Foreign investors reduce holdings in Tadawul to 4.66%

Foreign investors – namely swap holders, residents, qualified foreign investors (QFIs), foreign DPMs and strategic partners – reduced their ownership in the Saudi Stock Exchange (Tadawul) by 0.04 percent to 4.66 percent in the week ending Jan. 3, 2019, new market data show.

The Kingdom seeks to increase foreign ownership of Saudi equities to a minimum of 10 percent in 2019 and 15 percent by 2020.

In 2017, foreign ownership saw a steep decline in late September, when Crédit Agricole S.A. sold its 16.2 percent stake in Banque Saudi Fransi (BSF) to Kingdom Holding Co. (KHC).

The foreign ownership continued to shrink with the launch of Saudi Arabia's anti-corruption drive in November 2017. Later on, foreign investors started to boost their ownership to hit a record high of over 5 percent in April 2018.

The increase was buoyed by FTSE Russel's decision to promote the Kingdom to Secondary Emerging Market (EM) status, starting March 2019.

Foreign ownership maintained its uptrend following MSCI's decision to include Tadawul in EM status as of May 2019, hitting its highest level at 5.14 percent of total market capitalization in the week ending Sept. 6, 2018.

However, it has declined gradually to stand at current 4.66 percent.

Founding foreign investors accounted for 3.03 percent of total foreign ownership in the same period, data compiled by Argaam show.

Founding investors' ownership steeply declined in the week ending Sept. 28, 2018 when KHC bought Crédit Agricole stake in BSF.

It declined further when Saudi Investment Bank (SAIB) acquired the full stake of founding shareholder, JP Morgan International Finance in the bank.

Non-founding foreign investors represented 1.63 percent of total ownership in the week ending Jan. 3, signaling sell-offs since October.

On the other hand, GCC investors raised their ownership to 1.98 percent in the week ending Jan. 3, 2019, from 1.97 percent in the previous week.

GCC investors' ownership saw a gradual decrease in 2017 to 2.40 percent in April, ahead of dropping to 2.08 percent in average last year.