Saudi stock market faces critical test amid Profit-taking and sectoral shifts

The Saudi stock market is set to experience partial profit-taking during Monday’s trading session as momentum in the upward trend weakens near the 12,000-point milestone. This marks a critical juncture for investors as the market navigates through a cautious phase.

Banking shares are expected to capture significant attention today, supported by optimistic reports from Al Jazira Capital and Al Rajhi Financial. Analysts highlight increased opportunities for upward valuation revisions in the sector, driven by expectations of corporate loan growth and profits outpacing market capitalization growth.

Ahmed Al-Rasheed, senior financial analyst at Al Eqtisadiah, remarked, “Despite potential selling pressures from profit-taking, the banking sector remains highly attractive to investors. Banks are pivotal players in the economy, which is poised for strong growth in the coming year.”

As the global and Saudi markets enter the final week of speculation over the U.S. Federal Reserve’s upcoming interest rate decision, volatility may continue to influence trading sentiment.

Economic momentum

Saudi Arabia’s economy recorded its first quarterly growth in five quarters, expanding by 2.8% year-on-year in Q3 2024. The recovery, driven by a resurgence in oil activities alongside robust non-oil and government sectors, underscores the country’s economic resilience.

According to a report by SICO Investment Bank, this growth trajectory, coupled with Saudi Arabia’s Vision 2030 economic diversification plans, positions the cement sector as a key beneficiary.

Key corporate developments

As trading unfolds, investors will watch closely to see if the market can maintain stability amid these developments. With sectors like banking, cement, and food poised for growth, alongside a resurgence in economic activity, the Saudi market remains a focal point for regional and global stakeholders alike.