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Liquidity issues deepen TASI decline
The Saudi Stock Exchange "TASI" index declined by 1.7%, reaching 9,952 points, with widespread losses affecting 228 companies compared to only 19 that gained. This was due to decreased liquidity, which was fragmented into smaller trades, increasing selling pressure. Trading value dropped to approximately 3.8 billion Riyals. Losses were concentrated across all sectors, especially in basic materials and banking, with a significant impact from the decline in Saudi Aramco shares, which decreased by 1.2%. Despite the current valuations being lower, the rise in government bond yields to 6% and the near 5.45% yield of the SIPOR (Saudi Interbank Offered Rate) continue to enhance the attraction of equities, provided that company profits remain stable. A drop in prices leads to cheaper valuations, but this is contingent on companies' ability to achieve expected growth.
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