The Saudi stock market is facing volatility as regional tensions rise. The Tadawul All Share Index fell 2.2% in October’s first three trading days. This decline comes as Israel considers missile strikes against Iran-backed Hezbollah.
The recent downturn has erased all of this year’s gains. Investors are worried about further conflict escalation and low oil prices, which are below the levels needed to fund Saudi Arabia’s economic diversification efforts.
Saudi stock volatility amid tensions
Ryan Lemand, CEO of Neovision Wealth Management, said investors are typically frightened by wars and geopolitical conflicts. Stock markets in countries close to the escalating war might experience capital outflows.
Jassim Al-Jubran, Head of Sell-Side Research at Aljazira Capital, suggests the market will likely remain under pressure in the short term. He predicts the Tadawul index could drop to 11,380 points, a decline of about 5% from the last closing. However, he also mentions that the index might rise by the same margin if regional conditions improve.
HSBC Holdings strategists have downgraded their rating of Saudi Arabian stocks from “overweight” to “neutral.” They cite the short-term risks associated with increased geopolitical risk and low oil prices.
