Dubai: Saudi authorities are changing market regulations to attract foreign investors to the country’s stock market. Those changes haven’t enticed local individuals to buy shares.
Net sales of Saudi stocks by retail, high-net-worth and individual professional investors stretched to 80 consecutive weeks at the end of November, figures from the Riyadh bourse show. They have only bought in three weeks since detailed data started 27 months ago. Institutions have been more positive, purchasing stocks when local retail investors sell, seen by some analysts as a sign of government support.
The sell-off by individuals has been unrelenting since oil prices started their decline in 2014. Government efforts to reduce reliance on crude exports, sell stakes in state companies and shake up market regulation to make equities more enticing have yet to win over locals.
Last month’s corruption crackdown and regional risks stemming from the conflict in Yemen and tensions with Iran haven’t helped either.
“Retail investors have been selling amid concerns regarding the current macro situation,” said Jasem Al Jubran, equities analyst at Aljazira Capital in Riyadh. “The latest geopolitical issues make retail even more cautious. Even the recent increase in the oil price has not been enough to increase their appetite.” News of stepped-up spending by the government in the next budget could help sentiment to recover, he said.
Mutual funds and entities tied to the government are among institutions that have increased their ownership of local shares to 67.1 per cent as of the end of November, more than 2 1/2 times the proportion held by individuals. That ratio was below two in August 2015.
