Nawaf Al-Otaibi, Head of Wealth Management at Saudi Fransi Capital, said that the expectations of the Saudi stock market are “positive” during the current year, supported by the acceleration of economic growth and capital spending linked to the Kingdom’s Vision 2030.
Al-Otaibi explained in an interview with “Al-Arabiya” that Saudi financial market It is distinguished from the rest of the emerging markets by the availability of good commodity prices, while the exchange rate of the Saudi riyal remains linked to the US dollar.
He continued, “The exchange rate link to the dollar adds advantages to the Saudi market because other emerging market currencies are considered volatile in light of the rise in interest rates by the US Federal Reserve.”
He pointed out that the relative improvement in oil prices leads to the strength of the government’s financial reserves, easing spending restrictions and implementing a more flexible fiscal policy.
Al-Otaibi believes that the high participation in the market led to an increase in share prices, especially during the year 2020, adding: “We noticed the increase in the participation of individuals during the active subscription periods, in which there were many new shares offerings.”
He pointed out that the Capital Market Authority’s announcements that reveal companies that wish to be listed in the financial market find remarkable activity in the IPO sector, expecting that this will contribute to a greater participation in the individual sector.
He revealed that oil-related prices have a major role in many of the basic expectations of Saudi Fransi Capital for the Saudi economy as well as the local stock market.
Al-Otaibi stressed that the high liquidity and the participation of investors in the market comes with unfair low valuations, especially in the energy and basic materials sector, which is one of the biggest beneficiaries of the high energy prices.
He pointed to the decline in the banking sector’s assessments as well, in conjunction with the decisions to raise interest rates, expecting an increase in demand for financing and providing opportunities for the Central Bank “SAMA” to manage liquidity, which supports bank stock prices.
He expected that the resumption of tourism and travel would be a catalyst for the benefit of this sector in the Saudi market, specifically companies that rely on tourism programs.
