The Saudi stock market in 2022 … What will the scene be like?

Muhammad Al-Omran, a member of the Saudi Economic Association, expected that global markets, and with them the markets of the region, will see strong ups and downs in 2022, in light of the major challenges posed by rising interest rates and reduction of liquidity.

He said in an interview with “Al Arabiya”, that it is necessary to see new stimuli and go back to basics to sustain the demand for shares questyear, considering that corporate earnings growth will determine whether the stock value is right.

He pointed out that valuations are high in the Saudi market, even relative to their historical rates. However, in his view, the issue is not important in light of the strong growth in corporate profits, especially in the petrochemical sector. in whose earnings growth has exceeded 100% for some companies, in addition to the banking sector, which has seen growth of at least 40% year-on-year.

The number of urbanization and other factors supported the valuations, including the availability of large liquidity in cash in the economic system within the Kingdom. In 2021, the money supply exceeded two trillion riyals and is approaching 2.3 trillion riyals currently, as the stock market will have the lion’s share of this liquidity , plus the low interest rate environment that Stocks made tempting to take risks.

But in 2022 the picture may be different, depending on urbanization, the gap between intrinsic or fair value and the market value of shares has started to narrow, which is also true for global markets.

A member of the Saudi Economic Association predicts that, in the short term, oil prices will play an important role in influencing the overall trend of the Saudi market, as well as the Fed’s plan to raise interest rates, which will cast a shadow on the most global markets, including markets in the region.

Over the course of the full year, Al-Omran stressed that the Kingdom’s strong economic growth will play a role in supporting the market directly and indirectly, as well as corporate profits in light of growth, despite the relatively expected slowdown from the strong jump in 2021. compared to 2020, but the extent of this slowdown and of any Setal sectors will be evident in the first two quarters of quest’year.

He said: “Overall, we expect growth of less than 10%, which is also in in line with the expected profits of companies around the world in 2022 compared to 2021 “.

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