RIYADH: Saudi Arabia’s stock market saw foreign non-strategic investors reduce their ownership in nearly half of the companies listed on the main Tadawul All Share Index, or TASI, on the first day of implementing the decision to open the market to all categories of foreign investors, according to Tadawul data reflecting ownership positions as of Feb. 1  

According to the Financial Analysis Unit at Al-Eqtisadiah, foreign ownership declined in 120 companies, increased in 97 others, and remained unchanged in the rest, with no variation in the number of shares held by foreign investors. 

Foreign investors favor growth stocks 

Looking at the changes purely through valuation multiples — without factoring in operational or sectoral considerations — foreign investors appear to be reallocating ownership toward growth stocks at the expense of value stocks, with higher multiples used as an approximate indicator of growth. 

Ownership declines were concentrated in companies with lower valuation multiples, where the median price-to-earnings ratio stood at about 17.1 times and the median price-to-book ratio was around 2 times. 

Conversely, ownership rose in companies with higher multiples, with a median price-to-earnings ratio of 23.3 times and a median price-to-book ratio of 2.6 times. 

Mid- and small-cap firms see biggest changes 

Raoom, Entaj, and Obeikan Glass saw the largest declines in foreign ownership, dropping between 10 percent and 16 percent. In contrast, Tamkeen, SACO, and Abo Moati led gains, with foreign stakes rising 10 to 20 percent. 

In terms of overall foreign ownership, Al-Babtain, Rasan, and Etihad Etisalat topped the list at roughly 34 percent, 29 percent, and 24 percent, respectively.

Gradual foreign inflow and delayed impact 

The initial changes remain insufficient to reflect a major impact of the full foreign access decision, especially as the first day coincided with the weekend. Additionally, entry is expected to be gradual until financial institutions are fully ready to open accounts, particularly for individuals. 

Mohammed Al-Shammasi, CEO of Derayah Financial, has told Asharq that the firm received around 500 individual investor applications on the first day of full foreign access. 

Meanwhile, foreign institutions managing under $500 million can now invest directly in the market with easier access, joining more than 4,000 qualified foreign investors who already hold assets worth SR377 billion ($100.5 billion)