Saudi Economy: April 2012 Jadwa Chartbook

Published: April 4, 2012

Share Article

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 April Saudi Chartbook and a link to the complete report, rich with illuminating charts and graphs. SUSRIS thanks Jadwa Investment’s Head of Research Paul Gamble, Chief Economist, Brad Bourland, and Associate Research Director Gasim Abdulkarim, for providing this insightful report for your consideration.

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

***

Saudi Chartbook
April 2012 

Summary

Real economy: Key economic data softened slightly in February, but remained at levels consistent with robust economic growth. Both of the main guides to consumer spending we track dipped in February, but were up by over 20 percent in year-on-year terms.

Construction indicators: Early indicators suggest that the construction sector has got off to a strong start in 2012. It is a large beneficiary of government spending and we expect it to be the fastest growing component of the economy this year.

Bank lending: Bank lending to the private sector posted another healthy rise in February. There were sharp moves in the maturity profile of outstanding debt. The loan-to-deposit ratio was little changed, meaning banks have plenty of room for further lending.

Banking indicators: A rise in bank holdings of Treasury bills in February suggests the government may be becoming concerned about inflation. It does not appear that bank deposits are being drawn down significantly to finance stock market purchases.

Inflation: Year-on-year inflation ticked up in February, driven by an increase in rental inflation. Inflation for most other components of the cost of living index also rose. High money supply growth may be adding to inflationary pressures.

Oil: Oil prices remained at elevated levels in March. Tensions with Iran continue to add a risk premium to prices that are also being inflated by disruptions to supply. The Kingdom’s oil production has stayed high, generating bumper oil export revenues.

Exchange rates: The main move over March has been the further weakening of the yen against the dollar after the surprise easing of monetary policy in February. The impact of a weaker yen on China’s competitiveness may be behind the modest appreciation of yuan.

Stock market: Nothing has happened so far in March to derail the positive momentum that the TASI has built and it is on track to be one of the best performing markets in the world in March. The TASI is on course to be up for the sixth month out of the last seven.

Volumes: Stock market volumes have continued to rise, with daily turnover averaging its highest in more than four years. Four sectors accounted for nearly 60 percent of total turnover.

Sectoral performance: Two sectors were down so far in March and five of the remaining 13 posted double-digit gains. The best performers have been subject to considerable speculative activity, though the insurance sector, where trading has been highest, is flat.

***

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

***

Related Items: