The reasons for what happened to the Saudi stock market

August 19, 2015 in the versions Center Add comment

Panic overshadowed traders in Saudi Arabia's stock on Tuesday, where stocks fell to close at 8197 points, Losing 2.8% of their market value. So to lose more than $ 14.4 billion (54 billion riyals)
According to analysts, the declines have wiped out gains this year to its transformation into a loss of about 1.6%. The declines came after collective impairment sectors
International Monetary Fund forecast to slow the growth of real GDP in Saudi Arabia to 2.8 percent this year and 2.4 percent in 2016, while government spending begins to adapt to the prevailing decline in oil prices, that amounts to about 3 percent in the medium term.
The market saw sharp declines almost break the barrier of 8,000 points, but the aftershock wave offset one-third of the losses and prevented the break, was quoted as saying "the economic newspaper."

Internal reasons

Many analysts and experts in the stock markets because of what happened in the Saudi market to a number of internal factors, including:
falling oil prices caused significant decrease in export and fiscal revenues. Where oil prices have reached low levels below $ 50.
the deficit in the public finances of the kingdom pushed the government to resort to bonds to cover the deficit despite the drag from the reserve about a quarter trillion rials until last May.
slowed in recent months involved the movement of deposits to the banking system, as a decline in private credit growth rate.
The continuation of the deficit will make the choice of religion in bridging need, what makes the government competes with the private sector in the demand for credit by banks
near the National Bank of Saudi IPO which will be launched after a week in which to push pressure on the market and reap the profits of the fact that the underwriters of individuals are forced to liquidate their shares
In addition to the continuation of the market in the past three months, the highest level without going through a profit-taking.
In addition to the continuation of military operations in Yemen.

External causes
There are many external causes have had the impact of what happened in the Saudi stock market, including :.
The decline semi collective global markets, especially in China, with a decline of about 6%, raising concern that the occurrence of growth opportunities in the global economy boosts corporate profitability dwindle.
International Monetary Fund report on the slowed growth in real GDP in Saudi Arabia to 2.8 percent this year, and 2.4 percent in 2016.
downturn in the Chinese economy is one of the largest global economies.
The dollar still maintains strength as the negative impact on the Saudi exports, which will be more expensive because of the link riyal to the dollar.
Tensions and political turmoil, especially in Iraq, Syria and Yemen region, which launched a wave of sell-off affected the markets of the Gulf, particularly Saudi Arabia.
Here Experts believe that the Saudi market vulnerable to decline and trading area in 7000, but back above the important 8450 point to protect the market from the patch along the wave to those low-lying areas.
It is said that this decline in the stock market is not the first has reached its losses in October 2014 around 144 billion riyals and lost three months of trading gains, so talk about the bankruptcy and the deterioration or economic collapse in Saudi Arabia is a fantasy now and exaggeration.
The sudden decline in stock prices strong General in most sectors, oil prices could fall more than the current it has come down to less than fifty dollars, which cast the decision maker a responsibility to strive to create a diversified economy in its sources to prevent falling into economic disaster.

Amer Omran