Abstract
This study aims to determine if a cause exists between foreign investors BUY and SELL and the Saudi stock market performance. The dependent variable is Saudi stock index represented by INDEX while the independent variables are buying for foreign investors, selling for foreign investors namely BUY and SELL. The research period starts from January 2008 to December 2018. Unit root tests with structural breaks based on Augmented Dickey-Fuller unit root test and Zivot Andrew unit root test, Co-integration analysis, and Granger causality tests were used to test 4 hypotheses stating no effect on Saudi stock market of foreign buy and sell. Results indicate the importance of foreign investors BUY and SELL to explain stock market movements. The study will guide Saudi policymakers, analysts, and financial institutions to benefit from the clear link between investors selling and buying and Saudi stock performance paving the way for Wise policies.
Highlights
This study aims to determine if a cause exists between foreign investors BUY and SELL and the Saudi stock market performance
This research applies the granger causality to study the relationship between foreign investors buying, selling and the Saudi stock market performance for the period of Jan. 2008 to Dec. 2018
The conclusion of this study illustrates the movement of the foreign investors buy and sells and their impact on the Saudi stock market performance, in addition to indicating that foreign investors make their transaction decisions according to performance index information
Summary
The historical beginnings of the Saudi stock market are due to 1932 when the first joint-stock company was established in the Kingdom Saudi Arabia, the Arab Automotive Company, later; other companies were established during the seventies of the Gregorian, as the number of these companies increased. As the number of shareholding companies grew, a non-market emerged of shares in the early 1980s, until the order was issued High No 1230/8 in 1984 regulating trading; the task of supervising and implementing market activity was assigned rules.
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