Ikrami Abdullah from Riyadh
Foreign investors seized the opportunities in the Saudi stock market, taking advantage of the decline in the index since the beginning of the year, to record net purchases of about 14.5 billion riyals during the first eight months of this year, ignoring the repercussions of the Corona pandemic, reflecting their confidence in the Saudi economy and market.
According to the monitoring unit of the reports in Al-Eqtisadiah newspaper, based on the data of the Saudi Stock Exchange Company (Tadawul), the market value of foreign ownership of Saudi stocks reached 192.3 billion riyals by the end of last August, which is the highest historical level of their investments in the market, which constitutes 2.14 percent of the value. The market amounted to 8.98 trillion riyals by the end of the same period.
The net purchases of foreigners during the first eight months came after the total purchases of 93.7 billion riyals during the aforementioned period, compared to total sales of 79.2 billion riyals.
Their net purchases amounted to two billion riyals last January, with the market down 1.7 percent, and then purchases of 2.5 billion riyals after the index fell 7.5 percent in February.
While they recorded net sales of 3.4 billion riyals in March with the market dropping 14.7 percent, then net purchases of 1.6 billion riyals in April coinciding with the market rise of 9.3 percent during the same month, and then net purchases in May of 2.8 billion riyals.
They recorded net purchases of about 4.9 billion riyals in June, with the market rising slightly by 0.2 percent, then purchases of 0.9 billion riyals in July, with the index rising 3.3 percent, and 3.1 billion riyals in August, with the market rising 7 percent.
The foreign purchases in June coincided with the implementation of the last tranche of the fifth phase of the "FTSE" indicators on the 22nd of the same month.
During the first eight months of 2020, the Saudi stock market index declined 4.8 percent, to end August at 7,983.8 points, compared to 8,346.6 points by the end of 2019.
During the last 21 months (as of December 2018), foreigners recorded a net purchase of Saudi stocks during 20 of them, while they sold in only one month (last March).
During that period, foreigners registered net purchases of about 105.9 billion riyals (28.2 billion dollars), after total purchases of 336.4 billion riyals against total sales of 230.6 billion riyals.
In the same period, the market value of foreign ownership in the Saudi stock market increased by 126 percent (107.3 billion riyals), to reach 192.3 billion riyals at the end of last August, representing 2.14 percent of the market value of about 8.98 trillion riyals, compared to their 85 billion riyals by the end of November 2018.
This coincided with the accession of the Saudi stock market to the emerging market indices, "Morgan Stanley, FTSE, Standard & Poor's".
Markets
In June 2015, the Saudi Capital Market Authority allowed qualified international investors to buy local shares directly, while previously their investments were limited to "swap agreements" only.
The foreign investor’s stake in Saudi stocks includes foreign strategic corporate partners, swap agreements, resident investors, qualified foreign institutions, and finally managed portfolios.
In June 2015, the Saudi Capital Market Authority allowed qualified international investors to buy local shares directly, while previously their investments were limited to "swap agreements" only.
The foreign investor’s stake in Saudi stocks includes foreign strategic corporate partners, swap agreements, resident investors, qualified foreign institutions, and finally managed portfolios.
The first phase of the accessions to the two global indexes FTSE Russell and S&P Dow Jones emerging markets took place on March 18, 2019, according to closing prices of March 14, 2019.
Based on what was announced by "FTSE Russell" within the plan to join the Saudi Stock Exchange to emerging market indices, the first of the five stages has been implemented, and the first stage represents 10 percent of the total weight of the Saudi financial market.
On the same date, the first phase of the Saudi Stock Exchange’s accession to the S&P Dow Jones Index, which took place in two phases, was implemented. The first phase was implemented by 50 percent of the total weight of the Saudi financial market.
The second and third phases of joining the FTSE indices were implemented on May 1 and June 24, 2019, with 15 and 25 percent powders, respectively.
The first phase of the Saudi stock market’s accession to Morgan Stanley's emerging market indexes was implemented on May 29, 2019, with a weight of 50 percent of the market.
On March 28, 2018, FTSE Russell decided to include the Saudi market in the ranks of secondary emerging markets, in stages beginning in March 2019 and ending in March 2020, due to the large size of the market, but it ended it on June 22 ( June) last to reduce risk to investors.
On July 25, 2018, Standard & Poor's Dow Jones Company decided to upgrade the Saudi market to an emerging market, starting from March 2019.
The foundation added at the time, "The promotion will take place in two phases, the first coinciding with the quarterly rebalancing on March 18, 2019, by 50 percent, and the second with the annual review on September 23, 2019, 100 percent.
Economic Reports Unit
