Finance & Capital Market

Saudi share index rallies 11pc after Q1 decline

After Saudi Arabia's Tadawul All Share Index (Tasi) declined by 22% in the first quarter (Q1) of 2020, it has recovered 11% mainly helped by the inclusion of Saudi stocks in FTSE global indices in June, a report said.

The top three companies that contributed most of Tasi’s rally were Sabic, Aramco, and STC, said Al Rajhi Capital, a leading financial services provider in the Kingdom, in its Saudi Arabian Equities report.

 Despite a drop in oil prices and widening fiscal budget, strong consumer discretionary sales, increased telecoms consumption, improved petrochemical prices, strong mortgage sales helping both banks and the cement sector, pre-VAT purchases have all played out in Q2.

The second half of the year begins with the implementation of 15% VAT (from 5%), concerns of increasing provisions for banks, possibly weaker discretionary consumer spending, a wave of expats exodus and till now, partial opening up of multiple sectors such as gyms, malls, restaurants, etc.

“We expect the recovery to be gradual and believe that the theme that would play out is, the large companies getting larger at the behest of the smaller ones,” Al Rajhi Capital said in the report. – TradeArabia News Service