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Capital Markets

Saudi Arabian stocks: Sophisticates at the gate

Without foreign institutional investors, Saudi Arabia’s equities market still has a long way to go before it can match the strength and sophistication of the Kingdom’s leading companies. But a more active foreign presence is expected. Dominic O’Neill reports from Riyadh and Jeddah.

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RESEARCH ON SAUDI Arabian stocks is at least consistent on one point. The market, say analysts, has reached a trough. Time to revisit is the title of Egyptian investment bank EFG Hermes’s November 6 strategy note on Saudi Arabia.

And well it might be. As 2007 comes to a close, the Saudi stock market’s capitalization, having fallen from a peak of more than SR2 trillion in early 2006, stands at around SR800 billion ($214.5 billion) – much the same as it was at the beginning of the year. The market, say analysts, has gone through a textbook "double bottom" pattern preceding a recovery, with the index sinking below 7000 at the end of January, rising, and then dropping to almost exactly the same point at the end of June.

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