Editor’s Note:
The Jadwa Investment firm in Riyadh introduced the “Saudi Chartbook” in February which provides a quick, chart-based briefing on the key developments and trends in the Saudi economy and stock market for the previous month. SUSRIS is pleased to provide the summary from the April Saudi Chartbook and a link to the complete report. SUSRIS thanks Jadwa Investment’s Chief Economist, Brad Bourland, and Head of Research, Paul Gamble, for providing this insightful product for your consideration.
Saudi Economic Trends – Jadwa Chartbook – April 2010
Real economy: New economic data are encouraging. They point to a strengthening of performance across the economy. With the TASI also having a good month and oil prices holding above $80 per barrel, it seems that the revival of private sector confidence is gaining momentum.
Bank lending: Lack of access to bank credit remains the leading private sector concern, so growth in bank lending during February is positive. Nonetheless, as the bulk of lending short term, there is a risk that some companies will be unable to rollover their debt.
Banking indicators: Growth in bank deposits has continued to ease owing to low interest rates, meaning that the loan to deposit ratio is up for the second consecutive month. Slowing money supply growth points to subdued domestic inflationary pressure.
Inflation: Inflation jumped to 4.6 percent in February owing to higher food prices. This reflects the very low base for comparison, as food prices plunged during late 2008 and early 2009. Rental inflation fell again, though rents are now 50 percent higher than at end 2006.
Trade: Imports through the ports were 18 percent higher in February than one year earlier, with consumer goods increasing by 26 percent and construction goods up by 37 percent. While this data is healthy, it is largely due to the slump in imports in late 2008 and early 2009.
Oil: Oil prices have been stable over the past month at a level that Opec producers are comfortable with. Their decision not to alter production quotas at their mid March meeting was therefore not a surprise. High stocks remain a potential concern.
Exchange rates: The dollar has eased after EU members unveiled a plan to support the Greek economy. Future episodes of heightened risk aversion will lead to renewed dollar strength.
Stock market: The TASI rose for the third consecutive month and was up by 11.1 percent over the first quarter. Performance in March was boosted by growing confidence about corporate performance and the launch of the first exchange traded fund.
Sector performance: Fourteen of the 15 sectors rose in March, headed by petrochemicals, which benefitted from high oil prices and expectations of good first quarter results. Multi investment was the weakest sector after very strong performance earlier in the year.
Dividends: Dividend payouts were healthy last year given the tough operating environment. They are likely to pick up in 2010 as conditions improve.
For comments and queries please contact the authors:
Paul Gamble, Head of Research – pgamble@jadwa.com and Gasim Abdulkarim, Associate Director: Research – gabdulkarim@jadwa.com or: Brad Bourland, CFA, Chief Economist- jadwaresearch@jadwa.com
Head office:
Phone +966 1 2791111
Fax +966 1 2791571
P.O. Box 60677, Riyadh 11555
Kingdom of Saudi Arabia
http://www.jadwa.com
COMPLETE REPORT
Jadwa Chartbook – April 2010
About Jadwa Investment - Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.<
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