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Saudi stock trading slumps as interest jumps in US stocks

Path, Road, City BHB06R Wall Street Bull in Downtown Manhattan, NYC Dbtravel/Alamy
Transactions in the US market accounted for more than 97% of total trading by Saudis in foreign markets during the fourth quarter of 2023
  • Saudi trading in US stocks trebles
  • $15.6bn in Q4 2023
  • Total trading at a historic low

Saudi trading in US stocks trebled in the fourth quarter of 2023 compared with the previous year to SAR58.7 billion ($15.6 billion), as the kingdom’s interest in US equities revived following the Covid pandemic.

Total trading in foreign and domestic markets remains historically low. 

The transactions in the US market accounted for more than 97 percent of total trading by Saudis in foreign markets during the fourth quarter of 2023, the Capital Markets Authority (CMA) said in a quarterly report.

The report lists the local and global buys and sells in global markets of CMA-registered brokerages.  

GCC and European markets came a distant second with around 1.2 percent of trading each, at SAR753 million and SAR716 million respectively in the fourth quarter of 2023. 

Trades in Saudi markets dwarfed those numbers at SAR721 billion in Q4 2023, but this was only a 16.5 percent rise on the previous year and 31.5 percent down on a high of SAR1.1 trillion in the first quarter of 2022. 

Total trading at that time was SAR1.14 trillion, of which US equities accounted for only SAR39.9 billion. 

The Saudi economy contracted by 0.8 percent in 2023 following a government policy of oil output cuts, in an attempt to push up world prices, though the government says the non-oil sector accounted for 50 percent of GDP for the first time. 

But as the output cuts continue, the economy also contracted by 1.8 percent year on year in the first quarter of 2024, while growth in non-oil activities slowed to its lowest rate in a year, according to official statistics released this week

The International Monetary Fund recently raised its estimate for Saudi Arabia’s fiscal breakeven price to $96.2 per barrel of oil from $86 last year, but predicted that would ease to $84.7 in 2025. Brent crude is currently trading at around $81 per barrel.

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