Foreign Investors Inject 343 Million Riyals into Saudi Stock Market in One Week
In a clear demonstration of growing confidence in the Saudi economy, both foreign and local investors dominated trading activity on the Saudi Stock Exchange (Tadawul) during the week ending on January 2, 2025. Notably, the substantial participation of foreign investors highlights the increasing attractiveness of the Saudi market as a key investment hub in the region.
According to the weekly report published by Tadawul on Sunday, both foreign and Saudi investors accounted for the majority of trading volume. Foreign investors particularly recorded a net purchase, in contrast to Gulf investors, who posted net sales during the same period, signaling a divergence in regional investor sentiment.
Strong Net Buying by Foreign Investors
The report revealed that foreign investors made a significant net purchase of 343.17 million Riyals during the week. This indicates strong confidence in the market’s performance, with foreign investors optimistic about capital appreciation and future growth as the market continues to develop.
In total, foreign investors made purchases amounting to 5.04 billion Riyals, representing approximately 21.58% of all buying transactions during the week. Their sales, on the other hand, amounted to 4.69 billion Riyals, which makes up about 20.11% of total sales. This imbalance between buying and selling suggests that foreign investors are primarily focused on accumulating assets, which is often seen as a bullish signal for the market.
Saudi Investors Support the Local Market
Saudi investors also displayed strong support for the local stock market, with net purchases totaling 99 million Riyals. This demonstrates their ongoing confidence in Saudi companies and their commitment to supporting the growth and stability of the local economy.
The total amount spent by Saudi investors on buying securities reached 18 billion Riyals, accounting for a dominant 77.13% of the total purchases in the market. Conversely, Saudi sales totaled 17.9 billion Riyals, or 76.71% of the overall sales, further illustrating the active participation of Saudi investors in maintaining liquidity.
Mixed Performance Among Different Investor Categories
A noticeable variance in performance was observed across different categories of investors. Qualified investors, typically large institutional investors and investment funds, registered a net purchase of 350.59 million Riyals. This reflects the positive outlook these large investors have for Saudi Arabia’s economic growth, which is underpinned by a series of structural reforms and the ongoing diversification of the economy.
In contrast, swap agreements and resident investors posted relatively small net sales of 3.67 million Riyals and 3.56 million Riyals, respectively. These figures suggest a more cautious approach by local institutional players and retail investors compared to their foreign counterparts.
Looking specifically at Saudi investors, institutional investors were clearly the most active in terms of buying, recording a net purchase of 1.19 billion Riyals. Meanwhile, individual investors exhibited a more bearish stance, registering a net sale of 1.09 billion Riyals. This divergence may reflect a shift in sentiment within the Saudi retail investor community, with some taking profits after the market’s strong performance in previous months.
On the other hand, Gulf investors recorded net sales of 442.18 million Riyals, indicating a decrease in their interest in the Saudi market. This selling activity may be attributed to several factors, including regional market dynamics, potential shifts in the oil market, or broader geopolitical considerations that may have influenced investor behavior.
Factors Driving the Market’s Dominance by Foreign and Saudi Investors
Several factors are driving the dominance of foreign and Saudi investors in the trading activity observed in Tadawul during the past week. One key factor is the positive sentiment surrounding the Saudi economy, which is supported by comprehensive economic reforms led by the Saudi government. These reforms, designed to diversify the economy away from oil dependence, have attracted both foreign and local investments, contributing to an overall sense of optimism about the market’s future.
Additionally, the attractiveness of the Saudi market relative to other regional markets has played a pivotal role in driving investment activity. As one of the largest and most liquid markets in the Middle East, Saudi Arabia offers a wide range of growth opportunities for investors. Furthermore, the Kingdom’s strategic position as a major hub for trade, investment, and tourism has bolstered its appeal to both foreign and domestic investors.
Another important factor contributing to the market’s strong performance is the success of ongoing privatization initiatives and the IPO boom in the country. The government’s efforts to privatize state-owned companies, alongside the introduction of new public offerings, have injected additional liquidity and investment opportunities into the market, further fueling investor interest.
Lastly, the international visibility of Saudi Arabia’s ambitious Vision 2030 plan has also reinforced investor confidence. Focused on developing a more diversified and sustainable economy, Vision 2030 has become a key driver of long-term market growth, drawing attention from global investors.
Growing Confidence in the Saudi Economy
The figures from the past week underscore the continued appeal of the Saudi stock market to both foreign and local investors. The net buying activity from foreign investors, combined with strong support from Saudi investors, signals growing confidence in the future of the Saudi economy and the performance of its stock market. The combination of positive economic indicators, government reforms, and expanding investment opportunities continues to solidify Saudi Arabia’s position as a key player in both the regional and global financial landscape.
These results not only highlight the strength of the Saudi stock market but also emphasize the country’s growing influence as a financial and economic powerhouse in the Middle East and beyond. As the market continues to develop, investor confidence is expected to grow, contributing to a sustainable and thriving economic environment in Saudi Arabia.
