Saudi Economy: March 2012 Jadwa Chartbook

Published: March 4, 2012

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Editor’s Note:

The Jadwa Investment firm in Riyadh introduced the “Saudi Chartbook” to provide a quick, chart-based briefing on the key developments and trends in the Saudi economy and stock market. SUSRIS is pleased to provide the summary from the March Saudi Chartbook and a link to the complete report, rich with illuminating charts and graphs. SUSRIS thanks Jadwa Investment’s Chief Economist, Brad Bourland, Head of Research, Paul Gamble and Associate Research Director Gasim Abdulkarim, for providing this insightful report for your consideration.

[Complete report with charts, graphs and tables at this link.]

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Saudi Chartbook
March 2012 

Summary

Real economy: Economic data for January was strong. Consumer spending remained robust, with the value of point of sales transactions hitting a new high. Cement sales were also at their largest level on record.  Non-oil private sector growth hit its 2011 high in the fourth quarter.

Bank lending: Bank lending to the private sector posted its strongest gain in over two years in January. Lending to consumers rose at a much faster pace than lending to companies last year.

Bank deposits: Bank deposits rose for the fifth consecutive month in January, with demand deposits accounting for the entire rise to reach almost 60 percent of total bank deposits.

Bank profits: Higher lending and deposits and lower provisions have supported bank profits, which were at a three-year high in January and 38 percent higher than in January 2011.

Inflation: Year-on-year inflation was unchanged in January, though this hid some sharp movements, with rental inflation jumping and inflation from “other expenses and services” falling. While external inflationary pressures are easing, domestic pressures are mounting.

Trade: Non-oil exports hit a new all-time high in December. Imports also jumped that month and data on letters of credit issued for imports suggest further rises are likely in the months ahead.

Oil: Oil prices leapt over the past month owing to rising tension with Iran, stronger economic data and progress in dealing with Eurozone financial problems. According to unofficial data, the Kingdom’s oil output has stayed high to offset reduced demand for Iranian oil.

Exchange rates: Movements of major currencies over the past month have been driven by central bank policies. Injections of liquidity have taken place in the Eurozone and Japan but look less likely in the US.

Stock market: The TASI retained a strong upward momentum during February and early March amid much higher volumes. A number of global, regional and local factors have combined to intensify a revival in sentiment among local and foreign investors.

Valuation: The recent rally has lifted the price-to-earnings (P/E) ratio, though it remains fairly low on an historical basis. The P/E ratio is slightly higher than in other emerging and regional markets.

Sectoral performance: All fifteen sectors rose in February, with five posting double-digit gains.

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About Jadwa Investment – Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.

For comments and queries you can contact the authors:

Paul Gamble, Head of Research
pgamble@jadwa.com
and:
Gasim Abdulkarim, Associate Director: Research
gabdulkarim@jadwa.com
or:
Brad Bourland, CFA, Chief Economist
jadwaresearch@jadwa.com

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