DUBAI: Shares in Saudi Arabia pulled back on Tuesday as local short-term investors booked profits in stocks that had jumped when Deputy Crown Prince Mohammed bin Salman announced economic reforms on Monday.

Riyadh's stock index, which had gained 2.5 percent on Monday mainly from banks that could win business handling the government's privatization plans, dropped 1.6 percent to 6,757.14 points. Trading volume shrank by almost one-third.

Samba Financial Group, lead underwriter of the recent initial public offer of Middle East Healthcare, dropped 5.3 percent after rocketing 9.3 percent on Monday.

Because the reforms will take years, most fund managers do not expect any immediate, extended rally of the overall stock market.

"The implications for Saudi non-oil growth would provide a meaningful uplift to Saudi earnings in the medium to long term," said Mohamed Eljamal, head of asset management at Abu Dhabi-based Waha Capital.

Khaled Abdel Majeed, managing partner at London-based asset manager MENA Capital, said his fund might conceivably put more money into Saudi Arabia in the wake of the reform announcement, but would do so very selectively.

"At the moment the Saudi market is 15 times trailing earnings for 2015, but earnings in the first quarter of 2016 were flat, so zero growth, so if you annualize that and assume there will be no growth in 2016, then you are talking forward earnings of 15 times," he said. "At that price, I don't think I am being paid enough to take that risk. If it was trading at 10 times, then yes, maybe."

However, some stocks gained on Tuesday on the belief their industries would benefit from the reforms.

Saudi Arabian Mining Co. (Maaden) rose 0.6 percent. One target of the economic plan is to raise the mining industry's contribution to gross domestic product to SR97 billion ($25.9 billion) and increase the number of jobs in the sector by 90,000 by 2020.