Foreigners buy Saudi stocks as index calls loom, oil gains

DUBAI — Foreign investors are piling into Saudi Arabian stocks, counting on the country’s inclusion in emerging-markets indexes at a time when the outlook for oil prices is improving.

Foreigners were net buyers of more than 5.5 billion riyals ($1.47 billion) of shares for 11 straight weeks this year, according to data provided by Saudi Arabia’s stock exchange. Last week, they bought 1.375 billion riyals in shares, more than in any other week since Bloomberg started compiling the data in October 2015.

Foreign firms from Renaissance Capital to Deutsche Bank AG and Goldman Sachs Group Inc are planning to expand in Saudi Ara-

We see scope for continued outperformance given our relatively constructive view on oil prices Hootan Yazhari, Head of Mena, global frontier markets, Bank of America Merrill Lynch

bia this year as they seek to benefit from a pickup in market activity fuelled in part by government reforms to steer the economy away from oil. Investors are also betting the kingdom will be classified as an emerging market by index compilers FTSE Russell and MSCI Inc this month and in June, respectively, steps that could spur yet more capital inflows. The country’s main gauge is up 6.4 per cent this year — more than the average gain of 4.2 per cent for stocks from developing economies.

“We see scope for continued outperformance given our relatively constructive view on oil prices, the forthcoming FTSE announcement and continued healthy momentum in underlying earnings, particularly for the banks and petrochemical companies,“said Hootan Yazhari, the head of MENA and global frontier markets at Bank of America Merrill Lynch in Dubai.