DUBAI: Qualified foreign investors from outside the Gulf were net buyers of Saudi shares by yet another record last week. It’s the third time that’s happened this year, and it probably won’t be the last.
Foreigners were the main purchasers of shares in Riyadh in the five days ended May 2, during the second phase of FTSE Russell’s inclusion of the kingdom in its emerging-market benchmarks. Buying activity should escalate later this month, when MSCI Inc. follows suit, since its indexes reference a much broader fund universe.
Those making money as foreigners arrive are mostly Saudi. Local individual and institutional investors have been net sellers almost every week this year. The institutional group includes government-related entities and mutual funds tied to the government, which stepped up purchases during an October crisis triggered by the killing of journalist Jamal Khashoggi in Turkey. As of May 2, they held about 67 per cent of local shares.
The Tadawul All Share Index climbed 0.7 per cent last week, its eighth straight weekly gain. But it fell as much as 3.4 per cent on Monday amid a global risk-off mode sparked by trade tensions between the US and China.
The index trimmed Monday’s loss to 1.5 per cent by the end of the session, an indication of possible buying action by local institutional investors to stem declines, according to Mohammad Ali Yasin, chief strategy officer at Al Dhabi Capital. “They can’t stop it. But they will try to soften it. That usually happens toward the end the session once they absorb the full hit of the day,” he said. The gauge was down 0.3 per cent as of 11:20am on Tuesday.