Saudi Stock Market Sees Mixed Signals Amidst Profit-Taking and Upcoming IPOs
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The Saudi Tadawul All share Index (TASI) saw a modest 0.28% increase on Monday, closing at 12,104 points. However, this slight gain comes amidst ongoing profit-taking, marking the second consecutive session of pressure on the market following last week’s significant gains in bank stocks.
Conversely, the parallel market index experienced a more significant decline, dropping 0.66% too 30,850 points by 11:58 Riyadh time. This fluctuation highlights the complex dynamics at play within the Saudi stock market.
Last week’s trading saw a notable shift, with Saudi institutions making net purchases of 1.2 billion riyals, a move counterbalanced by nearly equivalent profit-taking by individual traders. This marked a significant change in trader behavior after approximately two months of a different trend.
Aramco and Bank Stocks Under Scrutiny
Market attention is currently focused on the performance of bank stocks, especially Al Rajhi Bank (TADAWUL), whose performance yesterday contributed to a roughly 0.3% decline in the TASI. The return of foreign investors is also anticipated, perhaps boosting Aramco shares following recent price increases.
Saudi Arabia’s 2025 Borrowing Plan: A Potential Catalyst
The Saudi government’s announced borrowing plan for 2025, estimating financing needs at approximately 139 billion riyals (a 61% increase from last year), is expected to influence market activity. Finance Minister Mohammed Al-Jadaan stated in an interview with Al-Sharq last November: “We see that expanding spending is possible, and this is what the budgets for the next three years will include. Although the deficit will range between 100 and 140 billion riyals annually during that period, the return on the economy will be greater than the cost of borrowing to cover this deficit.”
This increased spending is projected to positively impact sectors such as tourism, real estate, construction, and utilities. Banks are also poised to benefit significantly from their role in financing these expansionary projects.
Arabian Oud IPO on the Horizon
Arabian Oud Company has announced plans for an initial public offering (IPO) this year, according to Omar Al-Jasser, the company’s CEO, in an interview with Al-Eqtisadiah newspaper. Following this announcement, shares of Al Majid Oud, a related company, saw a 3.3% increase, reaching a 12-week high. Al-Jasser highlighted the significant size of the Saudi Arabian perfume market, estimated at 8 billion riyals annually, with projected compound annual growth of 8% over the next five years.
The market also awaits the official listing and trading dates for Al-Mousa Health and Nice One, following the allocation of shares and the return of subscription surpluses to individual investors.
Note: This article provides general information and should not be considered financial advice. Consult with a financial professional before making any investment decisions.
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Saudi Staks Show Volatility Amidst Profit-Taking and Anticipated IPOs
World-Today-News.com Senior Editor, Sarah Williams, discusses recent market trends and upcoming developments with renowned financial expert, Dr. ahmed Khalil.
Sarah: Dr. Khalil, the saudi Tadawul All Share Index closed slightly higher today, but we are seeing decreased momentum following last week’s surge. What factors are contributing to this volatility?
Dr. Khalil: It’s a combination of factors, Sarah.
We saw a strong run-up in bank stocks last week, especially fueled by institutional buying.However, profit-taking has set in for many retail investors this week, leading to some pullbacks. This is a natural market correction after critically important gains.
Sarah: Last week’s trading activity showed some interesting shifts in investor behavior. Can you elaborate on that?
Dr. Khalil: We observed a notable change in the trading patterns of Saudi institutions and retail investors. For about two months, retail investors were dominant buyers in the market.
Though,last week marked a reversal with institutions becoming net buyers,while individual traders engaged in profit-taking to a similar degree. This suggests a potential shift in sentiment within the market.
Sarah: Aramco’s performance and the return of foreign investors are often closely watched. What are your expectations for these factors in the coming weeks?
Dr.Khalil: Aramco’s stock price has experienced a recent increase. This could be further influenced by the anticipated return of foreign investors, who are likely attracted by the company’s strong fundamentals and growth prospects. The outcome of Aramco’s performance will likely have a ripple effect across the broader Saudi market.
sarah: The Saudi government announced a significant borrowing plan for 2025. How do you think this will impact the market?
Dr. khalil: This borrowing plan, estimated at approximately 139 billion riyals, signals the government’s intention to invest heavily in key sectors such as tourism, real estate, construction, and utilities. These investments will create opportunities for businesses and stimulate economic growth.
Banks will also benefit significantly from financing these projects. However, market participants will need to monitor the impact of increased government debt levels.
Sarah:
Many are watching the upcoming IPOs of Arabian Oud and other companies. Can you shed some light on these developments and their potential impact on the market?
Dr. Khalil: The upcoming IPOs of Arabian Oud, Al-Mousa Health, and Nice One have generated considerable excitement in the market.Arabian Oud’s announcement has already lead to gains in the share price of related companies.
these IPOs will attract attention from both domestic and international investors. They will also inject liquidity into the market and provide investment opportunities for a wider range of participants.
Sarah: thank you for sharing your valuable insights, Dr.Khalil.
On a* final note, it is vital for investors to conduct thorough research and consult with financial advisors before making any investment decisions.
