QFI inflows strong in Tadawul a week after FTSE inclusion: Al Rajhi Cap

Data after a week of the first tranche (10%) of Tadawul’s inclusion into FTSE Russell emerging market (EM) index suggests that qualified foreign investors (QFI) buying continues to be strong, Al Rajhi Capital said in a new report on Monday.

“If we assume traded value during the auction period (SAR1.4bn) on March 14, the inclusion day, to be primarily driven by QFI/Swaps, then including this week’s data, foreigners have purchased SAR2.66bn in Saudi stocks, which is above market expectations,” the brokerage added.

Also read: Tadawul set to gain from strong QFI inflows

The report noted while GREs (government related entities) are selling, it has been mainly led by individuals which may eventually decline and thereby could be positive for Saudi stocks during upcoming tranches.

Al Rajhi Capital also sees negotiated deals increasing and the month of March saw negotiated deals in each of the MSCI probable names with a total deal size of around 35 percent of net foreigner purchases.

The brokerage also witnessed an accumulation of QFI interest in large caps this year. Top 10 stocks, which have significant weights in EM indices, have been the primary recipients of inflows (around 64 percent of total foreigners combined passive inflows) so far in 2019.