The Saudi Stock Exchange (Tadawul) plunged to its lowest level this year in April, falling 3.53 per cent, and analysts say the market is set to continue to fall throughout May.

Market capitalisation fell 3.78 per cent over the previous month to SR1.48 trillion ($395bn), while the total number of transactions executed in April fell 8.26 per cent when compared with March.

“The main reason the market was down was the drop in oil prices. Also in March, the price of stocks were inflated, so the Tadawul underwent correction in April,” says Majdi Gharzeddeene, senior vice-president and head of investment research at Kipco Asset Management Company (Kamco).   

The Tadawul All-Shares Index (Tasi) plunged to its lowest level in eight months on 16 April after petrochemical firms posted disappointing first quarter results.

The Tasi has not had a good start to the week, plunging 1.27 per cent to 7,450.26 points on 5 May as petrochemical and banking shares weighed on the gauge following a drop in oil prices and global stocks. The downward trend is likely to continue as oil prices average $110 a barrel.

The Tadawul is more reactive to the global markets when compared to some of the other regional exchanges. The slow global economic recovery and the soft landing of the Chinese economy have had a repercussion on the Saudi bourse.

“The Saudi petrochemical companies export to China, which is a huge market for them, so the slowing economic growth in China will automatically affect their sales,” says Gharzeddeene.