Foreign investor appetite returns to GCC markets
Foreign investors piled back into GCC stock markets in the first quarter of 2024, reversing a trend of net selling seen in the final quarter of 2023.
Analysing data from Bloomberg and GCC stock exchanges, a report by Kamco Invest showed a net inflow of $1.5 billion from foreign investors during Q1, compared to net outflows of $1.3bn in Q4 2023.
The UAE emerged as the top destination for foreign capital, with the Abu Dhabi and Dubai exchanges attracting a combined $888.4 million in net buying throughout the quarter. Boursa Kuwait followed with $334.9m in net foreign inflows.
However, the trend across the GCC was mixed. Saudi Arabia and Qatar witnessed net selling by foreign investors in January, followed by net buying in the remaining two months. Oman and Bahrain were the only markets to see net selling throughout Q1, with Oman experiencing a brief period of buying in January.
Analysts attributed the uneven foreign investor flows to a combination of factors, including regional market performance, initial public offerings (IPOs), geopolitical tensions, individual country economic health, and crude oil prices.
While the quarter saw a mixed bag for equity markets, five out of seven GCC exchanges ended Q1 with gains. Global interest rate fluctuations also influenced investor sentiment in the region. However, seasonal selling pressure during Ramadan dampened market activity in March, leading to net selling by local investors. This presented an opportunity for foreign investors, who capitalised on the dip, resulting in broad-based net buying for the quarter.
Looking at the month-on-month breakdown, foreign investor net buying peaked in February at $678.4m, followed by $582m in March and $199.4m in January.
Historically, foreign investor activity in GCC markets has only dipped twice in the past five years. The strongest foreign buying period came in Q1 2022, with a net inflow of $11bn, driven primarily by increased buying in Saudi Arabia and Qatar.
In contrast to foreign investors, GCC investors were net sellers in Q1 2024, with net outflows reaching $414.6m compared to $570.7m in Q4 2023.
Oman led the selling by GCC investors with $141.7m, followed by Saudi Arabia and Dubai at $140.2m and $120.9m, respectively. Notably, the Abu Dhabi exchange saw net buying by GCC investors, partially offsetting the overall selling trend.
Overall trading activity in the GCC saw a significant increase, with total traded volume rising 35.9 per cent quarter-on-quarter to 80.6bn shares in Q1 2024, compared to 59.3bn shares in Q4 2023. Saudi Arabia led the surge with a 68.5pc increase to 24.1bn shares traded, followed by Abu Dhabi with a 61.5pc rise to 18.3bn shares. Qatar, on the other hand, saw a decline in traded volume, falling from 11.5bn shares in Q4 to 10.5bn shares in Q1.
The total value of shares traded during Q1 2024 also increased, with broad-based gains across most markets. While Qatar, Bahrain, and Oman experienced a decline in traded value, the rest of the GCC witnessed growth. The aggregate value traded reached $202bn in Q1, up from $137.5bn in Q4. Saudi Arabia saw the most significant increase, with traded value rising from $93.6bn to $154.5bn, representing a 76.5pc share compared to 68pc in Q4.
Nine Saudi-listed stocks ranked among the top 10 most traded GCC stocks by value in Q1. Aramco topped the list with $7.7bn in trades, followed by Al Rajhi Bank at $6.3bn and Sal Saudi Logistics Services at $6.1bn. Abu Dhabi’s International Holding Company was the only non-Saudi stock on the list, with a traded value of $3.7bn in Q1.
The return of foreign investor interest in Q1 signifies renewed confidence in the GCC markets. As the region navigates global economic uncertainties, continued market reforms, strategic IPOs, and a focus on diversification are likely to be key factors influencing future foreign investment flows.
Source: https://www.gdnonline.com/Details/1310966/Foreign-investor-appetite-returns-to-GCC-markets
