Samer Choucair: Negative Foreign Net Flows Reveal the Limits of Capital Inflows Into the Saudi Market
Saudi Arabia’s benchmark Tadawul All Share Index, TASI, ended August 2026 at 11,127.08 points, gaining 5.07% during the month, while the value of shares traded jumped 30.61% to SAR 112.44 billion, according to Saudi Exchange data.
Trading volume increased 25.90% to 5.77 billion shares, while the number of transactions rose 18.42% to 10.27 million. The total market capitalization of listed equities increased by a more modest 0.96% to SAR 9.54 trillion.
Morgan Stanley Saudi Arabia ranked first among brokerage firms by trading value for the second consecutive month, executing SAR 32.05 billion and capturing a 14.25% market share. Al Rajhi Capital followed with SAR 31.68 billion and a 14.09% share, while SNB Capital recorded SAR 29.83 billion and a 13.26% share.
Together, the three brokers accounted for approximately 41.6% of member trading value on the Main Market.
Investment leader Samer Choucair said the August figures should not simply be interpreted as evidence that Saudi equities are either cheap or expensive.
“August does not tell us that the market is absolutely cheap or expensive,” Samer Choucair said. “What it tells us is that capital allocation within the Saudi economy has become more institutionalized at the execution level, while the external capital-flow story remains incomplete.”
Choucair said the sharp increase in trading liquidity relative to the comparatively modest increase in total market capitalization provides an important signal about what actually drove the market during the month.
“The market moved because capital repriced risk, not because valuations expanded to the same extent,” he said.
Domestic Institutions Drove the Buying
Saudi institutions recorded net purchases of approximately SAR 3.48 billion during the period, while foreign institutions registered net sales of around SAR 961.5 million. Saudi individual investors, meanwhile, recorded approximately SAR 2.72 billion in net sales.
At the same time, the total value of foreign ownership increased to SAR 461.52 billion, representing an increase of SAR 23.65 billion.
For Samer Choucair, the apparent contradiction between rising foreign ownership values and negative foreign institutional net flows is one of the most important signals in the August data.
“Negative foreign net flows alongside an increase in the value of foreign holdings means that the market repriced existing positions more than it attracted new money across the border,” Samer Choucair said.
The distinction is critical when assessing the sustainability of market liquidity.
A rising market can increase the value of foreign-owned portfolios even when international investors are net sellers during the same period. As a result, investors need to separate the valuation effect from actual capital flows before concluding that higher foreign ownership represents fresh international money entering Saudi equities.
Brokerage Data Reveal Different Types of Investors
Brokerage activity provides another perspective on the changing structure of the Saudi market.
Al Rajhi Capital ranked first by trading volume, handling approximately 1.95 billion shares for a 16.99% market share. It also led by number of transactions, with approximately 3.50 million trades representing 17.03% of the market.
In electronic trading, SNB Capital ranked first with a 24.52% share, followed by Al Rajhi Capital at 22.27% and Derayah Financial at 9.49%.
Samer Choucair said the differences between rankings by trading value, volume, transaction count, and electronic activity reveal important distinctions in client profiles and execution channels.
“The real competition is no longer about who wins monthly market share,” Choucair said. “It is about who owns the execution relationship with investment funds and asset managers that rebuild portfolios gradually. A broker that wins on value without necessarily winning on volume is serving an investor who thinks in quarters and years, not trading sessions.”
The strong presence of global investment banks, combined with the influence of domestic institutions and digital platforms across volume and electronic trading, suggests that the Saudi market is developing simultaneously along two different dimensions.
One is institutional execution, where larger portfolio decisions and higher-value transactions can determine brokerage economics. The other is technology-driven market access, where digital platforms increasingly shape trading frequency, accessibility, and investor participation.
Liquidity Is Becoming More Selective
Banks, materials, and energy remained among the leading sectors by trading value during August.
At the same time, the large-cap index advanced 6.23%, compared with gains of 4.89% for mid-cap companies and 4.65% for small-cap stocks.
For Choucair, this dispersion matters because it demonstrates that the Saudi equity market is becoming increasingly selective rather than moving as a single block.
“The jump in liquidity is important, but the more important question is where that liquidity went and how it redistributed risk across sectors and company sizes,” Samer Choucair said.
That distinction becomes particularly relevant for institutional investors because aggregate market turnover can conceal substantial differences in the quality and direction of capital allocation.
Higher liquidity concentrated in large banks, energy companies, or other highly liquid names carries different implications from an indiscriminate rise in speculative trading across smaller companies.
Similarly, institutional accumulation during periods of weakness can provide a different signal about market structure than liquidity generated primarily by short-term retail activity.
Foreign Ownership Is Not the Same as Foreign Inflows
Choucair said investors should pay particular attention to foreign institutional flows over the coming months, especially after adjusting for the effect of market appreciation on the value of existing foreign holdings.
This is likely to become an increasingly important measure of whether Saudi Arabia’s capital-market reforms are translating into sustained international portfolio allocations rather than simply higher valuations for capital already invested in the Kingdom.
The August figures illustrate why headline foreign ownership alone can provide an incomplete picture.
Foreign holdings may rise in value because Saudi equities appreciate, while net cross-border flows remain negative. Sustainable internationalization of the market ultimately requires both: stronger valuations supported by corporate fundamentals and persistent incremental allocations from global investors.
For institutional investors assessing Saudi Arabia, the question is therefore shifting from whether foreign participation exists to whether that participation is deepening through new capital commitments.
What Investors Should Watch Next
Samer Choucair said several indicators will become increasingly important in determining whether the August liquidity expansion represents a durable structural change.
Among the most significant will be foreign institutional net flows after separating out price effects, the share of electronic trading in total market value, and whether Saudi institutions continue to accumulate equities during periods of market weakness.
The behavior of domestic institutions will be particularly important because their SAR 3.48 billion in net purchases during the period suggests that local professional capital played a significant role in absorbing supply from other investor categories.
If that pattern persists, it could reinforce the growing influence of domestic asset managers, investment funds, and institutional portfolios in determining marginal pricing across the Saudi market.
But if higher market levels are to be supported by a broader international capital story, foreign flows will eventually need to confirm what rising foreign ownership valuations alone cannot.
From Monthly Performance to Structural Transformation
Samer Choucair concluded that investors building positions in Saudi equities today should focus less on individual monthly closing levels and more on whether the structural transformation of the market continues.
“An investor building a position today is betting on the continuation of this transformation, not on a monthly closing number,” Choucair said.
The evolution of brokerage services, asset management, institutional participation, and execution channels forms part of a broader redesign of Saudi Arabia’s financial architecture and the effort to deepen its capital markets under Vision 2030.
For Samer Choucair, August therefore provides a more nuanced signal than the TASI’s 5.07% monthly gain alone would suggest.
Liquidity expanded substantially. Domestic institutions were net buyers. Foreign holdings increased in value. Yet foreign institutions remained net sellers.
Taken together, those figures suggest that Saudi Arabia’s equity market is becoming deeper and more institutionally sophisticated, while simultaneously demonstrating that the next stage of its development will depend not merely on higher asset prices, but on its ability to convert greater international visibility into sustained cross-border capital inflows.