Earlier in August, Saudi Arabia's Tadawul All Share Index posted nine straight days of declines and shed over 5% of its value in the worst streak of losses in over six years. During the week ending Aug. 3, outflows reached 6.5 billion Saudi riyals ($1.7 billion) as foreign investors sold off Saudi stocks. After an optimistic end to 2022 and a 12% rise between January and July, what has happened?
Akber Khan, acting chief executive officer at Al Rayan Investment in Doha, told Al-Monitor that many of the larger Saudi listed companies have struggled since the start of the year. However, very strong performances from a handful of firms pushed up the Tadawul Index and therefore skewed the overall picture.
“Sectors representing 70% of the index — banking, energy, and materials — have actually performed very poorly this year,” Khan said. Stocks outside those three sectors boosted the index, "and now we’re seeing a bit of a correction.”
Several companies have indeed had a strong year on the Tadawul. The telecoms firm Zain has seen gains of over 25% since January. Elm Co., which offers digital services and products in Saudi Arabia, is up more than 110%, and agricultural firm Nadec had strengthened by over 135%. However, it is a very different story for the banking and materials companies which dominate the index. Riyad Bank is down 5%, as is Bank Albilad. Saudi Kayan Petrochemical has shed about 10% of its value.
