Riyadh - Mubasher: The traded value of the Saudi Stock Exchange (Tadawul) reached multi-year lows recently, touching approximately SAR 2.3 billion per day in the week of 21 to 25 August, according to Al Rajhi Capital’ report issued on Tuesday.
The average daily traded value during 2016 so far has been 20% lower than the average of the last 5 years, the report indicated.
The ownership of Saudi Individuals declined 610 bps over the last 3 years to 30.5%, while that of Government related entities, the major constituent of Saudi Institutions group, increased by 530 bps to 39%, making it the single largest investor group in the market, the report added.
Since oil price’s downward trend in Aug 2014, Saudi Individual investors’ trading volumes have been dropping and that of Saudi Institutions rising, mostly offsetting each other, according to the research firm.
Portfolio turnover of Saudi Individuals is significantly compared to almost negligible turnover of Institutions, Al Rajhi’s analysis shows that the average daily trading volume during market up-move is 30% higher versus when the market declines.
Al Rajhi believes Market ownership moving from Saudi retail investors to Institutions is long-term positive for the market as it is expected to decrease volatility, although it might come at the expense of overall market liquidity, nevertheless, participation of more active institutional investors is required to ensure a more vibrant market.
It also remains to be seen if the increase in trading commission has any impact on overall turnover, especially for the high volume traders, the report concluded.
