A recently released report by Jadwa Investment, entitled, “Oil Prices and the Saudi Stock Exchange (Tadawul),” examines both the real and sentimental changes in the Saudi stock market as a result of lower oil prices.
“With Saudi Arabia being a predominantly oil-based economy, major changes in the price of oil are likely to be followed by sentimental as well as real changes in the stock market. While sentimental changes often impact the stock market immediately, real changes will take effect over the longer term. If oil prices remain low, this ultimately affects economic policy framework, private sector activity and corporate profitability.”
Fahad Alturki, Ph.D.
Chief Economist and Head of Research of Jadwa Investment.
“The entry of qualified foreign investors (QFIs) into the Saudi Stock Exchange (Tadawul) and the recent weaker performance of the GCC stock markets, especially in the context of lower oil prices during H2 2014, makes it worth assessing the nature of the Tadawul All Share Index’s (TASI’s) relationship with global oil prices. An analysis of this relationship can establish a clearer understanding of the type of strategy QFIs may employ in trying to diversify or hedge against changes in oil price.”
