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Determinants of foreign portfolio investment in emerging markets: evidence from Saudi stock market

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Abstract

Saudi Arabia has the largest stock market in the Gulf Region. Recently, it officially opened up to foreign investors in an effort to promote market stability and reduce volatility. In this study, we aim to explore the determinants that encourage foreign investors to invest in the Saudi stock market. The analysis shows that investors prefer to invest in privately owned firms and institutions with relatively higher levels of tangible assets while they disfavour firms that are government owned and have a high level of liquidity. This study investigates an issue that has not been previously addressed in this particular market; it also contributes to an understanding of foreign investors’ behaviours in emerging markets.

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Authors and Affiliations

  1. Riyadh, Kingdom of Saudi Arabia

    Ahmed Badawi

  2. Yarmouk University , Irbid, Jordan

    Anas Al Qudah

  3. Al Imam Mohammad Ibn Saud Islamic University, Riyadh, Kingdom of Saudi Arabia

    Waleed M. Rashideh

Authors
  1. Ahmed Badawi
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  2. Anas Al Qudah
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  3. Waleed M. Rashideh
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Correspondence to Anas Al Qudah.

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Badawi, A., Al Qudah, A. & Rashideh, W.M. Determinants of foreign portfolio investment in emerging markets: evidence from Saudi stock market. J Econ Finan 43, 779–794 (2019). https://doi.org/10.1007/s12197-019-09482-8

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