Foreign investors in the Saudi stock market recorded net purchases of 19.3 billion riyals during 11 months of this year, ignoring the repercussions of the Corona pandemic, reflecting their confidence in the Saudi economy and the 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 in Saudi stocks by the end of last November reached 211.7 billion riyals, which is the highest historical level of their investments in the market, which constitutes 2.28 percent of the value The market amounted to 9.3 trillion riyals by the end of the same period.
The net purchases of foreigners within 11 months came after the total purchases of 140.1 billion riyals during the aforementioned period, compared to total sales of 120.8 billion riyals.
Their net purchases amounted to two billion riyals during last January, with the market declining 1.7 percent, and then purchases of 2.5 billion riyals after the index fell 7.5 percent in February.
While foreign investors 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, 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.
Their net purchases amounted to 0.4 billion riyals in September, with the index rising 3.9 percent, then purchases by 2.4 billion riyals, taking advantage of the market decline of 4.7 percent in October, then purchases of two billion riyals, with the index rising 10.6 percent in November.
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 11 months of 2020, the Saudi stock market index rose 4.3 percent, to end November at 8,747.1 points, compared to 8,389.2 points by the end of 2019.
During the last 24 months (as of December 2018), foreigners recorded net purchases of Saudi stocks during the 23 of them, while they sold in only one month (last March).
During that period, foreigners recorded net purchases of about 110.7 billion riyals (29.5 billion dollars), after total purchases of 382.8 billion riyals against total sales of 272.1 billion riyals.
In the same period, the market value of foreign ownership in the Saudi stock market rose by 149 percent (126.7 billion riyals), to reach 211.7 billion riyals at the end of last November, compared to their 85 billion riyals at 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".
Emerging 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.
On August 29, 2019, Saudi stocks joined the MSCI Emerging Markets Index with the implementation of the second phase, including 50 percent of the market's weight, making the Saudi market weighing 2.8 percent of the global index.
100 percent of the market was included in the S&P Index, and 75 percent by the FTSE Russell index.
Also during December of 2019, Saudi Aramco was included in Morgan Stanley and FTSE Russell emerging market indexes, adding new foreign flows to the market.
The first phase of the joining operations for the two global indexes FTSE Russell and S&P Dow Jones for emerging markets took place on March 18, 2019, according to closing prices of March 14, 2019.
Based on what was announced by "FTSE Russell" as part of the plan to join the Saudi financial market 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 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 weighted, respectively.
The first phase of the Saudi stock market's accession to Morgan Stanley emerging market indexes was implemented on May 29, 2019, with a weight of 50 percent of the market.
FTSE Russell decided on March 28, 2018, 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
