Following the largest monthly net redemptions in October, foreign investors are returning to Saudi stocks, with net inflows extending for a second week. November has seen a turnaround, with international traders buying 12.7 billion riyals ($3.4 billion) of Saudi stocks. Despite concerns arising from geopolitical tensions impacting Middle Eastern markets, attractive equity valuations in Saudi Arabia are drawing investors.
Recent events had repercussions on regional markets last month, causing fluctuations in Saudi Arabia's Tadawul All Share Index. The uncertainty surrounding the situation even led to a temporary elimination of yearly gains at one point, impacting risk appetite. Despite these challenges, the benchmark has managed to recover, currently showing a 3.6% increase for the year, outperforming the MSCI Emerging Markets Index.
Why it matters
While Saudi Arabia's GDP contracted in Q3 due to reduced oil production, the non-oil economy, supported by diversification efforts, recorded gains. Crown Prince Mohammed bin Salman's investment in diversification plans, focusing on industries like tourism and manufacturing, remains a key driver of employment. “Saudi Arabia has a strong fundamental story and significant untapped potential.” said Junaid Ansari, director of investment strategy and research at Kamco Investment Company.