Investors adopt 'cautious' outlook on Tadawul for 2019: Al Rajhi Cap

Investor sentiments on the Saudi stock market remained "mostly cautious" for next year, Al Rajhi Capital said in its latest survey.

Thirty-eight percent of participants remained "negative" while 62 percent were "not negative" (30 percent of participants optimistic and 32 percent participants neutral), it said, revealing that 73 percent of trading in the market is retail based which includes high net worth individuals.

After closing almost flat last year, Saudi market is up 9.6 percent year-to-date. It gained 15 percent on FTSE and MSCI inclusion in H1 2018 but lost 4.8 percent in H2 2018 to date, mainly due to oil, trade war, geopolitical concerns.

However, the consultancy believed that sentiments could change with expected key drivers such as the inclusion of Saudi Arabia in the FTSE EM and MSCI EM indices next year, higher probability of an improvement in oil prices from the current level and improvement in government spending.

Despite the recent volatility in the domestic stock market, the survey found that 68 percent of respondents have invested in the stock market with most people preferring to invest on their own and only few participants investing through mutual fund route.

As per Capital Market Authority data, the number of retail investors rose to 4.72 million by the end of Q3 2018 from 3.68 million in 2017, with retail investment portfolios increasing to 9.75 million from 9.37 million last year.

According to Al Rajhi, 32 percent of the respondents cited lack of required capital and knowledge as primary reasons for not preferring to invest in the stock market.

Fifty-nine percent of survey takers said their primary objective for the stock market investment remained long-term gains, while around one-quarter of investors were active in trading to earn speculative gains.

Additionally, 72 percent of respondents said they have either maintained or increased their trading activity, which reflected investor confidence in the initiatives undertaken by the government, the survey noted.