Stocks listed in Saudi Arabia are poised for their worst month since the start of the pandemic as investors succumb to global risk-off sentiment amid recession fears.
The benchmark Tadawul All Share Index has declined 10% in May, nearly twice as much as the MSCI Emerging Markets gauge, and on track for its biggest monthly slide since March 2020. Banks accounted for the biggest drag as investors offloaded lenders with lofty valuations during a global equities correction.
“Investors are taking money off the table looking at the strong bout of selling in the international market,” said Faisal Hasan, chief investment officer at Al Mal Capital in Dubai. Still, the economic backdrop in the kingdom should stay strong as oil prices remain elevated and the second half of the year could provide some reprieve to Saudi shares, he said.
Even after the selloff, the Saudi stock index is the eighth-best performer in the world this year, in US dollar terms. Investors had flocked to the kingdom’s shares as its economy got a boost from soaring oil prices and government reforms.
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