The Saudi stock market is benefiting from continuous upward momentum with global geopolitical concerns on the back burner and oil prices remaining solid, say leading investment analysts.
The stock exchange is also finding strength from last week’s performance in international markets, they said.
Their remarks came as the bourse recovered from last week’s weakness to hit a five-year high with gains in most sectors.
“We are gearing for the year’s first annual corporate results and many investors are positioning themselves for that,” said John Sfakianakis, chief investment strategist at MASIC.
“Naturally, valuations are becoming expensive for certain sectors such as retail but catalysts even for the more expensive stocks are on the upside. The foreign worker debacle is smoothing out any imbalances and things are gradually settling in the construction, cement and retail and wholesale segments of the economy,” said Sfakianakis.
Asim Bukhtiar, vice president and head of research at Riyad Capital, said: The Saudi market found strength from last week’s performance in international markets. Trading patterns lately suggest a surge early in the week followed by some moderation or pullback toward the end of the week on the Tadawul.”
He said: “We expect continued investor interest through the first quarter earnings season.”
Tadawul All-Share Index (TASI) rose 1.3 percent to 9,425 points, its highest level since July 2008.
Most stocks closed in the black, including petrochemicals, banks, cement makers and food producers.
Jarmo T. Kotilaine, a regional analyst, commented: “This is really reflective of the sustained dynamism of the Saudi and broader regional economy. Important investments have been made in economic diversification and the capital markets and the sustained resilience of the bourse, even during a challenging time for the global economy, reflects this.”
An earlier report from the National Commercial Bank said the market breadth expanded last year. However, the number of IPOs and the total size of offerings markedly fell to 5 and SR1.96 billion, respectively, from 7 and SR5.3 billion in 2012.
In January, one IPO was concluded for the Saudi Marketing Company that offered 7.5 million shares at a price of SR36.
The value of traded shares reached SR8.69 billion on Sunday. The Hotel and Tourism Index gained 2.72 percent.
A report Jadwa Investment said the TASI retained a strong upward momentum during February combined with slightly higher volumes.
Upward momentum has been maintained for the sixth consecutive month, according to Jadwa.
A number of global, regional and local factors have combined to intensify a revival in sentiment among local and foreign investors.