RIYADH: Saudis trading in US stocks, through market institutions licensed by the Capital Market Authority (CMA), recorded a decline of 25.4 percent, during the second quarter from a year ago, marking a decline in trading for the third quarter in a row, official data showed.
Saudis’ transactions in the US stocks during the second quarter of this year amounted to SR60.65 billion ($16.17 billion) including buying and selling, compared to about SR81.34 billion in the second quarter last year, CMA data revealed. Trading fell by 21.7 percent compared to the first quarter of this year, after it was SR77.4 billion during.
Despite the fall in the second quarter, trading in US equity witnessed a huge jump since the start of 2020. The trading of the third quarter of 2020 is the highest recorded so far, as it exceeded SR100 billion, the data showed.
The Saudis’ trading in the US stock market during the past year 2020 recorded historical levels at SR323.4 billion, compared to transactions that amounted to about SR45.8 billion in the year preceding 2019.
“There are three reasons behind Saudis’ rush to invest in US stocks, as there is no currency risk, there is a lower brokerage cost relative to other international markets and the attractive performance of the US market in the last 12 months,” Mazen Al-Sudairi, head of research at Al-Rajhi Capital told Arab news.
The three main indicators in the US market recorded a positive performance during the second quarter, continuing their strong performance since the beginning of this year, amid economic recovery with vaccines's acceleration and also the important impact of interest rates and inflation.
The Saudis’ trading in the US stock market is through companies licensed by the CMA, or direct trading without a local broker, but there is no official data on the volume of these trades, according to the CMA.
The US market is the most popular destination for Saudi individual investors as they accounted for about 96.9 percent of the total trades in foreign markets, amounting to SR62.6 billion during the second quarter of this year, CMA data showed.
US equity benchmarks closed the first half of 2021 at or near record highs as the economy continues its reopening and more and more people are returning to work. Historic fiscal and monetary stimulus has provided a consistent tailwind since the Spring of 2020, and there is little evidence those efforts will be removed anytime soon, according to a Nasdaq report.
GCC and Arab markets
Trading in the Gulf Cooperation Council comes in second place with about SR1.19 billion, or 1.9 percent of the total trades in foreign markets.
The trades in the Arab markets amounted to about SR250 million, representing 0.4 percent of the total trades in the foreign markets, while the trades in the Asian markets reached about SR82 million — a small part of the total trades during the second quarter of this year.
