Saudi Economy: June 2012 Jadwa Chartbook

Published: June 6, 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 June Saudi Chartbook and a link to the complete report, rich with illuminating charts and graphs. SUSRIS thanks Jadwa Investment’s Chief Economist and Head of Research Paul Gamble for providing this insightful report for your consideration.

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

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

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Saudi Chartbook
June 2012 

Summary

Real economy: Latest data point to a modest slowdown of economic activity in April, with indicators of consumer spending and cement sales dipping. Nonetheless, all remain strong and the healthy underlying economic momentum remains in place.

Bank lending: Bank lending to the private sector posted another solid increase in April. In year-on-year terms lending growth was at its highest since March 2009. Bank deposits declined slightly, owing to a further fall in funds held in time and savings deposits.

Banking indicators: Banks remain highly liquid, though their holdings of Treasury bills have dropped, suggesting that the government is less concerned about the potential impact of this liquidity on inflation.

Inflation: Lower food price inflation caused year-on-year inflation to dip slightly in April; inflation has been very stable for the past eight months. Rental inflation bounced to close to a two-year high and inflation for clothing and footwear hit a long-term high.

Trade: Non-oil exports and imports grew strongly in March in both volume and value terms. Petrochemicals and refined products led non-oil exports and food and building materials headed imports. New letters of credit opened suggest a further rise in imports in the coming months.

Oil: Oil prices have slumped in the past month. Brent crude has fallen by around 20 percent due to weakening economic data, falls in global stock markets, a reduction in the political risk premium (as tensions with Iran have eased) and an increase in global oil stocks.

Exchange rates: Heightened uncertainty about prospects for the Eurozone and disappointing global economic data has caused an intensification of risk aversion, triggering inflows into assets considered safe havens, which are primarily dollar– and yen- denominated.

Stock market: The TASI has fallen abruptly in line with global markets and volumes have plunged. By early June most of the gains recorded in the first quarter of the year had been wiped out. Foreign investors were net sellers for a third consecutive month for the first time in the three months ending May.

Sectoral performance: Media and publishing was the only sector that rose last month. All the other 14 sectors declined, with four recording double-digit falls. The worst performers were those affected by the deteriorating global outlook and lower speculation by local investors.

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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 author:

Paul Gamble, Chief Economist and Head of Research
pgamble@jadwa.com

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