Tadawul Up 11.2 Percent This Year, Funds Seen as Increasingly Bullish on Saudi Arabian Equities

After a rough second half of 2014, Saudi Arabia’s stock market, the Tadawul or TASI, has begun a bounce-back. The bourse is up 11.2 percent this year, and a recent Reuters survey of regional asset managers found bullishness in those polled about Saudi Arabia equities and the Tadawul.

The current gains in Riyadh are the strongest in the region, according to Reuters. Saudi Arabia has outperformed all other major bourses in the Middle East, whose returns are mostly in the low single digits, the news agency reports.

“In the February version of the monthly survey, 53 percent of respondents said they expected to increase their Saudi equity allocations in the next three months, while none intended to cut them. A month earlier, 40 percent planned to boost Saudi equity allocations and the rest expected them to be stable,” Reuters reports. 

[Click here to see a graphic of the results]

At least part of the turnaround has followed the price of oil. In the second half of 2014, oil saw a near halving of its price on international indices, and the Tadawul largely fell with it. Now, with oil on the rebound and Saudi Arabia’s Ali Al-Naimi, Minister of Petroleum and Natural Resources, seeing increased demand and a stabilizing of the market, the Tadawul is reacting accordingly with gains.

Oil is up 35% from a 6-year low in January.

The rally for the Tadawul comes at an opportune moment as the Kingdom prepares to open its stock market to wider foreign investment in April of this year. Saudi Arabia’s bourse will at last be accessible by international institutional investors that are eager to participate. “Rightly so,” wrote Riyadh-based Jadwa Investment wrote in an investor note last year. “The stock market has a number of exceptional companies.”