TASI breaches 9000 as stocks rise for 9th consecutive session

Saudi Arabia's Tadawul All Share Index (TASI) crossed the 9000-point barrier on Thursday, registering its highest level in three and a half years.

The benchmark index was up 0.4 percent at 9,025 points at 11.50 am Riyadh time.

Stock market analysts told Argaam earlier that Tadawul, the Arab world’s biggest stock market, was expected to breach the 9,000 point mark on the optimism of an oil price recovery and inclusion into Morgan Stanley Capital Index (MSCI) and FTSE Russell emerging market indices this year.

“We are positive about oil which is trading below what we think is a long term sustainable price. A recovery will add to the optimism and help the market in 2019,” Mazen Alsudairi, Head of Research, Al Rajhi Capital, had told Argaam.

In March, brokerage firm Riyad Capital said that TASI is likely to reach 9,409 points by the end of the year, trading at a P/E ratio of 17.6x, ahead of rallying to 10,162 points in 2020.

Separately, AlJazira Capital estimates the stock market to reach 9100-9300 points in Q2 2019 based on a forward price-to-earnings (PE) expansion.

"TASI has witnessed a considerable growth in QFI ownership since the upgradation announcement; it still provides much scope for further infusion as compared to its other emerging market peers," it added.

The five-tranche inclusion of Tadawul in FTSE EM index began in March, with the second inclusion taking place in April. The final inclusion will be in March 2020.

The MSCI inclusion will be in two tranches – first taking place in May followed by the next in August.

Saudi Arabia will be the largest Middle East market in the FTSE Emerging Index with an overall weighting of 2.7 percent, while in the MSCI Saudi Arabia Index will have a weighting of approximately 2.6 percent in the Emerging Markets Index, with 32 securities.

Write to Parag Deulgaonkar at parag.d@argaamplus.com