Net Purchases of Foreign Investors Hit SR25.5bln, in 2021

Foreign investors’ net purchases on the main stock exchange amounted to SR25.5 billion, during 2021, an increase of 36.26% over theirs, in 2020, as their net purchases stood at SR18.75 billion, after the valuation of their purchases in shares rose 20.37% to SR187.87 billion, while their sales increased, too, but at a lesser rate, by 18.2% to reach SR162.33 billion.

They recorded, in general, in the last 5 years net purchases in shares worth SR133 billion, and the highest was in 2019 where their net purchases amounted to SR91.18 billion, while the qualified investors had the largest share in the net purchases, during the last five years, as they were the only category that recorded net purchases, all through the five years, with no exception, at all.

The Capital Market Authority had made amendments to the Qualified Foreign Investor Program, in June 2019, after its launch in June 2015.

The most prominent of these amendments was easing registration requirements and expanding the range of qualified institutional investors.

According to the Authority, a Qualified Foreign Investor may not own 10% or more of the shares of any issuer, whose shares are listed or his the convertible debt instruments.

The transactions of foreign investors are generally distributed among swap agreements, resident and other investors, qualified investors, managed portfolios, and in addition to strategic investors.

Excluding foreign strategic investors, no more than 49% of the issuer may be owned, on aggregate, by foreign investors, and entities eligible for QFI status include banks, brokerage firms, securities, insurance companies, investment funds, government agencies, and entities affiliated with foreign government institutions.

Potential eligible institutions must be licensed or subject to regulatory oversight, and applicants must have assets under management of at least $500 million, excluding governmental entities.

During the last five years, foreigners recorded net sales of SR6.98 billion through swap agreements, while they only recorded net purchases through swap agreements, in 2018 with a value of SR756 million, while net sales of resident investors during that period were only SR8.13 billion, and they did not register a net purchase in any of the five years, while foreigners recorded net purchases through managed portfolios at a value of as much as 1.17 billion, after recording net sales in three years against net purchases, in two years.

As for strategic partners, foreigners recorded net sales in the last five years, amounted to SR9.07 billion, as they had recorded sales in 3 years and net purchases in one year, while no foreign transactions were made through strategic partners, during the year 2021.

Foreigners recorded net purchases in December 2021 amounting to SR5.45 billion, which is the highest in 28 months, specifically since September 2019, when it amounted to SR5.69 billion.

At the same time, their net purchases in July amounted to SR12 million, which is the lowest in five years.

During the last five years, foreigners recorded net purchases in 46 months, with a value of as much as SR153 billion, while they recorded net sales in only 14 months, with a total value of SR20 billion. Accordingly, they recorded net purchases during the period, amounted to SR133 billion.