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Opening New MEGA Trade: Long Saudi Equities ( Buy M1SAP on Swap / Liquidity $100mm a Day) - Potentially the EM Flow Story of 2018... if FTSE addition is announced on March 28" we expect an inflow of $5bn on a basket which trades 100mm USD a day (50X ADV)... this is even before MSCI announcement in June where inflows could be substantially higher - The Most Powerful Macro Trades are when Macro Fundemantals + Flow Meet... This is Saudi in 2018 Key Points: 1. Saudi has significantly underperformed Oil by 14% last 6 months. With the recent introduction of the citizens account programme, subsidy cuts, pushing out the budget balance to 2023, and the news of increased handouts, Saudi should re correlate with oil and move higher from here. 2. Saudi equities remain under-owned globally > foreign ownership of Saudi equities is at 1.3% vs Russia 70%, Turkey 55%, South Africa 50%, Brazil 45%, UAE 20%, Qatar 10% 3. Good liquidity vs other EMs but volume trading at lows relative to history > Tadawul ADV close to all-time lows at Sibn (10yr range is $1-8bn) 4. Major index events in 2018/19 with FTSE announcement on 28" March next catalyst> FTSE announcement could trigger inflows of up to SSbn . Combined with the MSCI announcement later this year, potential active and passive inflows can total $15-S40bn. So the potential of at least $20bn inflows on a basket which trades 100mm USD a day (200 Days Volume) ? 5. In comparison, during the MSC] UAE and Qatar inclusions, UAE was trading 10% below historic avg @14x PE and rerated to 22x into MSC! EM inclusion with Dubai up +110% (vs +47% prev year). Qatar was trading inline with historic avg @11x PE and rerated to 18x MSCI EM inclusion with Qatar up +60% (vs +9% prev year) HOUSE_OVERSIGHT_029464