GCC Equity Flow Monitor - March 2020

In March 2020, GCC equity markets closed lower for a third consecutive month. The MSCI GCC Countries index dropped -17.2% to take its first quarter decline to -24.6%. The losses were broad based with the Tadawul and the DFM index losing -14.7% and -31.6% in March 2020. The coronavirus outbreak coupled with the decline in oil prices weighed on investor sentiment. Brent oil prices dropped -55% in March 2020.

Unsurprisingly, the global backdrop weighed on fund flows into GCC markets. All major markets saw massive outflows. However, on a quarterly basis, the picture was more mixed.

Despite outflows of SAR 3.4bn in March 2020, the Tadawul, on an aggregate basis, saw inflows of SAR 1.06bn in Q1 2020. The foreign ownership of Saudi equities was at 12.03% at the end of the first quarter. Interestingly, Saudi institutional investors were net buyers for each of the last three months. On a cumulative basis, they bought stocks worth SAR 5.16bn in Q1 2020.

Tadawul - Foreign investors inflows net (SARmn)

Source: Emirates NBD Research

The DFM index saw the largest one-month outflow in March 2020 since we started tracking the data. Non-GCC investors were net sellers to the tune of AED 739.4mn in March.

DFM - Non GCC inflows net (AED mn)

Source: Emirates NBD Research

The trend was similar on the Qatar Exchange. Foreign investors sold stocks worth QAR 776mn in March 2020 to take their aggregate outflows to QAR 404mn in Q1 2020.

Qatar Exchange - Non Qatari inflows net (QAR mn)

Source: Emirates NBD Research

The outflows from GCC markets in March 2020 were accompanied by a sharp rise in trading volumes. The average daily value traded increased 44% m/m on the DFM and 39% m/m on the Tadawul. On a y/y basis, the trend was similar in Q1 2020.

Average daily value traded (USD mn)

Source: Emirates NBD Research

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