June 22, 2017 / 9:36 AM / a month ago

EMERGING MARKETS-Saudi stocks set for bumper weekly gain; rouble near 4-1/2 mth low

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LONDON, June 22 (Reuters) - Saudi Arabian stocks rose more than 1 percent on Thursday, heading for their biggest weekly gain in six years, after the promotion of a reformist Prince Mohammed to the role of crown prince and the prospect of inclusion in MSCI's equity index.

The outperformance came even though crude prices resumed their slide. With Brent futures now down more than 10 percent in June, most oil-exporting emerging markets are under pressure, while broader emerging assets have also traded sideways this week amid concern over slowing U.S. inflation and growth.

MSCI's emerging equity index firmed 0.2 percent, after two days of losses thanks to some recovery in Asia while most emerging currencies firmed against the tepid dollar.

But the biggest winner of the day was Saudi Arabia which hit 20-month highs after MSCI put it on the watchlist for index inclusion and also the promotion of Mohammed bin Salman to the position of crown prince.

The index had jumped 5.5 percent on Wednesday. Prince Mohammed has spearheaded the kingdom's reform push, including privatising part of the state oil firm Aramco.

Jason Tuvey at Capital Economics noted an estimated 2.4 percent weight would see $38 billion in inflows to Saudi stocks, sufficient cover the current account gap one-and-half times over. But the optimism may be overdone, he warned.

"There was a lot of optimism ahead of the opening of the Saudi stock market to foreign investors in mid-2015. Since then, however, the proportion of stocks owned by "qualified foreign investors" has remained limited and the (index) has fallen by 25 percent, taking their lead from oil prices."

"The second reason for caution is that oil prices are likely to remain the key driver of Saudi equity prices."

The oil factor kept most other Gulf markets under pressure ahead of the weekend and week-long Eid holiday, and while Qatari stocks rose 2 percent on the day they are down 3 percent this week as its spat with other Gulf states dragged on.

The oil prices weighed also on Russian assets where the rouble has tumbled to 4-1/2 month lows to the dollar, though it firmed half a percent on Thursday. Russian stocks fell half a percent and 10-year bond yields rose five basis points, approaching recent one-month highs.

Chinese mainland shares were in buoyant mood after index provider MSCI said it would allow some of them into the emerging markets benchmark from 2018.

Shenzen-listed blue chip shares jumped to 18-month highs though profit-taking erased the gains towards end of the day to close the index flat while Shanghai shares lost 0.3 percent.

For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 1008.04 +1.57 +0.16 +16.91

Czech Rep 991.93 -3.04 -0.31 +7.63

Poland 2314.05 -5.08 -0.22 +18.80

Hungary 35921.54 -23.69 -0.07 +12.24

Romania 8334.76 -39.75 -0.47 +17.64

Greece 826.39 +3.07 +0.37 +28.39

Russia 968.27 -5.06 -0.52 -15.97

South Africa 44873.48 -339.97 -0.75 +2.21

Turkey 99590.47 +200.34 +0.20 +27.45

China 3147.12 -9.09 -0.29 +1.40

India 31424.89 +141.25 +0.45 +18.02

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 26.25 26.29 +0.17 +2.88

Poland 4.24 4.25 +0.21 +3.81

Hungary 309.08 308.92 -0.05 -0.08

Romania 4.59 4.60 +0.15 -1.16

Serbia 121.68 121.67 -0.01 +1.37

Russia 59.90 60.28 +0.64 +2.28

Kazakhstan 327.71 326.56 -0.35 +1.81

Ukraine 26.02 26.01 -0.05 +3.77

South Africa 13.00 13.08 +0.56 +5.60

Kenya 103.55 103.52 -0.03 -1.14

Israel 3.54 3.54 -0.19 +8.65

Turkey 3.52 3.53 +0.36 +0.26

China 6.83 6.83 -0.06 +1.63

India 64.55 64.53 -0.03 +5.26

Brazil 3.33 3.34 +0.04 -2.44

Mexico 18.17 18.23 +0.30 +13.98

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 336 3 .03 7 86.03 1

All data taken from Reuters at 09:09 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT. (Editing by Ralph Boulton)

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