Saudi Stock Market Sees Sharpest Decline in Nearly Ten Months
Saudi Arabian equities experienced their most significant drop in almost ten months on Sunday, with the Tadawul All Share Index falling by 1.9% in Riyadh. This marked the benchmark's largest closing decline since April, driven by a combination of global metals selloff pressures and escalating geopolitical tensions involving the US, Iran, and Israel.
Metals Sector Leads Market Decline
The materials sector, particularly mining companies, bore the brunt of the selloff. Saudi Arabian Mining Co. and other producers saw substantial losses following a late-week rally in the US dollar that accelerated a dramatic plunge in precious metals prices. Gold recorded its most significant single-day slide in four decades on Friday, while silver prices also tumbled sharply.
Beyond mining firms, capital goods companies, real estate developers, and energy sector stocks also suffered during the trading session. Market analysts pointed to geopolitical concerns as a primary driver of the broad-based decline across multiple sectors.
Geopolitical Tensions Intensify Regional Concerns
The market downturn coincided with heightened tensions in the Middle East. Iran's Supreme Leader Ayatollah Ali Khamenei issued warnings about a potential "regional war" on Sunday, as speculation intensified regarding possible US military strikes against Tehran. These fears have grown since President Donald Trump ordered US Navy vessels to the Middle East in January following Iran's deadly crackdown on protesters.
While President Trump claimed on Friday that he had persuaded Tehran to delay executing demonstrators, recent reports from local media about several incidents near Iran's southern waters have further fueled concerns about escalating regional tensions.
Regional Market Divergence and Analyst Perspectives
In contrast to Saudi Arabia's market decline, equities in neighboring Gulf countries showed resilience. Stock markets in Bahrain, Kuwait, and Qatar actually advanced during the same trading session, highlighting the selective impact of current market pressures.
Junaid Ansari, head of research and strategy at Kamco Investment Co., commented on the Saudi market performance: "The decline in Saudi is understandable due to geopolitics as well as profit booking. Mining shares are also down due to the gold crash."
Market Context and Regulatory Changes
The Sunday decline followed what had been the Saudi benchmark's strongest monthly performance since 2022 in January. The timing is particularly notable as it occurred on what might otherwise have been a positive day for the market, given recent regulatory changes.
As of February 1st, non-Saudi investors gained direct access to Saudi Arabian stocks, ending years of limited market access and specific criteria requirements. Previously, foreign investors needed to meet conditions such as having $500 million in assets under management to participate in the market.
This regulatory shift represents a significant opening of Saudi Arabia's financial markets to international investment, though Sunday's trading session demonstrated that geopolitical factors and global commodity movements continue to exert substantial influence on market performance.
