Saudi Arabia continues to see strong equity inflows

In February 2018, GCC equity markets declined with the MSCI GCC Countries index losing -3.2%. The decline was broad based with all major indices closing in negative territory. The Tadawul and the DFM index dropped -3.0% and -4.4% respectively.

The focus of investors’ since the start of 2018 has remained on the possibility of inclusion of Saudi Arabian equities in the EM index of FTSE and MSCI. FTSE has informed that it will take a decision on the same by end of March 2018 while MSCI is expected to announce its decision in June 2018.

The Tadawul saw inflows from foreign investors for a second consecutive month. Foreign investors bought stocks worth SAR 1.36bn amid renewed focus on potential upgrade to the EM status. In the first two months of 2018, the Tadawul has received inflows of SAR 3.68bn. Al Rajhi Bank was the biggest beneficiary with inflows of USD 282mn in February 2018.

Tadawul - Foreign investors inflow net (SARmn)

Source: Emirates NBD Research

In February 2018, the DFM index saw outflows of c. AED 195.7mn from non-GCC investors. Among stocks, Dubai Islamic Bank saw outflows of USD 18.1mn.

The Qatar Exchange saw outflows for the first time in five months. Foreign investors sold stocks worth QAR 53.5mn in February 2018. Doha Bank saw inflows of USD 5.8mn while Qatar Navigation saw outflows of USD 17.6mn.

Trading volumes continue to remain weak across GCC equity markets. On a m/m basis the average daily value traded declined across the board with -31.0% m/m drop on the DFM index and -5.0% m/m drop on the Tadawul. The trend is similar on a y/y basis for most markets with the exception of the Tadawul where it has increased +5.0% y/y.

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