Saudi stocks edge up ahead of FTSE Russell index inclusion

Saudi stocks inched 0.2 percent higher on Sunday, a day ahead of the exchange’s inclusion in the FTSE Russell’s emerging market index, while other Gulf stock markets were mixed with Qatar’s bourse went down 0.8 percent on weakness in banks and real estate firms.

The Saudi index has gained 9.8 percent so far this year, outperforming major Gulf markets. Foreign investors have been net buyers of Saudi stocks every week this year, positioning for passive fund inflows after its inclusion in the FTSE Russell index on March 18 and MSCI in late May.

Foreign net buying has hit $2.1 billion year-to-date. “We can reasonably expect between 90 billion to 100 billion riyals ($24-$27 billion) inflows,” said Muhammad Faisal Potrik, head of research at Riyad Capital.

He said traded value is also expected to rise 14 percent to $100 million a day in the wake of Saudi’s inclusion in key benchmark indices.

On Sunday, the Saudi market was steady with some of the non financial stocks weak, notably Saudi Basic Industries which fell 0.2 percent and Saudi Telecom which dropped 0.6 percent.

However, Al Rajhi Bank was up 0.5 percent, while Saudi British Bank gained 1 percent.

Potrik said as opposed to more significant rallies in Dubai and Qatar 12-months before index inclusion, the Saudi has risen only by a modest 14 percent in the last 12 months.

The market was hit by selling in the second half of the year as foreign funds sold in the aftermath of the murder of Saudi journalist Jamal Khashoggi in early October in the Saudi consulate in Istanbul.

Among other Gulf markets, the Abu Dhabi index fell 0.6 percent, hit by weakness in market heavyweights, First Abu Dhabi, which was down 1.4 percent and Emirates Telecommunications Group which fell 0.9 percent.

Dana Gas, however, gained 2.7 percent after the company approved plans for a sukuk buyback and also said it plans to seek shareholder approval to buy back 690 million of the company’s shares. The company said share buyback is aimed at enhancing shareholder value.

Dubai stocks were up 0.1 percent, with Emaar Properties up 1.1 percent, however Aramex was down 2.1 percent after Australia Post sold its 10 percent stake in the company.

Qatar index dropped 0.8 percent, hurt by selling in insurance and real estate stocks. Qatar Insurance was down 1.6 percent, while Barwa Real Estate dropped 2.2 percent.

Source: Reuters