Saudi Arabia's economy is set to draw tens of billions of dollars in foreign investment after gaining recognition Wednesday as an emerging market from index compiler MSCI — a vote of confidence for the domestic stock exchange ahead of the Aramco IPO.

Saudi Arabia will be added to MSCI's emerging market index next year in two stages, joining a group of countries including Russia and China. Many of the world's largest fund managers benchmark themselves against index compilers and will automatically invest in Saudi stocks following the upgrade. With a market capitalisation of around $520bn, the Tadawul, as the bourse is locally named, is the Arab world's largest stock market.