Foreigners still net sellers of Saudi stocks in wake of corruption crackdown

Foreign investors were net sellers of Saudi Arabian equities for a third straight week after authorities launched a major crackdown on corruption, but by a smaller margin than in the previous week, exchange data showed on Sunday.

The crackdown, which has involved the arrest of dozens of senior officials and businessmen and the freezing of over 2,000 Saudi bank accounts, has alarmed investors, who fear it could damage the economy and lead to forced sales of assets.

Foreign investors sold SAR835m ($223m) of Saudi stocks and bought SAR598m in the week through November 23, resulting in net selling of SAR237m.

That compares with net selling of SAR309m in the week to November 16 and SAR1.08bn in the week to November 9, immediately after the purge was announced.

The latest data also showed selling by Saudi individual investors easing. They sold SAR10.5bn in the latest week and bought SAR9.5bn. In the previous week, they were net sellers by a margin of SAR2.4bn.

Some individuals have been pulling money out of the market for fear it could be seized in the crackdown, according to local fund managers. But in the latest week, high net worth individuals turned net buyers by a small margin.

Saudi institutions, mostly mutual funds and corporations, have been heavy net buyers since the crackdown was launched; regional asset managers think much of this buying was by state-linked funds deliberately supporting the market to avert a panic.

The data showed institutions were net buyers to the tune of only SAR1.34bn in the latest week, compared with SAR2.87bn in the previous week.