Who Wants To Buy Some Saudi Stocks Just As The Region Descends Into Chaos?!

Ok, so Saudi stocks did it again on Wednesday.

After falling 1.1% intraday, they rallied in the last 25 or so minutes of trading to close green. This is four days in a row of this now and I’ve got to tell you, it is truly farcical:

Saudi

As we wrote on Tuesday afternoon, it is obvious that state funds are stepping in to rescue this market as investors remain vexed about what happens next in the region with tension between Iran’s proxy armies and MbS reaching a veritable fever pitch.

 

Saudi CDS is blowing out too, although it’s worth noting that we’re a long way away from where things stood in early 2016 when a series of events that started with Riyadh posting a record budget deficit and culminated with a diplomatic crisis after the execution of prominent Shiite cleric Nimr al-Nimr drove the kingdom to the brink of war with Iran. Here’s some perspective on that:

SaudiCDS

You’re reminded that in the episode which coincided with the peak shown there on the chart, Iranian protesters actually ransacked Saudi Arabia’s embassy in Tehran and set the place on fire:

Fire

So you know, it could be worse (there’s some sarcasm there).

And hey, if you’re a bargain hunter, Exotix notes that valuations are compelling. “Investor (domestic and foreign) expectations of success in meeting challenges appears low given the valuation of the equity market, measured by the Tadawul All Share, is at a 20% and 7% discount to the mid-point of the last five-year range for trailing P/B and P/E, respectively, and trading volumes (dominated by locals) this year are down to a third of the level seen in 2014-16,” they write, in a note dated yesterday.

PB

So see? There’s always a silver (or I guess in this case “gold” is more appropriate) lining.

 

 

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4 thoughts on “Who Wants To Buy Some Saudi Stocks Just As The Region Descends Into Chaos?!

  1. The region has always been unstable. What can create some form of stability is that MbS becomes king of KSA, he will be there for a long time. This is a change from a string of geriatrics in the past and present.

    • Yep, no off-balance-sheet debt like medicare and pensions which will probably be reneged on.

      But others’ numbers are misleadingly better – you can click on a country to get details. Example:

      “In Singapore’s case, she borrows to invest, not to spend. She is in fact a net CREDITOR country, NOT a net debtor. We are always asked, why does she borrow? She can borrow cheap and reinvest the funds.”

      http://www.nationaldebtclocks.org/debtclock/singapore

      “The Norwegian central government is in a net asset position, i.e. the government’s total financial assets exceed the total debt. They borrow cheap to then re-invest.”

      http://www.nationaldebtclocks.org/debtclock/norway

      These are two best places to work or live, though Norway is very dependent on oil exports.

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