Saudi stocks will be phased in by FTSE Russell beginning in March, 2019.
"People are anticipating anywhere from from $3 to $5 billion of international flows will come into the stock market prior to MSCI, FTSE inclusion. On the back of that, you have a lot of locals who are beginning also to invest in the stock market. That's keeping up the momentum. The stock market is roughly by now about 10 percent lower than where it was the last time oil prices were at $70," said John Sfakianakis, director of economic research at the Gulf Research Center.
He said there are estimates that MSCI inclusion would bring in another $15 to $20 billion of foreign inflows. The widely held iShares MSCI Emerging Markets ETF is based on MSCI, and managers who use MSCI indexes would have to add Saudi shares if it is approved.
Crown Prince Mohammed bin Salman, known as MBS, has been in the U.S. and is visiting with government officials and business leaders, as part of his efforts to change Saudi into a more diverse, modern economy. On Tuesday evening, the prince announced, along with Softbank, a plan to build the world's largest solar power generation project.
Sarah Al-Suhaimi, chairwoman of the bourse, or the Tadawul, told CNBC Tuesday that the exchange has been transforming itself, in areas such as clearing, in line with international standards. She was attending the Saudi-U.S. CEO forum in New York.
The Aramco IPO is expected to list first on the Saudi exchange and has been targeted for 2018, though it could be later in early, 2019.
On the local exchange, "they could test the waters a little bit, see what investor appetite is. If its true this FTSE and MSCI litings come through, you could have a lot more buyers at the table," said Donisanu.
He said the overall Saudi market has a market cap of about $450 billion, and the IPO listing there would have to be smaller than the $100 billion the company hopes to raise globally.
The company has also been considering listing in Hong Kong, London or New York which would come after the Riyadh listing.
Nishit Lakhotia, head of SICO told CNBC earlier Wednesday that he expected to see the FTSE Russell listing to be announced. "In terms of the flows, yes the market is factoring it in," he said.
Lakhotia said the passive flows from the FTSE inclusion could be about $4.5 billion, but total flows would be more.
"That's a widely anticipated event. Everybody's looking at that. It's a major thing for Saudi Arabia. It's one of the internationally accepted benchmarks and it gives MBS [Crown Prince Mohammed bin Salman] additional credit for reform and change in the capital markets," said Sfakianakis.