FTSE Russell announces changes to Middle East Index in semi-annual review

FTSE Russell has disclosed its latest semi-annual review of stocks included in its emerging indices, focusing on the Middle East index. The updated list incorporates a range of medium, small, and micro-cap companies, selected based on specific criteria related to liquidity, market value, and trading volume.

Among the notable changes, four companies — IFA Hotels and Resorts, Al-Sakab Kuwait, KFH Capital REIT Sukuk, and Sukuk Holding — will be added to the micro-cap index. Meanwhile, Human Soft will be downgraded from the list of medium-sized companies to the small companies list, reports Al-Jarida daily.

Conversely, four Kuwaiti companies — Injazat Real Estate Development, Al Enmaa Real Estate, Burgan Well Drilling, Trading and Maintenance, and Kuwait Factories Construction and Contracting — have been excluded from the index. Sources familiar with the matter clarified that the anticipated liquidity inflow into these stocks is relatively modest compared to overall market liquidity.

The review results are slated to come into effect as of the close of March 14, 2024, with the possibility of further adjustments until the end of the following month.

Attention is drawn to FTSE Russell’s upcoming annual review in August, particularly concerning the qualification for the Advanced Emerging Markets Club. A crucial requirement for advancement to the FTSE Advanced Emerging Markets index is the establishment of a central counterparty (CCP) for cash and associated changes to clearing and settlement systems.

Market participants are currently engaged in extensive testing to finalize preparations for the system’s launch, expected by June as per the Capital Markets Authority’s timeline. While the forthcoming FTSE Russell report on advanced emerging markets may acknowledge Kuwait Stock Exchange’s progress towards promotion criteria, actual accession to the advanced emerging markets index might be deferred until the August 2025 review if the central counterparty system remains incomplete.

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