Saudi Arabia’s Shoura Council has agreed to amend the Ant-bribery Law issued by Saudi Arabia Royal Decree No M36/1412 as amended in 2015. The amendments were proposed by Atta Alsubaiti and Latifa Alshalan and seek to stress the provisions of the UN agreement on combating corruption. The amendments propose appointing a special employee for combating bribery and ensuring the implementation of transparency and integrity standards. The amendments are aimed at protecting public facilities from corruption in all its forms and ensure the soundness of investigations and trials for crimes subject to this law.
The index maker MSCI announced on Thursday 21st June the inclusion of Saudi stocks in its benchmark, the MSCI Emerging Markets, by June 2019. Saudi stocks will account for around 2.6% of global capitalisation.
The inclusion of Saudi Arabia in the MSCI Equity index would also be closely watched by bond market players.
Saudi equities entering the Emerging Markets benchmark is a strong signal of confidence for investors. For several months, Riyadh has made the necessary efforts to improve the regulation and especially the conditions of access for foreign investors to their stock markets.
The decision was eagerly awaited by local authorities, given the weight of the index among investors. The MSCI EM index serves as a benchmark for funds claiming more than $ 1.5 trillion in assets under management (20% of which are passive funds). Entering the index is therefore the insurance to get into the radars of the largest investment funds in the world.
The inclusion of Saudi Arabia is anything but a surprise, as the country has already incorporated a few weeks ago the emerging index created by FTSE Russell. For Riyadh this step is all the more important and symbolic seeing how the neighboring markets of Qatar and the United Arab Emirates had already joined the MSCI EM in 2014, while the largest stock market in the region (490 billion dollars of capitalization) remained at the doorstep.
Saudi stocks will weigh about 2.6% of the MSCI EM index. This will be done in two stages, in May 2019, then in August. With the upcoming IPO of Aramco, Saudi Arabia’s global financial weight could indeed increase in the future.
For now foreign investors hold only 1.8% of the Tadawul index, against 14% for UAE shares and more than 9% for Qatar. With the decision of MSCI, the country could attract $ 40 billion of additional flows according to Bassel Khatoun, CIO at Franklin Templeton Investment.
The Saudi Arabian Capital Market Authority (CMA) and the Saudi Stock Exchange (Tadawul) have been demonstrating an extraordinary commitment in the past couple of years to privatization and opening up their markets to foreign investors.
CMA and Tadawul have implemented several enhancements that have increased the opening of the domestic equity market to international institutional investors. Following the introduction by the CMA in 2015 of regulations for approved foreign financial institutions, the methods of access to the stock market have moved from indirect participations via derivative instruments, such as P-notes and / or SWAPs, to direct participations. Tadawul completed a complete redesign of its business model, including the introduction of a 2-day settlement and a cash-based delivery in April 2017.
Another breaking news to look out for… MSCI has also announced that it will include the MSCI Kuwait Index in its annual review of the 2019 market classification with a view to a potential reclassification of its status from a Frontier Market to an Emerging Market.
This goes to say, patience is key… vision 2030 seems to have stirred up curiosity across the globe and concrete steps on all sides are being taken. Let’s wait and see what investors will have to say…
Sources from the Saudi Arabian Housing Ministry have said it is likely the Ministry, through its electronic Ejaar rent system will start using unified contracts for the commercial sector by the last quarter of this year. The sources added the Ministry has referred the contract template to the Justice Ministry to consider before it is implemented.
Newspaper: Al-Madina, 4 June 2018
Saudi Arabia’s General Authority for Food and Medicine has announced it has completed an e-medicine system to track medicine from production to customers.
The aim is to ensure medicines are readily available and are safe. The Authority has placed barcodes on packaging and created the necessary technical infrastructure to host the movement details of medicines. They are also working with relevant parties including factories, importers, storage units and distribution centres, hospitals and pharmacies to implement the system.
Saudi Arabia’s Health Minister, Tawfik Alrabiya has announced a new patient strategy centre for following up on medical mistakes has been established. The aim is improve procedures in this area. Alrabiya added the Health Ministry is looking to reduce the number of medical mistakes by developing and improving the relevant authorities to help document and treat cases quickly.
The Director General of Saudi Arabia’s General Department of Traffic Director General, Mohammed al-Bassami has announced the female driving ban will be lifted from next month. From 24 June, women will be allowed to drive in the Kingdom. Women over 18 will be allowed to apply for a driver’s licence and women with foreign driving licences will be able to apply for a local one separately following an assessment of their driving ability. Driving schools for women have been set up across five cities in the country. Learner drivers will be taught by men and women, some of whom obtained their licenses abroad.
Saudi Arabia’s Shoura Council has refused recommendations to facilitate the purchase of largest share of Aramco by Saudi nationals. The proposal called for 50% of the total number of shares to be allocated to Saudis only to maximise the country’s wealth. Council members refused to support the proposal because the listing of this volume of shares is the largest public listing in terms of financial value and the local market will not be enough to accommodate it. It is therefore important to include foreign investors.
Weekly Spotlight: New Regulations and Technical Requirements for Leisure Drones and Cinemas in Saudi Arabia
This week the spotlight is on legal and regulatory developments in Saudi Arabia, where according to local media reports, regulations to monitor the use of leisure drones in the Kingdom are being finalised by the Interior Ministry. It comes after a leisure drone caused a security alert around the Royal palaces in the country’s capital, Riyadh. Until they are finalised, leisure drone users will have to get permission from the police before they can fly them.
Elsewhere, the Kingdom’s Municipality and Rural Affairs Ministry has issued the municipal and technical requirements for movies in cinemas as part of the Implementing Regulations for licensing cinemas including independent screening houses and cinemas annexed to shopping malls in the Kingdom. Amongst other things, the requirements state the location needs to be in the urban boundaries of a city, it should be allocated for commercial use and should be on two streets one of which should be a commercial street. They should be at least 100 metres away from petrol stations and gas selling points. They should also be 100 metres away from malls, factories, schools and wedding halls. The entry and exit points should be off the commercial street, car parking should be made available to customers with a ratio of one parking lot for every three seats and entrance and exits of cinemas annexed to shopping malls should be the same as the shopping malls.
Saudi Arabia’s Health Insurance Council has confirmed it is scrapping the individual health insurance system for private sector employees. The Council added employers should provide insurance to employees and their families. This includes spouses, male children under 25 and unmarried daughters. The aim is to transfer responsibility for health insurance from employees to employers, regulate the health insurance market more effectively and eliminate fake insurance.
KSA: Agencies working to tackle the increasing numbers of cases involving government purchase irregularities
Saudi Arabia’s Shoura Council has asked the Kingdom’s National Anti-Corruption Commission to work with other agencies to tackle the increasing numbers of cases involving government purchase irregularities. It comes as the country has recorded the highest ever number of bribery cases. The call came during the Council’s latest meeting.