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FTSE Russell is set to announce over the weekend in the Middle East if it will add Saudi Arabia and Kuwait to its list of emerging markets in what could spur a surge in inflows to both markets and be a prelude to MSCI Inc. inclusion next year. While recent market infrastructure improvements have been made in both countries, analysts and investors say Kuwait may be closer to being added than Saudi Arabia, which is aiming to modernize its market ahead of the sale of shares of state-controlled oil company Saudi Arabian Oil Co. in what is being tipped as the biggest initial public offering in history.Saudi Arabia's main benchmark has gained just 1 percent this year, while Kuwait's has climbed by some 16 percent.Saudi Arabia could constitute about 2.5 percent of FTSE secondary emerging index, resulting in passive fund flow of about $3 billion, according to Khatoun.EFG-Hermes is overweight on Kuwait and underweight on Saudi Arabia."Kuwait chances appear to be slightly better, but FTSE may need to test further as well". He estimates Kuwait could attract passive inflows of $700 million while Saudi Arabia's could rise as high as $6.5 billion following an Aramco IPO.
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