Saudi retail investors traded a record 302.2 billion riyals of United States equities in the second quarter of this year, according to Capital Market Authority figures reported by Argaam, a rise of 56 per cent on the 193.4 billion riyals recorded in the same quarter a year earlier and 25 per cent above the 241.9 billion riyals traded in the first quarter.
The quarter beat the previous record of 253.9 billion riyals, set in the final quarter of last year. Total overseas trading through licensed Saudi capital market institutions reached 312.1 billion riyals, of which the United States accounted for 96.8 per cent, up from 91.5 per cent in the first quarter. Every other market was marginal by comparison: other markets accounted for about 4.3 billion riyals, European markets 3.1 billion, GCC markets 2.4 billion, Asian markets 183 million and Arab markets 28 million.
Across the first half the United States figure was about 544 billion riyals against 367.2 billion in the corresponding period last year, a rise of 48 per cent. Overseas trading now equals 47.7 per cent of the value traded on the domestic market, which stood at 654.5 billion riyals in the quarter, with United States trading alone equal to 46.2 per cent of domestic turnover.
What the number does and does not show
Two caveats matter and both limit how far the figure can be read as capital flight. The series counts buys and sells together, so it measures turnover rather than net flow and says nothing about the value of assets Saudi investors hold abroad. It also covers only trades executed through licensed Saudi capital market institutions, which means activity routed through foreign brokers sits outside it entirely. Nor do the data show how many investors or portfolios are involved, so no claim about the breadth of participation can be drawn from them.
What the figure does show is a decisive shift in where domestic brokerage turnover is being generated. A market whose overseas trading is approaching half its domestic turnover, and whose overseas trading is almost entirely one foreign market, has a concentration that is as much an operational question for brokers as a behavioural one for investors.
The regulator is already moving
The Capital Market Authority released draft regulations on dealings in overseas financial markets for public consultation in late September, with the consultation period running to the twenty seventh of October. The draft would require clients to post margin of at least 50 per cent of transaction value, prohibit margin transactions in highly leveraged instruments and in shares of companies whose accumulated losses exceed half their share capital, and set requirements for assessing whether an overseas product is suitable for a given client.
The sequencing is worth noting. The consultation was opened before these quarterly figures were published, which suggests the regulator was already working from the same trend rather than reacting to a headline. A 50 per cent margin floor would bite hardest on the leveraged retail activity that has grown fastest, and the accumulated losses test reads as a direct response to Saudi retail money finding its way into distressed small capitalisation United States stocks.
