Saudi stocks dipped slightly on Sunday, a day ahead of the market's inclusion in the FTSE Russell's emerging market index, while other Gulf markets were mixed with Qatar down 1.1 percent on weakness in banks and real estate firms. Investors booked profits in recent gainers on the Tadawul, weakening the benchmark, which was down 0.2 percent. The Saudi index has gained 9.5 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 in MSCI from late May. "There is some profit-taking on select leading stocks but the overall trend is still upward," said a Saudi trader, asking not to be named.
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 weakness among some non-financial stocks, notably Saudi Basic Industries, which fell 0.3 percent, and Saudi Telecom, which dropped 0.8 percent. However, Al Rajhi Bank was up 0.1 percent, while Saudi British Bank gained 0.9 percent.
Potrik said the Saudi market had risen only by a modest 14 percent in the last 12 months, as opposed to more significant rallies in Dubai and Qatar before index inclusion. Foreign funds had sold Saudi assets in late 2018 following 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 0.4 percent, hit by weakness in market heavyweights, First Abu Dhabi, which was down one percent. News that Qatar will no longer permit First Abu Dhabi Bank to provide services for new customers in Doha, its regulator said, amid a probe over alleged currency manipulation after the Gulf rift did not have much impact on the stock.
An FAB spokeswoman said the bank had no immediate comment on the matter. Abu Dhabi-listed 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, buoyed by Emaar Properties which was up 0.4 percent, however Aramex was down 2.1 percent after Australia Post sold its 10 percent stake in the company. The United Arab Emirates "markets continue to trade on weakness in traded values and index movement within a tight horizontal range due to general assembly meetings season, where dividends are being approved, and shares prices correcting downwards because of that as they trade ex-dividend," said Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital.
"We are also in a company vaccuum currently and until the first quarter results for this year become available, incentives to invest are not strong," Yasin said. Qatar index dropped 1.1 percent, hurt by selling in insurance and real estate stocks. Qatar Insurance was down 4.1 percent, while Barwa Real Estate dropped 1.9 percent.
"We have been bearish on Qatar since the beginning of the year and expect the market to continue to underperform," said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital. "We see limited growth opportunities for companies & therefore find valuation levels stretched," Bhandari said.
Elsewhere in the region, Egypt's main benchmark rose 0.3 percent, led by banks, investment firrms and real estate companies Commercial International Bank rose 0.7 percent. Egypt Kuwait Holding rose 3.4 percent, while Heliopolis Co for Housing and Development rose 2.7 percent.
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