Continued recovery supported by growth, oil prices and corporate performance

The estimates of the Ministry of Finance, the Capital Market Authority and the oil companies revealed 3 main factors that push the Saudi stock market to continue recovery in 2022. The estimates of the Ministry of Finance in the last budget statement include an increase in growth to 7% and the continued improvement of companies’ performance and oil prices, after an exceptional performance in 2021, With it, the index rose by 30%, and according to the International Energy Agency and OPEC, the demand for oil is expected to rise to more than 100 million barrels this year, which will lead to an improvement in the performance of companies and local and international stock markets.

The stock market witnessed record highs in 2021, and recorded its highest gains in 14 years; The general index of the market “TASI” rose by 29.83%, to add 2,592.18 points to its balance, by which it jumped 11,281.71 points, compared to 8,689.53 points at the end of 2020, and the market witnessed during the past year an increase in overall liquidity at 2.22 trillion riyals, an increase of 7%, and with an average daily liquidity of 8.92 billion Rial.

According to experts, the Saudi market is looking at it with more optimism in the current period for the launch of large projects related to Vision 2030, the continuation of reforms, and the rises of 2021, the stock index becomes high by 1515%, within 36 years, with an average annual rise of 42%, where the index was 691 points at the end of 1985 .

Oil prices and economic growth are the main catalysts

Expected oil prices at the level of $ 80 this year are the most important motivating factors for the stock market due to the strong consumption of energy in the coming period, according to estimates by OPEC and the International Energy Agency, and experts reduce concerns about Corona’s mutations in light of the high rates of vaccination globally, and it is expected that the market will continue to continue Its rise is due to the Kingdom’s continued implementation of Vision 2030 programs, the growth of the economy by more than 7% and the achievement of a budget surplus of $90 billion, which will be reflected on the profits of companies and thus make their prices attractive to investment. To the prices of 2018, which is better than the prices before the Corona pandemic, and the market witnessed positive news, including the National Investment Strategy, the Partner Program and The Line in NEOM and Oxagon; This led to the influx of liquidity from foreign investment as well as the local investor, and the market value of shares exceeded 10 trillion riyals, while the ownership of foreigners rose to more than 300 billion riyals and the Gulf nationals to 53 billion riyals.

Gradual increase in listings annually

The document of the Financial Sector Development Program focuses on increasing listings in the Saudi market so that the baseline in 2020 will be 6 companies, 16 companies in 2021, 20 companies in 2022, and 24 companies in 2023 and 2024. Despite this ambitious program, there are significant challenges In front of the Saudi market, the US Federal Reserve raised interest rates, inflation, the emergence of new variables, and oil prices, which directly affected the performance of financial markets in general, while many rely on the importance of expanding the investor base, reducing rumors, and focusing on long-term institutional investment.

3 Pillars of Market Rise

Saudi stocks rose mainly during 2021 with the support of the achievements of Vision 2030 during the first five years and the diversification of the local economy, in addition to the rise in oil prices and the launch of a partner program from which many listed companies benefit. Huge government spending through the budget and the Public Investment Fund and the launch of many mega projects, and among the 26 years in which the market recorded increases, the index rose by more than 75%, in four years, respectively, in 2005, during which the index rose by 103.7%, followed by 2004, with an increase of 84.9 %, then 1991 with a rise of 80.2%, and 2003, which rose through the index by 76.2%, and among the ten years that recorded a decline, the declines exceeded 25%, during four years, which are, respectively, 56.5% in 2008, and 52.5%, in 2006 and 28.5% in 1994, and 27.8% in 1998.

50 companies apply for listing this year

According to the Tadawul Group, 50 companies submitted applications to offer their shares for subscription, whether in the main or parallel market in 2022, and some of them were approved, and among the most prominent companies preparing to offer their shares are Jazz Arabia for Metal Technology, Al-Nahdi Medical Company, Elm, the Saudi Home Finance Company, and the Grand Factories Company for Mining in the same context; The Tadawul Group revealed a new subscription to the parallel market for the Arab Gas Technology Company, with 5% of its total shares, amounting to 790,000 shares, on January 23 for a period of 5 days.


About the author

Leave a Reply

Your email address will not be published. Required fields are marked *