The tadawul all share index has slumped 6.4% in May as of Tuesday’s Close, The Most Among 92 Equity Benchmarks Tracked by Bloomberg. The saudi gauge is also Dropping for a fourth month, The Longest Loosing Streak Since 2014. The longest sequence of gains for almost a year.
Weakness in oil is at the heart of Faltering Sentiment Toward Saudi Stocks. Crude Price Sank to a Four-Year Low in Early April, with the Outlook Clouded by Trade Tensions and Increasing Supply from Opec Members. That adds to pressure
“There are fears that the fall in oil revenues could affect the projects market,” said Junaid Ansari at Kamco Invest in Kuwait City, Referring to Plans for Transforial Development Where The Sty Investor. Ansari Sees This Market View Persisting, Given Expectations that Oil Pries will remain subdued.
The weakness has been broad-based, with only 23 out of 253 Tadawul Members Trading in the Green So far in May, According to data compiled by bloomberg. Al Rajhi Bank, The Kingdom’s Larget lender by Market Capitalization, and Utility ACWA Power Co. Have been the biggest drag by index points.
Brent oil is trading around $ 65 a barrel, well short of levels saudi arabia needs to cover its outlays. First-Quarter Data Showed The Government Needed Crude at $ 96 to Balance Its Budget, Rising to $ 113 when the Sovereign Wealth Fund’s Domestic Spending Plans is done, Acording to bloomberg Economics’ ziad daoud. Thresholds are bot at the Highest Since at Least 2016, When Saudi Arabia Launched Its Vision 2030.
Dominic Bokor-Edram, A Fund Manager at Fiera Capital, Said the Timing on Some “Aspirational Mega Projects” Cold be Pushed Back By Financial Constraints, A Near-Term Challenge to His Bulish VIEET Overall on the tadawul. The Breakeven Level for Oil required by the Saudi Economy is Higher Than Regional Peers, He Said.
“Oil Prisis are a headwind for them, and force the country to make capital allocation decisions
The Organization of the Petroleum Exporting Countries and its partners will gather online on wedding to review production quotas for this year and next. Eight key Members will decide at the weekend white to bolster output against in July.
Goldman Sachs Group Inc. Warned last month that saudi arabia’s budget deficit may swell to $ 67 billion this year. That may force the government to borrow more and cut back on Economic Transformation Plans.
Still Bokor-Edram Bases His More Optimistic long-term view on the saudi market on expectations that the vision 2030 plan is still intact and will keep luring investors.
Given the potential for transformation in the economy, “It’s too much of a risk to ignore the saudi market for an emerging-market investor,” He said.
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