Saudi stocks slide as funds turn bearish

Saudi Arabia's stock market fell sharply on Wednesday with all its banking shares dropping as receding fund inflows dampened investor appetite on a day when second phase of Saudi stocks joined the MSCI emerging markets index, reports Reuters.

EFG Hermes said in a note on Wednesday the investment case for Saudi banks is no longer 'compelling' in their view on the backdrop of receding passive flows, rates becoming a headwind, and the emergence of credit quality concerns.

"We think Saudi can drift lower, before finding a support above the 8k mark. Stock picking would be the name of the game hereon and companies that deliver good results shall outperform the broader Index," said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.

Sixty per cent of fund mangers said they would decrease their investments in Saudi Arabia, displaying bearishness that has carried over from last month.

The Saudi index declined 1.4 per cent with Al Rajhi Bank losing 2 per cent and the country's largest lender National Commercial Bank decreasing 2.4 per cent.

A second batch of Saudi shares was added to the MSCI emerging markets index on Wednesday after the country's stocks were first included in the index in May.