Heavy flows of new money into Saudi Arabias stock market mean its bull run may just have begun, despite year-to-date gains by the main index of 13 percent, analysts say.
Daily trading turnover on the Saudi exchange in February ran at between two and three times levels seen late last year. It jumped to SR16.1 billion ($4.3 billion) Tuesday, the highest level since January 2008 – before the global financial crisis damaged confidence in equities around the world.
Some of the rise in stock prices is due to a return of the short-term speculation that characterized the market before the crisis, traders believe. Insurance is one sector which may have become overheated; it is up 29 percent so far this year and analysts estimate its average price/earnings ratio at about 20 times this years earnings, high compared to other sectors and by historical standards.
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