Saudi Arabia's stock market witnessed its steepest single-day decline in nearly nine months on Sunday, rattled by escalating geopolitical concerns across the Middle East and beyond. The benchmark Tadawul All Share Index tumbled 1.8%, marking its most significant drop since global markets were shaken by US tariffs in April 2023.
Market Plunge and Regional Ripples
The sell-off was broad-based, with every single industry sector closing in negative territory. The index finished at its lowest level since October 2023, a point it has been testing for several weeks. In contrast, equity markets in neighbouring Gulf nations like Kuwait, Qatar, Oman, and Bahrain managed to eke out marginal gains.
Analysts directly linked the sharp correction to investor anxiety over multiple regional flashpoints. "The current weakness in the Saudi market reflects the regional geopolitical issues, even though there's no indication of confrontation or escalation at this time, especially related to Yemen," said Junaid Ansari, head of research and strategy at Kamco Investment Co.
Geopolitical Storm Clouds Gather
The downturn coincided with critical developments. Saudi Arabia called for talks in Riyadh between warring southern factions in Yemen, where its-backed forces are clashing with UAE-supported separatists. Simultaneously, Iran's Supreme Leader Ayatollah Ali Khamenei blamed external forces for inciting deadly protests within the country, raising tensions further.
"The situation in Iran is also affecting sentiment and adding to the geopolitical risk premium for the region," Ansari added. Furthermore, the potential for oil market disruption following the political crisis in Venezuela, with the ouster of President Nicolás Maduro, looms. Ansari noted that any impact from this on stocks would only be felt from Monday, when crude trading resumes.
Broader Challenges and a Murky Outlook
This drop compounds a difficult period for Saudi equities, which are coming off their worst annual performance since 2015. A combination of subdued oil prices, which restrain government spending and corporate earnings, has weighed heavily on the market.
The outlook for 2026 remains uncertain. Some analysts see potential upside from possible changes to foreign ownership limits, which could attract international investment. Others, however, caution that the market broadly lacks positive momentum and direction, making a sustained recovery challenging in the near term.
