Foreigners make record purchases of Saudi shares in January

Kingdom Tower - Credit Bloomberg

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Investors from outside the country and the Gulf were net buyers of around SAR 4.4 billion ($1.17 billion) of Saudi-listed stocks in January, the most for a single month since data became available in 2015.

Monday 04, February 2019

(Bloomberg) --Foreigners made their highest net purchases of Saudi shares on record last month ahead of the inclusion of local stocks in major benchmarks.

International funds are seeking to build exposure as some of the stocks will be added to emerging-market indexes compiled by MSCI and FTSE Russell. Local funds, on the other hand, are buying less.

Investors jumping at Saudi stocks now are finding high prices and an economic scenario that doesn’t corroborate expensive valuations, according to Tina Byles Williams and Adam Choppin, respectively the chief executive officer and investment officer at FIS Group.

“Speculation around huge foreign inflows are based on naive assumptions about how index providers and ETF issuers trade through such events, and we believe those waiting for ‘dumb passive money’ in Saudi will be kept waiting come fall 2019,” they wrote in a report. “Following index inclusion, we expect to see a fair degree of selling pressure as state affiliated Saudi investors use the inclusion as a liquidity event for chunks of their Saudi equity portfolio.”

TAGS : Tadawul, MSCI, FTSE Russell

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