April 29, 2018 / 7:39 PM / in 3 months

Foreigners turn net sellers of Saudi equities for first time this year

RIYADH (Reuters) - Foreign investors turned net sellers of Saudi Arabian stocks last week for the first time this year, exchange data showed on Sunday, as fund managers became increasingly concerned about rich valuations.

FILE PHOTO: A trader uses his mobile as he monitors screens displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh June 15, 2015. REUTERS/Faisal Al Nasser/File Photo

Foreign portfolio funds have been flooding into the kingdom ahead of Riyadh’s expected inclusion in global emerging market indexes next year. In the week through April 19, foreigners bought a net $384 million of equities, a record sum.

In the week through last Thursday, however, foreigners were net sellers to the tune of $48 million, the data showed. They bought $313 million and sold $361 million.

Propelled by inflows of funds, the Saudi stock index .TASI has jumped 13.8 percent this year, meaning it is trading at more than 16 times corporate earnings for the past 12 months; MSCI’s emerging market index .MSCIEF is below 15 times.

Sunday’s data showed heavy net selling of stocks last week, at a ratio of more than two to one, by foreigners investing in Saudi stocks indirectly through swap agreements.

But qualified foreign institutions which invest directly remained net buyers, suggesting newly licensed institutions that are only now entering Saudi Arabia are continuing to build up their portfolios.

Reporting by Andrew Torchia; Editing by Robin Pomeroy

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