HOUSE OVERSIGHT 029459 GtObblE Saudi trade continues to gain momentum as we head into March 28 FTSE decision, followed by MSCI in June. Our base case is for a positive outcome for both EM index reviews. • Tadawul +5% past 3 sessions printing new 3 year highs, Foreign inflows YTD at $1.35bn • Recent headline on Aramco: Saudi Aramco likely to be delayed to 2019. Delay not all together surprising giving complexity of the transaction, delays in choosing the trading venues, as well as to better align the IPO with potential MSCI / FTSE index inflow timelines • Crown Prince MBS will appear on '60 Minutes' on March 18th, one day before he lands in the US for a 10 day tour, meeting Trump on the 20th. • Reform agenda picking up speed: Women Driving; Entertainment/Movie Theaters; Welfare Programs; Market access reforms & Intl debt issues Saudi Fundamentals are strong (see Jean-Michel Saliba's report from Jan. 29th below): • Growth has bottomed out • OPEC is succeeding at rebalancing the oil market. Fiscal adjustment now sufficient to safeguard stability at cUS$60/bbl. • Equity strategy: remain positive, outlook gains momentum - We retain our positive view on the Saudi market as we see strong earnings momentum as well as increasing appetite for Saudi equities amongst global investors: Best way to access the trade: IX/MAP (MSCI Saudi Provisional Index) • 32-name MSCI-owned index, that will rebalance into the full MSCI EM index upon inclusion • Trades $90m/ day based on bottleneck liquidity • Tradable on swap at lmL+90bps, std comm applies; also accessible on fully funded Luxembourg-listed warrant (MERRI1DT LX) 10 single stock names to own in Saudi • Al Rajhi: BAML Top pick for 2018 » Largest bank in Saudi » Reflation trade beneficiary » We see the bank continuing to deliver strong earnings momentum on the back of: (1) Stand out NIM expansion given a unique cost of funding position and further policy rate hikes (2) a continued normalization in asset quality d