator of both blocks, will retain 45.25 percent in block 2913B and 42.475 percent in block 2912. Other partners include Impact Oil & Gas, which holds 9.5 percent in both blocks and the National Petroleum Corp. of Namibia, which owns 10 percent in block 2913B and 15 percent in block 2912.
Located about 300 km off the coast of the African country, in water depths ranging from 2,600 to 3,800 meters, these blocks host the promising Venus discovery. The Venus field has attracted considerable attention as a significant find that could impact Namibia’s energy future.
This offshore acquisition complements QatarEnergy’s recent ventures into renewable energy. In October, the company announced a 50 percent stake in TotalEnergies’ 1.25-gigawatt solar project in Iraq.
The initiative, part of Iraq’s $27 billion Gas Growth Integrated Project, aims to enhance Iraq’s energy self-sufficiency by addressing its reliance on electricity imports and reducing environmental impacts.
The solar project, set to deploy 2 million bifacial solar panels, will generate up to 1.25 GW of renewable energy at peak capacity, supplying electricity to approximately 350,000 homes in Iraq’s Basra region.
QatarEnergy will share equal ownership of the project with TotalEnergies, which retains the remaining 50 percent.
The firm’s dual focus on traditional and renewable energy highlights its strategic approach to meeting global demands while addressing sustainability concerns.
Its involvement in Namibia’s offshore blocks and Iraq’s shift toward renewable energy highlights a well-rounded portfolio that includes fossil fuels and clean energy investments.
GCC lending growth hits 3.1% in Q3, Saudi Arabia leads: report
RIYADH: Listed banks in the Gulf Cooperation Council achieved their highest lending growth in 13 quarters, with loans rising 3.1 percent to $2.12 trillion in the third quarter.
According to a report by Kamco Invest, Saudi Arabia led the surge with a 3.7 percent quarter-on-quarter increase in gross loans, marking its fastest growth in nine quarters.
Qatar followed with a 1.9 percent rise, while Bahrain recorded a 1.2 percent increase.
This growth aligns with the International Monetary Fund’s projection of 3.5 percent nominal gross domestic product growth for GCC nations in 2024, driven by the strong performance of non-oil sectors in the UAE, Qatar, Bahrain, and Saudi Arabia.
The region’s commitment to diversification and long-term infrastructure development continues to drive its financial sector.
Despite record lending levels, aggregate net income for GCC-listed banks increased marginally by 0.4 percent to $14.9 billion.
While total revenues grew 4.1 percent, supported by a 2.8 percent rise in net interest income and a 6.9 percent increase in non-interest income, higher expenses and impairments weighed on profitability.
Loan impairments rose to a three-quarter high of $2.5 billion, with increases in the UAE, Saudi Arabia, Oman, and Bahrain partially offset by declines in Qatar and Kuwait.
Customer deposits across GCC-listed banks reached a nine-quarter high, rising 3.2 percent to $2.5 trillion.
Saudi Arabia led with a 4.6 percent increase, while the UAE maintained its position as the largest deposit market at $828 billion.
Deposits in Oman and Qatar also saw solid growth, contributing to the region’s overall resilience.
The aggregate loan-to-deposit ratio remained stable at 81.4 percent, with Saudi Arabia reporting the highest ratio of 92.8 percent and the UAE the lowest at 69.3 percent, reflecting its strong liquidity position.
The GCC banking sector’s resilience is further demonstrated by its consistent focus on operational efficiency. The cost-to-income ratio declined slightly to 39.9 percent, highlighting the sector’s ability to manage expenses effectively despite rising costs.
As the region continues to diversify its economy, the banking sector remains a critical enabler of growth, funding large-scale projects and fostering financial innovation.
While rising funding costs and potential interest rate cuts may pose challenges, the sector’s robust fundamentals and strategic focus on non-oil growth position it for sustainable expansion.
The commitment to balancing economic diversification with financial innovation is expected to drive the sector’s continued success, reinforcing its pivotal role in the GCC’s broader economic landscape.
Saudi Arabia launches Ramlah Co. to boost tourism in Hail region
RIYADH: Saudi Arabia’s Ministry of Tourism is supporting private sector growth by launching Ramlah Co. for Tourist Trips and Resorts, a new initiative to attract visitors to the Hail region.
This undertaking is part of the broader Saudi Winter Season campaign, which offers unique experiences in its key destinations.
The Minister of Tourism Ahmed Al-Khateeb inaugurated the Ramlah Co. during a visit to Hail, signaling the Kingdom’s ongoing efforts to develop the tourism sector and foster private-sector participation, the Saudi Press Agency reported.
Al-Khateeb, also the chairman of the Saudi Tourism Authority, emphasized that the launch of the company aligns with Saudi Arabia’s Vision 2030 objectives to diversify the economy and promote tourism as a key growth sector.
The Saudi Winter Season, which began in October and runs through the first quarter of 2025, highlights seven key destinations, including Riyadh, Jeddah, and AlUla, as well as the Red Sea, the Eastern Province, Madinah, and Hail.
The campaign is designed to showcase the Kingdom’s cultural and natural attractions, with private companies like Ramlah Co. offering tailored experiences for visitors.
Ramlah Co. has met all licensing requirements set by the Ministry of Tourism and will offer a diverse range of activities in the region, from desert camping and sandboarding to off-road safaris and historical tours of landmarks such as Jubbah.
The company will also provide stargazing experiences and flexible tourism packages designed for families, groups, and solo travelers.
During his visit, Al-Khateeb announced several initiatives aimed at further developing the region’s tourism infrastructure. He revealed plans for 1,000 international training opportunities and 10,000 domestic training programs for Hail residents, according to the minister’s official X account.
He also highlighted efforts to enhance tourism initiatives and projects, underscored by the signing of two memoranda of understanding with the Hail Development Authority.
Speaking on future investments, Al-Khateeb noted that the Tourism Development Fund is currently evaluating support for several key projects in the Hail region.
“The fund is studying supporting a number of distinguished projects, the value of which exceeds SR1 billion and is expected to contribute to providing more than 850 hotel rooms in the area,” Al-Khateeb said.
These projects are anticipated to boost Hail’s hospitality capacity while fostering economic growth and job creation.
The minister also visited the Hail Tourism Development Authority, where he reviewed several qualitative initiatives designed to enhance the region’s tourism offerings.
The launch of Ramlah Co. reflects the government’s commitment to developing regional tourism hubs and providing a platform for private companies to play a pivotal role in the country’s tourism sector.
Hail, known for its UNESCO-listed Hail Rock Art and Fayd Historic City, is one of the Kingdom’s most culturally rich regions. The area also features natural attractions like Al-Adham Park, offering tourists a range of recreational activities.
Al-Khateeb continues his tour as part of the Winter Season campaign, with AlUla being his next stop.
Saudi Arabia permits flour mills to export surplus production
JEDDAH: Saudi Arabia has approved a plan allowing licensed flour mills to export surplus production to international markets, provided local supply remains secure.
The General Food Security Authority issued the approval, requiring mills to repay the full value of the wheat subsidies provided by the government for the quantities they intend to export, the Saudi Press Agency reported.
Ahmed bin Abdulaziz Al-Faris, governor of the GFSA, emphasized that this decision aligns with Saudi Arabia’s Vision 2030, which supports national industries and fosters competition based on high product quality.
Under Article 14 of the Kingdom’s Wheat Flour Production Law, issued in 2018, flour mills are prohibited from exporting wheat, flour, or derived products without prior approval from the relevant authority. Mills must repay the subsidy granted for these products intended for export. Additionally, exports must not disrupt the local supply of these products.
Saudi Arabia has developed a strategic plan for its agricultural sector, focusing on sustainability, food security, and welfare for farmers, as well as economic contributions and preventative measures.
Despite its desert climate and limited water resources, the Kingdom’s national policies address critical issues such as food and water security, sustainable agricultural development, and ecological balance.
These efforts reflect Saudi Arabia’s commitment to enhancing agricultural productivity while ensuring the responsible management of its natural resources.
In 2023, Saudi Arabia’s grain production reached 1.75 million tonnes, harvested from 323,000 hectares of a total of 331,000 hectares planted, according to the figures released by the General Authority for Statistics.
Wheat was the leading crop, accounting for 63.4 percent of the total area, with production reaching 1.314 million tonnes.
Formerly known as the Saudi Grains Organization, the GFSA plays an important role in driving economic development and meeting the food needs of Saudi citizens.
Established in 1972, the GFSA was created as part of the government’s efforts to ensure national development. Its objectives include establishing and operating flour mills, production facilities, and animal feed factories, as well as developing complementary food industries.
The authority is also responsible for marketing products, purchasing grains, and maintaining an adequate reserve stock for emergencies, in line with the government’s political-agricultural policy.
Saudi Arabia forms new committee to spur private sector role in petrochemicals
RIYADH: Saudi Arabia has launched its first-ever national committee for energy and petrochemicals under the Federation of Saudi Chambers to bolster private sector participation.
This comes as investments in the petrochemical sector are projected to reach $600 billion by 2030, with the council set to collaborate with ministries, authorities, and major companies to unlock opportunities for local and foreign investors.
This initiative marks a significant step in fostering closer ties between the private sector and government to shape policies and accelerate investment in energy and petrochemicals.
Jaber bin Ayed Al-Fahad was elected chairman, with Saad bin Ajlan Al-Ajlan as vice chairman.
