MIDEAST STOCKS-Global woes weigh on Saudi stocks as they join MSCI index

May 29 (Reuters) - Saudi Arabia’s stock market slipped on Wednesday as weak global sentiment clouded the first day of trading for the market as a new member of the MSCI emerging markets index. Most other Gulf markets also dropped.

Thirty Saudi-listed securities were added to the index after the market close on Tuesday, representing an aggregate weight of 1.42% in the MSCI Emerging Markets Index.

Saudi’s index fell 1.6%, weighed down by financial stocks, with Al Rajhi Bank decreasing 1.9% and Banque Saudi Fransi sliding 4.6%.

The index is still up 7.6% this year driven by foreign capital flows in Saudi stocks, and its MSCI entry is expected to attract billions of dollars more into the Saudi market.

“Saudi Arabia’s inclusion into the MSCI emerging markets index is a significant milestone for the MENA region, putting it firmly on the radar of global investors,” said Bassel Khatoun, Managing Director, Frontier and MENA, Franklin Templeton Emerging Markets Equity.

“The expected increase in foreign flows is a huge win for its capital markets. More than $8.6 billion has already come into the market this year from international institutional investors, including passive flows through ETFs of over $2.5 billion,” added Khatoun. “In total, we expect inflows of $40 billion as a result of Saudi’s inclusion in the MSCI Emerging Markets Index”

Qatar’s index was also down 0.4%. Qatar Islamic Bank dropped 1.6%, and Qatar Fuel fell 2.3%.

In Dubai, the index edged down 0.1% as real estate shares slid. Blue-chip developer Emaar Properties shed 1.1% while its unit Emaar Malls fell 2.1%.

Bucking the trend was the Abu Dhabi index, which rose 0.3%, boosted mainly by a 1% rise in the United Arab Emirates’ largest lender, First Abu Dhabi Bank, and a 0.4% gain in Emirates Telecommunications Group. (Reporting by Shakeel Ahmad in Bengaluru; Editing by Hugh Lawson)