Saudi market corrections to attract active QFIs, create strong support levels: Al Rajhi Capital

Any significant corrections in the Tadawul All Share Index (TASI) may bring more active participation by qualified foreign investors (QFIs) to the market and create strong support levels, Al Rajhi Capital said in a recent report.

The relatively low weight of actives in Saudi Arabia after the last inclusion in emerging markets index shows further potential for additional active inflows into the Kingdom over time.

Out of the total holdings held by active QFIs, the financial sector (banking and insurance) accounted for 79 percent of active foreign flows, the report said.

Al Rajhi Bank remains the investors’ favorite with $489 million, or 45 percent of the total active QFIs funds. SAMBA followed at 10.12 percent, while NCB came third at 7.54 percent.

As the market gets more confident of Aramco’s inclusion, there may be selling in other stocks, as some good stocks may be available for bargain prices.

“We could see further foreign active investors entering the market. Not just actives, given that the global passive funds are gaining market share overactive funds, there might be continual additional market flows,” the report added.