A recently released note by Jadwa Investment discusses the effect that seasonal trends have on the Saudi economy, noting that while all economies have seasonal trends, “for Saudi Arabia these trends are more pronounced than for most other global economies…The slowdown in activity in the third quarter due to the long hot summer is a key driver of seasonality. Although the affect on company earnings can be large, the seasonal distortions appear to be factored into share prices.”
Jadwa, “examined quarterly earnings from 2004 for each of the 15 sectors of the market to determine seasonal trends. Our assumption is that under normal circumstances earnings would grow, so we have placed most emphasis on the times when quarterly earnings have fallen. For the market as a whole, earnings have fallen 11 times in the past 32 quarters. Seven of these 11 occasions have occurred in the fourth quarter.”
Quarterly Earnings Growth in Saudi Arabia - Jadwa Investments
In the report found below, Jadwa Investments examines “quarterly earnings for each of the 15 sectors of the market as well as quarterly real GDO growth rate to determine seasonal trends. Within corporate results, the fourth quarter tends to be the weakest as companies choose to clean up their balance sheets in order to start the new year on a sounder footing while the second quarter is generally the peak time for private sector activity owing to a push from companies to conclude deals and projects ahead of the summer slowdown. The report also highlights some puzzling seasonal trends in the recently released quarterly real GDP growth particularly in the oil and manufacturing sectors, though it appears that this early data is subject to further revisions.”
[For the full report from Jadwa Investment, click HERE]
Saudi Arabia sectoral earnings performance compared with the previous quarter - Jadwa Investments
[For the full report from Jadwa Investment, click HERE]
